Ireland wake up – there is no recession online

10 May 2011

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The internet capital of Europe’s success at providing the right environment for the world’s best technology companies hides a disturbing anomaly – indigenous companies are failing badly at e-commerce.

They say that before Rome fell, the Eternal City consisted of islands of palaces amid a sea of slums. The same could be said for Ireland when it comes to the digital economy.

Ireland has what you would call a two-speed economy. As the internet economy globally is booming, the country is the de facto engine room of e-commerce with a myriad of secure data centres supporting an enviable array of the world’s best and brightest technology companies, from Google to Facebook, eBay, Yahoo, Amazon, Microsoft, LinkedIn, Zynga, Apple, HP, IBM and many, many more.

IT employment in Ireland is up 6pc and exports are actually booming despite the indigenous calamity of unemployment and a possible default facing a country that lost it all through the actions of an inept elite consisting of bankers, politicians and builders who rolled the dice for too long on a property bubble that exploded in their faces.

Every day jobs are being lost in sensitive areas, like retail, as consumers hold onto their cash and indigenous businesses struggle in the face of a banking crisis that has cut the flow of credit.

Yet there is no recession online. Irish people are, in fact, buying goods and services online in droves and the sad fact is they are buying from web-savvy firms overseas because local firms simply don’t get e-commerce and aren’t making any serious effort.

“We got too fat and too lazy,” says Ronan Harris, Google’s director of online sales and operations in Ireland. Google is one of the jewels in Ireland’s technological crown. It grew employment from 200 in 2004 to nearly 2,000 today and is still growing.

Google yesterday kick started a national campaign, Getting Irish Business Online, aimed at allowing businesses with no web presence to set up a site for free in less than 30 minutes. The campaign is targeting the 40pc of Irish SMEs, including sole traders that do not have a website or an online presence.

Like me, Harris is embarrassed and angry at the situation. It’s so obvious what the possibilities can be. Firms can only survive if they do something to help themselves. The internet economy is not a silver bullet, but it is the place where trade is happening.

“We engaged IPSOS MORI to go out and do a survey and they talked to 800 companies and the picture isn’t good. Some 40pc had no online presence, 60pc didn’t have an entry in an online directory and 97pc of the ones that do have a website are using their company website as brochure ware.

“Fifty-seven per cent of SMEs perceived an online presence as too expensive and complex.

Disappointed

“As an Irishman I feel very disappointed, we talk about it being a smart economy, a digital economy and an economy of the future but when you look at stats, where the rubber hits the road, we are way behind our counterparts and we’re sliding further behind.”

Harris said a World Economic Forum networked readiness report positioned Ireland at No 28 and the country has slid consistently down the rankings over the last five years.

The real problem here is that there has been no national internet or digital strategy. Politicians and business leaders ignored the internet and the need for real broadband infrastructure as too complex a subject for their understanding and instead opted for the low-hanging fruit of property. The end result is underskilled firms doing nothing to help themselves and abundance of unemployed law graduates.

“We need to turn the rhetoric and theory in to something practical and real. If we are successful as a nation at doing this I believe we can give companies access to new revenue streams and customers.”

It’s an ironic situation. Harris says that according to Google’s own research, businesses who are finding themselves struggling with offline revenues are actually seeing strong growth in online where they have decent online presence. “There are too few companies with a reasonable online presence here.

“If we can give some of these 270,000 small businesses in Ireland a greater belief in e-commerce; we just need to give them access to enough growth to employ one person more it would have a big big impact.”

Yep, let’s do the maths – if 270,000 firms found growth online and hired one more person it would take 270,000 people off the dole. There are 450,000 people on the dole.

“If you look at comparative metrics, the UK, which rightly calls itself the Connected Kingdom, puts the value of the internet economy in UK at 7pc of GDP today and growing to 10pc by 2015, that’s massive.

“We don’t have today statistics on this for Ireland, we’re a smart economy not knowing if we have the measure of a smart economy. We’ve set ourselves an internal benchmark target of 10pc through the campaign – that’s 25,000 businesses but that’s not enough.

“That does not do for Ireland to have enough impact; we need to think about a bigger number, and possibly get to that to an 80pc figure.

“While it would be great to think this initiative and movement could drive a lot of that, what we need is a change in psyche where every business questions itself about how good its online presence actually is.

“Every graduate, or apprentice should be figuring out how to find customers and online. This does not mean we have to become experts in e-commerce but at least know the fundamentals to establish a presence and connect with customers because that would be the life blood of their businesses.”

Harris makes a thorough point – 75pc of Irish people use the internet as a primary source of research for making a purchase. Yet with few businesses online it means they will end up buying overseas. This sounds like madness if you think about shops closing and businesses going under on a daily basis.

As Harris points out: “There is no recession online.”

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com