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SMALL ENTERPRISES IGNORE E-COMMERCE GROUP'S CALL

Posted on September 22, 2004

      The Canadian E-Business Initiative is counting on the federal government's new Minister of Industry to end years of stagnant growth in Internet-related technology adoption by small and medium enterprises.

      In Net Impact Study Canada: Strategies for Increasing SME Engagement in the e-Economy, the private sector-lead Canadian E-Business Initiative (CeBI) recommends the government create a central Web site for small and medium enterprises to find "trusted partners" that could help them with Internet-related projects. It also suggests lending institutions provide "SME-friendly" advice on risk management for investments in infrastructure for online transactions.

      CeBI is a private sector partnership with Industry Canada and a successor to the Canadian E-Business Roundtable, which had a mission of accelerating the country's participation in the new economy. The group is best known for Fast Forward, a series of publications that examine Canada's level of e-commerce activity compared to other countries. Now in its fifth edition, this year's Fast Forward notes that Canada has fallen to 11th place in the Economist Intelligence Unit's E-readiness rankings and concludes SMEs are key to turning things around.

      Morphing into CeBI was supposed to bring more focus to the former E-Business Roundtable's efforts, but its own reports indicate its annual calls to action have been largely ignored. "Overall adoption of Internet business solutions by SMEs in Canada showed no improvement between 2002 and 2004," it says, noting that although 50 per cent have starting using some form of e-commerce technology, adoption has "slowed, or perhaps stalled."

      Terry Walsh, the president of Cisco Systems Canada who inherited CeBI's co-chair position from his predecessor at Cisco, Pierre-Paul Allard, said the arrival of David Emerson as Industry Minister could offer a new opportunity to get government tackling the other half of the SME market.

      "After a certain point, if you keep putting out the research and it continues to fall on deaf ears, you have to step back and consider what else you can do," he said, though he added that the organization can only go so far in taking action. "We can be a great resource for the government ... but it is not for CeBI to take the lead on this."

      Previous CeBI research has highlighted a lack of IT expertise among SMEs and concerns over cost . Those haven't changed, according to Ron McClean, executive director of Information Services and Technology in the Schulich School of Business at York University, who helped conduct the CeBI research.

      "Canadian SMEs tend to be more risk-averse than their counterparts elsewhere," he said. "You couple that with perhaps being two years behind on the adoption curve of the United States, for example, (and) with the dot-bomb, and they're sort of behind the eight-ball. They're just naturally reluctant to take this kind of thing on."

      Potential strategies for the government might include working with universities and schools to develop more e-business programs, or perhaps developing tax incentives for SMEs to adopt technology, McClean said.

      "We're pointing to particular information kiosks or portals for particular narrow vertical segments of the market," he said. "We can put up success stories. We can begin to convince them that it does work."

      Part of that marketing challenge is looking beyond the macroeconomic forces and coming up with reasons for e-commerce adoption that will resonate with individual SMEs, Walsh said.

      "Certainly most small business owners don't wake up every day worrying about the state of Canadian productivity," he admitted. "It's kind of like trying to convince a 20-year-old to invest in an RRSP. They don't want to listen to it at the time but down the road they'll really wish they did."

      CeBI representatives will be presenting the findings of Net Impact and Fast Forward at e-Commerce to e-Economy conference in Ottawa early next week.

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