SMEs ‘struggle to understand’ e-business

28 Nov 2005

A new survey of small businesses across Ireland reveals that despite progress in the rollout of broadband, the lack of a basic understanding of broadband and ICT is the greatest obstacle to the development of e-business in Ireland.

In this year’s survey, unlike previous years, the sample was not restricted to Chamber of Commerce of Ireland (CCI) members, but instead was drawn from the wider SME community. Alarmingly, the survey reveals that in 2003 CCI members were outperforming the average SME respondent two years later on a wide spectrum of e-business measures from having a company website through to the variety of ICT applications they used. For example, 92pc of respondents had internet access in 2003. When a combined CCI member and other companies’ survey was conducted in 2005, this had fallen to 85pc of companies.

Fewer than 30pc of respondents to the survey accessed the internet via broadband, despite the advances in supply over the past two years. CCI attributes this low uptake to confusion about what constitutes broadband. Over half of the companies surveyed claimed they had broadband, however when questioned further it transpired that many respondents were using ISDN and not a broadband connection.

Despite the existence of broadband, the survey reveals that businesses are not making the leap to broaden their usage of e-business technologies. For most users of broadband, faster access to the internet and quicker downloading of emails are still seen as the technology’s greatest advantages. Teleworking, in particular, has not been embraced by SMEs despite growing traffic volumes and issues regarding accessible childcare. Other efficiencies of e-business such as computer-based learning, e-tendering, online ordering and payments are being overlooked to the determent of Ireland’s competitiveness.

The survey found that 85pc of businesses had access to the internet. Firms in the construction (79pc) and retail industries (76pc) were the least likely to have internet capability, compared to the financial services (96pc) and transport, storage and communications (92pc) sector.

Internet penetration rates were highest in the Dublin region (95pc) and amongst companies with between 50 and 249 employees (92pc). Only 30pc of companies that did not have access to the internet said they would like to connect to the internet in the next 12 months. While one in every two companies interviewed claimed to access the internet via broadband, when questioned further, only 29pc of firms had broadband-enabled connections.

More than a third of businesses still connected via a standard phone line. Micro businesses (with less than nine employees) were the most likely (45pc) to connect through a standard phone line as were businesses in the midland (47pc) and border (45pc) regions. Some 65pc of Dublin companies had broadband capability.

Interestingly, more than half of SMEs had attempted a technical upgrade of their internet connection and half again had tried to do so in the past six months. Three out of 10 companies that had attempted an upgrade were unsuccessful. The lack of availability of the pertinent service in their area was the principal reason that companies failed to upgrade their connection.

Telephone costs, both mobile and fixed line were the main telecommunications costs faced by SMEs. Some 47pc and 43pc cited mobile and fixed-line charges respectively as the most expensive telecommunication costs facing their business.

When asked if the lack of broadband take-up by SMEs was the fault of telecoms operators failing to deploy broadband in rural areas, Caoimhe Gavin, policy and research executive at CCI said it was a chicken and egg situation and the onus shouldn’t be solely on the shoulders of operators. “It is demand that’s the problem, not supply. Operators would provide broadband in regions if they knew there was definitely a demand. We would view it as an information problem. Businesses throughout the Republic of Ireland need to know more and realise how broadband can aid their business in terms of efficiency. In Northern Ireland, they had an SME simulation project that gave impartial advice – that’s exactly what’s needed in the Republic. There is a role that official Ireland must play to promote the reasons why businesses should demand broadband.

“Ireland is falling well behind in the league tables,” Gavin continues. “Comparing Ireland to other OECD countries we always come in at the bottom. My advice to the Government is that if you want to see continued investment in Ireland you need to invest in informing businesses of the advantages of ICT. More native companies need to have access to broadband and better e-government services – that depends on awareness and the supply of services.”

Gavin’s advice to operators is to continue with their rollout of services but to focus on designing specific SME products and services. “There is a need to tailor products that suit medium-sized firms and micro businesses also.” Her advice to SMEs is to study other firms that have broadband and see the efficiencies they are deriving from it. “The survey shows that any company that has deployed broadband has become more efficient.”

By John Kennedy