Transcript No Slide Title - Professor Jim Norton

“Winning in the race for e-business”
Lecture Four - “Benchmarking global best practice”
Presentation to Sheffield University Management
School MBA Students
24 February 2005
Prof. Jim Norton
Senior Policy Adviser
UK Institute of Directors
Former Director UK
Cabinet Office PIU
e-Commerce team
www.profjimnorton.com
Issues to be covered
• How much business is e-business?
• Measuring national e-business capabiltity.
• 2004 international benchmarking study results.
• A challenge: Remember the “people” dimension….
• Final thoughts.
How much business will be e-business?
EU e-business revenues (both B2B & B2C):
• 2001 revenues estimated to be $86bn;
• 2003 revenues forecast at $382bn; and
• 2005 revenues forecast at $1510bn.
UK e-business sales revenues:
• 2002 revenues were £19bn; and
• 2003 revenues were £39.5 (up 108%);
• of this £39.5bn, £11.45bn was B2C (29%)
• goods at £27.26bn outpace services at £12.24bn.
UK businesses & consumers bought £195.6bn of goods and
services over other ICTs (EDI, e-mail, automated telephone
sales in 2003.
These figures all exclude the financial sector…
Source: Net Figures at Net Profit - March 2002 and ONS Nov 2004
http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=6645
Top Ten E-Commerce Sites in the UK - 12/04
Rank
1
2
3
4
5
6
7
8
9
10
Domain
ebay.co.uk/
amazon.co.uk
uk.kelkoo.com
argos.co.uk
play.com
euro.dell.com
tesco.com
ebaymotors.co.uk
comet.co.uk
currys.co.uk
Market share
29.74%
7.64%
2.44%
2.44%
1.94%
1.8%
1.79%
1.64%
1.04%
0.94%
UK Consumers spent £4bn online in 4Q04 out of total retail
spend of £75.8bn
Source: Hitwise http://www.hitwise.com & IMRG Jan 05
Businesses that placed orders online 2002-2004
Note:
Business
here means
businesses
representing
x% of
employment
in the
relevant
country…
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 74
www2.bah.com/dti2004
Businesses that pay online 2002-2004
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 76
www2.bah.com/dti2004
Resolution of the Solow productivity paradox
Policy-makers and economists have long debated the role of information and communications
technology (ICT) in the economy. The traditional view in the 1980s and 1990s was that its impact was
limited. This was well characterised by the Solow Productivity Paradox that "you can see the
computer age everywhere but in the productivity statistics". In the last year this paradox has been
resolved. A confluence of new evidence based on analysis of US economic performance in the late
1990s demonstrates a strong inter-dependence and that ICT has had a substantial impact on GDP.
This view has been supported by research by the European Commission that lies behind the claim by
Erkki Liikanen, commissioner for enterprise and information society, in October 2003 that "there is
more and more evidence that the adoption of ICT is a key to productivity growth. In the US, it has
been unusually robust, and has spread to the wider economy." Evidence of a substantial impact on
productivity and GDP growth in Europe is much more limited to date. For the first time since 1950
European catch-up ceased and the productivity gap between the US and Europe started to increase
again after 1995. Innovation in ICT has a transformational impact on productivity and growth - in
the US, ICT produced an estimated one percentage point increase in yearly GDP growth in the late
1990s. Evidence and reasoned argument point to this productivity and growth improvement
continuing for many years to come. Applying the same logic to the European economy, ICT could
increase our future GDP growth rate from 2 per cent to 3 per cent. ICT can do to our economy in the
21st century what railroads did in the 1800s and electricity in the 1900s. Sectors that are or will be
particularly heavy users of ICT - retail, financial services, media and government - stand to benefit
most, although the whole economy will profit indirectly. This raises the question of whether policy
makers in Europe can do anything to improve Europe's relative productivity performance.
Source: Andrew Heaney of Spectrum Strategy Consultants and Brian Williamson of Indepen,
"Reaping the Telecoms Dividend" January 2004. Quoted in the Financial Times 18 Feb 2004
Issues to be covered
• How much business is e-business?
• Measuring national e-business capability.
• 2004 international benchmarking study results.
• A challenge: Remember the “people” dimension….
• Final thoughts.
A framework for analysis..
The UK is the leading centre for e-commerce activity within a strong Single
European Market, based on openness and innovation by suppliers and customers,
light touch regulation, and Government-Industry partnership
Access
Trust
Understanding
Market-led approach
A competitive and
innovative environment
Co-ordination and focus
across Government
Internationally agreed tax and
regulatory frameworks
Monitoring and evaluation
Source: PIU Report “[email protected]”
Vision
[email protected]
Access
Individuals...
 have ubiquitous, low cost, high
bandwidth, fixed and mobile,
access, with an “always on”
capability.
 are not e-excluded. Almost all,
including the disadvantaged,
have affordable access.
 are no longer barred by limited
literacy..
Business and Government….
 have access through broadband
networks which are nearly
ubiquitous throughout the UK.
Understanding
Individuals...
 are aware of the benefits
that they can gain from ecommerce and feel confident
that they have the skills to
exploit them.
 are able to use routinely
electronic means for
Government transactions.
Business and Government….
 use e-commerce as an
integral part of strategic
thinking in UK industry.
 have embraced the tools of
e-commerce to develop
skills.
Source: PIU Report “[email protected]”
Trust
Individuals...
 can use networks for ecommerce transactions with
minimal risk of being
defrauded.
 have minimal risk of being
‘hacked’ or ‘spammed’.
Business and Government….
 are fully confident in the use
of e-commerce transactions.
 have systems which are
intrinsically secure.
 Can protect their IPR.
Assembling the ‘Sophistication Index’
Environment
People
Technology
Processes
Based on a fusion of the ‘three pillars’ and ‘technology innovation lifecycle’
approaches with 50 sub-indicators.
Source: UK DTI Business in the Information Age:
International Benchmarking Study 2004 Page 102
www2.bah.com/dti2004
Defining the sophistication index
The technology innovation lifecycle approach:
• Awareness - the ability to make an informed decision based on ‘knowledge’;
• Adoption - decision making, ‘ownership’ of, or access to, particular
resources;
• Deployment - ‘usage and optimisation’ of particular resources; and
• Impact - the ‘outcomes realised’ from the adoption and deployment of
particular resources.
The three pillars approach:
• People - the leadership, skills and culture of business;
• Technology - ‘online’ platforms and applications;
• Processes - ‘buy-side’, ‘sell-side’, and ‘inside’ processes, which
support specific business functions;
and surrounding them all environment - competition, government,
customers, suppliers and other influences.
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 103
www2.bah.com/dti2004
Issues to be covered
• How much business is e-business?
• Measuring national e-business capability.
• 2004 international benchmarking study results.
• A challenge: Remember the “people” dimension….
• Final thoughts.
E-Business benchmark winners 2004
Source: UK DTI Business in the Information Age:
International Benchmarking Study 2004 Page 105
www2.bah.com/dti2004
Overall sophistication index scores - 2004
Source: UK DTI Business in the Information Age:
International Benchmarking Study 2004 Page 107
www2.bah.com/dti2004
Sophistication index - numerical results 2004
The absolute score differences between nations are generally quite close, in
most cases within ten percentage points. Overall the leading nations are
Sweden, Ireland, and the UK.
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 104
www2.bah.com/dti2004
Year on year sophistication index change
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 106
www2.bah.com/dti2004
UK ICT sophistication index
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 17
www2.bah.com/dti2004
Sweden tops the league table
Its strengths are environment, adoption, technology process and
deployment…
• Environment - A sharp improvement (six index points) on 2003. Driven by
rise from 8 to 18% of in businesses making payments online to
Government, and rise from 22 to 35% of businesses interacting with
Government through e-mail.
• Technology - Very high internet connection speeds, two thirds of
businesses use mobile or remote terminals (up 9 percentage points since
2003 and Swedish businesses are the most consistent implementers of
advanced ICT.
• Process & Deployment - 65% of businesses make payments online (up ten
percentage points since 2003), 54% of businesses allow customers to
order online (up three percentage points), 33% of businesses allow
customers to make payments online (up 14 percentage points since 2003).
Swedish people have a strong affinity for new technologies and a
familiarity with e-banking and e-shopping.
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 108
www2.bah.com/dti2004
…followed by Ireland
Doing the basics very well…
• People - Irish businesses are among the most confident that their IT skills
are meeting the needs of business and their staff have very positive
attitudes to new technologies. 78% believe that their IT skills mostly or
completely meet business needs;
• Awareness - 54% of Irish businesses measure the benefits of technology
this is up 13 percentage points on 2003.
• Technology & Adoption - the key to Ireland’s high score is the high level of
basic connectivity among businesses: there is almost total saturation of
Internet and e-mail access. Connectivity amongst small and micro
businesses is amongst the highest measured. Ireland also excels in the
adoption of more advanced ICT such as WAN, LAN and VoIP.
Ireland’s main liability remains the low penetration of broadband
access resulting from low levels of infrastructure competition.
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 109
www2.bah.com/dti2004
…along with the UK
UK’s strengths are across the board, without any specific leadership:
• People - 53% of UK businesses now measure the benefits of ICT, up 15
percentage points on 2003, They are also being much more proactive
about skills development, 69% of businesses that identify skill gaps now
use regular or ad hoc training up 19% points on 2003.
• Technology & Awareness - UK businesses have shown a marked
improvement in the adoption of advanced ICT, broadband access doubled in the year, they have also enthusiastically adopted Wireless
LANs, VoIP and desktop video conferencing.
• Process & Deployment - UK businesses are deploying ICT more deeply
into their processes and operations. Of businesses with an internal
network 70% already have or intend to integrate their internal systems to
improve information sharing - up 8 percentage points on 2003.
Percentages using online banking and invoicing have also increased
sharply.
Source: UK DTI Business in the Information Age: International Benchmarking Study 2004 Page 109
www2.bah.com/dti2004
Issues to be covered
• How much business is e-business?
• Measuring national e-business capability.
• 2004 international benchmarking study results.
• A challenge: Remember the “people” dimension….
• Final thoughts.
Technology of course makes an excellent
servant but a poor master…
As an engineer and
director my strong
concern is with the
process by which
increasingly rapid
change in technological
capability diffuses out
into society and the
economy…
Source: Jim Norton, COGS Network
Meeting, University of Sheffield, 20/01/03
The people dimension…part one
Networked information systems can be either (or both!)
a benefit and a curse…
• Major scope to improve
quality and lower cost in
product manufacture and
service delivery…
• But poor track record in
building systems which
align people, systems and
processes.
• Potential for SMEs to
“level the playing field”
with large companies…
• But in the UK SMEs Were
slow to adopt e-business
seriously.
• Immense potential in
sharing “knowledge”
across divisional
boundaries…
• But how to overcome the
“knowledge is power”
barriers and reward
knowledge sharing?
Source: Jim Norton, COGS Network Meeting, University of Sheffield, 20/01/03
The people dimension…part two
Networked information systems can be either (or both!)
a benefit and a curse…
• Potential for enhanced
information flow and more
responsive management
exploiting e-mail…
• But widespread poor
practice leading to
information overload and
excessive hours worked.
• Opportunity to codify
explicit knowledge into
attractive expert systems…
• But increasing premium
on tacit knowledge
strengthens ‘clusters’.
• Potential to tailor
private and public sector
services to individual
consumers…
• But major absence of the
‘trust’ required to permit the
holding and use of personal
data.
Source: Jim Norton, COGS Network Meeting, University of Sheffield, 20/01/03
Structural change proves challenging…
Organisational change has been slower than I expected..
• Some very successful
pioneers - e.g. Oracle (trial
financial balance each day)..
• But an enormous number
of failed ERP and e-CRM
system implementations
• Much scope for more
‘virtual’ organisations and
for portfolio working; greater
empowerment of individuals.
• But little sign of serious
implementation (or new
support structures such as
Guilds)
• Great scope for eGovernment initiatives to
improve accessibility…
• But very low take up of eGovernment services,
particularly in the UK…
Source: Jim Norton, COGS Network Meeting, University of Sheffield, 20/01/03
Issues to be covered
• How much business is e-business?
• Measuring national e-business capability.
• 2004 international benchmarking study results.
• A challenge: Remember the “people” dimension….
• Final thoughts.
Some final thoughts….





E-business has not gone away!
The excess of gloom on the ‘downside’ was just as wrong as
the earlier excess of ‘hype’.
Normal ‘Darwinian’ processes have removed from the
market those who had wacky business plans and little
common sense…
E-business is now being integrated into ‘traditional’
business, bringing major cost savings, service
enhancements and new business opportunities.
Remember that, in e-business, people and processes are
much more of a challenge than technology…
And remember the law of unintended
consequences….
Questions & Answers
Slides (in portable document format) available to download from:
www.profjimnorton.com/shef05mba4.ppt