ECA Innovation and Competitiveness ECA Innovation and Competitiveness Workshop Workshop e-Business for MSME Competitiveness February 18, 2004 Jim Hanna Lead Operations Officer & eBusiness Advisor Latin America & Caribbean Region [email protected]The World Bank The World Bank Group Group Working for a World Free of Poverty Working for a World Free of Poverty • e-Business as innovation • Contributions to development • Accelerating e-business adoption
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ECA Innovation and Competitiveness Workshop e-Business for MSME Competitiveness February 18, 2004 Jim Hanna Lead Operations Officer & eBusiness Advisor.
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ECA Innovation and Competitiveness WorkshopECA Innovation and Competitiveness Workshop
The World BankThe World Bank GroupGroupWorking for a World Free of PovertyWorking for a World Free of Poverty
• e-Business as innovation
• Contributions to development
• Accelerating e-business adoption
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“E-business is a major business innovation that most firms will have to adopt.” “ICT and Economic Growth: Evidence from OECD Countries, Industries & Firms”, OECD, 2003
e-Business…more than PCs and wirese-Business…more than PCs and wires
Most economic benefits of e-business begin with:
• Transactions – “front office” relational & product innovation to improve market reach and product range
• Customer development & e-marketing solutions
• E-business solutions to buy & sell services via Internet
• Customer service and support solutions
• Integration –“back office” process & organizational innovation to improve production and management
• Product design and production solutions
• Procurement and supply chain management
• Finance, online banking and accounting solutions
• eLearning solutions to upgrade employee skills
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Contributing to productivity & growthA micro viewContributing to productivity & growthA micro view
“Net Impact Study Canada: The International Experience” 1/ Canadian eBusiness Initiative, May 2003
Key business innovation impacts
• Lower customer service costs
• Sales and marketing efficiency
• Increased worker efficiency
• Reduced materials costs
• Improved inventory management
• Lower dist’n or shipping cost
• New customer acquisition
___________________________________
eBusiness Adoption by Small FirmsSolutions Adopted
0 10 20 30 40 50 60 70
Customer Dev. & e-Marketing
e-Commerce (incl. B2B)
Customer service
Finance & Accounting
Procurement
Sales Force Automation
Supply Chain Management
% Share of Total Firms
EU
Canada
US
eBusiness Adoption by Small FirmsFinancial Impacts
0 2 4 6 8 10 12
% Increase inRevenue
% Decrease inCost of Goods
Sold
% Decrease inSales & Gen.
Admin.
EU
Canada
US
1/ Source: The Canadian e-Business Initiative (CeBI) and the OECD ICT Database Eurostat Survey measuring the Information Economy, 2002. Total survey size was 1,668 small (to 100 employees) and medium (100-250 employees) firms in Canada, the US and EU. Results reflect 1-2 years implementation periods.
• Promote and facilitate inter-modal competition between cable, DSL, fiber and wireless operators.
• Remove barriers to local loop and leased line competition and sharing of infrastructure
• Promote demand by shared use of Internet (schools, SMEs, etc) and community access to broadband (telecenters, schools)
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• Issues
• Registration time for business formation is 91 for medium complexity and 136 days for high complexity firms (Monterrey)
• Government lacks comprehensive system to electronically link the more than a dozen agencies involved in the process
• Objectives
• Process re-engineering to simplify registration & operating permits in 10 states
• ICT-based solutions to integrate operations at all layers
• Improved e-procurement system to build value chains
• Training for government staff and business
• Dissemination program among business to promote use
• Approach
• Demand-driven by interests of states and municipalities
• Coordinated with Federal regulatory reform program (SARE) for business process simplification
• Managed under each state and local authorities working group by integrator managers
• Bank financing of consulting services, equipment, works and training under approved reform plan
• Minimum 25% state financing contribution
Expanding G2BBusiness registration & procurement in MexicoExpanding G2BBusiness registration & procurement in Mexico
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Deepening ebusiness marketsAwareness, training & learning-by-doingDeepening ebusiness marketsAwareness, training & learning-by-doing
Barriers to Adoption of E-business by Chilean Firms(Percentage of total responses)
0 5 10 15 20 25 30 35 40
Not interested or consider unjustif ied
Staff unprepared
No trust or lack of know ledge
Inadequate f inancial resources
Inadequate ICT infrastructure
Size of f irm
Privacy/security
Cost
Complexity
• Top barriers to e-business adoption among MSMEs
• Lack understanding of how e-business functions as a strategic, value-adding tool
• Lack metrics and models that convince them that benefits are greater than costs
• Lack internal ICT & e-business know-how, outside support & time to design and implement e-business systems
• Promote e-business awareness information, tools & training programs used to determine business case and prepare e-business investment plan
• Workshops and peer exchange of experience
• Online information, downloads and self-service tools
• Initial economic & technical consultations
• Facilitate pre-investment support for in-firm learning-by-doing and innovation
• Demonstrates success in overcoming market failures
• lack of information & hands-on experience in e-business
• underestimate e-business value & under-invest in e-assets
• Support development of intermediaries to facilitate adoption
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• Reaching the poor - lessons of telecenters in LAC
• Good at expanding communications• Weak ICT and e-business training and upskilling• Low sustainability and business value added • Low development impact• Little commercial investment in e-learning, applications & content
• Need to redirect toward high value, sustainable e-business service markets - pilots in Ecuador and Mexico to
• Reach at least 50,000 low income microbusinesses• Generate market outreach, competitiveness, growth• Yield financial sustainability & franchising within 3 years
transactions and improving core business processes• Local business content market development• eBanking services with microfinance partners
Peru - Red Cientifica Peruana (RCP)
Connectivity, not productivity
• 89% of Peru’s Internet users use RCP “Cabinas Publicas”
• User profile - higher education & income
• 56% users between 15- 25 years old • 40% users have a computer at home
• Use profile – email, info search, chat
Email (60%), Search for information (51%), chat (39%)
60,5% total users visit Cabinas between 2 to 3 times per week.
Deepening ebusiness markets among microbusiness Sustainable eBusiness development services markets Deepening ebusiness markets among microbusiness Sustainable eBusiness development services markets
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RecapRecap
E-business is one important innovation strategy that can
– Advance productivity, competitiveness and growth
– Reduce business environment barriers
– Contribute to MDG for poverty reduction
The Bank can help accelerate e-business adoption by supporting
1. e-leadership institution-building for policy reforms, programs, monitoring and evaluation
2. Continued reforms in ICT infrastructure, trust and security regulations
3. G2B programs to lower transaction costs and expand opportunities
4. Awareness, training and pre-investment programs to deepen e-business markets
5. Expansion of sustainable e-business services markets to reach low-income microbusiness