Few Canadian businesses are ready to compete in electronic economy: study

Many Canadian companies are only “dabbling” in electronic commerce and do not consider it a high business priority, according to a recent study by Andersen Consulting.

Of the 293 major Canadian companies surveyed, more than 70 per cent did not rank e-commerce initiatives high on their lists of business priorities, even though 84 per cent of senior business leaders surveyed admitted e-commerce will likely play a bigger role in their organizations over the next five years.

Only 20 per cent of the respondents were identified as e-commerce “Leaders,” while 41 per cent were characterized as “Dabblers” and the remaining 39 per cent were labelled “Side-Line Observers,” said Janet Kummeth, an associate partner with Andersen’s technology practice in Toronto.

“Until e-commerce is recognized as a vehicle to attain top-of-mind business priorities, it’s always going to be viewed as a low priority,” she said.

Kummeth found it particularly interesting that only one in five surveyed viewed e-commerce as a serious competitive threat.

“So again, until Canadian businesses say, ‘Hey, this is a threat and we need to worry about it,’ it’s not going to be there. Canadian businesses need to understand that e-commerce is not a separate initiative, but is central to reaching their own business priorities. And since everything is moving so rapidly, they can’t afford to be left behind.”

One of the top reasons given for not implementing an e-commerce initiative sooner was that their customers were not ready for such extensive capabilities, which Kummeth said indicates a lack of perception.

“They’re saying, ‘My customers aren’t ready’ but the customers are saying that they are. People don’t know what the others want, and they are not listening, because they are worried about what they think they want.”

Reluctance to adopt a new technology and a lack of understanding also play a role in the lag, she said.

“It’s a matter of the technology folks being able to speak in the language that the business folks can understand. A lot of our companies are not technically savvy, so the businesses don’t always appreciate what technology can bring.”

Kummeth estimates Canadian companies have less than a year to implement an e-commerce solution if they are to reap the full benefits of selling products on-line.

“This is kind of the wake-up call to say, ‘Hey guys, in the next six to nine months you’ve got to get serious about this, or you are going to be left behind.’ Because this is a global economy – that’s what makes it different.”

Gaylen Duncan, president of the Mississauga, Ont.-based Information Technology Association of Canada (ITAC), said he hopes the lag in Canadian e-commerce is nothing more than a timing difference between Canadian and the U.S. adoption rates.

“I’m disappointed that we are not maintaining the lead that we had. It’s certainly not the fault of the IT industry, who have provided all the infrastructure. And I don’t think it’s a problem of government policies. But it is clear in the retail and consulting worlds we are not picking [e-commerce] up as quickly as the U.S.”

Brian O’Higgins, executive vice-president and CTO of Ottawa-based Entrust Technologies Ltd., expressed surprise at the study’s results.

“Priority one should be Y2K, but the very next thing should be electronic business. So I’d say the opposite (of the study) is true. People, especially larger companies that want to automate processes, are in a panic to understand how they can gain from electronic commerce.”

John Reid, president of Ottawa-based advocacy group CATA Alliance, said the e-commerce market is much bigger than what was first measured, which caught many companies outside the high-tech sector off guard.

“But the line between early adopters and mass adoption is quite thin. [Electronic commerce] is going to squeeze those who do not adopt it out of the marketplace. When you see your numbers dipping and that your competitors are using e-commerce solutions, then I don’t think we are going to have an absorption problem in Canada (for long),” he said.

“What [Andersen] did is take a snapshot. And while it may be an accurate snapshot at one point in time, I think six months from now that snapshot will look totally different.”