It is hard being an SME in this world of the internet and e-business. You feel bewildered. Everyone tells you to get into e-business at once or else competitors from all over the world will take away your livelihood. At the same time you have been assaulted by stories of dot.com failures and the dangers of using the world wide web, especially for making payments.
A Which Online survey earlier this year showed that 51% of internet users have not purchased anything online, only 23% of users think it is safe to use credit cards online and yet 73% of e-traders did not give details of their contract terms online. Clearly we have a crisis of confidence at a time when all about are singing the praises of e-business.
It is true that the use of the internet is intensifying the market economy of sellers and buyers in the business to business arena (b2b) in many parts of the world. The development of a common language for electronic business, based on XML, allows retailers and manufacturers to process orders and forecast demand across every continent. These b2b marketplaces are being developed in many sectors (see www.timberweb.com, www.e-steel.com, www.elogistics.com) and are truly worldwide. Again, the fast-moving consumer goods (FMCG) companies, ranging from Ahold to Wal*Mart and Danone to Unilever are in the forefront, using the internet to accelerate the supply chain from manufacturer to consumer, reducing costs, giving shorter negotiating cycles, offering additional sourcing capabilities to buyers. These marketplaces do also offer new sales channels, bigger reach and increased profits to suppliers and manufacturers, many of whom are SMEs.
There are sane and sensible reasons for SMEs to become part of this global internet world. The important thing is to develop enough understanding and experience to have trust and confidence in working in this e-world. There are many good case studies of UK SMEs that have embraced e-business to their advantage, ranging from companies such as Pentwyn Splicers in South Wales ( www.splicer.co.uk), a small specialist firm making pneumatic yarn splicers, to Cooksons, a Stockport firm selling 50,000 different lines of tools ( www.cooksons.com) to other businesses.
The following 10 suggested steps are the sort of things that may have started them on the road to best practice:
1. Business Process Analysis - remember that e-business is not an end in itself but a means to an end. Be clear about your business objectives first and only then consider how e-business can help. An essential starting point for all businesses is to consider the following: what are your objectives, which e-business activities can help you achieve these, at what cost (ie cost to your business v perceived benefits) and how can this be realised (ie a plan of action)?
2. Consider what your customers require from you (and talk with them about this) and how you can achieve these more easily through electronic processes (eg processing orders, providing information, more efficient administration procedures). Do you need to exchange information securely, using encryption or electronic signatures?
3. See the bigger picture: look at integrating all aspects of your business electronically. Identify every aspect of your business, both front and back end (ie what the customer sees and doesn't see), and consider what is required/ how you can integrate all these activities electronically.
4. Itemise exactly what e-business activities you want to use. For example, email, marketing on the internet, online trading, EDI, automated stock control. Consider the purpose of each of these activities and what you expect each activity to achieve, eg to save time, to minimise human error of data entries, to increase awareness of your company or to generate more sales. Do a breakdown of the different aspects of each e-business activity and what you believe it may entail: specialist equipment, software, trained staff, other factors/ resources?
5. Consult widely as to what the appropriate business solutions are, such as IT equipment and software. Consider whether your supplier has an "ethical dealings" policy, proven experience, runs a viable business, can provide a cost effective solution with a timely delivery.
6. Seek independent advice, particularly on what the best practices and standards are. You may not be aware, but the e-business solution you adopt may not be universally used, which may turn out to be a very costly waste of time, money and other valuable resources.
7. Consider the legal and financial implications of your e-business activities: e-centreUK and other support agencies, such as Business Links, can provide independent advice on these areas.
8. Review your business objectives and the performance of your e-business activities regularly. With technology moving so fast, your business or sector may be significantly affected and you will need to alter your plans accordingly. Invest in an e-business review process, such as the e-commerce scorecard ( www.e-commscore.com) which lets you establish and monitor key e-business performance measures and points the way ahead.
9. Make sure you can fulfil the expectations of your trading partners and/or customers. A new website for orders/inquiries is not much good if you respond to emails once a week, or cannot deliver items on time, or find that your new electronic communications channels are not compatible with other key trading partners. A survey by Reuters found that one in 10 online orders never arrived!
10. Maintenance of systems is crucial, as is having a total recovery service. Get your IT specialist to consider each individual aspect of your e-business activity, and to identify possible weak links and problem areas. Consider how your business would cope with a partial or total collapse (eg power failure, fire, burst water pipes, security infringement of databases). And when you train staff make sure that you start with the MD!
About a year ago the Cabinet Office produced an excellent report on e-business in the UK, entitled e-commerce@its.best.uk ( www.cabinet-office.gov.uk/innovation/index.htm) which said that building a stable environment for e-business needed awareness, access, trust and confidence. There are many initiatives about e-business awareness, ranging from the sorts of thing that independent bodies like e centre do ( www.e-centre.org.ukwww.e-centre.org.uk) to the major government initiatives through Business Links and the new Government portals (www.ukonlineforbusiness.gov.uk). The issue of access to good internet services at reasonable costs (during business hours) has been discussed at length elsewhere.
Finally we (that is business and government) all need to work together to really build this trust and confidence in e-business, based on an open environment in which we can all develop best practice so that the UK and its many SMEs can flourish.
• Dr Roger Till is director of e-centreUK, roger.till@e-centre.org
