Canada closing e-business gap with United States

Canada made some progress in closing the e-business gap with the United States last year and will close it further through 2004, but U.S. companies still remain far ahead in the online world.

These findings are part of ongoing research, released Tuesday by the Canadian e-Business Opportunities Roundtable’s e-Business Acceleration team, led by IBM Canada’s president and CEO John Wetmore. IDC Canada and its U.S.-based parent, International Data Corp, conducted the research.

IDC projects a compound annual growth rate for the Canadian e-Business sector of 75.5 per cent through 2004, compared to 67.9 per cent in the United States

By 2004, those percentages will represent $100-billion (U.S.) in e-business spending in Canada, and $1-trillion in the United States.

John Wetmore, president and CEO, IBM Canada and chair, e-Business Acceleration Team, said in press release that he was pleased with the results, but suggested a lot more work had to be done to close the gap especially in the small business sector.

A closer look at the research reveals that it’s the business-to-consumer sector where Canadian firms are gaining the most ground. IDC is now predicting CAGR of 67.8 per cent in the Canadian B2C sector, compared to 44.1 per cent in the United States.

But most notably, in the business-to-business sector, Canadian growth remains behind the United States through 2004 – a CAGR of 67.8 per cent compared to 72.9 per cent in the United States.

Joe Greene, vice-president, IDC Canada echoed Wetmore’s observations. While the Canadian business-to-business sector represents over 80 per cent of all e-business and will be a driving force in the future small businesses, in particular, are not getting the message that they must learn to conduct business online if they hope to remain competitive, Greene was quoted as saying in a release.

Greene said that too many small business operators believe that having email and a basic Web site is enough, but it’s not. E-business is the way of the future that will enable them to meet the challenges of local and global competitors, Greene was quoted as saying in the release.

The IDC research also indicates that medium and large Canadian businesses still lag behind their U.S. counterparts in the most basic components of e-business. The number of medium-sized (100-499) businesses with Web connections is almost 16 per cent lower in Canada than in the United States, and the number of large businesses using sophisticated supply chain management tools (like extranets) is 10 per cent lower in Canada than in the United States.

Mr. Wetmore said that the e-Business Acceleration Team has identified education and skills development, large enterprise supply chain pull-through, and a time-limited SME e-business tax incentive as essentials to help Canadian business – especially small business – further close the gap with the United States.

Some of the other specific research findings included:

– the percentage of small companies (under 100 employees) with connections

to the Web has increased faster in Canada than in the United States. In 1998, only 15 per cent of small Canadian companies were connected, compared to 35 per cent in 1999. In the United States, the percentage rose from 52 per cent to 57 per.

– the number of small Canadian companies with Web sites also increased, but not as fast as in the United States. In 1998, six per cent of Canadian small businesses had a Web site, growing to 13 per cent in 1999. In the United States, 18 per cent of small businesses had a site in 1998, growing to 28 per cent in 1999.

The Canadian E-Business Opportunities Roundtable is a private sector led initiative, supported by Industry Canada and formed in 1999 to develop a strategy for accelerating Canada’s participation in the Internet economy.

The E-Business Acceleration team was announced in March, 2000 with a mandate to create a sense of awareness and urgency for Canadian companies to adopt e-business to compete more effectively in a networked world.