Training for E-Commerce Success in SMEs

Rapid developments in Information and Communication Technologies (ICTs), such as electronic commerce (e-commerce), have revolutionized the way that business is conducted. E-commerce refers to the process of buying and selling goods and services electronically involving transactions using Internet, network, and other digital technology. It offers companies tremendous opportunities to improve their business performance in new and innovative ways. However, its huge potential benefit would only be realized by capable managers who can deal with these emerging technologies and implement them wisely. A skills shortage has been categorized as one of the challenges facing global e-commerce by Bingi and Khamalah (2000). The demand for highly knowledgeable and skilled managers and workloads places enormous pressure upon companies to improve or update their current knowledge and skills. This is particularly important in Small and Medium Enterprises (SMEs) as compared with their larger counterparts, as they are often described as “lacking the expertise needed to set up the technologies necessary, despite having a great deal to gain from doing so” (Anonymous, 1998).

Building the Professional Services E-Practice

Information Technology (IT) has played an important role in the professional services sector for many years. Professional firms such as accountants, lawyers and management consultants have used IT to increase internal efficiencies, and the expertise gained has enabled some of them to offer IT-related professional advice to their clients. Over time, IT has increased in sophistication and we have now entered the Internet or electronic age (e-age) where the letter ‘e’ precedes commerce, business, government, learning and so forth. The emergence of the World Wide Web (Web) on the Internet has created even greater scope for professional firms to manage their internal affairs more efficiently and effectively, and to improve client services. The purpose of this chapter is to provide small professional services practices with an understanding of how to enter the e-age by building an e-practice. It proceeds by mapping the progress that needs to be made in moving from a previous stage of organizational development to one that is suitable for the ‘virtual age.’ In the transition to the mature stage of development, they need to re-engineer their practices to offer online services and to maximize their intellectual capital through technology-enabled knowledge management.

The Role of SMEs in Promoting Electronic Commerce in Communities

The primary emphasis of much of the literature on electronic commerce (EC) is on its global nature. The literature is replete with examples of companies that, over a relatively short period of time, made a successful transition from a local, small business, to a global enterprise, with customers and suppliers based all over the world. The literature in EC, both in the popular media and the learned journals, attributes this phenomenon to the fact that with access to the Internet, many businesses can sell globally without having to make an investment in “bricks and mortar.” The rhetoric that EC is free from constraints of geography is, however, contradicted by a growing evidence that, particularly for small and medium enterprises (defined in this chapter as “organizations with less than 500 employees”), business on the Internet is not necessarily as profitable and risk free as it is supposed to be. Establishing an EC “shop-front” may be a relatively painless exercise, but having prospective customers notice that shop-front, having them actually transact with the virtual business, and setting the business so that it successfully copes with the demands of a virtual customer base are all challenges that most small and medium enterprises (SMEs) find difficult to meet.

Web Initiatives & E-Commerce Strategy

Two important forces are at work today in the Canadian and global economies. First is the traditional force of small and medium-sized enterprises (SMEs). Statistics Canada reports SMEs account for more than 60% of Canada’s private sector employment and 40% of gross domestic product. Second, Information Technology (IT) and the Internet continue to change the way businesses and individuals work, shop, and/or relax. In particular, the Internet and Electronic Commerce (EC) are heralded as a great opportunity for business, consumers, and governments. The impact on SMEs is somewhat uncertain and still emerging. Some argue the Internet levels the playing field, giving smaller firms greater opportunity to compete against larger firms. Others argue that, since SMEs generally have fewer resources available for IT or other initiatives, they could be left behind. In addition, because of their size, SMEs have minimal control or influence over such external forces.

Franchising and Information Technology

According to Justis and Judd (1998), franchising is defined as “a business opportunity by which the owner (producer or distributor) of a service or a trademarked product grants exclusive rights to an individual for the local distribution and/or sale of the service or product, and in return receives a payment or royalty and conformance to quality standards. The individual or business granting the business rights is called the franchisor, and the individual or business granted the right to operate in accordance with the chosen method to produce or sell the product or service is called the franchisee.” Although the business of the franchisor is usually larger than the “satellite small businesses” of the franchisees, most franchisors manage mostly small and medium-size enterprises (Stanworth, Price, and Purdy, 2001). The U.S. Small Business Administration (SBA) recognizes this fact and sponsors various seminars in franchising, for example, business plan and raising capital, through regional Small Business Development Centers (Thomas and Seid, 2000). In addition, SBA sets up programs specifically designed for franchises (for example, Franchise Registry Web site: www.franchiseregistry.com) to streamline the review process for SBA loan applications (Sherman, 1999) and provide special incentives for franchisees to open locations in economically depressed areas (Thomas and Seid, 2000).

Options for Business-to-Consumer E-Commerce in Developing Countries

Business-to-consumer electronic commerce in the developing world is hampered by a host of technological, cultural, economic, political and legal problems (Davis, 1999; Enns and Huff, 1999; Janczewski, 1992). Viewed from the perspective of consumers, the most fundamental requirement–Internet access–is unavailable to many. For example, Africa has the lowest rate of Internet access in the world–less than 1% in a population of nearly 800 million (Dunphy, 2000). As dramatic as measures of the digital divide may be, one can easily argue that investment priorities in the areas of health and education should rightfully come before investment in a larger Internet infrastructure for Africa or other developing areas of the world (Verhovek, 2000). Nonetheless, Internet access does exist for the few, and Internet access will grow in the future for a market of literate users in medium and large cities. Certainly this has been the pattern in Asia and Latin America where Internet cafes and kiosks or their equivalent have sprung up offering relatively inexpensive access, even for those who do not own microcomputers or have telephone service in their homes (Davis, 1999; Richtel, 2001).

How a Procedural Framework Would Assist SMEs in Developing Their E-Business Strategy

While Small-to-Medium Enterprises (SMEs) in Australia have an excellent opportunity to take advantage of the growth of e-commerce in Australian and the Asia Pacific region by reducing the effects of Australia’s relative isolation to Asian and world markets, a large number of managers choose not to take advantage of the opportunity to reach both the local and global markets because they do not know how to go about developing a strategic e-business and marketing plan. While there is plenty of literature provided by government agencies, business interest groups and commercial Web development houses, there is no procedural framework available for SME managers to follow when designing their e-business plan and revenue model so they can remain in charge of the process and not be pushed into a particular template designed by a consultant to suit their hardware and software platform.

Electronic Commerce Opportunities, Challenges and Organizational Issues for Australian SMEs

Australian small businesses are increasingly adopting the Internet and the World Wide Web as a medium of doing business to reach new customers and suppliers, cut costs and expand business. They also use it to enhance communication between buyers and suppliers. This chapter discusses the findings of an exploratory study in Australia that identified the objectives, opportunities and challenges of e-commerce experienced by small businesses that were mostly early adopters of the Internet as a medium of trade. E-commerce issues presented in this chapter include research findings, supported by theory from literature. Electronic commerce opportunities, challenges and organizational learning by small and medium enterprises (SMEs) in Australia indicate that small businesses have created value with e-commerce, although benefits are long term and dependent on a plethora of technological, business and management issues that need to be addressed. Due to the fast-evolving nature of e-business and technological developments that are new to many small businesses, challenges such as managing the expanded flow of information, cross-border taxation, authentication, trust and security, as well as the high costs of acquiring the required technologies and skills, are prevalent. Other challenges of e-commerce range from Web site maintenance to business process re-engineering for an integrated environment. Research findings also highlight the fact that small businesses need formal methods of evaluating the performance of e-commerce to realize the benefits of investment and to further expand their e-commerce venture.

Management's Contribution to Internet Commerce Benefit - Experiences of Online Small Businesses

In this day and age, IT applications are no longer just about in-house business software applications or local area networks. Today’s IT issues are invariably linked to the Internet and Internet Commerce applications. Is there any difference between traditional IT applications and e-commerce? Can we apply what we have learned from earlier small business IT experiences to e-commerce? Does the largely external nature of e-commerce systems mean that management needs to play a different role than in the past? These and many other questions need to be properly addressed. The aim of this study was to explore the answers to some of these questions and bridge the knowledge gap between traditional small business IT systems (such as Accounting, Inventory Management, and so forth) and Internet Commerce systems. The results may help management to rethink how they can secure Internet Commerce benefit, and avoid activities that are non-effective.

Modeling Technological Change in Small Business

Many small businesses are quite entrepreneurial in their operation, and are prepared to consider the advantages conferred by information technology. On the other hand, some are still quite happy to continue to do things in the same way they always have, and see no need to investigate use of this technology. How and why these businesses differ in this way, and why they adopt some technologies and not others, is investigated in this chapter. The introduction of a new information system into a small business, or the upgrading of an existing system, should be seen as an innovation and so considered through the lens of innovation theory. The most widely accepted theory of how technological innovation takes place is provided by innovation diffusion, but most of the research based on this model involves studies of large organizations or societal groups. This chapter argues that another approach, that of innovation translation, has more to offer in the case of innovations that take place in smaller organizations–those employing less than 20 people (Burgess, Tatnall, & Darbyshire, 1999).