STUDY UPON THE IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGIES UPON THE DEVELOPMENT OF E-BUSINESS

Lecturer Munteanu Alin, PhD

“Tibiscus” University of Timişoara

Faculty of Economic Science

1/A Daliei Street, 300558, Timisoara, Romania

Phone: +40-256-202931, Fax: +40-256-202930

E-mail: a_munteanu@yahoo.com

ABSTRACT

During the last two decades most of the organizations have adopted the information technologies. Lately the interest in applying information technologies has increased through developing business within the electronic environment, using concepts such as e-learning, e-commerce and e-business (GSM and Internet). The e-learning and e-commerce businesses have known great development due to the growth of broadband Internet users, and e-businesses have exponentially increased due to the large number of mobile telephony users, as well as to the Internet service types (B2B, B2C and e-government).

Key words: e-busniess, e-learning, e-commerce

INTRODUCTION

Although the 'new economy' revolution has not taken place as it seemed for a short moment in history it might, the evolutionary development of electronic business does not seem to have come to an end. On the contrary, the maturity of e-business has substantially increased across sectors and regions over the past five years. It has been a quiet revolution this time, but as a result, a new picture of the digital economy is beginning to emerge. ICT and e-business do matter in the global economy – probably even more than during the hype of the late 1990s.

As part of this maturing process, electronic business has progressed from a rather specific to a very broad topic over the past 10 years. Initially, however, particularly in the mid 1990s, the policy and research focus was very much on e-commerce, which can be defined as online commercial transactions. The term transactions refers to exchanges between a company and its suppliers or customers. These can be other companies (B2B – business-to-business), consumers (B2C – business-to-consumers), or governments (B2G – business-to-government). In the broad sense, transactions include commercial as well as other exchanges, such as sending tax return forms to the tax authorities. In the context of this study on e-business, transactions are predominantly commercial business transactions.

If transactions are conducted electronically (e-transactions), this constitutes e-commerce. Transactions can be broken down into different phases and related business processes, each of which can be relevant for e-commerce. The pre-sale (or pre-purchase) phase includes the presentation of (or request for) information about the offer, and the negotiation about the price. The sale / purchase phase covers the ordering, invoicing, payment and delivery processes. Finally, the after sale / purchase phase covers all processes after the product or service has been delivered to the buyer, such as after sales customer services (e.g. repair, updates). Practically each step in a transaction can either be pursued electronically (online) or non-electronically (offline), and all combinations of electronic and non-electronic implementation are possible. It is therefore difficult to decide which components actually have to be conducted online in order to call a transaction (as a whole) electronic.

PROBLEM DEFINITION

Modern ICT infrastructure is essential for the successful supply of telecommunication services. In fact, telecommunication companies not only have an important role as suppliers of ICT infrastructure and services; they also necessitate an efficient network infrastructure as well as powerful and secure internet connections for the provision of their services and the use of advanced e-business applications.

Broadband internet connections, for example, are not only an output of this industry. Rather, they also form the basis for specific telecommunication services such as the delivery of Voice over Internet Protocol (VoIP) or the provision of public WLAN (Wireless Local Area Network) access points. Specialised providers of VoIP or of public WLANs (e.g. in restaurants or gas stations) often use the broadband infrastructure of other telecommunication companies. Finally, broadband is also the basis for advanced e-business applications used in the telecommunication industry, e.g. to support internal and external collaboration and to provide customer services over the web.

Internet access and remote access to company network

Table 1

	Companies with internet access		Companies with broadband internet access		Average share of employees with internet access		Remote access to company network
Weighting:	% of emp	% of firms	% of emp	% of firms	% of emp	% of firms	% of emp	% of firms
Telecoms (EU-10)	100	99	88	85	n.a.	90	74	46
Micro (1-9 empl.)		99		85		90		41
Small (10-49 empl.)		100		87		87		70
Medium (50-249 empl.)		100		85		79		83
Large (250+ empl.)		100		79		74		93
All 10 sectors (EU-10)	95	93	76	69	n.a.	43	35	16
Micro (1-9 empl.)		89		62		51		12
Small (10-49 empl.)		98		75		29		22
Medium (50-249 empl.)		99		83		33		43
Large (250+ empl.)		99		84		44		60
Food & beverages	95	88	72	64		25	35	15
Footwear	96	89	75	62		28	17	10
Pulp & paper	99	94	80	68		40	56	21
ICT manufacturing	100	99	84	79		74	69	35
Consumer electronics	98	97	87	74		80	51	32
Shipbuilding & repair	100	100	87	86		30	41	27
Construction	95	90	72	64		47	25	13
Tourism	93	90	72	68		53	38	13
Telecommunication	100	99	88	85		90	74	46
Hospitals activities	100	98	85	78		41	39	34
Base (100%)	firms using computers		firms using computers		firms with internet acces		firms using computers
N (for sector, EU-10)	829		829		817		829

Source: e-Business W@tch (Survey 2006)

Indeed, telecommunication companies are well equipped with basic ICT infrastructure and internet connections. As could be expected, the respective usage rates are significantly above the all-sectors average. Practically all telecommunication companies, for example, reported having access to the internet and the huge majority of companies even said that they have broadband access, irrespective of their size.

The high relevance of the internet for telecommunication’s work processes is indicated by the large share of employees with internet access: About 90% of employees in the telecommunication industry – more than double as much as on average in all 10 sectors studied this year – have access to the internet. Similar high rates are only observed in other high-tech sectors, such as Consumer Electronics (80%) and ICT manufacturing (74%). In fact, in these sectors the internet has already become the main channel for communication and the primary way to store and access information.

Accordingly, there is also greater need for accessing the company network from remote locations (e.g. by managers or field services), and for connecting PCs via a Local Area Network (LAN). In addition, wireless LANs installed in telecommunication companies allow for flexible (wireless) access to the internet with mobile devices within a company location and, thus, further facilitate the collaboration of employees. Indeed, deployment ratios for remote access solutions, LANs and WLANs as well as for Virtual Private Networks to secure remote access connections are significantly above the all-sectors average.

Networks and protocols used

Table 2

	LAN		W-LAN		Use Voiceover-IP		Use VPN for remote access
Weighting:	% of emp	% of firms	% of emp	% of firms	% of emp	% of firms	% of emp	% of firms
Telecoms (EU-10)	94	74	52	44	45	37	78	50
Micro (1-9 empl.)		71		42		36		45
Small (10-49 empl.)		94		51		45		62
Medium (50-249 empl.)		94		52		50		81
All 10 sectors (EU-10)	65	46	32	16	16	13	57	26
Micro (1-9 empl.)		35		12		14		20
Small (10-49 empl.)		59		21		11		32
Medium (50-249 empl.)		84		37		13		57
Large (250+ empl.)		96		47		22		79
Base (100%)	firms using computers		firms using computers		firms using computers		firms enabling remote access
N (for sector, EU-10)	829		829		829		491

Source: e-Business W@tch (Survey 2006)

ICT investments in the telecommunication sector are significantly higher than in other sectors. On average every fifth Euro of total expenditures has been spent for ICT and e-business technologies, according to the survey results. This finding can be explained by the fact that ICT is not only used to support internal workflow and the collaboration with business partners. It is also needed as a basis for service provision. Investment goods in this sector, for example, include base stations for the rollout of wireless services as well as platforms for managing and billing telecommunication services.

Figure 1. ICT budget trend: percentage of companies that plan to increase - decrease their ICT budgets in 2006/07

The share of telecommunication companies that reported placing orders online is clearly above the all sectors average. More than three quarters of the companies in this sector reported that they place orders online. In addition, more than half of these companies said that the ordering volume is larger than 25% of their total orders. Interestingly, there are no size specific differences in e-ordering activities. A possible explanation for this finding is that electronic orders can already be placed via a simple web form or an online catalogue which is provided by a supplier. Thus, e-ordering does not pose a major challenge, neither for large nor for smaller enterprises.

Most companies (44%) reported that they order different products and services online. Among companies that focus their e-ordering activities on a specific product group, the electronic procurement of MRO (Maintenance, Repair and Operation) goods is most widespread. Like companies in other industries, telecommunication companies have constant need for so-called indirect goods, including MRO goods and office supplies. Although these goods are of less strategic importance and do not account for extensive procurement volume, processes related to their procurement are cost-intensive. Here, e-business tools can help to streamline procurement and sourcing processes and thus to reduce procurement costs. Other suggested input groups seem to be less important and are to a degree difficult to interpret for this sector.

Figure 2. Main type of supply goods ordered online

Those companies with procurement systems tend to use them for multiple functions, including ordering goods and services (89%), finding suppliers in the market (68%), inviting suppliers to quote prices (62%) and placing orders (56%). These findings are largely in line with the results from most other sectors. About one out of five companies with special ICT systems for procurement said that it runs online auctions among suppliers.

Figure 3. Sourcing and procurement processes supported by specific ICT solutions

The importance of ICT is even more significant for process innovation. In total, about one third of telecommunication companies reported that they have carried out significant process improvements in 2005.

Figure 4. The role of ICT for product and process innovation

In order to reveal main barriers for e-business adoption, companies that did not perceive any impact of e-business on the way the company operates were studied for reasons for not engaging in e-business. Taking into account that the largest part of “e-business sceptical” telecommunication companies are micro enterprises, it is not surprising that barriers like “company too small” and “technology too expensive” were reported as major inhibitors of doing e-business in this sector.

Figure 5. Barriers to e-business adoption as perceived by companies

While these reasons also prevail in most other sectors (usually among SMEs), security concerns seem to be particularly widespread in the telecommunication industry indicating pronounced awareness of security issues and, in general, closer affinity with ICT in this sector.

RESULTS

The forerunner position in the use of ICT infrastructure can be explained by the familiarity of telecommunication companies with technologies in this field due to their position as suppliers of infrastructure services. Marketing and sales support is of high strategic relevance in this sector that is characterized by increasing competition and limited opportunities for product differentiation. It is remarkable that telecommunication companies are also forerunners in using simple e-procurement and sourcing tools compared to other sectors surveyed – although procurement processes should be of less strategic importance in the telecommunication industry than in manufacturing sectors.

Market failures due to ICT usage have not been detected, either. On the contrary, the telecommunication industry may rather serve as a role model for the successful combination of liberalization efforts and the use of opportunities derived from e-business technologies. The combination of market liberalization and increasing importance of e-business was a main driver of competition in this sector. Decreasing price levels and an increasing variety and quality of telecommunication services (that may also accelerate the diffusion of e-business technologies in other sectors) are consequences of this development.

SOURCES:

Eurostat (2004): Structural indicators quality profile – broadband penetration. October 2004. Cf. http://epp.eurostat.cec.eu.int/ (Mai 7, 2006)

Eurostat (2005): The digital divide in Europe. Statistics in focus, 38/2005.

Eurostat (2006): “NACE Rev. 2 – Draft structure and explanatory notes”, April 2006.

OECD (2006): OECD broadband statistics, December 2005.

European Commission (2005): Commission Recommendation on broadband electronic communications through powerlines. 2005/292/EC. April 6, 2005.