Economy & Work :: Sectoral View (archived)

This page was archived when this portal was restructured in early 2007. You will find the relevant links originally contained in this theme in the newly revised Economy & Work theme, particularly under the eBusiness theme.

Across the board: the range of sectoral applications of ICT

There is hardly any sector of the European economy that has not felt the impact of new Information Society technologies. ICT play an important role to foster innovative products and business processes - and the challenge has now shifted to incorporating electronic business in both the internal and the external activities of companies. European policy is increasingly focussed on assessing the readiness of EU enterprises to conduct business electronically.

The benchmarking exercise of the eEurope2005 target "a dynamic e-business environment" allowed to draw an updated picture of the "e-readiness" and "e-proximity" of the EU economy sectors. eEurope 2005 benchmarking indicators measure the development of e-business in Europe: the first is "percentage of enterprises' total turnover form e-commerce"; the second is a composite indicator (e-business index) that has been developed by the European Commission to reflect the companies' level of readiness to engage in the more complex e-business environment.

The Go Digital initiative included a specific action concerning the measuring of the take-up of ICT and e-business in the EU. This action has resulted in the e-Business W@tch function, aimed to monitor, analyse and compare the development of businesses in different sectors of the European economy.

Main Sectors covered by the e-Business W@tch in 2004/05

The e-Business W@tch provides statistics and analysis on the progress made: a benchmarking exercise conducted in 2005, based on the definition of specific indicators resulted in the fourth edition of the European e-Business Report (2005), showing empirical evidence of practices and business implications in 10 sectors of the EU economy in 2004/05 (see synthesis below; for more details, see list of resources by sector and the Pocketbook of e-Business indicators 2005). In 2006, 10 new sectors will be analysed: full information will be soon available on the e-Business W@tch website.

ICT services
Food and Beverages
Textiles
Publishing and Printing
Pharmaceuticals
Machinery and Equipment
Automotive
Aeronautics
Construction
Tourism

ICT Services Although companies in this sector have IT and e-business as their end product, ICT also plays a significant role in the way that this product is produced, promoted and provided. Online channels have become key for marketing, communication and interaction with customers. A necessary requirement for such services is a powerful ICT infrastructure, such as a broadband connection between service providers and users, hence companies from the IT services sector are well equipped with it. As many products and services from this sector are delivered online, the border between "product" and "service" is becoming less distinct. In the software industry in particular, service orientation has increased along with e-business activity, with user needs being better understood and considered, with a lesser focus on technology. The open source development plays an important role in this context. Open source software (OSS) paves the way from product- centred software supply towards new business approaches that focus on services linked to that software. See full analysis of this sector. Trends and key issues:

Establishment of offshore IT services in Europe
Increased importance of OSS
Maturing concept of software as a service, with better consideration of user needs

Food and Beverages The growing complexity of the food sector drives companies to adopt more sophisticated and effective e-business solutions. Until recently, companies have used e-business mainly to improve their internal processes and procedures. The applications most commonly used are: e-mail, websites and online banking. Other applications subsequently adopted, with a considerable gap in terms of adoption rates, are EDI and ERP systems. On the whole, the sector has rather been a late adopter of ICT, with the notable exception of the large international companies. However, there are signs of increasing e-business activity, in response to structural changes and new requirements. See full analysis of this sector. Trends and key issues:

Increased use of ICT for specific purposes (food traceability and quality control)
Large firms will drive supply chain integration

Textile Industry The level of e-business activity is below average compared to other manufacturing sectors studied by the e-Business W@tch. The stated objectives of companies, and their short-term expenditure plans, also suggest a slow pace of change. The dominance of small firms is a factor in this but cannot be the only reason. Gaps in the diffusion of ICT and in e-business activity, particularly for more sophisticated applications such as Supply Chain Management (SCM) or Customer Relationship Management (CRM), have been identified in all sub-sectors. A relatively widely deployed activity is collaborative online design of products. This may be attributed to the long tradition of exchanging product design related data. The complex, and very fragmented, sector supply chain tends to be based on a network of long standing relationships between suppliers, third parties and customers. See full analysis of this sector. Trends and key issues:

Integration of business processes within the supply chain as a objective for the future
Focus on developing and agreeing on electronic standards, in particular XML based standards

Publishing and Printing ICT is changing work and production processes, and has encouraged competition by facilitating market entry. The European publishing and printing industry is in a continuous state of flux. The enormous increase in the availability of digital content, powerful IT solutions for workflow management, delivery and storage technologies, is drastically changing its existing supply value chain. In general, there are three major factors driving e-business evolution in the sector: the technology innovation imperative, market pressure due to substitution and new market entries, and changes in consumer demand. See full analysis of this sector. Trends and key issues:

Increased competition and risk of substitution for publishing companies, particularly for newspaper publishers
Change of the role of printing, from manufacturing to full-scale operation and provision of services • Organisational changes due to digital workflows in publishing and printing

Pharmaceuticals This sector is well suited to the use of ICT and e-business applications. This is true for both internal processes and for the support of B2B relationships. In fact, it is an intensive user of electronic business: ICT and Internet-based solutions play a key role in supporting marketing and sales processes. CRM systems and mobile solutions have a high potential for facilitating the management and work of the pharmaceutical sales force. See full analysis of this sector. Trends and key issues:

Further adoption of ICT for increasing process efficiency, both in supply-side and customer-facing applications
Increased use of CRM systems and mobile solutions to support the work of the sales force • Continued trendsetting in the adoption of RFID/Auto-ID for combating counterfeiting activity

Machinery and Equipment This sector has not been an early adopter of ICT. However, compared to 2002/03, it has advanced in its use of e-business. Companies have started to develop their own strategies. Applications are planned with an understanding of their scope and potential benefits. Companies are thereby moving away from a mere imitation strategy which was common in the early stages of e-business. The transition from e-business as a technical ICT tool to ‘e-business as a strategic concept’ is a major distinguishing factor in this recent phase. Customer service, and after-sales services in particular, play an important role in this context. See full analysis of this sector. Trends and key issues:

Increasing importance of e-business in delivering product related services (in particular after-sales services)
Growing maturity of online trading platforms after the failure of many of the initial e-marketplaces

Automotive Electronic business has had considerable impacts on supply chain processes. Large companies are steering this development. The sector exhibits a high level of basic ICT infrastructure. Consequently, the industry is among the most intensive users of e-business technologies and applications. However, even within this advanced sector, there are clear signs that the potential of e-business has not yet been fully utilised. Most importantly, there is a considerable gap between large companies and their small supply firms in terms of e-business activity. Notwithstanding this digital divide, online procurement and supply chain integration are key application areas for e-business. In terms of internal business process integration, enterprise resource planning (ERP) systems are widely diffused compared to other sectors. See full analysis of this sector. Trends and key issues:

Important role of OEMs in determining IT strategies of SMEs and suppliers
Growing maturity of e-business solutions and activity

Aeronautics This sector is an advanced user of ICT for managing collaborative processes and electronic procurement. As in the automotive industry, large firms lead the development. The European aircraft industry is characterised by a very high degree of concentration and a complex network of companies, joint ventures, international consortia and partnership agreements. A few very large companies play a dominant role as OEMs (Original Equipment Manufacturers) at the end of the value chain, cooperating with a large number of suppliers from various countries. Suppliers include companies from all sizebands. See full analysis of this sector.

Construction Electronic business activity is very limited compared to the other sectors studied by e-Business W@tch. Many companies prefer to be re-active rather than pro-active in their use of ICT. The construction industry has yet to show the same level of ICT driven improvement of productivity as in other industries. This can partly be explained by the nature of the work and the type of production involved in construction processes. It is also related to slow uptake of ICT in a sector which is dominated by SMEs. Large enterprises in the industry and new sector entrants have adopted ICT based production methods. However, there is still great potential for further ICT uptake, for example: production planning systems, ERP-systems with financial components, inventory management systems, supply chain management (SCM) and mobile solutions. See full analysis of this sector. Trends and key issues:

Search for strategies to overcome the fragmented IT landscape
Focus on tools for collaboration among the many partners in consortia.

Tourism The Internet has led to sustained changes in this sector. The dynamic development of e-tourism will continue. In the past 30 years, the tourism industry has been influenced by three major waves of ICT: the Computer Reservation System (CRS) in the ‘70s, the Global Distribution System (GDS) in the ‘80s and the Internet from the mid ‘90s onwards. The focus of e-business activity in tourism is on marketing and sales. Online booking and reservation services have been widely accepted among both leisure and business travellers to a degree where it is true to say that "e-tourism" has taken off. CRM is an important internal application, although not widely diffused among the smaller firms. The dynamic development of electronic business is likely to continue, as there are new opportunities ahead. One of the main trends is "destination management" where destinations (regions, areas) can be regarded as a kind of virtual enterprise. See full analysis of this sector. Trends and key issues:

Disintermediation and intermediation are occurring in parallel: new entrants (online players) on the one hand, and pressure on traditional intermediaries (travel agencies) on the other
Continued boom in e-tourism, triggered by EU enlargement and increases in domestic broadband Internet access
Experimentation with new mobile applications

Specific sectoral uses of ICT supported by EU initiatives

«The ICT revolution is not over. We are right now seeing a very important consolidation of the use of ICT that will drive productivity gains and new markets over the coming years.»
Viviane Reding

The following examples provide an introduction to some EU funded initiatives.

ICT sector. The IST program currently supports research into: Communication, computing and software technologies (Broadband for all, Mobile and wireless systems beyond 3G, Networked audiovisual systems and home platforms, Open development platforms for software and services, Embedded systems); Components and microsystems (Pushing the limits of CMOS and preparing for post-CMOS, Micro- and nano systems, Advanced displays, Optical, opto-electronic, and photonic functional components); Knowledge and interface technologies (Multimodal interfaces,Semantic-based knowledge systems, Cognitive systems).

A report published in November 2004 (Benchmarking national and regional policies in support of the competitiveness of the ICT sector in the EU) has identified, analysed and assessed more than 175 examples of national and regional policies that were implemented in the EU15 Member States in the last 5 years.
Tourism. The IST program supports research into electronic booking systems, and innovative ways of providing visitors with information about the places they are visiting, as and when they need it.
Transports. Applied IST research in eSafety for road and air transport. Main themes: intelligent transport infrastructure (helping to reduce congestion, pollution and risk); more efficient ways to provide travellers with information; optimising transport network capacity; monitoring pollution; managing emergency systems; development of intelligent vehicles (able to warn of impending collisions, or keep a safe distance from other vehicles automatically).
Health services. Applied IST research in eHealth: Electronic Health Cards; online health services (information on healthy living and illness prevention, electronic health records, teleconsultation and e-reimbursement, etc.); Health Information Networks.
Construction industry. CONNET initiative; ProdAEC network
Agriculture. The Leader+ initiative provides for the dissemination of information and the exchange of experience and know-how through electronic networking. EU AgriNet is an EU-funded portal providing a comprehensive overview of EU-supported research activities in agriculture.
Forest-based industries. PapiNet WoodX (best practice approaches for a Europe-wide uniform system of electronic messaging). Initiatives on Sustainable forests and the EU: Global Inventory of Forest Fires (GBA2000 project); TREEs II research program.
Textiles, clothing, leather and footwear. TANNET (network for disseminating results in the leather industry).

Several promising information society projects and candidate success stories covering a broad spectrum of ICT applications have been published under the Information Society Policy Link series: an overview leaflet outlining the scope of the initiative is available, as are the factsheets for each policy area. Some examples: