Checklist for National E-readiness
Small firms in developing countries can be more competitive using ICTs - by participating in new export sectors, streamlining business activities and linking with trade development partners more effectively. This article provides recommendations to firms and governments on integrating ICTs for trade.
It's said that the Silk Roads of the 21st century are paved with fibre optic cables and telecommunications networks. For small firms in developing countries, using information and communications technologies (ICTs) opens up new trade opportunities - provided they go beyond mere Internet access to developing e-business capacity and investing in strategic alliances.
Hope, hype and reality
Hope. The great hope of the Internet in the late 1990s was that it would spur efficiency and innovation in business. All of this is actually true.
Hype. Unfortunately, during the hype of the dotcom boom, these promises got distorted in many ways. It led to the belief that geography was dead, size and established brands did not matter, and e-marketplaces would replace traditional markets. Companies became distracted into thinking that all you needed was a catchy domain name and a fancy web site - forgetting that original business fundamentals remained unchanged.
Reality. The reality today is that technology is not cheap. Going online exposes businesses to new risks, such as online fraud and viruses. Legal mechanisms for e-commerce are not yet in place in many developing nations. Trade depends on trust; and trust depends on relationships. Relationships are still important and have not been replaced by the online world.
This does not mean that there are no more export growth opportunities for small firms using new technologies - far from it. While many business activities are web-enabled, most small and medium-sized enterprises (SMEs) stop at using e-mail. SMEs can gain a lot by going online: market research, auctions, electronic marketplaces based on sector or geography, niche services (such as customized exports), information technology-enabled services (such as medical transcription) and e-government. Wireless technologies are also opening up new channels via Short Message Service (SMS) and voice services for supply chain management and marketing.
These opportunities reflect key trade trends in today's world: globalization, regionalization of trade agreements, digitization of economic activities (such as online market research and Internet trading) and of communications (from paper formats to electronic), and "offshoring" (for example, moving call centres to India or the Philippines).
"8Cs" e-readiness checklist
Firms can't start using ICTs for trade in a vacuum. To assess national export readiness using new technologies - or e-readiness - strategy-makers should take into account "8Cs": connectivity, content, community, commerce, capacity, culture, cooperation and capital. The "8Cs" checklist examines two ways to use new technologies: ICTs as an instrument, such as to make manufacturing procedures more efficient, and ICTs as an industry, such as software and hardware production.
Is your country e-ready?
The "8Cs", below, serve as an informal checklist to assess a country's ability to use information and communications technologies to make their businesses more efficient or develop new export sectors.
ICTs as an instrument
ICTs as an industry
How affordable and widespread are ICTs (e.g., personal computers, Internet access, software) for common citizens and SMEs?
Does the country have ICT industries for hardware, software and services?
Is there useful content (foreign and local) for citizens and SMEs to use in their daily lives?
Is content being generated in local languages? Is this being accessed/used abroad?
Are there online or offline forums where citizens and SMEs can discuss ICT and other issues of concern?
Is the country a hub of discussion and forums for the ICT industry worldwide?
Is there infrastructure (technical, legal) for
e-commerce for citizens, SMEs and government? How much commerce is transacted electronically?
Does the country have indigenous e-commerce technology and services? Are these exported?
Do citizens and SMEs have the human resources capacity (technical, managerial, policy, legal) to harness ICTs effectively for daily use?
Does the country have the human resources capacity (technical, managerial, policy, legal) to create and export ICTs, and set standards?
Is there a forward-looking, progressive culture at the level of policy-makers, SMEs, educators, citizens and the media in opening up access to ICTs and harnessing them? Or is there nervousness about the cultural and political impacts of ICTs?
Are there "techies", entrepreneurs and managers proactive and savvy enough to create local companies and take them global?
Is there adequate cooperation between citizens, SMEs, academics, non-governmental organizations (NGOs) and policy-makers to create a favourable climate for using ICTs?
Is there a favourable regulatory environment in the country for creating ICT companies, mergers and acquisitions, and links with the diaspora population?
Are there enough financial resources to invest in ICT infrastructure and education? What is the level of foreign direct investment?
Is there a domestic venture capital industry? Are they investing abroad as well? How many international players are active in the local private equity market? Are there stockmarkets for public listing?
ICTs + e-skilled people = e-readiness
The "8Cs" give insights into the success of countries like India and the Philippines, where socio-economic divides co-exist with advanced e-skills in software development, call centre operations, technology support and content management services. ICTs are promoted as industrial sectors in their own right, via industry lobbies, educational schemes for human resource development, discounted Internet access and tax incentives. Also, sectors such as business process outsourcing, design and automobile component manufacturing are harnessing ICTs to improve production and delivery.
SMEs in the online world
ICTs offer SMEs no shortcuts to success - doing business remains hard work. But new technologies offer opportunities for efficiency and innovation, provided the capacity and skills are there.
SMEs should first set their own 'digital business house' in order before showcasing to the world. The four recommendations, or principles, below can help SMEs join the new 'E-Silk Road' in the Internet and wireless world:
Use technology in business processes. Focus on in-house applications - ranging from anti-virus protection and web site design to knowledge management and business intelligence. It's no longer enough to browse the web or handle e-mail. Useful ICT tools are emerging for e-business: data warehousing, enterprise resource planning, e-marketplaces, search engines and content management systems. Develop in-house competency to harness tools for e-business. Wireless communication technologies, such as SMS and voice, for coordinating supply chains and distribution networks cut costs.
Combine physical and electronic channels. The true strength of ICTs like the Internet is often best harnessed by a combination of offline and online channels (the 'clicks + bricks' model). In other words, don't ignore traditional media like print and direct mail/catalogues or physical locations entirely. At the same time, the Internet offers opportunities like taking part in "virtual tradeshows" which can be a good source to match buyers and sellers. Pay attention to the quality of online and offline marketing materials (such as web sites and product samples) since the Internet allows global comparison shopping and benchmarking for prospective buyers.
Develop alliancing strategies. SMEs can form partnerships with industry lobbies, trade consortia and governments, which are also working to increase e-readiness among SMEs. Business-to-business hubs will tend to form around existing business concentrations, so SMEs should develop partnerships in these growing networks. SMEs can also participate in standards forums on local language fonts and e-payment options. Since such issues affect them in the long run, they can proactively shape the usefulness of these ICT tools. Many developing countries have sizeable pockets of their citizens living abroad, particularly in the West, in countries with an advanced e-commerce infrastructure. Diaspora networks can help SMEs expand their presence into these markets, through marketing and technology partnerships.
Improve web presence. Many SMEs design web sites that are just online versions of their print brochures for domestic audiences. On the World Wide Web, design sites for a global audience. Include export-oriented process/contact information, showcase testimonials and third-party press coverage, get certification services and benchmark against counterparts in other countries.
Applying ICTs to business
Many early, well-intentioned ICT projects in developing countries failed because they were too techno-centric or stopped at the computer installation phase. Yet, even at early stages of information-seeking (versus information dissemination) operations, the Internet offers a wealth of resources for SMEs in trade: product and service information, contacts of buyers and sellers, regulatory information (customs, tariffs, taxes, duties), logistics (freight, shipping, transport), finance (insurance, banking) and market intelligence (news, updates).
With the "8Cs" and the 'E-Silk Road principles' incorporated into business practices, SMEs can launch e-commerce and e-business initiatives on their own (unilateral) or through partnerships with SMEs in another country (bilateral), in neighbouring countries (regional), through global organizations (multilateral, or sectoral with farmers, manufacturers, etc.) or with different communities.
The information society is not just about connectivity with the global information infrastructure, but about content being accessible, communities congregating on and offline, and a capacity to create and manage information spaces. It's about embedded and emerging cultural attitudes, commercial and other motives, and a spirit of cooperation and lifelong learning.
Early movers on the 'E-Silk Road'
Many companies are successfully incorporating 'E-Silk Road' principles for competitiveness in the 21st century. For instance, http://www.freemarkets.com conducts online auctions and reverse auctions of supplies and materials in many regions of the world. There are local players as well in some countries (such as http://www.procurehere.com in Malaysia). SMEs are tapping into these networks to uncover business opportunities.
Fishermen in the southern Indian state of Kerala are using mobile phones to reconfigure distribution chains dynamically while they are at sea, depending on which seafood market offers the best prices for the catch. Some fishing companies report that their profit in the peak fishing season has doubled, since they can contact multiple ports and seafood markets and identify the best sale prices for the catch of the day. Routes, fishing locations and even the composition of the catch itself can be planned and coordinated while the fishing boats are still at sea.
E-commerce company and Internet service provider Africa Online has struck partnerships with a number of universities to offer courses on e-commerce and capacity building among SMEs in African countries like Kenya. These courses are also offered through networks of cybercafes.
Countries where SMEs are tapping into their diaspora networks for e-commerce include Cuba (for remittance of foreign exchange) and Ethiopia (for online gift services). Small and medium-sized tourism operators in Thailand are successfully using web sites and e-mail for booking orders, especially among repeat visitors.
Dr Madanmohan Rao (madan@inomy.com) is editor of two book series, The Asia-Pacific Internet Handbook and The Knowledge Management Chronicles. He is based in Bangalore, India.