Canadian SMEs continue to feel the heat

In what is becoming a near-weekly assault on the small- and medium-sized enterprise (SME) space in Canada, another report has slammed the industry for its poor e-commerce adoption.

The report, entitled Net Impact Study Canada: The SME Experience, was sponsored by the Canadian e-Business Initiatives Benchmarking (CEBI) Metrics team in collaboration with Cisco Systems Canada, IDC Canada and the Schulich School of Business at York University. The report is an exact replica of a study completed in the U.S. last year.

According to the study, which was released on Friday, adoption rates for SMEs that are using Internet Business Solutions (IBS) is at 50.2 per cent, compared with 61 per cent south of the border. Similar studies conducted in Europe showed adoption rates were around 47 per cent for the SME space. The countries that were looked at included Italy, France and Germany.

The mandate to examine the ISB model as it relates to Canada’s SME sector came from the CEBI last year. The focus for driving the e-business initiative is a joint public-private affair, especially since outfits could expect a profit increase of up to 150 per cent, the study found.

“While we have data that SMEs using Internet technologies are more profitable and productive, there still exists many barriers to adoption,” said Pierre-Paul Allard, president, Cisco Systems Canada and co- chair for the Canadian e-business initiative.

The report examined five vertical sectors – manufacturing, financial services, retail, communications and Internet service providers and the public sector. In total, 1,968 SMEs were contacted by telephone and over 300 were randomly selected for longer more in-depth interviews. Of the sectors, the manufacturing sector was viewed as the most negligent.

“The striking thing is that the manufacturing sector tends to have been slower in adopting in almost any of the areas. Clearly they are not as customer focused as they might be,” said Ron McClean, professor at the Schulich school of business at York University in North York, Ont. On the whole, the numbers suggest a drastic slow down in IBS technology is being forecast over the next three years, McClean added.

In fact, one of the more disturbing results indicated that 28 per cent of SMEs asked said they had no intention of implementing an IBS strategy over the next three years. The reasons remain crystal clear for not moving forward however, as cost, time to implement these technologies and the lack of management’s support remain key barriers.

Deputy Minister for Industry Canada Peter Harder said, “within a North American context we have an SME challenge of adoption.” For Industry Canada’s part, the government says it is committed to “accelerating adoption in the SME of e-solutions because we know that participating in electronic commerce is an indicator of being at the cutting edge of enhancing your productivity,” Harder said.

The goal of CEBI is to encourage these companies to use the Internet to grow their business – especially as the small business sector in Canada comprises 80 per cent of the business landscape.

A second study, to be released in 2003, will explore Canada’s competitiveness globally.

For complete study results, visit