Bid Sectoral e-Business Watch

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Sectoral e-Business Policies in Support of SMEs
Sectoral e-Business Policies in Support of SMEs (2007)
Innovative approaches, good practices and lessons to be learned
A study by
EMPIRICA
DATABANK
IDATE
European
Commission
Benchmarking Report
Benchmarking Sectoral e-Business Policies
About this document
This is the Final Benchmarking Report of the study "Benchmarking Sectoral Policy Initiatives in
Support of e-Business for SMEs". It presents case studies of 15 such initiatives. The case studies
were selected out of about 75 initiatives which had been identified during the first study phase
("stock-taking") in the countries covered. The study compares and assesses different policy
approaches in terms of their strengths and weaknesses and identifies key learning points. The
objective is to promote the adoption of best policy practices in this field in Europe.
The study was jointly conducted by empirica GmbH, Databank and IDATE, based on a service
contract with the European Commission, Enterprise and Industry Directorate General (contract no.
SI2.449074).
empirica GmbH
Databank S.p.A.
IDATE
Oxfordstr. 2
53111 Bonn
Germany
Via Spartaco 19
20135 Milan
Italy
BP 4167
34092 Montpellier cedex 5
France
www.empirica.com
www.databank.it
www.idate.fr
Acknowledgements
We would like to thank the national correspondents who supported the study team in identifying
and gathering information about initiatives and projects in more than 30 countries worldwide, and
for helping us conducting case studies about the most interesting initiatives.
Also, thanks to Ms Terttu Lukkannen, Head of Unit at the Research Institute of the Finnish
Economy, and Ms Alexandra Rammer, Senior Consultant at Technopolis Austria GmbH, for
thoroughly reviewing the methodology framework and the draft version of this report and for their
valuable comments and suggestions.
Disclaimer
Neither the European Commission nor any person acting on behalf of the Commission is
responsible for the use which might be made of the following information. The views expressed in
this report are those of the authors and do not necessarily reflect those of the European
Commission.
Rights Restrictions
Reproduction or republication of this report (or parts thereof) is authorised, provided that the
European Commission, DG Enterprise and Industry, is informed and that the source is properly
acknowledged.
Contact for requests:
European Commission
Enterprise and Industry Directorate-General
Unit D4 “Technology for Innovation / ICT industries and e-Business”
1040 Brussels, Belgium
e-Mail: [email protected]
Bonn, November 2007
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Table of Contents
Executive Summary ...............................................................................................................5
1
Introduction..............................................................................................................9
1.1
Study objectives and scope ........................................................................................................................... 9
1.2
Methodology ................................................................................................................................................10
2
Elements of good practice ..................................................................................... 13
2.1
Going new ways – innovative policy approaches ......................................................................................14
2.2
Gaining from networking – involvement of stakeholders and links with other initiatives .....................16
2.3
Communicating effectively – approaches for internal and external communication...............................17
2.4
Improving business processes – how individual companies benefit.........................................................19
2.5
Integrating digitally – the wider impact on sectors and the regional economy........................................21
3
Facilitators and barriers......................................................................................... 24
3.1
Facilitators ....................................................................................................................................................24
3.2
Barriers..........................................................................................................................................................25
4
Recommendations for future initiatives ................................................................. 26
5
Policy case studies ................................................................................................ 29
5.1
VERSO – Vertical Software Solutions (Finland) .........................................................................................30
5.2
The ICT-SMEs 2010 Action Plan (France) ...................................................................................................41
5.3
A.L.F.A. – Improvement of Business Relations in the Automotive Industry (France) .............................53
5.4
PROZEUS – Processes and Standards (Germany)......................................................................................64
5.5
TASK – Programme for Establishing Software Supply Chains (Germany) ..............................................83
5.6
The Digital Future Initiative (Greece) .........................................................................................................95
5.7
CITAX – The Construction IT Alliance eXchange (Ireland).....................................................................104
5.8
DDTA – Digital Districts in the Textile and Clothing Sector (Italy) ........................................................117
5.9
The Digital Netherlands Initiative.............................................................................................................130
5.10
BuildingSMART (Norway)........................................................................................................................143
5.11
The Digital SME Programme (Portugal) ...................................................................................................156
5.12
e-SLOG – e-Commerce in the Slovene Economy (Slovenia) ....................................................................170
5.13
The CANARIE eBusiness Programme (Canada)......................................................................................180
5.14
Supply Chain Logistics Metrics (Canada).................................................................................................190
5.15
The Sectoral B2B Networks Initiative (Korea) ..........................................................................................200
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6
Sectoral e-business policy initiatives: common characteristics and differences. 209
6.1
Types of initiatives covered.......................................................................................................................209
6.2
The time perspective – duration and scope ..............................................................................................210
6.3
Geographic distribution.............................................................................................................................212
6.4
Sectors addressed.......................................................................................................................................215
6.5
Activities and approaches..........................................................................................................................218
Annex: The eBSN – the European e-Business Support Network ......................................... 221
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Executive Summary
About this document
This report presents the results of the study
"Benchmarking Sectoral Policy Initiatives in
Support of e-Business for SMEs." The study was
jointly conducted by empirica GmbH,
Databank and IDATE, based on a service
contract with the European Commission,
Enterprise and Industry Directorate General.
The objective to promote the adoption of good
policy practices in this field in Europe.
The report presents 15 case studies of relevant
policy initiatives. These were selected out of
about 75 initiatives which had been identified
during the first study phase. The study
compares and assesses the different policy
approaches in terms of their strengths and
weaknesses, and identifies innovative practices
and learning points.
What is a "sectoral e-business policy
initiative"?
In recent years, several EU Member States –
notably France, Germany, Italy, Portugal and
Spain – have launched initiatives to facilitate ebusiness exchanges within specific industry
supply chains.
A key objective in most of these sectoral initiatives is to enhance SME participation in these
supply chains. Large companies are increasingly streamlining and integrating their procurement processes; smaller firms in lower tiers of
the supply chain that cannot comply with
technical requirements of their customers risk
to be eliminated from the chain, with negative
effects for regional or national economies.
Policy initiatives aim to counteract this digital
divide, arguing that intervention will create a
win-win situation for all players involved and
thus positive aggregate effects.
The concept of a "sectoral approach" does not
necessarily imply that such programmes only
target one specific industry. In fact, 10 out of
the 15 initiatives presented in this report
address more than one sector. However, what
they have in common is that they have sectorspecific action lines or networking projects
within the programme, and that the targets and
(at least some of) the policy instruments used
are adapted to these industries.
In fact, the broad range of e-business initiatives
identified by this study shows that there is not
always a clear borderline between "sectoral"
and non-sector specific ones. While some
programmes are undoubtedly industry-specific
in their approach (including, obviously, singlesector initiatives), others have only sectoral
elements. In the French ICT-SME 2010 Action
Plan (see Section 5.2) the sectoral approach is a
decisive feature through and through; it is a
less dominant aspect, however, in the "Digital
Netherlands" and the Greek "Digital Future"
initiatives (see Sections 5.4 and 5.6).
To this end, the following definition of a
"sectoral e-business policy initiative" was used
to define the scope of the study:
•
the public sector should be involved in the
initiative (either as initiator, provider of
funding, and/or in the implementation);
•
the initiative should address goals that are
related to e-business, which includes the
use of ICT to facilitate data exchanges with
business partners;
•
the initiative should include activities that
focus on data exchanges in one or several
specific industries or value chains.
In addition, the study focused on activities in
support of small and medium-sized enterprises
(SMEs) with up to 249 employees.
Different activities and approaches
While all initiatives focus on the overall
objective of supporting the e-business adoption
of SMEs, they differ in their specific goals and
the approaches they take to address them.
Basically, activities can be grouped into three
main categories:
•
Activities focusing on establishing or
enhancing B2B networks;
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•
support activities for individual companies, typically by means of providing
grants for projects;
projects, but include relevant elements that go
beyond implementing grant schemes for
individual enterprises. Example: PROZEUS.
•
actions aiming to improve the framework
conditions for e-business adoption, for
example initiatives to promote agreements
on e-business standards and research
projects developing ICT solutions for
SMEs.
In Type 3 initiatives, sectoral characteristics are
relevant as well, but the activities then focus
more on the individual firm rather than on
value chains and networks as whole. Example:
Digital SME.
Some of the initiatives combine various of the
above approaches in their activities.
A portfolio of policy approaches
Based on these considerations, the policy
initiatives assessed in this study can be mapped
according to their sectoral focus (high vs. low)
and their activities (the chosen approach, i.e.
whether they concentrate on supporting single
firm e-business projects or on larger, complex
supply chain initiatives) – see Section 6.5.
Exhibit: Mapping policy approaches
Sectoral focus
highly
relevant
Innovative approaches
Type 1
Type 3
1
Type 2
Type 5
side
aspect
Type 4
0
0
Single firm
support
1
Mixed
approach
Type 5 initiatives have a more traditional
approach, as they typically focus on providing
ICT-related support to individual companies
and to raise awareness, using a broad range of
instruments and channels. Examples: Digital
Netherlands, Digital Future.
Elements of good practice and lessons
learned
3
2
Type 4 initiatives are quite different from Type
3 with regard to both criteria. Sectors are only
peripherally relevant; instead, they focus on
specific or general issues identified as action
points to enable electronic data exchange
between companies. Example: eSLOG.
2
Networking
projects
3
Firm focus ---> value chain orientation
Type 1 are policies where the sectoral approach
is essential for the design; activities are geared
towards strengthening sectoral value chains by
achieving agreement among stakeholders on
specific issues. This was the 'archetype' and
model that inspired this study. Examples in this
study: ICT-SMEs 2010, ALFA, buildingSMART,
CANARIE, B2B Networks, CITAX, DDTA and
TASK.
By and large, a shift can be observed towards
larger initiatives that are more selective in their
approach, while at the same time pursuing a
replication of activities in different regions or
sectors based on a single chosen approach.
Thus, they work at micro level, but involve
central coordination, aiming at achieving
replicable outputs and outcomes. An increased
responsibility of the participating organisations
is an emerging characteristic of these initiatives.
A common feature in some of the analysed
policies is the goal to establish a "community of
interest" among SMEs, able to work together
and communicate and to spread new working
practices to other players along the value chain,
be in the same industry or not.
A common strategy is the practice of leveraging the driving force of leading companies.
In Type 2 initiatives, sectoral characteristics
also play a role in the design of the programme,
but to a lesser extent than for Type 1. Activities
do not focus on establishing networking
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Gaining from networking & communicating
effectively
The possibility to gain from networking was a
quite common condition for many of the
analysed policies. The sectoral focus is a
facilitator in this respect, as it "naturally" drives
to the involvement of stakeholders and experts
with sectoral background and reputation. It
also makes it easier to involve industry
associations and chambers of commerce in the
dissemination phase.
The right communication strategy can be
decisive, in particular to involve stakeholders
external to the industry community. The
apparently narrow focus of the policies (limited
to one or a few sectors) facilitated cooperating
on very practical and operational issues (such
as standards and the agreement on exchange
practices) that have the potential for being
transferred and used at a much broader level.
Improving business processes – how individual
companies benefit
A good practice element found in some of the
initiatives is to assess or even measure the
return-on-investment in ICT and to document
project results. This evidence can then be used
for show-casing success stories. Several
initiatives report that showcasing effects are
even more pronounced if delivered in a peerto-peer context.
Initiatives that monitored and assessed the outcome of their projects have convincing evidence
of mostly positive effects. In other words:
reasonable investments in ICT provide more
often than not attractive returns for SMEs,
either by supporting their growth or by helping
them to cut costs.
Policy initiatives appear to make a strategic
shift from addressing weaknesses to reinforcing strengths: While many of the earlier
initiatives addressed "starters" with little or no
ICT experience, more recent policies exhibit a
trend towards focusing on more advanced and
motivated SMEs which "know what they
want", i.e. have clear business objectives. It is
hoped and expected that other companies will
then follow their example.
Benchmarking Report
of paramount importance to get SMEs digitally
connected within their supply chains.
Integrating digitally – the wider impact on
sectors
There is a trend towards larger and longerterm initiatives, often with a duration of more
than five years. The scope of policy initiatives
has arguably increased compared to awareness
raising programmes and grant schemes of
earlier years. This is necessary, considering the
increased complexity of the objectives and
activities,
often
involving
numerous
organisations and stakeholders. It can require
substantial resources (and some patience) to
create momentum and critical mass with such
programmes.
An important success factor for supply-chain
oriented initiatives is the participation of large
enterprises, as they are normally key nodes
within "their" chain. Ideally, policy initiatives
will therefore leverage the role of large firms.
Once again, the initiatives confirm that ebusiness is not only a problem of hardware,
software and standards (i.e. upgrading ICT
infrastructures in numerous companies), but it
requires organisational innovation.
The biggest challenge is often convincing firms
that they have to introduce organisational
changes.
Another success factor is that the project
manager be representational, legitimate and
recognised by all sectors which are represented
in the project. As conflicts of interest cannot be
avoided in complex projects where many
stakeholders have to agree on common
processes and standards, it is important that
working groups and other joint activities within
the project are coordinated by experienced,
neutral third-party moderators.
A good practice which is increasingly considered by initiatives is to hold projects
accountable, in the sense that the impact of
large-scale networking projects on the productivity of firms and the sector as a whole must be
clearly demonstrated already in advance in
order to receive grants.
Many initiatives address standards and
interoperability issues; they confirm that this is
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Recommendations
Are sectoral policies superior?
A key question underlying this study was
whether sectoral e-business initiatives were
more effective than other programmes. While a
simplistic "yes" or "no" would not do justice to
the complexity of the underlying topic
(initiatives with a sectoral focus are not
successful per se), sector-focused approaches
in e-business programmes can certainly be
recommended.
The 15 case examples presented in this report
contain a broad range of innovative aspects,
good practice elements and learning points.
Their strength derives from two advantages:
• the facilitated involvement of stakeholders,
notably the strong commitment of industry
associations to support such initiatives; and
• the suitability as a framework for addressing
advanced e-business goals, such as data
exchange models for specific value chains,
as there is inevitably a trade-off between
depth and scope.
However, a sectoral focus is not a guarantee per
se – the choice whether to focus on sectors or
not must be derived from the goals that are to
be addressed.
Which sectors are most suitable for initiatives?
The initial search found that many of the
existing policies focus on manufacturing
sectors, and in particular on the textile and
automotive industries. This reflects that sectoral
initiatives probably have their largest potential
in industries with deep and well-structured
supply chains. The effects from standardising
business processes and data exchange formats
increases by the number of transactions and
players involved.
qualify in this respect, the selection should
consider the relative importance of SMEs in this
industry, the existing work on e-business
standards (exploit momentum rather than
"starting from zero"), and the interest &
commitment of sector associations to support
the proposed actions.
Specific recommendations
The following more specific recommendations
for future e-business policy initiatives can be
derived from the policies analysed for this
study (see (see Chapter 4):
1. Recognise the importance of management
skills: e-Business is always linked with
organisational issues, and as such it is predominantly a management issue (notably in
SMEs).
2. Ensure the ease of participation – but
demand documentation of results (in exchange for commissioning grants to
companies).
3. Stay focused on harmonising data exchanges and supporting SMEs in developing the capability to participate; this is a
win-win situation.
4. Enhance
knowledge
sharing
and
cooperation among SMEs. This has gained
momentum, but needs to be taken a step
further, notably in manufacturing.
5. Use modular approaches in policy design,
in order to stay flexible in longer-term
initiatives.
6. Consider the cross-border and European
dimension in e-business; there are still
issues to be tackled to fully establish the
single market in electronic exchanges.
However, examples featured in this report also
show that the concept is not limited to
manufacturing industries, but can also be
applied to construction (see case studies on
CITAX and buildingSmart) and service sectors
such as the software industry (see TASK).
Therefore, the selection of an industry should
mainly be based on its importance for the
regional or national economy. If several sectors
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1
Introduction
1.1
Study objectives and scope
This study is rooted in the work of the eBSN (e-Business Support Network for SMEs), a
network of representatives of public policies or private-public partnerships in support of
the promotion of e-business practices to SMEs, coordinated by the European
Commission, DG Enterprise and Industry.
In 2005, the eBSN decided to focus policy exchanges and actions on four e-business
related policy priorities, one of which has been the sector specific policy approaches.
This policy priority recognises that the characteristics and impact of ICT use by
enterprises differ considerably between industries, as well as between small and large
companies. Thus, an underlying assumption for this study is that good e-business
policies should be designed in a way taking into account the specific requirements of
industries and SMEs.
Against this background, the study aims at supporting the main mission of the eBSN: to
facilitate the sharing of good policy practices in the field of e-business, with the ultimate
goal that successful policy approaches and instruments might be replicated and adapted
throughout Europe.
To this, the study has the following main objectives:
to identify relevant examples of sectoral e-business policy initiatives in about 30
countries worldwide;
to describe and assess them against a set of pre-defined benchmarking criteria;
to disseminate the "good policy elements" identified among the policy and
business support communities that work on e-business related issues.
More specifically, the operational targets are:
to further elaborate and refine a methodology for policies comparative
benchmarking, coherent with the benchmarking criteria defined by the eBSN
Network and suited to the specific sectoral approach of this study;
to collect relevant information about sectoral e-business policies in more than 30
countries in the EU, EEA as well as in a few non European countries: Japan, Korea,
India, Canada, Singapore, USA;
to assess the policies' results and impacts versus their targets, and to identify good
practice elements on this basis;
to carry out a comparative analysis of the selected policies and to provide a
consolidated view of their points of strength and weakness.
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1.2
Methodology
This study has been conducted in four phases of data collection. For each phase, a set of
selection or evaluation criteria was developed to guide data collection and the
subsequent analysis (see Exhibits 1.2-1 and 1.2-2).1
In phase 1, the objective was to identify relevant policy initiatives, i.e. to obtain a broad
overview of initiatives that could qualify as "sectoral e-business policies" in the countries
covered by the study. About 80 initiatives that broadly matched the search criteria were
identified. This search and information gathering was supported by national
correspondents in the countries covered by the study. Phase 1 was conducted mainly
from January to April 2007 (including the initial set-up phase for the search plan and
benchmarking methodology).
This initial search for relevant initiatives was guided by the following criteria that
defined the scope of interest:
"Policy initiative": the public sector should have an active role in the policy
initiative
"e-Business": the policy initiative should address goals that are related to ebusiness, which is – in the broadest sense – the use of ICT for doing business.
"Sectoral": the policy initiative should focus on companies from one or several
specific industries, notably by focusing on data exchanges within a specific value
chain;
"SMEs": the policy initiative should focus on small and/or medium-sized
enterprises with up to 249 employees;
National / regional: no restriction – the study covers regional as well as national
policy initiatives, recognising that it may not be possible to identify all regional
initiatives;
Implementation time: the policy must be recent, but should be mature enough in
its implementation status to draw conclusions and learning points;
These search criteria have been applied with a certain degree of flexibility. Only policies
that clearly did not fulfil search criteria were discarded, while further information was
collected for those that appeared questionable at a first sight. For instance, policies that
have been more recently implemented were nevertheless included in the sample.
In phase 2, more detailed information was collected for about 50 policy initiatives,
selected out of those initially identified. Information was gathered via desk research and
through interviews. At this stage, the selection was made entirely on the basis of policies'
characteristics, while no assessment of the policy was made in terms of their
effectiveness. Phase 2 was conducted mainly from May to June 2007.
In phase 3, the 15 policies that matched the criteria best were selected and assessed in
more detail in the form of policy case studies. Case studies involved additional
interviews with organisations involved in the implementation, and, if possible, with
participants (e.g. SMEs that had received a grant). As in phase 1, information gathering
1
The methodological approach is explained in more detail in the "Benchmarking Framework", an
earlier study deliverable. The summary in this report (Section 1.2) should be sufficient to
understand how the contractor went about to address the tasks described in Section 1.1.
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was supported by national correspondents. Summaries of these case studies, which were
conducted from July – September 2007, are presented in this booklet.
Finally, in phase 4, a synthesis view of the case studies was prepared, to identify
elements of good practice and common learning points. The objective was not to come up
with an overall ranking of policies according to their merits, but to highlight innovative
practices and success factors. Special emphasis was placed on understanding the
background and context for a policy initiative, and to assess the activities against this
background. This synthesis assessment was prepared from September to November 2007.
Exhibit 1.2-1: The information gathering, benchmarking and evaluation process
Step I: "Stock-Taking"
Filter I
Step II: Policy descriptions
Filter II
Information
gathering
Search
criteria
Identification
of sectoral
e-business
policies
Sources
- eBSN members
- Industry
associations
- Desk research
- Correspondents
80
Policy
Index Cards
Step III: Case studies
Step IV
Filter III
Selection
criteria
Information
gathering
Collect more
info about
selected
policies
Conduct
policy case
studies
Sources:
- More Interviews:
- with implementing
organisations and
- with beneficiaries
(SMEs)
Sources
- Interviews with
implementing
organisations
- Policy documents
45
Information
gathering
Benchmarking
criteria
Policy
Descriptions
15
Evaluation
criteria
Synthesis
• Info about
sectoral
e-business
policies
• Case studies
• Good
practices
• Lessons
learned
Policy
Case Studies
Final
Benchmarking
Report
(estimate)
Interim Report
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Search and selection criteria
As demonstrated for phase 1 above, specific search and selection criteria were applied
during each phase in order to filter out the most relevant and interesting initiatives. The
following table shows the criteria used in each phase and explains their function in the
study.
Exhibit 1.2-2: The information gathering, benchmarking and evaluation process
Study Criteria
phase
1
2
3
4
Search
criteria
Selection
criteria
Benchmarking
criteria
Evaluation
criteria
Function
in the study
Characteristics
Identify policy
initiatives which
broadly qualify for this
study
Broad guidelines with
"in" or "out"
definitions; consider
the content and
characteristics of a
policy initiative.
Select 50 policies for a
closer assessment
Select 15 policies for
case studies
Identify elements of
good practice among
and within the
selected policies
Focus on policy
characteristics –
metrics for scoring
policies in terms of
their "study fit".
Focus on policy
features and
achievements
Focus on policy
outcomes and impact
Main criteria used
•
"Policy"
•
"e-Business"
•
"Sector"
•
"SME"
•
Timing
•
"Policy"
•
"e-Business"
•
"Sector"
•
Relevance
•
Targets
•
Implementation,
communication
•
Evaluation
•
Innovativeness
•
Networking
involvement
•
Effectiveness and
efficiency of activities
•
Policy reach (outputs,
outcomes and
impacts)
Presentation of initiatives at eBSN Workshop
Complementary to conducting this study, the contractor organised the "eBSN Workshop
on Sectoral e-Business Policy Initiatives" in Paris, 5-6 July 2007. At this workshop, several
of the policy initiatives featured in this booklet were presented and discussed (e.g.
A.L.F.A., eSLOG, PROZEUS, DDTA, buildingSMART, Digital Netherlands, CANARIE).
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Elements of good practice
The 15 policy initiatives presented in this report have been selected and evaluated against
a set of qualitative criteria (see Exhibits 1.2-1 and 1.2-2 of this report). These criteria
mainly rely on previous benchmarking exercises in this field, in particular on the results
presented in the final report "Benchmarking national and regional Policies in Support of
e-Business for SMEs" and on the results of the 2005 "Assessment of the Impacts of
Regional & National e-Business Policies".
These reports identified elements of good practice in policies targeting SMEs. The good
practice elements were based on the various phases in the policy cycle and were inherent
to the policy design and to the chosen management and implementation modalities. They
also referred to the ability of the policy to overcome relevant barriers, to create privatepublic partnerships, to exploit existing networks for promotion and delivery.
The present analysis took into consideration all these aspects. However, the objective was
to identify new elements of good practice that have emerged recently and are
particularly meaningful in the current policy scenario.
An underlying assumption for this study is that good e-business policies should be
designed in a way taking into account the specific requirements of industries and
SMEs. In this perspective, the sectoral focus of the policies analysed hereby, is, per se, a
good practice element that is common to all the cases analysed, although to different
extents and with various modalities. Therefore, the following sections, will not directly
cover the sectoral issue. Instead, they will highlight those practices that, within the
chosen sectoral approach, appear to be elements of novelty.
Exhibit 1.2-1: Structural approach for the identification of good practice elements
Phase in the
policy life-cycle
Policy rationale
Policy rationale
Dimension of
analysis
Focus in identifying
good practices
Examples of
good practice elements
Objectives
Targets
Policy
Policy
implementation
implementation
Resources
Communication
Innovativeness
of the approach
Effective
communication
Activities / outputs
Policy results
Policy results
Evaluation
Systemic approach:
stakeholder involvement
Direct outcomes
Benefits for SMEs –
improved processes
Wider impact
Digital integration –
wider effects on sector s
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• Central coordination – local
deployment
• Third-party moderators
• Build communities of interest
• Leveraging power of large firms
• Pilot actions
•
•
•
•
•
•
•
•
•
Cross-sectoral networking
International dimension
Display best practices
Usage of multipliers
Involvement of stakeholders
outside industry
Calculate e-business ROI
Good documentation of results
Address management
Focus on organisational
implications
• Promote use of proven
standards for e-business
• Focus on tier-x suppliers
Benchmarking Report
2.1
Going new ways – innovative policy approaches
By and large, a shift can be observed towards policies that are more selective in their approach, but
with a view to replicating activities in different regions or sectors based on this approach. They
work at micro level, but aim at achieving replicable outputs and outcomes. An increased
responsibility of the participating organisations is an emerging characteristic of these initiatives.
Innovativeness in policies targeting SMEs can be looked at from different perspectives,
for example in terms of the adopted approach, the targets, the promoted technologies,
and the processes.
The sectoral focus brings about a general shift of policy goals from the strengthening of
individual participants to the improvement of the competitive positioning at a higher
community level (geographical area or industry sectors or sub-sectors). This approach
inevitably determines the raising of issues related to competitiveness among players. In
order to overcome companies' resistance and to establish common systems among
competitors, the policy measures defined new ways of approaching and involving
beneficiaries. These innovative policy approaches are highlighted in this section.
Innovativeness in technology and processes will be addressed in the following sections.
A feature that is common to a few of the analysed policies, is the goal to establish a
community, able to work and communicate and aiming at spreading new working
practices to other players along the value chain, be in the same industry or not. The
concept of "community of interest" was made explicit in the CANARIE initiative, where
groups of companies belonging to various sectors have worked together and shared
information in order to define new business models. A similar approach, although not
explicitly defined as such, has been adopted in the DDTA initiative that helped
companies belonging to the same district to cooperate to the common goal of enhancing
and contrasting international competition. Another interesting example is the
cooperation model established by the Task initiative that included the set up of working
groups gathering software providers, system integrators and user companies.
Linked to the previous, is the practice of leveraging the driving force of leading
companies. This approach was taken, e.g. in DDTA and eSLOG. The rationale is that
leading players in a sector or a district may act as catalyst in their value chain, thus
facilitating the inclusion of other actors. Moreover, large players can more easily
contribute to the technological developments and to the definition of standards that are
of general interest for the industry.
A modified concept of working with pioneers is to showcase their experiences, in order
to stimulate other firms to do follow their path, while at the same time enabling them to
learn from the experience of the early adopters. This approach has been adopted by the
German PROZEUS initiative, where 60 company projects have been documented in detail
to the benefit of potential "imitators".
Another interesting practice is the decision to start with pilot actions aimed at testing
and tuning the policy mechanism in order to smooth the implementation on a larger scale
and reduce the risk. This is the case, e.g. of DDTA and Alfa. These two policies also
highlighted another interesting approach, which is the combination of a top-down with
a bottom up approach, that is to say central management and controlling and
regional/local deployment. This practice is particularly interesting whenever measures
are to be applied in various areas or districts belonging to the same sector industry but
with local features. Central coordination increases the efficiency of the action, avoids
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duplication of efforts, facilitates the collaboration with international stakeholders, e.g. in
the field of standardisation and increases the possibility to replicate the initiative. The
bottom-up approach of the regional implementation assures a close link with the target
beneficiaries which allows the provision of services actually tailored to customers' needs.
Although this concept may appear obvious, it has not always been applied properly in
the past.
Looking at the analysed polices, it can be observed that a quite high degree of
commitment has been required to the participant organisations, through various
mechanisms, including e.g. stricter selection criteria. It is a quite general practice that
candidates had not only to fulfil selection criteria (passive selection) but were also asked
to react to the call presenting their own plans and projects. Examples of good practice in
selecting committed participants come from the CANARIE, Logistics Metrics and the
DDTA initiatives. In these cases, candidate companies, after passing the first selection,
were asked to prepare a business plan for participating to the project and these business
plans were then evaluated by external experts. This led to drop many projects but at the
same time ensured reliability and sustainability over time. To reinforce this concept, the
CANARIE initiative established a mechanism for which contributions are royalty-based:
contract terms specify a repayment obligation based on sales. In CITAX, e.g. all
participating companies were required to identify representative personnel and to ensure
their availability for the project activity. Another example comes from the B2B Pilot
project in which proposals were selected according to their impact on the sector, the
expected outcome and the potential to connect different sectors and overseas markets.
On the other hand, policy makers have –more often than in the past- proposed these
policies as long-term initiatives that are likely to continue and self-sustain after the end
of the funded phase. It can be argued that the sectoral focus facilitates the coordination of
e-business measures with industrial policies at large.
Exhibit 2.1-1: Innovativeness of sectoral e-business policies targeting SMEs - elements of good
practice within the analysed policy measures
Creation of a
community of
interest
Leveraging large
companies as
pioneers /
Showcasing of
projects
CANARIE
eSLOG
DDTA
DDTA
TASK
ALFA
PROZEUS
Digital NL
ALFA
Pilot
actions
Enhance
commitment of
participant
organisations
Central
management
and local
deployment
CANARIE
DDTA
DDTA
ALFA
B2B Pilot
PME
Logistics Metrics
CITAX
TASK
CITAX
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DDTA
ALFA
ICT SME
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2.2
Gaining from networking – involvement of stakeholders
and links with other initiatives
The analysed initiatives confirm the important role of local networks for promoting the policy and
disseminating the results. The sectoral focus facilitates hereby the involvement of stakeholders at
various levels. This is likely to have an important impact on the results if measures are applied on
a larger scale.
Relying on existing networks for service delivery and promotion is commonly recognised
as a good practice element in the design and implementation of e-business policies.
Previous analyses also pointed out that public/private partnerships are an efficient and
effective way to implement policies.
The possibility to gain from networking was a quite common condition for many of the
analysed policies. The sectoral focus is a facilitator in this respect, as it "naturally" drives
to the involvement of stakeholders and experts with sectoral background and reputation.
It also makes it easier to involve industry associations and chambers of commerce in the
promotion and dissemination phase. These organisations often play an important role as
intermediaries, for example in smoothing conflicts of interest or removing concerns about
competition. Other relevant players involved were ICT providers, many of whom had
sector or cross-sector specific know-how and expertise and therefore could significantly
contribute to the development of the technological solutions.
In some cases, the analysed initiatives aimed at involving all the key players along the
value chain that were addressed, including suppliers, customers and service providers of
different kinds. The CITAX initiative, for example, which focuses on the construction
sector, aims at standardising exchange practices among all the players of construction
projects, such as architects, designers, manufacturers and suppliers of building materials.
Another interesting feature of the sectoral policies is that they succeeded, probably more
often than non-sector-specific ones, in cooperating at an international level, especially in
the field of standardisation. They brought interesting results also at a more general level
for example in the establishment and maintenance of links with external partners and
shareholders, including regulatory, standards, legal, safety and environmental
authorities.
Exhibit 2.2-1: Networking in sectoral e-business policies targeting SMEs – elements of good
Involvement of
relevant stakeholders
along the value chain
(applies to most/all of
the policies analysed
for this study)
Involvement of
industry experts and
specialised ICT
service providers
Cross sectoral
networking
International
dimension of the
cooperation
eSLOG
DDTA
CITAX
DDTA
ALFA
DDTA
CITAX
Citax
eSLOG
PROZEUS
Logistics Metrics
VERSO
B2B Networks
ICT SMEs
ICT SMEs
Builiding Smart
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Communicating effectively – approaches for internal
and external communication
By and large, the analysed policy initiatives have effectively reached their target groups, including
SMEs, associations and other relevant intermediaries. The right communication strategy can be
decisive in particular to involve stakeholders external to the industry community. The apparently
narrow focus of the policies (limited to one or a few sectors) was a facilitator for the achievement of
broad objectives. In particular, it allowed working and cooperating on very practical and
operational issues (such as standards and the agreement on exchange practices) that have the
potential for being transferred and used at a much broader level.
When looking at policy initiatives addressing SMEs, communication is essential both for
managing the initiatives (internal communication) and for involving relevant
stakeholders and beneficiaries (external communication). It is a common –and goodpractice among the analysed policies that the awareness and communication activities
were managed both centrally (involvement campaigns, the initiative's website, links with
other initiatives and external bodies) as locally (involvement of beneficiaries, the
organisation of business events).
The following paragraphs highlight a few innovative elements of good practice in
managing the communication activities.
Internal communication and the strong relationship between the central management
and the people and organisation in charge of the (local) implementation are relevant
factors allowing efficient management of the initiatives. This holds true in particular
when numerous and various players are involved and when the policy is implemented at
two levels, typically a central coordination level and a local implementation level. In this
respect, effective project management was a key success factor, e.g., for the PROZEUS
initiative.
The effectiveness of policy external communication can be assessed by looking at a
variety of aspects.
Towards direct beneficiaries, the implemented communication activities not only
increase awareness of the initiative among members of the business community, they
also serve as examples of reference introducing novel practices, tactics, and ways of
doing things to SMEs which can later adopt to their own business.
The most important elements highlighted by this analysis are: the involvement of other
sectoral stakeholders and, related to this, the management of various communication
channels. As regard these aspects, the Task project was very successful as it was able to
gain the support of software companies and user companies. It also proved that an
intensive and selective campaign for involving the right people in the initiative was a key
success factor. Digital NL was effective in exploiting the network of industry association,
chambers of craft and commerce and events.
In PROZEUS, TASK and the Digital NL, another element comes up that, quite
surprisingly, is not so common among the analysed policies: the participation to sectoral
fairs and events for communication purposes.
The exchange and dissemination of best practices for the benefit of the community at
large also came on the ground as a best practice element. This aspect is crucial for
expanding the base of potential beneficiaries of the initiatives as they may help to remove
cultural constraints.
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PROZEUS is a very successful initiative as for all the main communication aspects. It
cooperates with multipliers and uses a broad range of communication channels to
disseminate the good practice examples and lessons learned. Moreover, PROZEUS is an
outstanding example of best practice communication as it probably a unique source of
unbiased information about (German) SME e-business projects.
Another important feature of the sectoral e-business policies analysed is that they
successfully communicated with and raised interest of relevant stakeholders outside the
industry. If policy goals are focussed and clear, this initiatives are able to involve and
benefit from the contribution of external players, such as legislation and standardisation
bodies and other relevant players in the sector chain, such as suppliers and customers. As
for this latter aspect, e.g., again PROZEUS provides an interesting example, as large
retailers were involved and exerted a positive pressure on small manufacturers to use
standardised data and tools. Similarly, the experience from eSLOG confirmed that
creating market pressure on companies is a much more effective way to promote ebusiness standard that using pure awareness.
Exhibit 2.3-1: Communication in sectoral e-business policies targeting SMEs – elements of good
Excellent
internal
coordination
between
management and
implementation
Effective links
with the
business
community and
usage of sectoral
communication
channels
Communication
and
dissemination
of best practice
Usage of
multipliers for
communication
to potential
beneficiaries
Exchanges with
stakeholders
outside the
industry
B2B Pilot
ALFA
ALFA
ALFA
CANARIE
buildingSMART
B2B Pilot
B2B Pilot
B2B Pilot
eSLOG
CANARIE
CANARIE
DDTA
buildingSMART
ICT SMEs
CITAX
CITAX
ICT SMEs
CANARIE
Logistics Metrics
DDTA
DDTA
Logistics Metrics
CITAX
PROZEUS
Digital NL
Digital NL
PROZEUS
DDTA
TASK
ICT SMEs
ICT SMEs
VERSO
Digital NL
VERSO
Logistics Metrics
Logistics Metrics
eSLOG
PROZEUS
Digital SME
Logistics Metrics
VERSO
PROZEUS
Digital SME
TASK
PROZEUS
VERSO
VERSO
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Improving business processes – how individual
companies benefit
There is probably no better tool to enhance ICT investments among SMEs than the demonstration
of concrete, well documented and plausible success stories by peers. Unfortunately, the
documentation of e-business projects which were conducted as part of policy initiatives is still
quite poor, with some notable exceptions. Those initiatives that monitored and assessed the
outcome of their activities, however, have convincing evidence of mostly positive effects. In other
words: reasonable investments in ICT provide more often than not attractive returns for SMEs,
either by supporting their growth or by helping them to cut costs. The selection and
implementation of standards in business processes is often a critical success factor. Still, the
challenge for policy initiatives is how to enlarge their impact from companies that benefit from
grants to the wider business community.
Companies use ICT and e-business mainly for three purposes: to reduce costs, to better
serve the customer, and to support growth (e.g. by increasing their market reach). In
essence, all e-business projects of companies explicitly or implicitly address one or
several of these objectives. In almost every case, e-business introduction can be regarded
as an ICT-enabled process innovation. Understanding one's business processes, and
improving them (be it to save costs or to improve service quality) is therefore the key
underlying issue in most projects.
e-Business policy initiatives, then, support companies in achieving related goals, either
by directly providing support to individual firms, or by addressing framework
conditions. This section looks at the effectiveness of the analysed initiatives in this
respect, and summarises the main learning points.
A challenge in this context is that the empirical evidence on the impact of e-business
implementation projects is normally quite poor. Many initiatives that provide grants to
companies pay little or no attention to the evaluation and documentation of the projects'
outcome and the challenges experienced. However, saving this effort is ill-considered,
because this information is essential for better understanding success factors and, thus,
for optimising the design (and effectiveness) of similar initiatives in the future.
Furthermore, it is increasingly recognised that investments in ICT-enabled process
improvement must be justified by demonstrable payback within acceptable timeframes.
A good practice element in initiatives is therefore to assess or even measure the returnon-investment and to document project results. These can be used as show-cases.
Several initiatives report that showcasing effects are even more pronounced if delivered
in a peer-to-peer context (e.g. ALFA, PROZEUS).
Several initiatives in this sample are benchmarks in this respect. In the PROZEUS
initiative, the rigorous documentation of learning points and outcomes was a central
condition for receiving a grant. Similarly, in the ICT-SME 2010 initiative, the
measurement and demonstration of productivity effects is a precondition for funding. A
special case is the Supply Chain Logistics Metrics project, where establishing a benchmarking method for assessing the supply-chain efficiency was the project goal in itself.
It is broadly recognised that e-business initiatives require a differentiated approach
depending on the target group's e-maturity. While many of the earlier initiatives focused
on "starters" with little or no ICT experience, particularly in technologically less advanced
economies, more recent policies exhibit a trend towards focusing on more advanced and
motivated SMEs. These companies typically have a more positive attitude towards ICT
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and "know what they want", i.e. they have clear business objectives with regard to ICT.
Focusing support measures on those firms constitutes a strategic shift from addressing
weaknesses to reinforcing existing strengths. This increases in particular the efficiency of
activities, as less effort is needed for convincing companies about the usefulness of ICT.
Instead, resources can be directly geared towards the realisation of projects. Initiatives
which confirm this approach are ALFA and Digital Future. The latter continues the
activities of a similar preceding initiative, but deliberately turned its attention towards
the more advanced SMEs. The concept is that – with support from the programme – these
would emerge as pioneers and trigger a follow-on effect.
A differentiating feature is whether initiatives focus on promoting the deployment of
existing e-business solutions, on the adaptation of solutions for SMEs and processes for
specific purposes, or on the development of new services (e.g. in DDTA and VERSO).
Neither constitutes a best practice per se, as the effectiveness of the method depends very
much on the specific background and context. Moreover, a combined approach is
possible, for example when it comes to decisions on standards and processes. The eSLOG
initiative in Slovenia is a successful example. Here, a national standard for e-invoicing
was developed, considering the requirements of the SME-dominated economy; however,
the trick was to select a globally accepted standard (GS1 EANCOM) and to simplify it.
This ensures compatibility with international business.
The initiatives confirm that addressing standards and interoperability issues is of
paramount importance to get SMEs digitally connected within their supply chains. Work
on standards, awareness raising and the provision of information on this topic to
companies (e.g. guidelines for the selection of standards) constitute central elements in
many of the initiatives (e.g. PROZEUS, buildingSMART, ICT-SMEs 2010).
While fully recognising the importance of standards in e-business initiatives is probably
no longer just good practice but a necessity, there is an important learning point related
to this aspect: information campaigns should adequately address business managers.
This requires the preparation of information material in "executive summary" style,
targeting time constrained decision-makers. Well-structured guidelines and introductions
which explain the underlying concepts (without going too much into technical details in
the first place) and make recommendations for specific purposes help managers to
understand which decision they have to take. In particular when working with smaller
companies, often without a dedicated IT department, it is most important to adequately
address the owners or managers.
This links to the earlier finding of the 2005 benchmarking study that "(…) the adoption of
e-business applications need to be determined by the overall business strategy of the
company, calling therefore for an integration of e-business in the overall management
practices,"2 which should be reflected by the communication and implementation
strategy of respective policy initiatives.
Another learning point is that it can be more effective to focus on the deployment of
specific processes or ICT applications rather than aiming at promoting e-business in the
broadest sense. This enables initiatives to go into more detail and address challenges –
including technical, organisational and legal ones – more specifically, this possibly
achieving a deeper impact. (This is, by the way, also an argument in favour of sectorspecific approaches). The impressive success of several e-invoicing initiatives throughout
Europe (the Slovenian eSLOG initiative reported in this study replicates elements of
2
Assessment of the Impacts of Regional & National E-Business Policies (2005). Final Report.
Study by Databank, empirica and IDATE for the European Commission, DG Enterprise and
Industry.
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similar initiatives in Finland) appear to confirm this assertion. Another example is the
CITAX initiative focuses on five processes that are particularly relevant in construction
projects.
Exhibit 2.4-1: Effectiveness of sectoral e-business policies targeting SMEs – elements of good
Measure ROI,
assess and
document
projects
PROZEUS
ICT-SMEs
Logistics Metrics
Focus on
motivated /
advanced SMEs
Digital Future
ALFA
Recognise
importance of
standards &
interoperability
PROZEUS
ALFA
DDTA
ICT SMEs
CITAX
Address
business
managers
Focus on specific
applications or
processes
(most initiatives
consider this in
their
communication
strategy)
ALFA
eSLOG
CITAX
TASK
VERSO
buildingSMART
eSLOG
2.5
Integrating digitally – the wider impact on sectors and
the regional economy
The "archetypal" initiative that led to this study are supply-chain initiatives that aim at
harmonising data exchanges between players in different segments of a supply chain. The objective
is to close the digital divide by supporting smaller firms in coping with the requirements, so that
they are not excluded from digital supply chains.
Significant challenges need to be addressed in this context, which requires time and adequate
resources – initiatives typically have a larger scale than earlier awareness raising policies.
Furthermore, the most innovative policies recognise that this requires a cross-sectoral approach,
since smaller firms in tier-n typically deal customers from with different industries. Excellent
project management, involving coordinators that are broadly accepted by the target groups, is a
critical success factor. Finally, initiatives confirm that technical innovation in SMEs goes hand in
hand with organisational innovation, requiring "soft skills" e.g. in change management. However,
the question remains how this can be adequately considered in e-business programmes.
A key objective in many of the sectoral initiatives is to enhance SME participation in
digital supply chains, in order to strengthen the regional economy. Large companies are
increasingly streamlining and integrating their procurement processes; small firms in
lower tiers of the supply chain that are not capable of complying with technical
requirements of their customers (e.g. tier-1 suppliers) risk to be eliminated from the
supply chain.
Policy initiatives such as ALFA and ICT-SMEs 2010 aim to counteract this digital divide,
with a view to strengthen the competitiveness of SMEs in the target area of the initiative.
The strategic approach of those initiatives, and probably a key success factor, is to be able
to create a win-win situation for all players involved, i.e. not only for small firms. If more
companies can exchange data electronically based on agreed standards and processes,
buyers and sellers will both benefit. In particular, large manufacturers that maintain B2B
exchanges with a large number of business partners will also benefit from improvements
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of the overall e-maturity in their supply chain. Moreover, as the ALFA initiative clearly
demonstrates, the quality of customer service cannot be separated from the quality of
supplier relationships.
Since most of the initiatives presented in this study are quite recent and still under way
(see Section 6.2), it is quite challenging to assess already at this point the wider impact of
these e-business initiatives on sectors or regions. However, some conclusions with regard
to promising approaches and facilitators that help to achieve the intended effects can
already be drawn. A first observation is that there is a trend towards larger and longerterm initiatives, often with a duration of more than five years. The scope of policy
initiatives has arguably increased compared to awareness raising programmes and grant
schemes of earlier years. This is necessary, considering the increased complexity of the
objectives and activities, often involving numerous organisations and stakeholders.
In the CANARIE programme, for example, which ran for 8 years, a key component was
the requirement that each industry consortium that submitted a project proposal had to
develop a 5-year business plan addressing the sustainability of the proposed initiative.
The largest initiative presented in this study, the Sectoral B2B Networks initiative in
Korea, has been operational since 2000, with a total funding of about € 83 million. This
indicates that it can require substantial resources (and some patience) to create
momentum and critical mass with such programmes. Vice versa, some of the shorter and
smaller initiatives reported inadequate resources as a major problem in accomplishing
their goals (e.g. TASK).
Another important success factor for supply-chain oriented initiatives (besides scale and
scope) is the participation of large enterprises, as they are normally key nodes within
"their" chain. Ideally, policy initiatives will leverage the role of large firms. They have an
interest in exerting pressure on tier-1 suppliers to enable electronic data exchange; not
only in direct exchanges, but also upstream within the different segments of the supply
chain. Tier-2 companies will then pass on the concept to their own suppliers. Policy
should act as a moderator and SME ambassador in such processes, trying to ensure that
agreements are fair and do not only consider the requirements of the large firms.
While the overall objective and concept are quite clear, the operational implementation of
such initiatives is confronted with significant challenges. First and foremost, it is not only
a problem of hardware, software and standards (i.e. upgrading ICT infrastructures in
numerous companies), but it requires organisational innovation. The biggest challenge is
probably convincing firms that they have to introduce organisational changes, which, in
some cases, may question the way they have been doing business for many years. Several
of the initiatives pointed at this issue, e.g. Sectoral B2B Networks and ICT-SMEs 2010.
Another challenge is the structural complexity of supply chains, in particular for
companies that produce components which are used in different industries. This requires
a cross-sectoral approach and coordination, in particular if different systems or
standards are used in the sectors concerned. At first sight, this appears to challenge the
whole idea of "sectoral initiatives" which underlies this study; in fact, it does not. The
consideration of sectoral specificities in e-business networking projects is absolutely
critical. It is therefore important to analyse the value chain characteristics (e.g. types of
exchanges, players involved, standards used) prior to – or as a first step of – designing
and implementing specific network projects. The analysis will show which players from
which sectors (or segments of sectors) need to connect digitally; cross-sectoral
requirements can then be identified and addressed.
Due to the complexity of such cross-sectoral initiatives, a key success factor is that the
project leader be representational, legitimate and recognised by all sectors to which he
belongs. Without achieving broad consensus among the relevant players (prime
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contractors, OEMs, subcontractors) in the sectors concerned, a harmonisation of data
exchange models is hardly possible. Besides having recognition, a strong central project
management was found to be important. Conflicts of interest cannot be avoided in such
complex projects where many stakeholders have to agree on common processes and
standards. It is therefore important that working groups and other joint activities within
the project are coordinated by experienced, neutral third-party moderators.
A good practice which is increasingly considered by initiatives is to hold projects
accountable, in the sense that the impact of large-scale networking projects on the
productivity of firms and the sector as a whole must be clearly demonstrated already in
advance in order to receive grants (see, for example, ICT-SMEs 2010). The "burden of
proof" should lie with those who receive the money, in particular in large projects. An
evaluation should then assess to what extent the objectives have been achieved. In a
slightly modified way, this thinking should also be applied to smaller, single-firm ebusiness projects where companies typically receive grants of € 10,000 – 50,000. While a
company normally cannot be expected to quantify in advance the business impact, the
specification of clear objectives and performance targets is certainly to be recommended
at this level as well (see, for instance, PROZEUS and Digital Future).
Exhibit 2.5-1: Impact of sectoral e-business policies targeting SMEs – elements of good practice
within the analysed policy measures
Ensure
participation of
large firms and
crate a win-win
situation
Large scale,
longer term
initiatives to
create critical
mass
Deal with
organisational
innovation, not
only technical
issues
Central project
management,
recognised by all
stakeholders
involved
Hold projects
accountable –
demonstrate
impact on value
chain
ALFA
B2B Networks
B2B Networks
DDTA
ICT-SMEs 2010
ICT-SMEs
Digital Future
ICT-SMEs 2010
ICT-SMEs 2010
B2B Networks
Logistics Metrics
CANARIE
buildingSMART
VERSO
CITAX
DDTA
DDTA
Digital NL
ICT-SMEs
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3
Facilitators and barriers
3.1
Facilitators
In the context of this study, "facilitators" have been defined as factors that gave
momentum to the implementation and enhanced the impact of a policy. Facilitators can
be related to general trends in the business environment, to framework conditions in
which a policy is implemented, or stem from access to specific resources. While policy
initiatives normally cannot always have a direct influence on these factors, the smart
thing to do is to anticipate them and make use of them as good as possible.
Although such facilitators are highly contextual (see case studies in Chapter 4), some of
them have been experienced by several policies assessed for this study.
The most common facilitator for e-business initiatives is the commitment and support of
industry associations, in particular in sectoral initiatives. In fact, this is one of the
strongest arguments in favour of a sectoral policy approach, as it was found to be much
easier to gain the commitment of associations if specific sectors are addressed. Without
the active involvement of associations and /or other intermediaries, it is difficult to
effectively reach the vast number of SMEs. Initiatives are therefore well advised to
actively seek the cooperation with trade and employers' associations; for example, Digital
Netherlands points out that their early involvement in planning the deployment of the
programme was very important.
Another important facilitator is the ability to exploit synergies by having access to
resources from other initiatives or organisations. This is often the case if information
society programmes are designed in a systemic way, with specific initiatives (e.g. on ebusiness) being linked with each other. An example is the VERSO initiative (Finland),
where participating companies could use the services and infrastructure of Tekes'
international network and of other stakeholders involved in the policy. ALFA reports
that the use of existing and new local networks (for promotion of the initiative) was an
important facilitator.
A typical external facilitator, although with some ambivalence, is the increasing
competitive pressure on SMEs to streamline their processes. In this situation, the
motivation to introduce ICT-based innovation is high, if there is plausible evidence of the
return-on-investment. Pressure can be exerted from two sources. First, "peer pressure"
results from moves of competitors, e.g. if the rivalry in the marketplace increases and
competitors start to adopt e-business. Second, often experienced, the request of customers
that their SME suppliers should use standardised data exchange tools can be the source.
Many of the initiatives reported that market pressure has been an important driver of the
active participation of SMEs in the activities.
However, even if there is market pressure, the ease of participation is another important
facilitator mentioned by several initiatives, in particular when working with SMEs. The
administrative requirements for companies to submit a project proposal must be
reasonably low, as otherwise many companies shy away right from the start (see
PROZEUS, Digital SME).
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Barriers
Many of the policy initiatives analysed share common objectives, targets and implementation features. Therefore, the barriers experienced by these initiatives had also some
commonalities, although the specific context of a policy can imply specific barriers as
well.
A commonly found impediment for sectoral initiatives is the issue of competition among
companies in the target group. The sectoral focus and the involvement of companies that
are part of the same sector or community inevitably leads to competition issues with
possible conflicts of interest. This was experienced, for example, in the DDTA, CITAX
and ICT-SME initiatives. The TASK project successfully addressed conflicts of interest by
involving a third party moderator rather than just letting companies decide on their own
how to sort it out (eventually not joining the project).
Some of the studied initiatives deal with quite complex technological issues such as
standardisation. The awareness and knowledge of e-business standards used to be quite
limited among SMEs until recently, which was experienced as a barrier at the beginning
of some of the activities: it proved difficult to reach and motivate companies with such
topics, for instance at the beginning of the PROZEUS initiative.
Lack of awareness, often combined with mistrust regarding ICT and ICT service
providers (and their potential for improving SMEs' performance) is quite a common
problem, not only in this kind of initiative. This may represent a significant barrier in the
initial phase. Smaller companies can be hardly convinced about the efficacy of
introducing new business practices and tools unless these are very simple and benefits
can be proved. In the TASK project, for instance, it was very difficult to find users for the
prototypes of software solutions. A similar constraint was found in Digital NL, Digital
SME, buildingSMART, B2B Pilot and eSLOG.
The limited degree of informatisation among the target group has also been pointed out
as a relevant barrier for projects (a kind of "hen-and-egg" problem). In "low-tech"
contexts, the communication strategy towards the target group is particularly important.
Demonstrations and the peer-to-peer exchange of best practices can help. A proper
selection process aimed at identifying committed and motivated participants is also very
important.
Another issue frequently reported as a challenge are costs. Different approaches were
adopted by the policy initiatives regarding the financial contributions requested from the
SMEs for the service delivery. A few initiatives (eSLOG, CANARIE) did not foresee any
financial support for SME that were thus expected to sustain the full cost.
It is quite difficult to assess to what extent the financial support effectively contributed in
convincing the SMEs to participate in the initiatives or, conversely, if the lack of any
direct contribution should be considered as an indication of commitment from the
participants. On the one hand, budgetary and financial constraints were, not surprisingly,
quoted as relevant barriers for many initiatives, including CITAX, CANARIE and
eSLOG. On the other hand, the "grant trap", i.e. the participants' interest in money rather
than in the initiative itself, was indicated as a problem in the Digital SME policy.
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4
Recommendations for future initiatives
Sector-specific approaches recommended
A key question which this study was asked to address is whether sectoral e-business
initiatives were more effective than "unspecific" e-business programmes. While a
simplistic "yes" or "no" would not do justice to the complexity of the underlying topic
(initiatives with a sectoral focus are not successful per se), sector-focused approaches in ebusiness programmes can certainly be recommended. The 15 case examples presented in
this report contain a broad range of innovative aspects, good practice elements and
learning points that indicate advantages of this approach. The most significant ones that
have consistently been found in the studied initiatives are:
Facilitated involvement of stakeholders: the commitment of industry associations
to support such initiatives is much higher if goals and activities are tailored to their
turf. This, in turn, is critical to efficiently reach SMEs.
Good framework for addressing advanced goals: e-Business has matured in
general and initiatives now need to address more specific (and complex) goals. As
there is inevitably a trade-off between depth and scope, a sectoral focus enables
them to address more specific challenges, such as data exchange models for
specific value chains.
The study also found challenges of a sectoral approaches, in particular the typically
cross-sectoral characteristics of value chains in which SMEs are engaged. Most
companies trade with different sectors. This increases the complexity of sectoral projects,
as they need to operate in two layers with intra-sectoral nodes and cross-sector nodes.
The harmonisation of data exchange models across sectors will probably be one of the
key ICT-related issues in the future (see below).
Another question for this study was to assess which industries would be most
susceptible to sectoral e-business programmes, i.e. where those would be most effective.
The initially conducted search found that many of the existing policies focused on
manufacturing sectors, and in particular on the textile and automotive industries.
This is not by coincidence. It reflects that sectoral e-business initiatives probably have
their largest potential in manufacturing sectors, notably in industries with deep and
well-structured supply chains. The effects from standardising business processes and
data exchange formats increases by the number of transactions and players involved. The
concept would be less effective if applied to service sectors such as business services,
where the number of transactions to be processed is typically much lower, with a high
degree of customisation. A special area with a potential for policy initiatives is the
integration between manufacturers and retailers, for instance supporting SME
manufacturers to better comply with the request of large retail chains.
Other service sectors such as telecommunications and tourism have a high number of
transactions, but mostly with end users (B2C), and often without an exchange of physical
goods, i.e. distribution & logistics are less important. The requirements of these sectors
are quite different. Initiatives to promote ICT uptake in these industries (e.g. tourism) are
also possible, but their goals would be quite different to those of the initiatives discussed
in this report.
Within manufacturing, however, the concept applies both to discrete manufacturing
sectors, where companies often cooperate already in the design of components, as well as
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to process manufacturing industries (such as the chemical industry), where large firms
mainly procure raw materials, often commodities.
The evaluation of the large-scale Korean B2B Network Programme (released in 2007),
which assessed initiatives in 27 sectors, partly confirms this assessment. It showed that
the outcomes in paper manufacturing, credit insurance, non-steel metal and in the watch
industries were very successful, whereas e-learning, foundry, mineral and franchising
businesses were rather unsatisfactory.
Other types of initiatives remain valid
In some of the initiatives presented in this study, the sectoral focus was not in the
foreground, but only a side aspect. Nevertheless, these initiatives are also successful and
contain innovative good practices. Thus, as mentioned above, the choice whether to
focus on sectors or not must be derived from the goals that are addressed.
A good example in this context is the Slovenian eSLOG initiative. This initiative focused
on the deployment of e-invoicing among Slovene SMEs, an application which has proven
benefits even for smaller firms. It was decided to concentrate on developing a common
standard for e-invoicing that could be used by firms from any sector; thus, a sectoral
focus was not intended; however, the main beneficiaries of the initiative are enterprises in
transport and logistics, energy providers and telecommunications companies, as they
issue a lot of invoices.
As this example shows, successful e-business initiatives can also concentrate on the
deployment of specific applications or the improvement of framework conditions (e.g.
the clarification of legal uncertainties) which are relevant to all (or at least many) sectors.
A narrow focus on only selected sectors could be counterproductive and limit the impact
of these initiatives.
Specific recommendations
In addition to the general recommendation to continue sectoral programmes (taking into
account the cross-sectoral dimension, if necessary), the following more specific
recommendations for future e-business policy initiatives can be derived from the policies
analysed for this study:
1.
Recognise the importance of management skills: The next generation of policy
initiatives should focus even more on the effective and efficient use of ICT and ebusiness among SMEs. In this context, activities to enhance skills in non-technical
aspects (which are nevertheless related to ICT), such as organisational planning
and process management, should be considered. In essence, a view is
recommended that planning e-business implementation in SMEs should not be a
topic for the IT department (if such exists), but for management.
2.
Ensure the ease of participation – but demand documentation of results:
Programmes should take great care to avoid administrative and bureaucratic
burdens which could prevent SMEs from participating. However, in exchange for
receiving a grant, beneficiaries can be expected to share some of their experiences
with others. Therefore, projects should be well documented, including challenges
experienced and an assessment of the outcomes.
3.
Stay focused on harmonising data exchanges: In essence, "e-business" is about
substituting paper-based processes by automated or semi-automated digital
processes. Efforts in Europe should continue to support small and medium-sized
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firms in Europe in developing this capability, which is crucial for participating in
global supply chains.
4.
Enhance knowledge sharing and cooperation: A positive attitude towards
cooperation among SMEs should be further enhanced. Cooperation in networks
could be promoted, regardless of whether these are organised on a regional or
industry-specific basis. It is important, however, that these networks are
coordinated and moderated by experienced, unbiased (e.g. ICT-neutral) advisors.
The benchmark in this respect is the tourism industry, where the joint marketing of
whole regions has long become a commonplace.
5.
Use modular approaches in policy design: The complexity of more advanced ebusiness goals (e.g. value chain projects) requires longer programmes with more
funding. To stay flexible and be able to adapt to new developments, a modular
approach is recommended (e.g. implementation in 2-3 phases). Several initiatives
in this study that used a two-phase approach pointed out that this was a great
advantage.
6.
Consider cross-border and European dimension: All initiatives analysed in this
study – with the possible exception of eSLOG (which has cross-border elements) –
have a regional or national focus. However, as most of them focus on the use of
internationally accepted standards for data exchange, the effects will not be
restricted to exchanges within the national markets. Still, it is important to identify
and address the relevant issues to enable and ensure the single market in ebusiness as well.
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Policy case studies
This Chapter presents 15 policy initiatives in detail which were selected out of those
identified in the first and second study phase based on pre-defined criteria (see
Methodology, Section 1.2). The case studies describe the background and activities of the
selected initiatives, and aim at identifying elements of good practice and learning points
within them.
All case studies are based on desk research and interviews with representatives of
organisations involved in the design and implementation of the initiative. To the extent
possible, interviews were also conducted with beneficiaries of the initiative, for example
SMEs that had received a grant for a project. Interviews were conducted face-to-face or
by telephone, typically accompanied by e-mail exchanges with to clarify open details. As
already in the previous study phases, information gathering was supported by national
correspondents. Their work is acknowledged in the "references" section of each case
study.
The 15 case studies are presented in the alphabetical order of countries (English name),
with European cases coming first.
Exhibit 3.2-1: Overview of case studies
Section
e-Business Policy Initiative
Country
Sector(s)
5.1
VERSO – Vertical Software Solutions
Finland
(various)
5.2
ICT-SMEs 2010 Action Plan
France
(various)
5.3
A.L.F.A. – Improvement of Business
Relations in the Automotive Industry
France
Automotive
5.4
PROZEUS – Processes and Standards
Germany
Manufacturing,
consumer goods
5.5
TASK – Transfer Programme for Establishing
Software Supply Chains
Germany
Software
5.6
The Digital Future Initiative
Greece
(various)
5.7
CITAX – The Construction IT Alliance
eXchange
Ireland
Construction
5.8
DDTA – Digital Districts in the Textile and
Clothing Sector
Italy
Textile
5.9
Digital Netherlands I & II
The Netherlands
(various)
5.10
BuildingSMART
Norway
Construction
5.11
Digital SME programme
Portugal
(various)
5.12
e-SLOG – Electronic Commerce in Slovene
Economy
Slovenia
(various)
5.13
CANARIE e-Business Programme
Canada
(various)
5.14
Supply Chain Logistics Metrics
Canada
(various)
5.15
B2B Pilot Project
South Korea
(various)
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5.1
VERSO – Vertical Software Solutions (Finland)
Fact sheet
Name of the initiative (native
language):
VERSO
Name of the initiative (English):
VERSO - Vertical Software Solutions Technology Programme
Sector(s) addressed:
Finance, trade, construction, data management, games and
entertainment, bio and medicine, traffic and logistics, but the
programme may cover any market sector
Geographic focus:
Finland
Start date:
2006
End date:
2010
Initiated by:
Tekes, the Finnish Funding Agency for Technology and Innovation
Implemented by:
Tekes and PROFict Partners Ltd., a company employing experts
specializing in internationalisation and growth amongst technology
businesses
Total budget of the programme:
€ 120 million
Funding:
€ 56 million
by Tekes
The remaining part By the participating companies
Contact person(s):
Mr. Keith Bonnici (Programme Manager)
Tekes
Tel.: +358 1060 55777; e-Mail: [email protected]
Ms. Marit Tuominen (Programme Coordinator)
PROFict Partners Ltd.
Tel.: +358 400 810 018; e-Mail: [email protected]
Links with other initiative(s):
The initiative is part of the Tekes technology programmes
Website(s):
http://www.tekes.fi/verso
Abstract
Verso is a market-based technology programme of Tekes, the Finnish Funding Agency
for Technology and Innovation.
Its main objective is to enhance the digitisation of business processes and to promote
expertise relating to business activities and internationalisation within businesses,
selected customer sectors and sector specific cluster models.
The Verso technology programme is generating new, innovative software products,
collaboration and services that are both customer and market-oriented. It focuses on
integrated and comprehensive solutions that meet the requirements of important
application areas and customer groups in the international market. In providing ICT
services for cooperation and trade, Verso aims at enhancing the establishment and
development of sector specific cluster models.
The most interesting approach of this policy is the possibility offered to the participating
companies to use the Tekes international network services to gain a foothold in strategic
innovation centres. Another key strategic objective of the programme is to enable
international research cooperation, and thus to create added value for participating
stakeholders (e.g. in terms of know-how building). At the same time, through this
initiative, Tekes offers partners from abroad a gateway to the key technology players in
Finland.
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Verso started in 2006 and will end in 2010. As of July 2007, more than 50 projects are
being funded through Verso, including research and enterprise projects. While most
projects concentrate on user sectors, some projects have a vertical focus or address issues
in traffic and logistics. Among the projects financed up to July 2007, 8 projects have come
to an end. Due to the products and solutions developed during these projects, some
enterprises have already taken significant steps towards internationalisation, sold their
products to important domestic or international customers or started pilot projects.
5.1.1
Background, objectives and resources
Background and objectives
Innovation is vital for the economy and society; research and development help to create
new companies, businesses and services. Finland is one of the most research-intensive
countries in the world. Active dialogue between companies, universities, research
institutes and R&D funding organisations such as Tekes is one of the cornerstones of
Finnish innovativeness. Investment in R&D has a high priority in Finland. At present,
Finland invests around 3.5% of its GDP in research and development.
Verso is one of the technology programmes of Tekes, the Finnish Funding Agency for
Technology and Innovation. Tekes is the main public funding and expert organisation for
research and technological development in Finland. Tekes uses technology programmes
to allocate its funding, networking and expert services to areas that are important for
business and society. The main functions of the programmes are to improve cooperation
between research and business and to accelerate new innovations. These programmes
have been contributing to important changes in the Finnish innovation environment for
the past twenty years.
Tekes funds industrial projects as well as projects in research organisations and especially
promotes innovative, risk-intensive projects. Tekes boosts the development of Finnish
industries and the service sectors by technological means and through innovation with
the aim to renew the economy and increase added-value, productivity and exports,
thereby creating employment and enhancing well-being.
Verso is a market-based technology programme. Its main objective is to enhance the
digitalisation of business processes and to promote expertise relating to business
activities and internationalisation within businesses, selected customer sectors and sector
specific cluster models.
Verso aims at generating innovative software solutions and services by focusing on
integrated and comprehensive solutions that meet the requirements of important
application areas and customer groups in the international market. In providing ICT
services for cooperation and trade, Verso aims at enhancing the establishment and
development of sector specific cluster models.
Another core objective of the Verso technology programme is to enhance international
research cooperation, thus creating added value for the actors (e.g. in terms of know-how
building).
Target groups
The programme has a dual focus in terms of target groups. First and foremost, the
programme is designed for the Finnish software industry.
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Secondly, by promoting R&D with a view to very specific application areas and sectors,
the end users (i.e. companies) from the respective sectors can also be regarded as a target
group of this programme. Tekes intends to encourage innovation in areas defined on the
basis of clear user needs and that are of specific importance to Finland in the long term.
In 2007, R&D activities are focused on developing applications and services in particular
for the following industries:
Finance
Trade
Construction
Games and entertainment
The selection of sectors was based on research that was carried out before the start of the
programme, during which all potential vertical markets in Finland were analyzed.
Hundreds of interviews were conducted among key personnel from different Finnish
companies and universities. In addition, a number of vertical thematic workshops were
organised. Through the information collected, Tekes identified those vertical sectors with
the greatest potential to start co-operating in the Verso technological programme. The
output of the research was an annual report "Finnish Software Industry Survey". This
report is updated on a yearly basis following a survey of the industry. Tekes partly funds
this survey. In this way Tekes and the Verso programme can follow the software market
development more closely and better understand software companies' needs. This
information service is also supplied to Verso customers through the online service "Verso
Market and Business Landscape", available on the Verso web site.
From late 2007 / 2008 onwards, Verso will extend its activities to other user sectors.
Sectors that will be considered are energy, forestry, healthcare and the public sector.
Targets
Verso has specified goals to be achieved for the programme's primary target group, i.e.
Finnish software companies. The primary objectives are to reach a substantial growth (1030% annually) in the international business operations of participating software
businesses, and to increase the activities of Finnish software SMEs by widening the focus
of their business activities to also include the customer-sector software market and by
enhancing international business expertise and networks of participating companies.
On a higher level, Verso intends to create value by combining expertise on sectors,
businesses and software in new and innovative ways and promote customer-sector
specific clusters through networking. Verso aims at ensuring that the usability of
Finnish software solutions remains internationally at the cutting edge and all R&D
is customer-centred.
Verso also supports the use of open standards and open source. Businesses are
offered a possibility to gain foothold in innovation centres such as Shanghai,
St Petersburg, etc., i.e. ideally located within markets of considerable growth
potential.
To attract international research partners to participate, Verso is generating value for
them through networking activities (cooperation with new research and business
partners, e.g. among Finnish software businesses). Partners also gain competitive
advantages through international R&D collaboration, cluster building and enhanced
cooperation between software businesses and sectors deploying the software.
As to the advantages for end-users in industry and services, the participants who utilise
the developed solutions will benefit by improving their competitiveness (e.g. by being
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first to have access to sector-specific solutions that promise enhanced business processes).
Combining sector, business and software expertise improves the quality of
comprehensive solutions (e.g. with regard to data security, usability).
Resources
The budget of the VERSO programme (2006-2010) is about € 120 million. The total
amount of the policy funding is € 56 million contributed by Tekes, the Finnish Funding
Agency for Technology and Innovation. The remaining part of the costs are directly
covered by the companies participating in the programme.
Funding is provided by way of grants, capital loans and industrial loans or a combination
of these. Differing funding methods can be combined in a single project.
Companies operating in Finland can apply for funding at any time. Finnish universities
and research groups can apply for funding once a year. Applications for funding are
submitted to and handled by Tekes.
The Head of the programme is a senior technology adviser at Tekes. A private
consultancy specialized on growth and internationalisation of software companies,
PROFict Partners Ltd., is responsible for the programme coordination. Other actors
involved include organisations such as Finpro, an association founded by Finnish
companies focused on accelerating the internationalisation of Finnish companies and a
communication agency.
5.1.2
Activities
5.1.2.1
Implementation
As Verso is a market-oriented technology programme, one of the most important
activities is the individual consultation of the companies within the programme in order
to help them to grow and internationalize their business.
Additionally, joint activities for software companies in form of clusters, aiming at
internationalisation and growth of the participating companies play an important role.
Further to this, Verso organises seminars (such as the Verso Software Summit 2007) and
workshops to support and share knowledge on important themes related to growth and
internationalisation. Tekes also actively informs the participating companies on other
services, funding etc. which might be helpful for them. Information is customized to meet
the specific needs of each company.
The following action lines characterise the implementation phases of each financed
project funded under Verso:
Activation: the various activities are initiated by promoting the programme to
stakeholders, particularly among the target sectors such as: finance, trade,
construction, telecoms etc. This is usually achieved by means of seminars and
networking events.
Solutions development: the development of replicable, integrated comprehensive
solutions and commercialisation for different industrial sectors are encouraged.
Programme participants receive consultation for their projects through
experienced consultants supporting them.
Networking: interfaces are established with other activities run by Tekes that are
related to the software business and implemented within other programmes (e.g.
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FinnWell, MASI, VAMOS, FENIX, SERVE, LIITO). This is done for example
through joint participation in different events to encourage activating industries to
take part in the programme.
Business development: joint business development programmes related to the
technology programme's various focal areas, e.g. business expertise,
internationalisation, new business models (open standards, open-source) and the
overall quality of software solutions (processes, data security, usability), for
different customer sectors are launched. Examples for this are the Verso Open
Source Business Programme and Internationalisation path for companies focusing
on retail trade software, but also workshops for games companies and a project to
evaluate the potentials of the Russian Market for Verso companies (in cooperation
with Finpro and two different technology programmes).
Surveys: surveys for selecting 2-3 new customer sectors, e.g. the public sector (i.e.
eGovernment), energy, the forest industry or the machine and metal industries
have recently been launched.
As of July 2007, more than 50 projects have been funded through Verso. These include
both research and enterprise projects. Most projects concentrate on user sectors, other
projects have a vertical focus or address issues in traffic and logistics. More specifically
the projects financed so far belong to the following sectors:
Finance: 8 projects
Commerce: 8 projects
Construction industry: 2 projects
Entertainment and games industry: 16 projects
Public sector: 1 project
Data management: 2 projects
Bio and medicine: 3 projects
Traffic and logistics: 2 projects
Other verticals: 11 projects
To meet the goal of using open standards and open-source codes, Verso and COSS
(Finnish Centre for Open Source Software) are jointly organising a national open source
business programme for the Finnish industry during 2007. Verso Open Source Business
Programme is targeted at software providers and companies that are deploying open
source software in their products and services or plan to do so. The user organisations are
expected to represent various key industries such as mechanical engineering, telecom
and media.
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Project example: DynaRoad 4
The aim of the project is to develop an industry specific international software and
service product for earthmoving and heavy construction experts. DynaRoad is a
vertical tool for project management as well as an instrument for planning and
optimizing the mass balance and economy of construction projects. Before the actual
construction work, the software is used for design optimisation and creating a cost
optimized mass haul plan and schedule. During construction work the software is
used to control, monitor and forecast what actually happens at the site. Actual work
amounts are compared to the plan and effects of possible deviations of production
rates, mass hauls etc. on the project are analyzed.
Up to 65% of the cost of road construction project are related to earthworks.
DynaRoad is a project management software specially developed optimize these
costs. When compared to traditional tools, it allows for quicker and more accurate
planning and analysis.
The DynaRoad 4 release, financed by the Verso programme, will add a number of
services especially recommended to new users and new projects.
DynaRoad Oy was already in contact with Tekes for previous technology
programmes. When the Verso technology programme was launched, Tekes informed
them directly about the new initiative. DynaRoad Oy organised a meeting with
Tekes, to gain a better understanding of the programme. This meeting finally led to
DynaRoad's decision to participate. The funding for the project was approved in
January 2007 and the project is expected to run until the end of 2007. The project is
currently proceeding as planned: by August 2007 the specifications of the new
release were finalized and the coding and testing activites were begun.
DynaRoad Oy considers Verso a far better programme compared to previous
programmes by Tekes, because it not only supports the development of new software
products and solutions but it also helps SMEs to market them both at national and
international level. This is an excellent opportunity for SMEs, traditionally with no
or only limited R&D resources, because through Tekes' support they can speed up
the commercialisation process of their products. Evidence of first positive effects of
the programme's market-orientation are the first orders for the new solution
collected by DynaRoad Oy at national and international level.
Another important aspect of the Verso technology programme is the high-level
consultancy supplied to the participating companies. In the case of DynaRoad Oy,
an expert advisor supported the project in the specification and implementation
phase. This can be considered outstanding due to the fact that this specific sector
(development of software solutions for the construction market) is a sector where
only few specialised companies (and, accordingly, consultants) can be found.
In terms of future impacts deriving from the participation to the Verso technology
programme, DynaRoad Oy expects to internationalise their activities and sales.
More information: www.dynaroad.fi/pages/index.php?lang=en
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5.1.2.2
Communication
The promotion of the programme benefits from being part of the Tekes portfolio of
technology programmes. This creates synergies, as the same communication channels can
be used (website, newsletters), as well as links with other existing programmes can be
used (e.g. contact databases). The Verso web site has become a portal supplying relevant
information both to all the programme stakeholders and to potential final users of the
software solutions developed through the single financed projects.
The VERSO communication strategy is twofold:
External: Active cooperation with a communication agency to promote the
programme within Finland and internationally. Newsletter, website and seminars
are part of the tools utilised for external communication. Existing networks and
programme coordinators of Tekes are also actively involved. One of the positive
aspects so far is that the programme has been receiving a large amount of
applications. Tekes actively informs the participating companies on other services,
funding possibilities etc. which might be helpful for them. Information is
customized to meet the specific needs of each company.
Internal: regular and frequent communication between Tekes (head of the
programme) and the rest of the Verso team and coordinators through meetings, email message exchange and an online workspace.
Within the Verso initiative, Tekes is particularly active in organising seminars, round
tables and events to support and share knowledge on important themes related to
business growth and internationalisation. More specifically the most recent and future
events cover:
The organisation of Open Tuesday events, of which Verso is one of the partners.
Open Tuesday offers a platform for discussion and cooperation for those interested
in open source and the opportunities provided by it. Open Tuesday is a
networking event where developers, communities and industry interested in: open
source, open standards, open content etc. can interact. The events are held the first
Tuesday of each month around the world.
The annual event of Verso, "Verso Software Summit 2007 - Creating International
Success Stories in the Software Business" will take place in November 2007 and
will offer its participants a Seminar with international and Finnish keynote
speakers, round table discussions on themes related to internationalisation of
software businesses moderated by professionals of each theme, Expo of services
for Finnish software companies aiming at growth and internationalisation
(outsourcing, funding, development programs etc.).
5.1.2.3
Evaluation
All Technology Programmes within the Tekes framework are being evaluated during the
duration of the programme as well as after the programme has ended. As for Verso,
intermediate reports are asked from the participating companies, usually every 4 or 6
months, to check the status and implementation of the project. Once the project is
finished, the companies supply Tekes with more detailed reports analysing projects
goals, targets, and results (including results from a financial point of view).
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Results
Outputs
The programme has been running for about a year and the first projects are now coming
to an end. There are currently more than 50 ongoing projects in Verso. 8 enterprise
projects have come to an end: 3 in the Finance sector, 2 in Commerce, 1 in Games and
Entertainment, 1 in Traffic and Logistics and 1 in the Other Vertical markets area. All the
research projects are still ongoing.
More specifically in the Finance business area, the finished projects covered such topics
as:
Internal and external standardisation of an existing software product
Development and implementation of a procurement performance management
solution.
Development of a software application network for the international equities
markets.
In the Commerce business area, the finished projects covered the following issues:
Development of a solution for sales analysis and reporting, facilitating a retailer to
identify and respond to the customer needs and set quantitative measures to
objectives and specific activities, such as sales campaigns, and measure results.
Development of a tool for concept management, helping the chain management for
example in communication and reporting in case of several business units within
the same concept.
In the Games and Entertainment business area, the finished project covered the
development of an online gaming portal.
In the Traffic and Logistics business area, the project covered the development of a
solution for paratransit services including, for example, automatic scheduling and
dispatching.
In the Other Verticals business area a solution for assignment administration aimed at
professional organisations was developed.
Outcomes
The Verso programme is still rather young and it is therefore difficult at this stage to
assess outcomes and possible impacts. The finished projects have only very recently come
to an end. However, some companies have already taken significant steps towards
internationalisation and sold their products to important domestic or international
customers or started pilot projects. All the products and solutions developed up to now
through the financed projects represent a significant competitive advantage for the
software enterprises; they are now in a position to offer solutions with additional
functionalities, adaptable, in some cases, to a multitude of challenging communication
and research tasks both in the public and private sectors.
In general terms, all the participating companies have benefited from the programme in
terms of enhancement of their research capabilities and skills development, increased
competitiveness and business internationalisation. The market-oriented approach of
Verso, as well as the individual consultancy and support were highlighted as very
positive outcomes of the programme by the participating companies.
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The active cooperation with the consulting team, individually dealing with each
participating company, positively influenced the progress and implementation of the
single projects.
Thanks to the international network established by Tekes and the active cooperation with
other organisations focussed on international-based issues, one of the most important
achievement for the participants from the software industry is the internationalisation of
their business.
Wider effects on the economy
The effects of the Verso Technology programme are expected to not only cover the
Finnish geographical area but also a wider international context. The expected results can
be therefore divided in two areas: enhancement of the competitiveness of Finnish SMEs
and cooperation at national and international level.
Enhancement of SMEs' competitiveness: the added-value generated by the
programme in the long-term will be represented by the development of customerand market-oriented software products and services, of comprehensive solutions
enabling Finnish SMEs to compete more effectively in the global market. The
programme is expected to substantially enhance total revenue growth of software
businesses focusing on specific customer sectors, strengthen and internationalise
mini-clusters oriented towards specific customer sectors, consequently improving
the competitiveness of those utilising the different customer sectors (i.e. end users),
using solutions developed through the programme
Enhancement of cooperation at national and international level: the Verso
technology programme is expected to improve business expertise and strengthen
SMEs' networks in software business, combining sector, business and software
expertise in new, innovative ways. The programme is expected to enhance national
and international collaboration between software businesses and sectors deploying
the software and to enable research institutes, universities, colleges, and companies
to collaborate more closely both in Finland and internationally. Furthermore Verso
is also addressed to international partners. Through the support of Tekes and
Finpro, the cooperation and networking of international operators with Finnish
software companies is expected as well as an increased competitive advantage for
both Finnish and foreign companies supported by international R&D: expertise
specific to the sector, business and software combining in new and innovative
ways.
5.1.4
Conclusions & learning points
5.1.4.1
The innovative feature characterising the Verso technology programme is represented by
the enhancement of internationalisation of the business activities of Finnish companies.
Verso is a national policy addressed to Finnish SMEs, supporting the improvement of
their competitive advantage and helping them to come out of their regional and national
domains and open their business towards the global market, not only to increase the
export of their products and services but also to foster international cooperation.
The participating companies have the possibility of using the services of the international
Tekes network to gain a foothold in strategic innovation centres (such as in Shanghai, St
Petersburg and other centres located in the growing markets) and are also guided to
other service providers located in strategic areas for the companies themselves; this is one
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of the services supplied by Finpro, an association founded by Finnish companies focused
on accelerating the internationalisation of Finnish companies, which is involved in the
Verso programme.
Tekes' assumption that through mutual cooperation with international key partners
Finnish companies are able to strengthen ties and, by working together, produce greater
results, is the core of the Verso programme. With this in mind, Tekes openly invites
technology-oriented foreign entities to cooperate with Finnish companies offering them a
gateway to the key technology players in Finland.
Tekes, for example, recently signed major agreements on research and technology
cooperation with three of the most important regions in China. The agreements will
provide Finns with improved access to networking and cooperation with top Chinese
researchers and enterprises.
5.1.4.2
Facilitators
The possibility offered to the participating companies to use the services, infrastructure
and resources of Tekes' international network and of other stakeholders involved in the
policy, such as Finpro, and the regular individual consultation of companies are the most
important facilitators of this policy.
Another relevant facilitator is the adoption of the sector-specific cluster model in
supporting growth and internationalisation of companies. The programme is marketoriented and all projects within the programme are based on proven customer needs.
Sector identification is done through intensive research activities and vertical thematic
workshops aimed at identifying those vertical areas with the most potential to start cooperation in Verso.
Barriers
So far no major barriers have been identified in the programme. Tekes is implementing
the programme in a way to maximize the advantages for the participating companies,
and especially for small enterprises who often have limited resources (both financial and
human resources) that are needed to increase their activities.
As far as the participating companies and their projects are concerned, barriers or
weaknesses can mainly be found in relation to the solutions they are developing and, in
some cases, also in difficulties experienced in the management of their international
activities. This is mainly due to the size and the cultural constraints of SMEs that
sometimes hinder their departure from a purely local dimension. For this reason, the
Verso technology programme offers individual consultation to help overcome these
barriers.
5.1.4.3
Learning points
The Verso Technology Programme provides some interesting lessons since it represents a
concrete example of the mission of Tekes, to improve cooperation between research and
business to accelerate new innovations, to enable international research cooperation, and
thus to create added value for the stakeholders involved as well as to offer partners from
abroad a gateway to the key technology players in Finland.
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Customized consultation: Verso is offering participating companies an active support in
their project development by supplying them with individual consultancy services and
information to meet the specific needs of each participant company.
Market-oriented approach: All projects within the programme are based on proven
customer needs therefore the market approach will be helpful in developing their
business as a whole and not only the R&D aspects, thus giving them a possibility to
increase their competitiveness and to enter the global market.
International cooperation: Through mutual cooperation with international key partners
Finnish companies are enabled to strengthen ties and by thus working together to
produce better results.
Transparency of objectives and ease of participation: The whole Verso initiative follows
clear objectives and has a straightforward implementation plan. This transparency makes
it attractive for SMEs to participate.
5.1.4.4
Strengths and weaknesses
Strengths
(+) Clear targets: Having clear objectives and specific targets has helped to keep the
focus and make all parties work together.
(+) Consolidated international networks: The availability of the consolidated
international network of Tekes and of other organisations participating in the Verso
programme contribute to the internationalisation of the business of Finnish software
companies participating in the programme.
(+) Use of the cluster model: Focusing on sector-specific clusters allowed to
progressively select sectors and address specific companies step by step.
Weaknesses
(-)
5.1.5
No significant weaknesses have emerged so far.
References
Research and interviews for this case study were conducted by Databank
(www.databank.it). Main sources:
Mr. Keith Bonnici, Programme Manager, Tekes (www.tekes.fi)
Ms. Marit Tuominen, Programme Coordinator, and Ms. Sari Lehtinen, PROFict
Partners Ltd (www.profict.fi)
Mr. Juuso Mäkinen, DynaRoad Oy (www.dynaroad.fi)
Verso wwb site: www.tekes.fi/verso
Verso - Vertical Software Solutions Brochure (November 2006)
Verso - Vertical Software Solutions presentation (April 2007)
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5.2
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The ICT-SMEs 2010 Action Plan (France)
Fact sheet
language):
Plan d'Action TIC-PME 2010
ICT- SMEs 2010 Action Plan
Cross-sectoral (clothing, watch making, mechanical engineering,
aircraft and aerospace, agriculture, fishery, transportation,
manufacturing industries, public works, construction, logistics,
etc.).
Geographic focus:
France
Start date:
October 2005
End date:
December 2010
Initiated by:
Ministère de l'Economie, des Finances et de l'Emploi (MINEFE)
Implemented by:
http://www.finances.gouv.fr/
Funding:
€ 10.3 million
By French Ministry of Economy, Finance
and Employment
Funding
€ 5 million
By the FEDER
Funding:
N.C.
By professional associations and regional
councils.
Contact person(s):
Mr. Marc Moreau
Ministère de l'Economie, des Finances et de l'Emploi (MINEFE)
Direction Générale des Entreprises
139, rue de Bercy 75012 Paris, France
Tel.: +33 1 53 44 91 03
e-Mail : [email protected]
Not applicable
Website(s):
http://www.telecom.gouv.fr/tic-pme2010/
http://www.ticpme2010.fr/
Abstract
The ICT-SMEs 2010 Action Plan is an umbrella programme which aims at improving the
integration of small and medium-sized enterprises in industrial supply chains, which are
typically dominated by large enterprises. Launched in October 2005, the Action Plan
supports projects in selected sectors of the French economy. This sector strategy focuses
on a harmonisation of exchange models used by the players in the sector, including the
large industrial players, prime contractors to OEMs and tier-n suppliers.
The policy initiative has three main objectives:
to support the implementation and the use of common ICT tools in companies
belonging to the same sector to create "digital supply chains" based on models
deployed in the aircraft or car manufacturing sectors.
to improve interoperability between developed tools across different sectors
to locally develop actions for technical assistance within companies to support
organisational changes and help them integrate ICT in their internal processes and
data exchange with suppliers and customers.
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The first call for project proposals was a success – 76 proposals were received from 26
different industrial and services sectors. In May 2006, the DGE (General Directorate for
Enterprises) confirmed 48 projects, which were reworked into 17 specific sectors, with an
additional support project for information exchange, coordination and standardisation
consistency among the projects. The launch of a second call for project in the fourth
quarter of 2006 ended up with the selection of 6 new projects in July 2007.
The main expected result is to find agreement at cross sectoral level to optimise all the
production and supply chain processes in terms of profitability, deadline and reactivity.
Expected impacts of this initiative are the improvement of profitability in companies
from the sectors covered, an increase of investments in ICT, and the development of
added value services for SMEs.
5.2.1
SMEs are in the centre of the industrial sphere. They are drivers of innovation, creators of
new jobs and a determining factor for the prime contractors' competitiveness. To fulfil
this important role, however, it is crucial that SMEs adopt and use ICT in B2B exchanges.
The digitisation and the harmonisation of their data exchange models are a major
opportunity to enhance the competitiveness of production processes and supply chains.
However, ICT investments, especially from SMEs, are considered to be insufficient in
France. SMEs are lagging behind in the adoption of e-business and ICT. When compared
to the United States and advanced countries within the EU, notably the Nordic countries,
France stands on the wrong side of the digital divide.
Against this background, the French Ministry of the Economy, Finance and Enterprises
launched the ICT-SMEs 2010 Action Plan. The objectives of this policy initiative are
threefold:
to support the implementation of common tools in companies belonging to the
same sector to create "digital supply chains", similar to the data exchange models
deployed in the aircraft and automotive industries.
to improve interoperability between developed tools across different sectors, and
to promote standardisation of interchange formats between companies
to locally develop actions for technical assistance within companies to support
organisational change and help them integrate ICT in their internal processes and
data exchange with suppliers and customers, with the support of the DRIRE
(Regional Agency of the MINEFE) and the Chambers of Commerce and Industry.
This initiative heavily relies on successful initiatives from previous programs (e.g. UCIP)
and several industrial sectors (in particular in the automotive and aircraft industry)
which proved to be successful and provide examples how to do it (lessons learned,
pitfalls to avoid).
The launch of the ICT-SMEs 2010 Action Plan was based on the following key
assumptions:
1. It is far more efficient to support specific sectoral projects.
2. The approach should also be cross-sectoral as sectors are not independent.
3. The involvement of professional organisations and/or prime contractors is a key of
success.
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4. Bad steering and management of the project is a major cause of failure.
5. It is not only a problem of bringing hardware, software and network but a matter
of changing organisations and the way of doing business.
6. The deployment and implementation should be done at a local/regional scale.
One of the key conditions of success is that the project leader be representational,
legitimate and recognised by all sectors to which he belongs. It is important to obtain
consensus from all players of the sector (prime contractors, OEMs, subcontractors) for the
harmonisation of data exchange models.
Target groups
The primary target group of the Action Plan are small and medium-sized enterprises (=
firms with 1 to 500 employees) from selected sectors. By extension, however, this also
includes companies from other sectors which indirectly participate in the global
production processes of the direct target sectors. For example, in the aircraft and
automotive industries, more than 70% of the costs of the final products directly depend
on subcontracting activities. Therefore, subcontractors for other economic sectors, like in
the plastic sector, could indirectly benefit from the modernisation of data exchanges and
supply chains of the aircraft and automotive sectors.
According to the ICT-SMEs 2010 Action Plan, SMEs should align their strategies to those
of their sector that have improved their competitiveness compared to the market. This is
based on the assumption that suppliers could significantly improve their profitability by
means of a better supply chain integration based on ICT.
Interdependence of industries and services sectors
Sectors belonging to the
same ecosystem, sharing
the needs and the same
suppliers
Sectors (contractors, OEM, tier 1 to tier n suppliers)
Professions (mainly SME)
Tourism
Tourism
Wood
Wood––Forests
Forests
Sea
Sea resources
resources
Agriculture
Agriculture
Furnitures
Shoes
Furnitures,
, Shoes,
, Toys,Textile
Furnitures,
Shoes,
Toys,Textile
Retail
Retail
ITC
ITC&&Telcos
Telcos
Oil
Oil,
, chemistry
Oil,
chemistry
Nuclear
Nuclearindustry
industry
Services::customs,
customs,…
…
Services
Shipbuilding
Shipbuilding
Logistics/transportation
Railway
Railway
Textile
Textile
Automotive
Automotive
Aircraft
Aircraft
Aeospace
Aeospace/
/ Defense
Aeospace/
Defense
Electronics
Electronics
Architecture
Architecture&&Construction
Construction
Mecanics
Mecanics
Source: Marc Moreau, "TIC &PME 2010: Towards Digital value networks"
This sector strategy focuses on a harmonisation of exchange models used by the players
in the sector, including the large industrial players (for example main contractors such as
Renault or Airbus in the automotive and aircraft industry), prime contractors to OEMs
and tier-n suppliers.
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The exchange models cover data structures, catalogues and use global standards such as
ebXML and GS1. Models should as much as possible comply with EU standards. The
TIC-SME 2010 Action Plan aims at the harmonisation and standardisation of data
exchange models from the bottom to the top of the value chain in selected economic
sectors. The goal is to reach an agreement to optimise production and supply chain
processes in terms of profitability, deadline and reactivity.
Resources
The first phase of this policy initiative accounts for € 12 million. From this budget, the
MINEFE funded 17 projects (two of the initially selected projects were cancelled) for € 7.3
million. In 2006, projects were mainly selected from the following sectors:
textile/clothing/footwear, logistics/transportation, automotive, agriculture, toys, building
construction, electronics, fishing, aeronautics, clock making, agro-business (poultry),
furniture, cosmetics, and wood. The duration of projects is typically in a range from 2 to 3
years.
The total budget for the second call for proposals was initially estimated at about € 5
million. Projects have not yet been selected; however, it is anticipated that activities in the
2nd phase will focus on the following sectors: cardboard packing, optical, dental, surgery
materials, biotechnologies, and finance services (for online invoicing).
Funding provided by the MINEFE will probably be about € 1.7 million. These grants
cover less than 50% of the total costs for the contractors' guidance. The remaining costs
for contractors' guidance and project management assistance are contributed by
professional associations and their partners.
The MinEFE also provides the budget for technical support of the Coordination
Committee which was initially € 0.8 million for the first 2.5 years, but was then extended
by further € 0.5 million to take into account the second second call.
A first provision of €5 million was decided for the implementation of the regional
deployment phase that will take place from 2008-2010. This phase could be jointly
financed by FEDER funds, the regional councils and professional associations. So far, the
amount of the financial participation of regional councils and professional associations is
yet not fixed.
Funding from the Ministry of Economy, Finance and Employment (including FEDER funds)
Contribution by the French Ministry of
Economy, Finance and Employment
Phases
For period
First phase
€ 7,300,000
October 2006 – December 2009
Second phase
€ 1,700,000
Regional phase
€ 5,000,000 (1)
Mid 2006 – December 2010
Sub-Total
Technical support
Total
€ 14,000,000
€ 1,300,000
€ 15,300,000
(1) FEDER funds
Source: IDATE from the MINEFE
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5.2.2
Activities
5.2.2.1
Implementation
Benchmarking Report
In order to support SMEs climbing up the "eMaturity ladder" towards digital business
ecosystems, the ICT-SMEs 2010 Action Plan conducts the following activities:
it supports projects led by professional organisations and/or prime contractors for
a given sector of activity;
it supports innovative and advanced forms of ICT usage;
it provides grants to project owners (for project management, developing
specifications, launching a call for tender, acceptance tests, communication of
project results);
it coordinates the various activities and projects and offers a platform for
exchanging information across sectors and projects.
The three phases of the programme
The implementation of the ICT-SMES 2010 Action Plan consists of three main phases:
First call for projects (2005/2006)
The first call for projects by the DGE (Direction Générale des Entreprises) of the French
Ministry was issued in October 2005. 17 projects were selected for funding, covering the
following sectors: aircraft, automotive, mechanical engineering, electronics and electrical
products, cosmetics, watch making, furniture, toys, textile, shoes, transportation/logistics,
building construction, civil engineering, agriculture, fishing and wood/paper sectors.
Second call for projects (2006/2007)
The second call for projects was issued in the fourth quarter of 2006 with a selection
process that ended in July 2007. Six projects were selected during this call for projects.
Regional Deployment (2007/2008)
The third step of the action plan targets companies at the local and regional level. It
started in mid 2007 and will run until the end of 2010. This phase promotes the adoption
of ICT solutions by companies at local and regional level in France and to offer training to
teams which disseminate standardised data exchange formats within companies. The
deployment strategy is currently being designed, and the exact budget will be decided
accordingly.
Calendar of the ICT-SMEs 2010 Action Plan
05-Q3 05-Q4 06-Q1 06-Q2 06-Q3 06-Q4 07-Q1 07-Q2 07-Q3 07-Q4 08-Q1 08-Q2 08-Q3 08-Q4
First Call
Shorlisting and regrouping
Finalization and selection
Funding process
Second Call
Shortlisting and regrouping
Finalization and selection
Funding process
Regional Deployment
The launch of the regional call for projects will take place by the end of 2007. It will
prepare the deployment of IT solutions stemming from the previous actions and results
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of the ICT-SMEs 2010 Action Plan. The financing of the deployment of regional actions
will be engaged during the period 2008-2010. The use of European funds (FEDER) is
conceivable.
Project example:
TICIO (Standard TIC Inter-Opérable) / FIEN (Filière des
Industries Electroniques et Numériques)
Many SMEs in the electronic industries work with customers from different sectors
which are not endowed with common and homogeneous standards for data
exchange. This hampers efficient business processes and is a burden for the
competitiveness of these companies.
The objective of this project is to facilitate ICT integration in the vertical logistics
and supply chain of companies from the electronics industry, down to tier-5
subcontractors, via the "mutualisation" of tools and systems. The implementation of
interoperable standards should facilitate data exchanges within the supply chain. It
should also strengthen the integration of SMEs in such networks, by helping them
better dealing with customers: low added value tasks can be reduced by conducting
business via extranets and customer portals.
5.2.2.2
Communication
For external communication, a website was set up that informs about the initiative and
helps to mobilise industry associations to participate in the ICT-SMEs 2010 Action Plan.
The MINEFE has also published printed information material (brochures, reports,
information leaflets).
For internal communication, quarterly plenary meetings and working sessions are held
in order to enable and facilitate an exchange of experience between the various projects.
A schedule of these meetings is available online at www.ticpme2010.projets/agenca.xls.
These meetings are organised and coordinated by the Coordination Commitee.
A national meeting of information is held each year. The first one took place at the
French Ministry of Economy, Finance and Employment (in Bercy) on November 7, 2006
and the other one is planned for November 8, 2007, to take place at the MEDEF (the
French employers' association). Several regional meetings are planned for autumn 2007 to
prepare the activities of the third phase (regional deployment).
Moreover, the initiative (its approach and results) are regularly presented at conferences
and workshops, including for example presentations at e-BSN workshops. An important
objective of these networking activities is to motivate professional associations to support
and endorse the ICT-SMEs 2010 Action Plan by promoting its activities within their
sector.
5.2.2.3
Evaluation
To pilot and assess the ICT-SMEs 2010 Action Plan, two bodies were installed: a Steering
Committee and a Coordination Committee
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The Steering Committee is in charge of the global piloting of the ICT-SMEs 2010 Action
Plan and of the selection of projects. It is chaired by the DGE from the French Ministry of
Economy, Finance and Employment. Members include:
Experts from different ministerial directorates (DGE, CGM, CGTI, Commerce &
Craft industry, Agriculture, Equipment,),
Representatives of the MEDEF and of the ACFI (Association of the French Chambers
of Commerce and Industries)
The Coordination Committee is in charge of monitoring and supporting the selected
projects, organising meetings for mutual sharing of experiments, and ensuring the
coherency of standardisation works. The professional associations, part of the authority
of coordination, have also the mission to conduct on-going assessment of selected
projects in their respective economic sectors.
The Coordination Committee is chaired by a representative of the industry sector. Its
work is supported by
representatives of organisations specialised in e-business and standardisation work
(AFNet, GS1, EDI France);
the project coordinators.
A detailed evaluation of the programme and its outputs is planned for 2008.
5.2.3
Results
Outputs
It is too early to assess the results of the ICT-SMEs 2010 Action Plan as a whole. However,
the first call for proposals was a success, with 76 proposals received, coming from 26
manufacturing and services sectors. The DGE (General Directorate for Enterprises)
selected 48 project proposals which were then reworked into projects comprising 19
specific sectors, with an additional "horizontal" support project for information exchange,
coordination and standardisation consistency among the projects. Only two of the
initially proposed and selected projects had to be cancelled.
The constraint of having to select one project by economic sector has obliged professional
organisations and companies to negotiate their proposals between them; it was
recommended to them that they should work out an agreement how their various
proposals could be merged into a joint project. This negotiation phase in itself can be
considered as a positive result of the initiative, as stakeholders from a sector have to sit
together and to cooperate.
Besides initiating and funding projects, the initiative has led to the publication of several
guides about subjects of common interest, such as "ebXML for decision makers" and
"ebXML for contractors' assistants". These guides are publicly available on the website.
Information on digitisation and common e-business processes is also available online,
and working sessions are frequently organised on themes of common interest, such as
eCataloques, Identity Management, Traceability or Product Lifecycle Management.
Ultimately, it is expected that each project conducted as part of the ICT-SMEs 2010 Action
Plan should produce its own outputs and have an impact within its sector.
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Outcomes
A major expected outcome of the ICT-SMEs 2010 Action Plan is that models of data
exchanges within the value chain will be defined and business processes within the
sectors addressed will be harmonised. As a result, it should become possible to specify a
stable architecture for data processing and exchange.
If this can be achieved, the initiative may have the following further effects:
Once the architectures have been standardised, it will be easier to define a software
solution that fits with SMEs' needs and requirements. Moreover, this approach
supports the compatibility between solutions (interoperability).
For SMEs, the risks linked to ICT investments will become more acceptable
because they are "easier to read", i.e. they can be anticipated.
The compatibility between the architectures and data processing systems will help
SMEs to improve their internal organisation, as well as their relationship with
suppliers and customers.
The main results of this approach will be the possibility to take into consideration the
"ecosystem" (the cross-sector relationship between industrial sectors) which is crucial for
tier-2 subcontractors. In fact, these SMEs are often involved in different sectors. For
example, in the domain of mechanical engineering, companies often produce components
used in the aircraft, automotive, railroad and shipping industries. These subcontractors
currently have to comply with each customer's individual architecture for data exchange.
If a common and standardised model of data exchange could be adopted, they would be
able to use a unique platform of data exchange for all sectors in which they operate.
Against this background, expected impacts of the initiative are:
an improved profitability of firms in all sectors
an increase in ICT investments
the development of added value services for SMEs.
It is expected that between 20,000 and 30,000 SMEs will be interconnected as a result of
the Action Plan until 2008. The objective is to have 100,000 interconnected SMEs by 2010
when all the three phases have been implemented.
The annual statistical survey carried out by the French Statistical organisations (INSEE &
SESSI) on ICT use by people and companies will support the assessment of further ICT
penetration and ICT-based networking among companies (e.g. in terms of the digitisation
of exchanges) in the various economic sectors addressed, and according to company size.
Based on this survey, it will be possible to provide quantitative evidence on the impact of
the ICT-SMEs 2010 Action Plan.
Wider effects on the region / sector
As mentioned above, the third phase of the ICT-SMEs 2010 Action Plan will focus on a
regional approach. Almost all French regions will be impacted by the deployment of the
Action Plan.
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Deployment of projects at regional level
5.2.4
Conclusions and learning points
5.2.4.1
The main innovative aspects of the ICT-SMEs 2010 Action Plan can be found in its
objectives and in the cross-sectoral approach.
Innovative objective
The objectives of the ICT-SMEs 2010 Action Plan are to promote and develop
standardised e-business process in SMEs to make them more competitive. As the
competitiveness of a value chain generally depends on the competitiveness of all
companies that are part of this value chain, it is crucial to improve the ICT-based
integration of SMEs in industrial value chain. This is the reason why this initiative places
such emphasis that all the players of a given value chain must be included in the selected
projects.
At first sight, the "value-chain concept" of this initiative appears to be focused on trade
between French companies, with the risk that the projects promote only national
standards. However, Mr Marc Moreau, the programme manager of the ICT-SME 2010
Action Plan for the MINEFE, is aware of this risk and explains: "As we wanted SMEs to be
connected to the international economy, the projects have been strongly encouraged to use
international standards." Examples that projects focus on international are:
for aeronautics, SEINE is based on the Boost Aero standards;
for the automotive industry, Galia is member of the european association Odette;
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for the building sector, MediaConstruct is member of the IAI and working closely
with Norwegian partners;
for consumer goods, GS1 is a partner for all projects, bringing its worldwide
standards;
for the wood and paper sector, the PapiNet standard has been taken into account.
Moreover, project participants promote their standards at the international level once
they have started working on new topics. For example, AgroEDI for the agriculture and
EDI Build for the public works are especially active in the UN-CFACT Forum.
Thus, according to Mr Moreau, it should be "easily possible to connect also with
companies outside France, provided that these business partners comply with the UNCFACT, GS1 and ISO standards."
Innovative cross-sectoral approach
The optimisation of customer and supplier relationships takes into consideration the
wider "eco-system" of companies that is that many firms have relationships not only with
one but several economic. In particular for tier-2 sub-contractors, this is a fundamental
point. These SMEs are often involved in different economic sectors, especially in the
mechanical engineering industry, where they are subcontractors for firms from the
automotive, aeronautics, railway and shipbuilding sectors.
The cross-sectoral approach of ICT-SMEs 2010 aims to achieve that these companies will
no longer be required to adopt different architectures for processing data from different
customers.
One element of good practice is that governmental and regional institutions could avoid
financing similar projects that are not compatible each other. Moreover, it compels each
economic sector to harmonise their strategic plans.
5.2.4.2
Facilitators
The main facilitators of the ICT-SMEs 2010 Action Plan are:
industry commitment: the strong industry support to the chosen approach, and
especially the willingness of professional associations to share their developments in
standardisation and models of data exchanges.
organisational structure: the high engagement of economic players at a national and
regional level like the MEDEF, DRIRE and regional economic clusters
European dimension: the strong interest of the European Commission in this type of
initiative
experience: the replication of previous and successful experiments (UCIP:
Utilisation collective d'Internet pour les PME) especially in the aeronautic sector.
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Barriers
Some factors have hampered or obstructed the implementation of the policy initiative,
however, and possibly reduced its effects. These are:
challenge of scale: the large numbers of players involved
challenge of scope: the complexity of implementing a cross-sectoral approach
conflicts of interest: the different strategies and priorities of economic sectors
5.2.4.3
Learning points
Broad involvement of stakeholders: The broad involvement of stakeholders in the ICTSMEs Action Plan especially professional organisations and/or prime contractors has
certainly contributed to increase the number of proposals of projects, the deployment and
the implementation of selected projects in each economic sector at national level.
Focus on one specific project by sector: The selection of (only) one significant project by
sector, rather than conducting several projects in parallel, is also an interesting point to
notice. The explicit limitation to one project per sector has required a long process of
negotiating and compelled stakeholders and professional associations to adopt a
consensual process of decision. It ensures the consistency of the different standardisation
efforts at cross-sectoral level and avoids "wasting" public money.
Local and regional implementation: The chosen approach consists in deploying projects
at local and regional level. In other terms, it will be an extension of sectoral pilot projects
to other regions and/or companies to ensure a greater impact in each economic sector and
mobilise players of all the value chain. Furthermore, the monitoring and the evaluation of
the selected projects will improved thanks to the presence of local and regional project
coordinators.
Financing under conditions: The ICT-SMEs 2010 Action Plan is strictly results-oriented.
The French Ministry has decided to support the selected projects on the strict condition
that their results will impact the competitiveness of SMEs and the overall economic
sector. Public financing remains conditional.
According to Marc Moreau, this is very important: "Of course, there is no certainty whether
the project will really have an impact, at least not before it is completed. What we can do to
prevent that a project is not effective is not to start it at all, or at least not to go too far when there
are indications of ineffectiveness. Therefore, during the selection process, the partners have to
explain how their project is going to impact the individual or collective competitiveness of SMEs
and sectors – if possible in a quantitative way."
Several milestones have been defined for each selected project. The funding of
subsequent project phases will be delayed or even cancelled if the requirements have not
been met. One of the most common milestones used is an update and quantification of
the competitiveness impact, when the functionnal and technical specifications have been
validated. The final decision is always to fund the deployment or not, depending on the
results of the pilot project.
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5.2.4.4
Strengths
(+) Clear targets: The ICT-SMEs 2010 Action Plan has clear objectives and specific targets
that helped to keep people focused and make all parties work together.
(+) Win-win-situation: The stakeholders, especially OEM, Tier-2 and Tier-3 suppliers have
a clear understanding of benefits they can withdraw from a better standardised data
exchange process. The competitiveness of the entire value chain depends of the
competitiveness of each link of the value chain.
(+) Large support from various players: The initiative has received the support of many
players like the French Ministry, local and regional public institutions, professional
associations, and prime contractors.
(+) Good governance scheme: Steering Committee and the authority of coordination
gather the main stakeholders and have clear mission to monitor and assess the
implementation and the impacts of each selected projects.
Weaknesses
5.2.5
(-)
Complexity and size of the action plan: the initiative implies a certain risk to be "overambitious" in terms of objectives and the chosen approach. It may be difficult to keep all
the stakeholders mobilised during the period of the action plan.
(-)
Long term and theoretical approach: the lack of concrete results and feed-back on the
short term may dishearten some actors and will make it difficult to detect mistakes and
discrepancies which may show only in the third phase of the projects.
References
Research and interviews for this case study were conducted by IDATE (www.idate.fr).
Main sources:
Interviews with Marc Moreau, Project coordinator of SME-ICT 2010 Action Plan,
September 2007
"TIC &PME 2010: Towards Digital value networks", Presentation by Marc Moreau,
DGE, e-BSN Workshop, Oulu, December 7 & 8, 2006.
Le Plan d'action TIC-PME 2010, DGE, Ministère de l'économie, des finances et de
l'Emploi, http://www.ticpme2010.fr/ticpme_html/
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5.3
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A.L.F.A. – Improvement of Business Relations in the
Automotive Industry (France)
Fact sheet
language):
Amelioration des Liaisons dans la Filière Automobile (A.L.F.A.)
Improvement of the Liaisons in the Automotive Industry
Automotive
Geographic focus:
France
Start date:
October 2004
End date:
December 2010 (estimated)
Initiated by:
GALIA
Implemented by:
8 organisations, financial partners
Funding:
Depending on
each region
Contact person(s):
Mr. Alexandre Loire
By DRIRE (50%) and Regional Council
(50%)
GALIA (Groupe pour l'Amélioration des Liaisons dans
l'industrie automobile)
96, avenue du General Leclerc, 92514 Boulogne Billancourt
Cedex, France
Tel.: +1 33 41 31 68 65
Not applicable
Website(s):
http://www.galia.com
Abstract
The A.L.F.A. initiative was launched by GALIA in response to a study report by the
French Government which analysed the digital competitiveness of SMEs in various
sectors of the French economy. GALIA is a non-profit association created by the French
OEMs of the automotive industry. GALIA was requested by its board to elaborate and
initiate a national project dedicated to tier-2 suppliers, with the objective to promote
process efficiency in exchanges between manufacturers and their tier-1 suppliers by
using ICT tools.
The market globalisation in the automotive industry has led to a multiplication of data
exchanges, which is a strong cause for increasing use ICT by all players of the value
chain. In particular for tier-2 suppliers, the efficient use of ICT has become crucial for
their survival, whatever their size or their position in the supply chain. Companies need
to adapt to evolutions in the market, which is the key for a better efficiency and
performance of the whole value chain.
The A.L.F.A. initiative was launched to support CEOs and managers of SMEs in
understanding, managing and implementing ICT tools and ICT-based business processes
in their company. The project has been implemented in nine regions of France. Each of
them has been using a standard "blue-print" developed by GALIA to set up their own
regional project. Projects have been funded by the DRIRE (Regional Governmental Office
belonging to the French Ministry of Finance and Industry), the Regional Council and the
participating companies themselves.
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The main characteristics about the A.L.F.A. initiative are:
It is an industry lead initiative.
It is a cooperative initiative, implemented in partnership of national and regional
administrations, professional groups and players in the automotive industry
It is a long term initiative (running for more than five years until the end of 2010)
It promotes the adoption of existing ICT tools and processes that are commonly
used by manufacturers and tier-1 suppliers, rather then developing new ones.
5.3.1
The roles of players of the automotive industry are changing. Car manufacturers aim at
strengthening contacts with their customers either directly or indirectly through their
distribution channels. They design their cars according to their own marketing studies
and assemble products all over the world as close as possible to their final customers.
The design of car components and other parts, however, involves a large number of
players in the supply chain (tier-1, tier-2, …, tier-n). Due to market globalisation,
suppliers have to follow their customers into new markets, which are typically located in
low cost countries, either to serve local customers or to manufacture parts locally in order
to increase their profitability.
As a result, OEMs have been transferring more responsibility to their suppliers in the
international context. They have increasingly integrated production processes across the
supply chain, based on the concept of the extended enterprise (by way of collaboration).
This new way of working led to a growing need for technological and organisational
innovation.
One of the consequences of this evolution in manufacturing is a reinforcement of
customer- supplier relationships, in particular between tier-1 and tier-2 suppliers. There
are several approaches to this challenge:
Suppliers adopting the policies of their customers
Aiming at joint improvements in performance (e.g. in terms of quality, costs, and
reduced delays)
Follow-up and reinforced assistance of the customer
Processes with standardised exchanges and "shared" information systems
The standardisation of information exchanges has been a long time preoccupation of
GALIA, which was founded to provide solutions to related problems. In fact, the ICTbased tools proposed by the A.L.F.A. initiative to enable standardisation take into
account the recommendations and standards that have been published by GALIA since it
was founded in 1984.
Target groups
The main target group of the A.L.F.A. initiative are tier-2 suppliers of the automotive
industry. Until a few years ago, tier-1 suppliers used to focus on managing their
relationships with customers, while devoting little attention to their suppliers. Due to
globalisation and implications on supply chain structures, they are now challenged to
improve business processes with their suppliers. In this context, A.L.F.A. is dedicated to
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support and advocate the needs of small and medium-sized enterprises. SMEs are
defined in accordance with the definition applied by the European Community.
Targets
The following target marks were specified for the A.L.F.A. initiative
2000 tier-2 suppliers of the French Automotive Industry from all regions should be
contacted;
100 SMEs should get actively involved in one of the projects during the pilot phase.
1000 SMEs should be advised on how they could use ICT-solutions.
Resources
The A.L.F.A. initiative consists of many different regional projects. Although these
individual projects follow a similar organisational pattern, their funding schemes can
differ. Budgets are normally not fixed from the start, but managed with a high degree of
flexibility, depending on project requirements, the success and development. Therefore it
is not possible to provide figures for the total budget of the initiative. Some examples of
budgets for various actions conducted up to now are quoted in the following table.
Examples of budget for various actions
Funding
Contributed by
For period
€ 300.000
Tier-2 suppliers' contribution
Jan. 2004 – Dec. 2008
€ 1.000.000
Public Funding (Regional Council + DRIRE)
Nov. 2004 – Dec. 2008
Staff (2 persons) per year
GALIA for transversal animation
Jan. 2004 – Dec. 2008
Staff (1 person) per year
Each partner for regional animation
Jan. 2004 – Dec. 2008
€ 4.000 per region
Regional Marketing of the initiative (Forums,
phone calls, mailings, visits…)
Jan. 2004 – Dec. 2008
€ 2.000 per region
Publication of Regional A.L.F.A. brochures
Jan. 2004 – Dec. 2008
€ 3.000
A.L.F.A. web pages on GALIA" web site
Jan. 2004 – Dec. 2004
€ 10.000
Realisation of films based on study cases
Jan. 2004 – Dec. 2008
€ 20.000
Organisation by GALIA of national A.L.F.A
forums during Paris Motor show in 2004 and
2006
Oct. 2004 – Oct. 2006
Source : IDATE from GALIA
5.3.2
Activities
5.3.2.1
Implementation
GALIA planned and launched the A.L.F.A. initiative in 2003/04, inspired by a study
report of the French Ministry of Industry about the competitiveness of SMEs and their
(limited) usage of ICT. Initially, GALIA invited a representative of the automotive
industry, of the French Ministry of Industry and SME representatives to discuss
possibilities for an initiative to enhance the use of ICT in the automotive supply chain.
Stakeholders agreed on a common design for an initiative named A.L.F.A. – Amelioration
des Liaisons dans la Filière Automobile.
Then GALIA project leaders then developed a set of instruments to support regional
activities of the initiative, while ensuring the consistency of the overall approach. This
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included tools for diagnosis, PC tools, guidelines and slides for project presentations,
demonstrations and brochures, methodological guide, training for the A.L.F.A
consultants as well as all legal documents.
Pilot phase
The A.L.F.A. initiative started officially in October 2004 with a pilot phase. The objectives
of that phase were to check the robustness of processes, to create a national promotion
team and to realise the first case studies, in order to give examples for promoting the
follow-up action afterwards. The need for piloting was the main reason why A.L.FA.
decided to start in 8 regions at first (Bretagne, Pays de Loire, Basse Normandie, Haute
Normandie, Centre, Champagne Ardenne, Franche Comté and Rhône-Alpes) instead of
targeting 22 regions right from the start. The target for this first phase was to get 100
companies involved in projects within a period of two years.
During this period, each of the 8 regions launched a project with its own 2-year pilot
phase. For each project, a promotion team had to be set up, mostly composed of existing
or new local networks of organisations dedicated to the automotive industry, such as
PerfoEst in Franche Comté-Lorraine or Performance 2010 in Bretagne-Pays de Loire. The
promotion teams were in charge of requesting funds from public institutions, creating a
regional Steering Committee and management board, and of recruiting the consultants
that would then locally support SMEs in implementing ICT tools, based on the national
standard pattern.
Project phase
After the pilot phase, each regional promotion team organised a forum as a starting point
for the main project activities. They visited interested companies that were candidates for
participating in the projects. During these visits, a standardised "diagnosis" (taking 2
hours) about the current situation of ICT usage was conducted. This check helped the
CEOs to identify and select the most relevant ICT tool for their firm, i.e. the technology
which would have the most significant impact on the company's competitiveness. This
solution was then implemented, with guidance and support provided by GALIA. During
and after the implementation phase, SMEs could check if the consultants had correctly
respected the standard methodology guide provided by GALIA.
The regional promotion teams also had the task to contact and liaise with local industrial
networks. To this end, they organised web conferences and workshops on issues related
to the use of ICT. When a company project was completed, the promotion team again
visited the SME to see whether the application was efficiently used. Provided that the
company management agreed, a short film was produced to document the results for
promotional purposes.
This was basically the standard process used by most of the regions involved in the
A.L.F.A. initiative. Some of them were supported by GALIA when it came to selecting the
SMEs which would be involved in the pilot phase.
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Project example:
Implementing Web Conferencing in Lachant Spring (28)
Lachant Spring is a company of 130 people located on three sites in France. They are
one of the French leading companies in manufacturing different kinds of springs. In
addition of being spread on different regions, they work with customers or partners
in Europe, Asia and Americas. When GALIA first visited them, they explained how
much time it needed to solve problems on customers' sites. For instance, it could
take 3 days back and forth to provide a service, since it required a car trip to Paris
Charles de Gaulle airport, then take the plane and continue with another car trip to
get to the customer.
Therefore, the use of web conferencing promised substantial savings, if some of these
trips could be avoided.
The project consultant worked with the project team to identify the users with the
highest needs for this tool and to define the underlying business processes. In fact,
management, sales, quality, logistics, maintenance, engineering directions all
described daily situations where web conferencing would provide a fast return on
investment. For example, it was possible to replace a 3 days trip for on-site customer
support by a 15 minutes web conference.
As indicated in the above example, consultants worked with SMEs to implement the
chosen ICT solutions and related business processes. To this end, A.L.F.A provided
grants to SMEs which covered 80% of the costs (fees of consultants), while 20% had to be
contributed by the company itself. Costs for hardware and software purchases and for
integration with the existing technologies had to be paid by the company (100%).
The A.L.F.A initiative focused on the following ICT applications that can be grouped in
three categories:
Applications focusing on logistics and data exchange between companies
•
Enterprise Resource Planning (ERP)
•
EDI data exchange
•
Web-EDI services
Communication tools
•
Website development
•
Portal development
•
Web-conferencing services
Tools for online cooperation / collaboration
•
ENX connection (private, secure and high speed internet network)
•
Co-development of a vehicle using a virtual engineering platform
•
Collaborative work platforms
48% of the more than 100 SMEs that have participated in projects during the piloting
phase chose Logistics Management oriented tools (ERP, EDI and web EDI), 34 %
communication tools (website, portals and web conferencing) and 18% engineering and
collaborative development (collaborative work platforms, virtual engineering platform,
ENX European Network Exchange).
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The A.L.F.A. initiative had explicitly taken a decision to focus on the adoption and use of
existing solutions, rather than "re-inventing the wheel" by developing new solutions. The
strategy was to make sure that SMEs understand the benefit of these ICT applications
and their potential to digitise business processes, with the goal to increase firm
performances and profitability.
5.3.2.2
Communication
The promotion and communication of the initiative is based on a simple but effective
peer-2-peer mechanism: "let CEOs of SMEs speak to CEOs of SMEs". In fact, the project
communication relies to a large extent on testimonials of CEOs involved in the A.L.F.A.
which are featured in brochures, articles, videos, participation to forums, workshops and
web conferences. In order to get the best case studies while keeping an objective
perspective in the assessment, GALIA has solicited the support of two researchers from
the Ecole des Mines de Paris. These researchers will be in charge of conducting
interviews to document the project teams' feedback and the opinions of the involved
consultants, as well as of customers. They will document this evidence in form of case
studies and testimonials which will be then published and used by the A.L.F.A. network.
So far, two study cases are in course of drafting.
When a CEO gave his agreement and signed the A.L.F.A. Memorandum of
Understanding (MoU), he agreed to share the results of the project on the A.L.F.A. web
site, as well as by presenting findings at workshops, and to host site visits so that
representatives of other SMEs can see the benefits of ICT usage in the context.
The other A.L.F.A. communication actions have been dedicated to specific ICT
applications which the organisation proposes to implement. Instruments used to present
these applications included as e-learning tools, slide presentations, the organisation of
technical workshops (2 hours), and virtual presentations using web conferences (30
minutes).
At a national level, GALIA has organised 2 large forums during the Paris Motor shows of
2004 and 2006. The first one was the kick-off event for the initiative, the second one ended
the pilot phase.
5.3.2.3
Evaluation
The main targets of the initiative were to contact 2000 tier-2 suppliers of the French
Automotive Industry, get 100 SMEs involved during its pilot phase, and advise 1000
SMEs on the use of ICT.
The A.L.F.A. project is managed through different but complementary bodies. GALIA
controlled the National Strategic Committee and National Steering Committee while the
Regional Steering Committee is supervised by each regional promoter:
The National Strategic Committee has the overall controlling function. It acts as a
kind of supervisory board and checks that major milestones and deliverables are
respected. It meets once or twice a year. Representatives of the Ministry, of
manufacturers, tier-1 and tier-2 suppliers, of the regional funding organisations
and of the promoters participate.
The National Steering Committee collects information and monitors the progress
of each regional project. It discusses on transverse questions related to actions and
regional players. Meetings are held quarterly. The Committee consists of
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representatives of the ministry, of the regional promoters, and A.L.F.A consultants
that advise the companies.
The Regional Steering Committee mainly ensures the monitoring of regional
actions. A regional representative of A.L.FA. (mainly an A.L.F.A. consultant) could
participate at meetings but it is not mandatory.
The management of the initiative submits a progress report every two months to the
board of GALIA, whose members include two representatives of Renault, two
representatives of PSA Peugeot-Citroën and 10 representatives of the main tier-1
suppliers.
On the regional level, each of the projects has a Steering Committee chaired by the
regional promoter to manage the initiative locally.
This multiple level organisation ensures a high level of flexibility in the management of
the A.L.F.A. initiative, so that the initiative as a whole as well as individual projects can
adapt to new requirements and optimise the effects of its roll out.
The evaluation of the impacts of the programme should rely on the project promoter and
the financial partners at the level of the regional sector. But nothing is so far formalised.
But what is certain according to Alexandre Loire, from GALIA, "is that researchers from
the Ecole des Mines of Paris, via a partnership, will make an in-depth assessment of 10
A.L.F.A. projects. The results of this assessment will be public".
5.3.3
Results
Outputs
By mid 2007, i.e. after more than two years, 135 companies have participated in various
projects that were initiated by A.L.F.A. Thus, A.L.F.A. has over-achieved its own target.
As some projects, for example the implementation of an ERP solution, can take more than
a year to be completed, not all of these projects have yet been completed. Out of those
that have been completed, A.L.F.A has selected 10 projects and documented them as
study cases. The cases are available for publication and demonstration purposes (e.g.
there are six promotional videos).
The managers of those SMEs which participated in the A.L.F.A. initiative are aware that
ICT are crucial to improve the competitiveness and performance of their companies.
However, the initiative started deliberately with the motivated SMEs. Those companies
that remain to be contacted in the next phases of the initiative may be much harder to
convince about the importance of ICT. This is why A.L.F.A. mainly focuses its
communication on people who have already been satisfied by the operation and can
share their experiences directly with other SMEs. They generally highlight the positive
points and the way they solved the difficulties they met.
Outcomes
In particular by conducting the 10 study cases, A.L.F.A has already collected feedback on
the effects of its projects for SMEs. The following examples illustrate the benefits which
companies report to have drawn from the projects:
EDI / WebEDI tools: Several companies recognised that their decision to use EDI
was mainly imposed by customers. Only few of them had been proactive in this
matter. However, nearly all of them reported significant advantages stemming from
the EDI implementation, in particular a decrease in the number of errors and fewer
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delays. Demand forecasting has been facilitated. As for Web EDI, the service
typically was implemented and operational within less than three months.
ERP software: Companies that decided to implement ERP solutions did so mainly to
improve the internal processes and organisation. It was felt that more rigorous
processes were necessary to face the increasing market complexity and to reduce
administration burdens. Companies reported that ERP usage helped them to
implement their growth strategy. It also served as a backbone to facilitate EDI
installation and reduced the effort in audits. However, companies also reported
challenges. Successful ERP implementation requires that companies are absolutely
clear about their internal processes. This can require a change of attitude and – to
some extent – of company culture, particularly among smaller firms which have not
worked with process design before.
In most projects, the integration of tools with business partners is mandatory. As a result,
the initiative has contributed to tighten links within the supply chain.
Wider effects on the economy and sector
Some of the regions have decided to make available additional budgets in order to
increase the scope (e.g. more company projects), but also to be in a better position to react
to emerging technological trends.
In 2007, two new regions have started their own initiative (Poitou Charente and Alsace)
and five regions are in contact with GALIA (Nord-Pas de Calais, Bourgogne, Lorraine,
Auvergne and Ile de France) and are considering / preparing to get involved.
Complementary to this initiative, GALIA is also participating in the "TIC PME 2010"
initiative, which was launched in 2006 by the French Ministry of Industry. This parallel
initiative aims at digitally connecting SMEs within sectoral supply-chains, while also
considering cross-sector exchanges. A.L.F.A. is already working with the aerospace and
defence industry, and to some extent other manufacturing industries as well. Thus,
A.L.F.A can share its experience, the networks and communication channels with the
new initiatives, in order to facilitate contacts with SMEs.
5.3.4
5.3.4.1
The approach of A.L.F.A. was not innovative with regard to the technologies supported
and promoted, as the initiative focused on the deployment of existing ICT tools and
processes, even simple ones, rather than engaging in complex development or
standardisation activities. This was a highly pragmatic decision.
What has been innovative is rather the way how companies have been approached and
convinced that they should innovate and make investments in ICT applications. The way
how this initiative combined central management and controlling with regional
deployment of its activities is quite interesting, in particular for an industry-led initiative.
The initiative is also a good example for a public-private partnership; in this case, the
initiative came from the industry (A.L.F.A. is an industry-led initiative), with a broad
involvement of stakeholders, but has been taken up and supported by the national and
regional governments.
The initiative also confirms that customer service is inevitably connected with supply
chain management. Companies need to maintain excellent relationships with their
suppliers in order to be able to deliver competitive products and provide excellent
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customer service. The focus and design of the A.L.F.A. initiative reflects this spirit. For
GALIA, the launch of the initiative was a landmark, because it acknowledged that their
tier-1 suppliers had to focus more on their own suppliers rather than on customers only.
5.3.4.2
Facilitators
An important factor that facilitated the implementation of the initiative has been that
GALIA is a community of experts on the automotive industry who work for the
automotive industry. From the beginning, the initiative was heavily supported by
Renault and PSA Peugeot Citroën. In some cases, the initiation of a project was requested
from a tier-1 to his tier-2 suppliers. Moreover, the tools and processes proposed in the
A.L.F.A. initiative are based on GALIA's know-how and previous work with local
networks. If necessary, new project partners were acquired.
In summary, the following factors facilitated the work of the A.L.F.A. initiative and its
success:
The use of existing or new local networks for promotion and coordination :
•
Performance 2010 in Bretagne-Pays de Loire or PerfoEst in Franche-Comté,
Alsace-Lorraine has been partners of GALIA for many years.
•
Pôle Automobile de la Région Centre and Pôle d"Excellence Automobile de
Champagne Ardenne were created with A.L.F.A. as a first initiative.
New partnerships were initiated between:
•
The French Ministry of Industry, its delegations in regions (DRIRE), the
Regional Councils and GALIA
•
The network of Chambers of Commerce and the regional animators and
GALIA
The delivery of independent, unbiased advice to companies based on the
recommendations and standards elaborated by the industry experts in GALIA
workgroups. This reinforces the legitimacy of the initiative.
The offer of tools and processes that already exist and are used by large
manufacturers and suppliers.
The delivery of information and services in a way specifically adapted to the
stakeholders' needs and expectations: "Automotive industry people talk to players
in the automotive supply chain "
Application of a coherent project methodology when implementing new
technologies in SMEs which increased their confidence and commitment.
Another major facilitator was the existing market pressure. As an unspoken rule in the
automotive industry, a supplier has to increase its profitability and reduce prices of the
parts he produces every year. Competition is nowadays worldwide. Most of the SMEs
involved in the A.L.F.A. initiative have been fully aware of this situation. In this project,
the overall pressure on players has helped gaining the cooperation of companies and
associations.
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Barriers
The main impediments the initiative had to struggle are related to organisational and
technical challenges (at company level, notably concerning the SMEs), but also to
contextual challenges related to the general trends in the market place.
Organisational challenges: Some SMEs under-estimated the organisational
challenges involved; they under-staffed projects, despite the clear-cut
recommendations made in the A.L.F.A. methodology guide
Technical challenges, due to a lack of technical skills
Contextual challenges: While the increasing market pressure on all actors motivated
many SMEs to participate in projects, the fast evolution of the market environment
can also be a barrier in the case of other SMEs. Some companies feel that they do not
have the time or resources in this market situation to engage in "projects", due to the
enormous pressure on their day-to-day business. They do not think that ICT can
actually help them enough to improve their "normal" business operations.
5.3.4.3
Learning points
The following aspects can be learned from the experience of the A.L.F.A initiative:
Broad involvement of stakeholders: This was a mandatory requirement to initiate the
A.L.F.A. initiative. The French Ministry of Industry and its regional delegations, the
Regional Councils, professional networks (national and regional), manufacturers, tier-1
and some tier-2 suppliers (the automotive Industry has a strong hierarchical
organisation) have all strongly contributed to the design of the initiative. The project
management is convinced that it would have been difficult to achieve a satisfactory level
of participation without having the commitment of the relevant industry organisations.
Importance of "regional" leadership: The policy implementation has benefited from the
active involvement of local/regional players who are well connected with the regional
business networks. They know the issues at stake, the problems to be tackled, and have
good contacts with several of the CEOs or owners of the targeted SMEs. The cooperation
with such "local ambassadors", including their managing the projects in their region, has
been very important. With their support, all stakeholders feel more directly involved in
the actions.
Access to "neutral" information and advices: GALIA is a place of consensus and
discussions. Therefore the published GALIA s' recommendations and standards could be
trusted as "fair" technical constraint. Moreover, the selection process of consultants - by a
group of funders and technical experts - as well as their commitment to apply GALIA s'
methodology guide was an additional guarantee about the quality of advices.
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Some illustrative examples of possible strengths or weaknesses are listed below.
Strengths
(+) Clear targets: Nine tools, nine processes widely used by manufacturers made the
objectives very clear. All SMEs know at least 2 tools from the list and are sometimes
requested to implement them.
(+) Win-win-situation: The focus of the A.L.F.A. initiative was clearly to strengthen the
"digital" links between tier-1 and tier-2. Most of the project requested tier-1 resources
involvement. At the end, better links and automated processes would be beneficial for
each of the project stakeholders
(+) Leveraging a snow-ball effect: The A.L.F.A. initiative triggered snow-ball effects in two
ways. First, via the A.L.F.A initiative, tier-2 and tier-3 suppliers took advantage of the
processes and tools already used by manufacturers and tier-1 suppliers to gain
experience. Second, CEOs engaged in the A.L.F.A initiative act as ambassadors and
convince their peers in other firms that they should also consider stepping in. Once they
have done so with their companies, it will be their turn to communicate the lessons
learned to further companies.
Weaknesses
5.3.5
(-)
Different regional approaches: In some instances, regional specificities led to
organisational problems. For example, in some regions, networks are organised mostly
around a large dominant manufacturer, while in other regions there is no such large
OEM, but only smaller suppliers. In this case, the network is a unique professional
supply chain (Plastic Valley or cast steels). Despite these regional discrepancies, it
appeared important to GALIA and the A.L.F.A. initiative steering committee to have a
strong regional approach.
(-)
Dependency on tier-1 purchasing policies: Tier-1 suppliers are sometimes stuck in a
delicate situation. They are bound by their OEMs to work with suppliers located in low
cost countries (LCCs). Consequently, they cannot focus on the needs of their French
suppliers. Therefore, it is crucial to involve large suppliers, and create a project team
with tier-1 suppliers. This is particularly true for projects focusing on EDI
implementation or the establishment of a collaborative working platform. The
participation of large suppliers is absolutely necessary for the success of such an
initiative.
References
Research and interviews for this case study were conducted by IDATE (www.idate.fr).
Main sources:
A.L.F.A. web pages at the website of GALIA, http://www.galia.com.
Interviews with Alexandre LOIRE, GALIA, A.L.F.A programme manager
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5.4
PROZEUS – Processes and Standards (Germany)
Fact sheet
language):
PROZEUS – Prozesse und Standards
PROZEUS - eBusiness Processes and Standards
Manufacturing sectors, consumer goods industry, retail,
construction
Geographic focus:
Germany
Start date:
July 2002
End date:
December 2008
Initiated by:
The PROZEUS initiative was launched and is supported by the
German Federal Ministry of Economics and Technology.
The initiative is based on two initially separate project proposals
put forward by the Institut der deutschen Wirtschaft Köln Consult
(IW Consult) and GS1 Germany GmbH. These proposals were
merged into "PROZEUS".
Implemented by:
•
Institut der deutschen Wirtschaft Köln Consult GmbH (IW
Consult)
•
GS1 Germany GmbH
Funding:
€ 13 million (provided by the German Federal Ministry of
Economics and Technology)
Contact person(s):
Mr. Ralf Wiegand
Institut der deutschen Wirtschaft Köln Consult GmbH
Gustav-Heinemann-Ufer 84-88, 50968 Cologne, Germany
Tel.: +49 221 4981-849
Mr. Tim Bartram
GS1 Germany GmbH
Maarweg 133, 50825 Cologne,
Tel.: 0221 94714-419
The PROZEUS programme is part of the Government's
information society development initiative.
Website(s):
http://www.prozeus.de/
Abstract
e-Business studies confirm that inter-firm processes are increasingly being digitised. A
pre-condition for exchanging data with other companies electronically is the use of estandards. However, small and medium-sized firms often experience difficulties in
selecting the right standards and implementing them.
Against this background, the German PROZEUS initiative promotes the adoption of ebusiness among SMEs based on proven, recognised standards. PROZEUS focuses on
companies with up to 500 employees from manufacturing, the consumer goods industry,
retail and services. PROZEUS is funding projects in which SMEs implement e-business
standards. Companies are eligible to receive a grant covering up to 50% of personnel
costs for effort related to the project. The total funding provided per project is in most
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cases between 20,000 and 50,000 EUR. About 60 SME projects have been commissioned as
a result of two calls for proposals.
An innovative approach of PROZEUS is that companies receive grants only on the
conditions that they meticulously document the project, and that this documentation can
be made available to other firms as case studies to learn from. As a result, the project has
a wider impact that goes far beyond the direct beneficiaries (the SMEs that participate in
projects), since all SMEs can benefit from the meticulously documented project
descriptions.
PROZEUS was launched by the German Federal Ministry of Economics and Technology
in 2002. Initially, PROZEUS was planned to last until the end of 2005. Due to the success
of the initiative, it was extended until the end of 2008; a further extension is possible. The
initiative is implemented jointly by GS1 Germany (www.gs1-germany.de) and IW Consult
(www.iwconsult.de).
5.4.1
e-Business studies confirm that inter-firm processes are increasingly being digitised. This
concerns, for example, procurement related processes, logistics, sales and cooperative
processes in product design and development. The ICT-based automation of business
processes enables companies to cut costs and to enter new markets. However, for SMEs
in manufacturing, retail and service sectors it can be a challenge to make the necessary
investments that enable them to participate in digital B2B value chains.
Against this background, the German PROZEUS initiative promotes the adoption of ebusiness in SMEs based on proven, recognised standards. The initiative's mission
statement is that "PROZEUS provides neutral, independent and free information to companies
in Germany on how to automate their business processes and make them faster and more efficient."
PROZEUS was launched in 2002 by the German Federal Ministry of Economics and
Technology in the framework of the Government's information society development
programmes.3 The initiative is based on two initially separate project proposals put
forward by the Institut der deutschen Wirtschaft Köln Consult GmbH (IW Consult;
www.iwconsult.de) and GS1 Germany GmbH (www.gs1-germany.de), which were then
merged into one initiative.
The initiative is jointly implemented and managed by these organisations, in close
cooperation with the "Netzwerk Elektronischer Geschäftsverkehr" (the German ecommerce competence centres). IW Consult coordinates the projects in the
manufacturing industry, while GS1 Germany focuses on the consumer goods / retail
industry.
Initially, PROZEUS was planned to last until the end of 2005. Due to the success of the
initiative, it was then extended until the end of 2008.
The main objectives of the PROZEUS initiative are:
to promote transparency in e-business – and e-business standards in particular –
by developing know-how and sharing this information with others;
3
The action plan currently operational is the agenda "ID 2010 – Germany: the information
society", which was launched in November 2006.
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to increase security in planning and investment decisions for SMEs by providing
recommendations for e-business standards and applications;
to increase the practical knowledge and managerial understanding of e-business
by disseminating good practice examples;
to empower SMEs by enabling them to implement e-business solutions on their
own.
The main strategy used to address these objectives is to leverage multiplier effects, by
showcasing good examples of e-business usage in SMEs to peer companies. To this end,
projects are supported in which selected SMEs implement e-business standards. The
results of these projects are documented and made available to other SMEs to serve as
examples, i.e. in a form they can apply in their own business. Special emphasis is placed
on concrete, practical applications and their commercial benefits.
By exploiting the experience and learning factors from concrete projects with companies,
PROZEUS aims at promoting the transfer of proven e-business solutions into SMEs.
Target groups
PROZEUS focuses on companies with up to 500 employees from a variety of sectors,
mainly from manufacturing (e.g. textile and footwear, food and beverages, chemical,
rubber and plastics, machinery and equipment, electronics), the consumer goods industry
and in retail.4
The rather broad list of sectors implies at first sight that the target the initiative is not
focused on a specific industry. However, the individual projects that are conducted with
SMEs clearly have a sectoral focus. Calls for project proposals were geared towards
specific industries; furthermore, the documentation of these projects also addresses
predominantly companies from the same sector or from closely related sectors.
In a way, the PROZEUS initiative addresses primary and secondary beneficiaries.
"Primary beneficiaries" are those companies that participate in the e-business
projects. 60 SME projects have been commissioned as a result of two calls for
proposals. 25 projects which had been commissioned in the first call in 2002 have
been completed as of December 2004. Most of the projects of the second call are
under way.
"Secondary beneficiaries" are those companies that download the documentation
of these projects (or other resources such as guides and brochures) and thus
benefit from the experience and lessons learned.
Targets
The main operational targets of PROZEUS were
to initiate and support about 60 SME e-business projects and
to document these projects to the benefit of other companies.
There are no other specific quantitative targets for the programme as a whole. However,
targets play an important role within the individual SME projects. The definition of ebusiness related objectives and targets is an important criterion for the selection of project
proposals submitted by SMEs.
4
Grants are provided only to SMEs with up to 249 employees, in compliance with the European
de-minimis regulation for national funding.
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The achievement of targets is then monitored and – to the extent possible – reported on
the basis of quantitative data. To this end, the participating companies have to deliver
monthly progress reports about their e-business project, including information about the
effects which the project has had on their business.
Examples of metrics used to assess the effectiveness of projects are:
Acquisition of new customers within one year after the project has been completed
(e.g. if market expansion was a main project objective)
Increase in sales / market share
Increase in brand recognition
Employee motivation and satisfaction (measured by employee surveys)
Improvement in process efficiency (e.g. time needed to accomplish specific tasks in
production / distribution)
Metrics are selected in accordance with the project objectives.
Resources
The PROZEUS initiative has been funded by the German Federal Ministry of Economics
and Technology with a total amount of about € 13 million for the period 2002-2008.
5.4.2
Activities
5.4.2.1
Implementation
PROZEUS supports SMEs in recognising their e-business potential and taking the
necessary steps to exploit it. This is achieved by supporting concrete e-business projects
of enterprises from various sectors, in particular from manufacturing, consumer goods
and retail sectors.
Support to SMEs is provided in several ways, in particular by providing grants (see
below) and consulting services. The projects focus on business processes and e-standards
that support these processes. SMEs implement e-business solutions in their own
operations, based on globally applicable processes and standards. PROZEUS monitors
these projects and documents the results in full detail, in order to enable other SMEs to
learn from the experience of the participating companies (good practices, challenges).
Soliciting, supporting and monitoring SME projects constitutes the core activity of
PROZEUS, but there are other activities as well. The main pillars of the initiative are:
SME projects: selected SMEs receive a grant for an e-business project, based on the
use of commonly accepted standards.
Good practice examples: The results of these SME projects are documented in
detail and made available to other SMEs on the PROZEUS website, in a form they
can apply in their own businesses. Special emphasis is given to practical
applications and the commercial benefits achieved.
Information resources / networks of experts: PROZEUS initiated working-groups
that gather standardisation and e-business experts from companies and
institutions in Germany. Their objective is to develop practical recommendations
to the industry and to policy. Five working groups (consisting of about 5-7 experts
each) have been established on the following issues:
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§
standards for identification
§
standards for product classification
§
standards for catalogue exchanges
§
transaction standards
§
process standards
Their recommendations are documented in brochures that can be downloaded
from the website. About 10,000 copies of information brochures about e-standards
have been printed.
In addition, information brochures about a wide range of e-business related topics
have been prepared and published by the project management (about 70,000
copies in total). These were mainly distributed at events or mailed to target groups.
About 14,000 orders for brochures have been received, more than 64.000 have been
downloaded in electronic format from the website.
Multiplier networks: Experts inform and train multipliers from employers",
industrial and trade associations, as well as representatives of IT service
companies, on the subject of e-business and the dissemination and application of ebusiness standards. To this end, 500 industry associations were contacted and
offered services; about 60 associations replied to this offer. The work is now
focusing on these 'motivated' associations; they could become ambassadors for the
issues discussed in their networking with other associations.
Website (www.prozeus.de). Resources available online include, besides the detailed
documentation of case studies, PDF versions of brochures and leaflets, and access
to e-mail hotlines. Companies can download resources free of charge. The website
also offers access to an IT consultant pool, where PROZEUS offers a database
listing specialists in the implementation of e-business solutions for various
purposes.
SME e-business projects
The SME e-business projects are the focus of PROZEUS activities. Projects have been
commissioned on the basis of two calls ("phase 1" and "phase 2"), inviting companies to
submit proposals for e-business projects. Proposals were communicated via mailings to
more than 30,000 companies, using mailing lists of the organisations implementing
PROZEUS (IW Consult, GS1 Germany and the Netzwerk Elektronischer
Geschäftsverkehr maintain comprehensive company databases to support their
communication activities) and other communication channels (press releases, ads,
newsletters of various organisations).
To be eligible for support from PROZEUS, companies must have fewer than 250
employees, a maximum annual turnover of € 50 million and be independent companies,
not subsidiaries of a group, in order to match the requirements of the EU de-minimis
regulation for national funding.
In the first phase, PROZEUS received more than 300 e-business project proposals, out of
which 25 were finally selected (see table). In the second phase, about 30 projects were
selected. The duration of projects differ according to their complexity. Most projects last
between 4-15 months.
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Phase
Call
launched in
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Proposals received
Projects commissioned
Project status
Phase I
2002
more than 300
about 25
completed
Phase II
2006
more than 300
about 35
ongoing
The second call for proposals (which closed on 17 February 2006) focused on projects in
the following sectors and application areas:
e-Business for service companies working closely with production firms (in
particular for companies active in the maintenance & repair of industrial
machinery and buildings)
Implementation of electronic product catalogues based on BMEcat
EDI usage in the following sectors: building and housing, beverages, textile
Optimisation of business processes through EANCOM messaging in the FMCG
(fast moving consumer goods) industry
Optimisation of product data as a basis for e-business
Out of the 34 projects supported in phase II, 7 projects focus on the implementation of a
webshop, 7 on ICT-supported work-flow optimisation, 6 on the establishment of an ecatalogue (based on recognised product standards), 5 on the implementation of a CRM
system (customer relationship management), and the other on topics such as SCM
(supply chain management), e-procurement and RFID implementation.
A new call for proposal (open until October) was opened in 2007. Companies could
submit project proposals on the following topics:
Electronic news
Use of EPC/RFID in logistics and internal production processes
Optimisation of product data as a basis for e-business
Use of Open Source ERP systems
Grants
Companies whose proposals have been selected are eligible to receive a grant covering
up to 50% of personnel costs for effort related to the project. The total funding provided
per project is in most cases between 20,000 and 50,000 EUR, depending on the project.
There is an upper limit for various project types. The following rules apply:
Rates: A person-day is calculated with a rate of up to 780 EUR per day, depending
on the personnel category.
80/20 rule for outsourcing: for projects in manufacturing sectors (managed by IW
Consult), to be eligible for funding, a minimum of 20% and a maximum of 80% of
the project work must be conducted internally (by staff of the company); viceversa, 20-80% of the work can be outsourced to external service providers. On
average, companies used about 40% of the grants for external service providers
and 60% for their own effort.
In projects in the consumer goods industry (managed by GS1 Germany), the
average share of grants used for paying external ICT service providers was lower
(estimated at about 15-20%).
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Consulting and advisory services
PROZEUS itself is not a consultancy, but its co-operation partners offer two forms of
consulting services to participating SMEs:
Companies are entitled to a one-day introductory consultation offered by GS1
Germany for a reduced fee of € 200 (compared to the market cost of about € 1,400).
This service is aimed at SMEs in the consumer goods and retail sectors.
Another introductory consultation, indirectly provided by PROZEUS' co-operation
partner "Netzwerk Elektronischer Geschäftsverkehr" ("e-Business Network"), is
free of charge. This service focuses on smaller companies in the manufacturing
industry (and retail) which take their first steps in e-business.
Besides, companies can use information resources provided by PROZEUS, such as the
"SME IT-Services Pool." This information helps companies finding the right service
provider for their e-business projects.
Selection and implementation of projects – the process
The selection process for the SME projects consisted of the following steps:
1.
Statement of interest: call for proposals with information about the initiative and
the requirements for participation, asking companies to state their interest. At this
stage, only a brief 1-page form had to be filled in – no detailed proposal was
required.
2.
Questionnaire: Companies which had responded were sent a questionnaire.
3.
Company visit: An appointment for a first company visit was made with firms that
had returned the questionnaire, to discuss their plans in more detail.
4.
Letter of intent: For the final selection, all companies that had passed the previous
rounds were asked to send a letter of intent, confirming that they accept the
requirements for participation (including that the project documentation would be
publicly available).
5.
Selection of the projects, in consultation with the German Ministry of Economics
and Technology.
The implementation of the selected projects consists of the following phases:
1.
Detailed project description: companies had to develop a project plan, with
information about the status-quo, their business objectives, the targets, the
approach to be used, and the budget (person days), based on a template provided
by PROZEUS.
2.
Project implementation, according to the project plan, with regular progress reports
to PROZEUS. Besides controlling, PROZEUS provided help-desk functions and
advice to projects if needed.
3.
Final Report: After completion of their project, the SMEs had to send a detailed final
report. This included a questionnaire on organisational / structural changes and on
the business impact.
The following examples are about projects completed during 2002-2006. They illustrate
the type of activities that are initiated, supported and documented (for the benefit of
other companies) by the PROZEUS initiative.
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PROZEUS project example:
Güde GmbH – establishing an e-catalogue
Güde GmbH, founded in 1948, focuses on the production of lockwashers with high
traceable quality (metal products sector). It has about 50 employees and is located in
Plettenberg, North Rhine-Westfalia, Germany. More than 50% of the production
are exported.
A few years ago, one of the major customers requested that they could order
products from Güde from an electronic catalogue. Until then, the customer used to
document and maintain product data itself – the request was that Güde should
provide and update product data electronically. Güde decided to comply with this
request (in order to keep the customer) by establishing an electronic product
catalogue based on widely used e-standards: it decided to use e-Cl@ss 5.1 as its
classification standard and BMEcat 2005 as its catalogue exchange format. Data for
about 1200 articles should be maintained and updated by Güde.
Güde proposed this project (successfully) to the PROZEUS initiative. The project
started in March 2006 and was completed in October 2006. The grant provided by
PROZEUS was €32,370. The project was successfully implemented, although some
challenges were experienced. For example, the initial collection of all the required
product data was more work than anticipated. On the other hand, establishing the
eCl@ss classification on the basis of the collected data could be accomplished faster
than expected.
The company is convinced that the successful implementation of the e-catalogue for
product data created the basis for their participation in the digital economy. It is
committed to extend the scope of its electronic exchanges and will now focus on
orders and invoices.
The project – including challenges experienced – has been documented as part of the
PROZEUS requirements and can be studied by other companies who plan to engage
in a similar project.
Source: PROZEUS initiative. Detailed documentation available at
http://www.prozeus.de/prozeus/praxis/guede/verlauf.htm
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PROZEUS project example:
Enderlein GmbH – stock management at a toilet bag
manufacturer
Enderlein GmbH is a proprietor-managed, medium-sized business (190 employees)
in Berlin which specialises in the production of toilet bags. The large German retail
chain Karstadt Warenhaus GmbH is a major distribution partner.
Enderlein started e-business at an early stage. Together with Karstadt, Enderlein
successfully completed a PROZEUS-supported project to set up a manufacturercontrolled stock management system (also referred to as VMI – vendor managed
inventory) in mid 2004.
The new system enables an optimised product presence at the Karstadt retail stores
and a demand-oriented range planning at Enderlein. In addition to improved
strategic positioning, a tangible impact on process efficiency has been recorded. By
means of VMI, out-of-stocks were reduced from 12 to 3 days during a test phase.
Sales at the Karstadt test branches controlled by VMI increased by 22% as opposed
to 4% at non-controlled comparable branches.
The total costs of the system were € 62,200 in the first year (implementation), and
subsequently about € 21,800 per year for running / maintaining it. The paybackperiod was about 2.5 years. Due to the success, Enderlein aims at expanding the
approach to further distribution partners in retail.
Source: PROZEUS Best Practice Examples (folder); detailed documentation
available at www.prozeus.de/prozeus/praxis/enderlein-karstadt
Focus on proven standards
PROZEUS assists decision-makers in SMEs in selecting the "right" standards for their
business. It is important that the initiative acts as a neutral source of assistance and
advice. Advice is provided with regard to the following types of standards:
Type of standards
Examples of standards used
Identification standards
EAN/GTIN, GS1 128, EPC/RFID ...
(for clearly identifying companies and products)
Classification standards
eCl@ss, ETIM, GPC, UNSPSC ...
(describing products consistently)
BMEcat, cXML, Datanorm/Eldanorm,
PRICAT ...
Catalogue exchange formats
(providing electronic product data)
EANCOM , GS1 XML, ODETTE, OAGIS,
UBL ...
Transaction standards
(for an automatic exchange of documents)
Process standards
(for the automatisation of complex business processes)
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Category Management, ebXML,
RosettaNet, VMI ...
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Communication
External communication strategy
Communication of good practice examples to other companies is the very objective of the
PROZEUS initiative. Pilot projects prove that even small businesses can successfully
introduce complex and integrated business processes. Test results are published in full
detail and the new insights gained from these companies' practical experience are
available to help other SMEs with their own e-business activities.
PROZEUS cooperates with multipliers and uses a broad range of communication
channels to disseminate the good practice examples and lessons learned. The most
important multipliers who have helped to promote the initiative through their own
activities and networks are:
Netzwerk Elektronischer Geschäftsverkehr: PROZEUS cooperates with the
German e-Commerce Competence Centres, which are funded by the Ministry of
Economics and Technology.
IHK – Industrie und Handelskammern: The Chambers of Commerce have also
supported the initiative by promoting it to their members.
The most important communication channels are:
Networks: PROZEUS established expert networks on e-business standardisation.
Website: The website (www.prozeus.de) informs about the policy and contact details
for companies. The website has about 19,000 visits and 46,000 page views per
month (as of April 2007). About 64,000 documents available on the site have been
downloaded since 2004.
Newsletters: PROZEUS actively uses newsletters and e-newsletters of related
initiatives to inform about grants, projects and resources.
Events: The initiative is frequently showcased at industry fairs, workshops and
conferences.
Information stands at fairs and conferences: PROZEUS has participated with an
information stand at about 20 conferences / industry fairs since 2003.
Presentations: The PROZEUS initiative has been presented at about 70 events
(including workshops and seminars organised by PROZEUS as well as other
events) since 2003.
Internal communication
Effective project management is very important for the PROZEUS initiative, in particular
since numerous players are involved. The initiative is jointly coordinated by IW Consult
and GS1 Germany. By pure coincidence, both organisations are located in Cologne. This
has greatly facilitated the coordination, as meetings can be arranged on short notice and
with no effort for travel.
PROZEUS reports to the Ministry of Economics, mainly through the DLR – Deutsche
Luft- und Raumfahrtgesellschaft. DLR acts as a kind of agency on behalf of the Ministry,
monitoring the implementation of programme-related project funding. A PROZEUS
Steering Committee with representatives of 12 institutions has been implemented at the
Ministry of Economics to accompany this initiative. The Committee meets once per year
and provides comments and strategic guidance on the implementation.
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5.4.2.3
Evaluation
Evaluation at programme level
There was no formal evaluation of the initiative as a whole, and – as far as there is
information available – there is no evaluation planned. Implicitly, however, the relevance
of the PROZEUS initiative has been confirmed by a German study and survey on eBusiness investments (2004/05).5 The study concludes that the importance of e-business
standards had increased; 53% of respondents said that standards were "important" or
"very important", compared to 40% the year before. The study concluded that there was
still a huge demand for information and action in this field. Recent results of the new "eBusiness Barometer 2007/08" survey confirm the progress achieved, but also that there is
still work to be done.6
Evaluation at project level
At the individual project level within the PROZEUS initiative, the assessment of
outcomes is important. The definition of e-business related objectives and targets is an
important criterion for the selection of project proposals submitted by SMEs. The
achievement of targets is then monitored; to this end, the participating companies have to
deliver progress reports about their e-business project. This is a condition for receiving a
grant and is part of the project-related contract between PROZEUS and the company.
PROZEUS provides companies with standardised project management tools (e.g. a
project checklist and a manual) which are to be used for the documentation of the
progress, achievements and challenges experienced.
5.4.3
Results
Outputs
The main outputs of the PROZEUS initiative are:
SME projects: Since 2002, about 60 e-business projects of SMEs have been
supported by PROZEUS (see Section 1.4 – Activities). More than half of those have
been completed; some of the projects that were selected in the second call for
tender (2006) are ongoing. Most of the projects were successful.
Project documentation: All projects – whether successful or not – are documented
in case study format on the PROZEUS website, with explicit information about the
company, the technologies used, the challenges experienced, the short-term effects
of the project and the firm's plans for further e-business activities. This unbiased
documentation is a unique source of real-life e-business examples in
manufacturing, the consumer goods industry and retail. Reference projects can be
searched by
§
e-business application areas (e.g. CRM, collaborative planning, eprocurement)
§
sectors (e.g. chemical, rubber and plastics, electronics, food / beverages)
§
business functions (e.g. product development, production processes,
marketing, distribution, administration)
5
e-Business Barometer 2004/05: Zusammenfassung und Handlungsempfehlungen.
6
Cf. eBusiness Barometer 2007/2008, in: eBusiness 2007/2008. Jahrbuch der deutschen Wirtschaft.
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Provision of guides and information resources: PROZEUS offers companies a
wide range of information brochures about e-business standards and e-business
applications. Brochures are kept short, addressing managers who want to get a
quick overview and basic understanding of concepts (e.g. of existing e-business
standards and their advantages and disadvantages). All brochures can be ordered
in printed format or be downloaded from the website.
Awareness and dissemination activities: PROZEUS has participated with an
information stand at about 20 conferences / industry fairs since 2003 and given
presentations at about 70 events (for further figures, see Section 1.4
"Communication").
The high quality of all outputs is a decisive characteristics of the whole PROZEUS
initiative. The consistent approach for selecting, supporting, accompanying and
documenting projects, and preparing and disseminating additional resources about ebusiness, has been successful both in terms of quality of outputs and in terms of its reach.
It is the leading e-business support initiative for SMEs in Germany, with an impressive
record of activities and companies reached.
Outcomes
In analogy to the distinction between "primary beneficiaries" and "secondary beneficiaries" of the initiative, a distinction can be made between direct outcomes of the
PROZEUS initiative, i.e. the effects for the companies that conducted a project, and the
indirect wider impact of the initiative by disseminating good practices and lessons
learned.
PROZEUS has detailed empirical evidence (possibly a unique resource) about the effects
which e-business activities had for the companies that participated in the projects. The
collection of this evidence was possible because companies that apply for a grant have to
commit themselves to regularly report this type of information.
The available data allow, for example, to calculate the return-on-investment of e-business
related investments in the project companies. The payback-period for the investments in
e-business technologies7 differs considerably between projects, obviously depending on
the type and size of investment; typically, companies reach the break-even-point within a
period of 1-3 years. Some indicative project examples (from the consumer goods
industry) for the size of investments and the annual savings achieved by companies in
return are given in Exhibit 5.4-1. In exceptional cases, even small investments have
turned into substantial annual savings, with practically immediate return-on-investment.
7
the time period to reach the break-even-point
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Exhibit 5.4-1: Return-on-investment in SME ICT-projects supported by PROZEUS
Paybackperiod in
months
Investment
s made (€)
Annual
savings
(€)
Food – Master data
alignment
18
44,000
30,000
Schuh + Sport Wagner
Footwear / sports –
Master data alignment
22
15,000
8,000
Kurt Kränzle KG
Sports articles –
29
42,000
18,000
Beverages – Invoicing
27
10,000
4,000
Kelterei Müller KG
Beverages – CPFR
4
7,000
23,000
Enderlein GmbH & Co.
Toilet bags – VMI (Vendor
Managed Inventory)
28
62,000
26,000
Company
Hitschler International
GmbH
Sector and
project focus
Joint Forecasting
Hahn Getränke Union
GmbH
KG
Source: GS1 Germany. Presentation by Ms Steffi Kroll, GS1 Germany,
at the e-BSN Workshop in Paris, 05 July 2007
Further to these examples, there is evidence that most of the pilot projects have
successfully realised their targets.
85% of the companies reported faster distribution processes (with time savings of
up to 50%);
60% of firms reported a productivity increase (of up to 30%)
78% of firms attracted new customers due to the project
65% of firms increased employee satisfaction
70% of firms reported that the organisational structure had improved or even
significantly improved;
Complementary to these figures, the qualitative information available from the project
reports demonstrates that PROZEUS has had a positive effect on work processes and
skills development in the participating companies. For several companies that
participated, the PROZEUS project was one of their first steps into e-business. Many of
these projects have created a successful basis for further activities in the respective
companies.
Notable examples of outcomes of PROZEUS-supported projects are:
Hudora GmbH, a producer of sports articles with 40 employees, has successfully
reduced the effort for product tracking & tracing by 95% by developing a specific
software for monitoring the distribution of its products. After the end of their
project, they are now planning to introduce also the RFID-technology in their
internal and external processes.
Telschig Verfahrenstechnik GmbH, a machinery and equipment company with 15
employees, says that e-business enables the company to process a large order
within half a day. Prior to the ERP-based order management, processing a large
order could take up to 4 weeks.
As all projects focus on the implementation of proven e-business standards, the initiative
has in particular supported the digital integration of SMEs with their business partners
(see example "Güde GmbH" in this case study). In fact, this can be regarded as a core
objective of the initiative.
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Project results also demonstrate that the improved digital integration between companies
have positive effects on relations with customers and suppliers. This applies, in
particular, to business relations between manufacturers and their distribution partners in
retail.
However, while these positive effects for primary beneficiaries can easily be
demonstrated by solid empirical evidence, the impact is mostly limited to direct project
participants (with some spill-over effects since their business partners will normally also
benefit from the improved e-business capabilities of these SMEs). An assessment of the
wider impact that has been achieved by PROZEUS through disseminating results is
much more difficult.
The information resources generated by the initiative have been widely disseminated to
target groups (see figures in Section 1.4 "Activities of the policy" above). However, it is
hardly possible to quantify in any way the business impact of this information and
awareness raising activities.
In contrast to many other e-business initiatives, PROZEUS was not restricted or focused
on a specific region. Projects were conducted in all German Bundeslaender (Federal
States). Therefore, the impact cannot be compared with an initiative that has targeted a
specific sector and region.
In any case, PROZEUS has been the lighthouse project of German e-business policy
initiatives in the past five years. About 64,000 documents have been downloaded from
the website since 2004. The positive evaluation of the results has led to the extension of
the initiative in 2006 until the end of 2008. A further extension is not unlikely.
A main argument in favour of a prolongation is that PROZEUS has accelerated ebusiness uptake among SMEs and their digital integration with suppliers and customers,
by raising awareness and providing incentives (grants, support), even if the number of
firms that have directly benefited from a project grant is quite limited (about 60).
However, the programme managers point out that many of the companies which have
successfully completed a project are then widely promoting their case. Companies are
proud of their achievements and regard PROZEUS as a good platform to present their
company as being innovative and successful. By doing so, they support the cause of
PROZEUS – using e-standards to make business processes more efficient. Thus, there is
anecdotal evidence of a possible snow-ball effect.
Furthermore, it can be argued that PROZEUS has created a sustained impact – both for
the individual companies as well as a the industry / value-chain level. Companies that
have conducted a project will continue to use the e-standards and ICT solutions they
have adopted, and possibly build on this experience and expand their e-business usage.
There are concrete examples. As most projects focus on improving data exchanges within
the firm's value chain, this will have an aggregated effect on the process efficiency within
the industry. Furthermore, it accelerates the building of critical mass, which is a key
success factor for the deployment of any networking technology. As outline above,
however, these effects are less concentrated than in regionally focused initiatives and
therefore more difficult to monitor and measure.
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5.4.4
5.4.4.1
The PROZEUS initiative contains several innovative approaches that could be considered
for other policy initiatives as well – not only in the field of e-business. Notable examples
are:
Combining depth with breadth in reaching SMEs
A major advantage and innovative aspect of the PROZEUS approach is that it combines
depth with breadth in reaching companies. Many e-business initiatives face the challenge
that they either focus on providing support to a few selected companies ("depth") or on
raising awareness by disseminating information to many companies ("breadth").
The strategy of PROZEUS to conduct concrete projects, measure and document the
impact, and then communicate the experience to others, is a smart solution to this
problem. A positive side-effect of this approach is the creation of a unique data collection
on e-business impact. This resource helps to identify new challenges and to adequately
design new support programmes, if needed.
Detailed documentation of projects – for all
The PROZEUS online archive of case studies is probably a unique source of unbiased
information about (German) SME e-business projects. It is an ideal source for German
companies to see what other companies have done and accomplished in e-business. See:
www.prozeus.de/prozeus/praxis/index.htm.
All case studies are broken down into four main sections: the project profile; the
background and objectives; the implementation (project phases); and a summary of the
main results. The section on implementation provides detailed information for each
project phase. This includes concrete information about the time and effort required for
each phase, and about problems experienced.
The "80/20 principle" for grants
PROZEUS applies a kind of Pareto principle to its project funding conditions: a minimum
of 20% and a maximum of 80% of the project work must be conducted internally (by staff
of the company); vice-versa, 20-80% of the work has to be outsourced to external service
providers (see Section 1.4).
The underlying rationale for this "80/20 rule" for outsourcing is to ensure both: the
development of internal e-skills, as well as brining expertise from external ICT service
providers into the SMEs. The 80/20 rule forces companies to establish contacts with
service providers (if they have not done so before), while allowing them to make a choice
whether they want to outsource a major part or only a small part of the technology
development and implementation. According to the PROZEUS project management, this
rule has worked very well.
5.4.4.2
Facilitators
When PROZEUS was launched in 2002, the agreement of e-business standards, and
considerations how to promote their adoption, were emerging issues with rising
importance. The start of the initiative was therefore ideally timed, as the services offered
met an existing and rising demand among SMEs. Besides the good timing for this topic,
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the following factors enhanced the effects of the PROZEUS initiative and contributed to
its success:
Excellent positioning of the implementing organisations: the initiative is jointly
managed by a standardisation organisation (GS1) and a think-tank for economic
studies (IW Consult) with close industry ties. Both organisations have excellent
contacts with industry federations, besides having expertise on standardisation
issues. This has helped to promote the initiative and to ensure the high quality of
services provided to companies.
Long-term project: PROZEUS benefited from the prolongation of the initiative from
the year 2006 on. The initiative has created momentum and can exploit the
experience from documented case studies during the first phase (2002 – 2005).
Ease of participation: The initial effort and requirements for companies to submit a
project proposal are reasonably low. They have to fill in a questionnaire of about ten
pages. Only in case their project is selected, they have to comply with more
substantial administrative requirements (e.g. for regular reporting of progress). This
reduces initial barriers which are often experienced by SMEs in other grant
programmes.
Pressure of large retailers: In the consumer goods industry, large retail chains exert
pressure on manufacturers to use standardised data exchange tools. PROZEUS was
exactly the right initiative for consumer goods producers in this situation.
Barriers
PROZEUS was also confronted with some challenges, notably the following:
Complexity of the issue: The awareness and knowledge of e-business standards
was very limited among companies in the beginning of the initiative. It was very
challenging to effectively reach companies with this "low priority issue".
Generation gap in the mind-set: In proprietor-owned SMEs, there was quite often a
generation gap in the attitude towards ICT and e-business. In some cases, firms
would not take their first steps into e-business before the young entrepreneur took
over from his/her father.
Hen-and-egg problem: In particular in manufacturing, the base of SME business
partners with whom data can be exchanged electronically was quite low until
recently. This reduced the value and thus the motivation of firms to engage in
related activities (à Metcalfe's Law).8
High initial effort: The initial effort to collect and digitise company data (e.g.
product data) in a standardised way can be quite significant. This creates a barrier to
entry from which many firms shy away.
Ambiguous reputation of ICT service providers: The new economy crash had a
disastrous effect on the reputation of ICT service providers among SMEs. This was a
significant barrier for projects in the first phase (2002-2005) which inevitably
required external assistance of service providers .
8
Metcalfe's law states that the value of a telecommunications network is proportional to the
square of the number of users of the system. Cf. http://en.wikipedia.org/wiki/Metcalfe's_law
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5.4.4.3
Learning points
The potential of joint initiatives: PROZEUS is actually the result of a "merger". Initially,
in 2001/02, GS1 Germany and IW Consult had each proposed separate (but similar)
initiatives to the German Ministry of Economics and Technology. When the Ministry
requested that the two organisations should merge their ideas and present them as a joint
initiative, the two organisations developed the PROZEUS concept. The successful output
of this cooperation demonstrates the potential of joining similar ideas into a larger
project, exploiting synergies while avoiding duplications.
Addressing managers with the right amount of information: PROZEUS has produced a
broad range of information brochures about e-business standards and applications. These
brochures address business managers who want a quick, easy-to-read introduction to the
topic and the underlying concepts, in order to help them understanding which decisions
they have to take. The large demand for these brochures and the positive feed-back
received proves that there is a need for this type of management information about ebusiness. In particular when working with smaller companies, it is most important to
adequately address the owners or managers of a company.
Voucher for initial consultation: Providing companies with a voucher for an initial
consultation (e.g. to discuss the current situation, business goals and possible projects) is
a useful mechanism to create momentum. Often, this first consultation triggers processes
at the firm and boosts further activities, which can then lead to a concrete project.
Time requirements underestimated: Experience has shown that companies often
underestimate the time it takes to implement an e-business project. Either the
implementation is delayed due to current business requirements, or the effort has been
underestimated.
The value of peer-to-peer communication: Whenever possible, PROZEUS gives the floor
to company representatives and lets them present their project. Experience shows that
peer-to-peer communication among entrepreneurs is most effective, because information
has more credibility.
Sectoral focus matters: Initially, most of the PROZEUS information material focused on
specific e-business applications, without addressing sectors in particular. It turned out
that communication is much more effective if specific sectors are addressed. Otherwise,
firms tend to disregard information because they consider is as "not applicable" to their
industry.
Flexibility in e-business projects: PROZEUS placed emphasis on strict project
management in the e-business projects it supported, with clear-cut tasks and deadlines.
On the one hand, this pressure on companies has clearly strengthened their commitment
and probably increased the success rate of projects. On the other hand, it is well-known
that ICT projects in particular often need to be considerably revised. For example, it is
difficult to estimate the effort and time needed for organisational changes in advance. It is
therefore important to allow for flexibility in case a task cannot be implemented as
initially planned.
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Strengths
(+) Coherent, systematic approach: The initiative was implemented in a coherent,
systematic way, right from the start. The different modules and activities are well
connected to each other.
(+) Effective external communication: The policy initiative has effectively and
efficiently used multiplier networks (competence centres, chamber of commerce) as
well as its own distribution channels (contact databases of IW Consult, GS1) for
communication and promotion of PROZEUS.
(+) Efficient use of resources: The output of the initiative (see Section 1.5.1), e.g. in
terms of projects and their meticulous documentation of results, and the value
created for companies, is convincing in relation to the public funding used. The
efficiency is linked with the innovative approaches used (see Section 1.6.1) and the
cooperation of two organisations with complementary skills.
(+) Ability to provide unbiased advice: PROZEUS does not sell software, but acts as a
neutral source of assistance, information and advice. It does not recommend any
specific software solution, hardware application, providers or IT consultants. With
regard to service providers, PROZEUS "only" provides a platform where companies
can search free-of-charge for IT product suppliers and consultants.
(+) Creation of a unique resource of information: The reports received from SMEs
about their projects, including hard data on effects, has created a unique source of
information about e-business opportunities, challenges and impacts. This should be
exploited by policy and research.
Weaknesses
5.4.5
(-)
Limited regional / sectoral impact: Since PROZEUS works with companies from all
over Germany and from different sectors, the impact is less focused and visible than
in regional initiatives.
(-)
Limited number of projects: The chosen approach necessarily causes restrictions in
the number of SME projects that can be directly supported with grants (about 60).
References
Research and interviews for
(www.empirica.de). Main sources:
this
case study were conducted
by empirica
Website and brochures of the PROZEUS initiative (www.prozeus.de)
Telephone interview with Mr Ralf Wiegand, Institut der deutschen Wirtschaft Köln
Consult GmbH, 19 April 2007 (conducted by H. Selhofer, empirica GmbH)
Interview with Ms Steffi Kroll (GS1 Germany), Mr Ralf Wiegand and Ms Manuela
Alevrakis (Institut der deutschen Wirtschaft Köln Consult), Cologne, 20 September
2007
"The project PROZEUS: the German experience with application of standards in
SME business processes". Presentation by Mr Ralf Wiegand, IW Consult, and Mr
Tim Bartman, GS1 Germany, e-BSN Workshop in Berlin, 25 May 2007
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"The project PROZEUS – Best practice examples of eBusiness implementation in
SMEs". Presentation by Ms Steffi Kroll, GS1 Germany, at the e-BSN Workshop in
Paris, 05 July 2007
"The e-Business Project of Hudora GmbH – a PROZEUS project." Presentation by
Mr Maximillian Dornseif, Hudora GmbH, at the e-BSN Workshop in Paris, 05 July
2007.
e-Mail communication with representatives of the PROZEUS initiative on specific
questions, April-September 2007.
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5.5
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TASK – Programme for Establishing Software Supply
Chains (Germany)
Fact sheet
language):
TASK – Transferprogramm zum Aufbau von
Softwarelieferketten
TASK – Transfer Programme for Establishing Software Supply
Chains
Software industry
Geographic focus:
Land Baden-Wuerttemberg (in Germany)
Start date:
March 2005
End date:
The pilot project ended in October 2006. However, the project led
to the foundation of TaSK GmbH in Nov. 2006
Initiated by:
Ministry of Economics Baden-Wuerttemberg
Implemented by:
MFG Baden-Wuerttemberg (the state's centre of excellence for IT
and media)
Funding:
€ 150,000
Contact person(s):
For the TASK pilot project:
Ministry of Economics BadenWuerttemberg
Ms. Tina Schanzenbach
MFG Medien- und Filmgesellschaft Baden-Württemberg mbH,
Breitscheidstr. 4, 70174 Stuttgart, Germany
[email protected]
For TaSK GmbH:
Mr. Manfred W. Petz
Vordere Karlstraße 12, 73033 Göppingen, Germany
[email protected]
Website(s):
The TASK project was conducted as part of the "do.it" initiative,
an IT and media initiative of Baden-Württemberg's federal
government.
http://www.doit-task.de
http://www.task.de.com
Abstract
The production of software is increasingly conducted as a distributed process, involving
different service providers. System integrators coordinate their work and integrate the
various components of the software. Inter-firm cooperation for software engineering is
gaining in importance.
The TASK project (2005/06) aimed at enhancing the value creation within these emerging
"software supply chains" in Baden-Wuerttemberg, the third-largest of the 16 German
federal states (with 10.7 million inhabitants) and one of the leading high-tech regions in
Germany. The project focused on cross-company cooperation, integration and
implementation of software components. About 60 companies, including software
producers and user companies, cooperated in the development of innovative and
marketable solutions, such as a groupware tool ("colamo"), a tool for providing online
customer service and a solution for e-billing.
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The TASK project was implemented and managed by the MFG Baden-Wuerttemberg, the
state's centre of excellence for IT and media, and was funded by the Ministry of
Economics of Baden-Wuerttemberg. The project ended in 2006. However, as the results
were promising, a group of stakeholders founded the TaSK GmbH in 2007 to continue
the approach on a commercial basis. TaSK GmbH supports SMEs in the industry by
pooling resources and providing companies with services such as access to industry
networks, financing and support in distribution and marketing.
The initiative was successful in terms of its outputs and its sustained effects on
cooperation and networking within the regional software industry. It demonstrated the
importance of unbiased (third party) moderators and coordinators for cooperation
projects.
5.5.1
Baden-Württemberg, the third-largest of the 16 German federal states (with 10.7 million
inhabitants), is one of the leading European locations for IT and media. About 300,000
employees in more than 30,000 companies generate an annual turnover of € 57.3 billion.
The IT and media sector represents the most profitable and the most important industry
in Germany's Southwest. The sector accounts for close to 10% of the gross value added,
compared to 6% for the state's world-famous automotive industry.9
Many of these software and IT companies focus on developing innovative products and
services. They play a fundamental role as innovation enabler, via strong connections with
other technology areas and especially the creative industries.
Software production is increasingly conducted as a distributed process, involving
different service providers. System integrators coordinate their work and integrate the
various components of the software. Thus, inter-firm cooperation for software
engineering is gaining in importance.
Against this background, and considering the importance of the sector for the regional
economy, the TASK project aimed at enhancing the value creation within software
supply chains in Baden-Wuerttemberg. The project supported cross-company
cooperation, integration and implementation of software components.
The TASK project is rooted in the concept of "software supply-chains", which transfer the
concept of a manufacturing and retail supply chain to the software industry. The
argument is that small firms in this industry have to organise themselves in software
supply chains in order to stay competitive in the long run. The supply chain concept was
developed by the regional research association "PRIMIUM", which gathers about 20
universities, research organisations and companies in Baden-Wuerttemberg. PRIMIUM
proposed this as an important issue to the State's Ministry of Economics. The Ministry
responded to this impetus and issued a call for tender for the "TASK project". In this
project, three pilots should be conducted for the development of software supply-chains
in three domains (see 1.4.1 – implementation). For each project, a coordinator was to be
found.
The TASK project was launched in spring 2005. The implementation was managed and
controlled by the MFG Baden-Wuerttemberg, the state's centre of excellence for IT and
9
Cf. do it.online: "Baden-Wuerttemberg: Europe's leading location for IT and media."
http://www.english.doit-online.de/cms/At+a+glance/IT+and+Media+Sector (Sep. 2007)
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media,10 in the framework of the "do it Baden-Wuerttemberg – IT and Media Initiative"
(www.doIT-online.de). Via its do it.initiative, Baden-Württemberg strives to create and
sustain an ideal environment for its prospering IT and media sector. This encompasses
extending the infrastructure, providing dedicated support to company start-ups, e.g. via
opening up new markets and internationalisation. Do.it offers an information portal to
exchange ideas and promote cooperation and publishes a weekly newsletter with more
than 10,500 subscribers, as well as the do-it.magazine. The "do-it" office is also run by
MFG Baden-Württemberg.
The TASK project was funded by the State Ministry of Economics with € 150,000. The
project ended in November 2006, but resulted in the foundation of the TaSK GmbH
which operates on a commercial basis. In this case study, "TASK project" refers to the
initial project phase (i.e. the period from March 2005 to October 2006), while "TaSK
GmbH" refers to the commercial follow-up venture that was launched in January 2007.
Targets and target groups
The TASK initiative addressed primarily small and medium-sized software companies in
the region, and – indirectly – their business customers. The main direct goal was to pilot
three cooperative engineering processes ("software supply chains") in the industry. It was
anticipated that these pilots would trigger processes that contribute to the following
wider objectives:
Strengthening the competitiveness of SMEs in the software industry by improving
work processes and exploiting economies of scope
Enhancing the provision of high-quality software solutions and services to SMEs
from various sectors in the region
The second objective and the chosen approach take into account that many of the smaller
software companies provide their services mainly to customers in the same region.
Therefore, the competitiveness of the regional software industry, and in particular the
quality of their products and services, can have an impact on the productivity of user
industries.
The operational target was that at least 30 regional software companies should get
involved and cooperate with each other in the three pilot projects.
Resources
The TASK project was funded by the Ministry of Economics of Baden-Wuerttemberg
with € 150,000. This budget was mostly used for setting-up, promoting and coordinating
the three pilot projects.
The total cost of the project was higher, as many of the participating software companies
contributed services in kind (e.g. software modules that were required for the solutions
which were jointly developed by the working groups). These services were not financed
from the project budget. The total value of these contributions has not been calculated.
10
With an annual business volume of € 15 million and more than 60 employees in the headquarter
in Stuttgart, MFG promotes Baden-Wuerttemberg as a premier location for the creative
industries. More information: www.mfg.de/english
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5.5.2
Activities
5.5.2.1
Implementation
Initiation phase
The initial idea for developing and enhancing regional "software supply-chains" of
software SMEs was developed by a regional research association, involving about 20
universities, research organisations and companies.11 The Ministry of Economics
responded positively to this idea and – jointly with the universities – developed the plan
for a project, in which modules and reference architectures for supply-chain chains
should be developed and tested in several pilot projects.
In 2004, the Ministry issued a call, inviting proposals for suitable projects and offers to set
up and moderate a working group. The technical requirements specified in the call very
not very specific, giving tenderers much room for developing their own ideas. Finally,
three project managers were selected and appointed to build a working group and start a
project.
The three working groups
The TASK project started in March 2005 with the establishment of three working groups,
gathering software providers, system integrators and user companies from BadenWuerttemberg.
The working groups were assigned to plan and initiate innovative cooperative pilot
projects in the following three application areas:
Working Group 1: Infrastructure/Middleware – interoperable data transfer for
group data in groupware, CRM and ERP
Working Group 2: Business applications for B2B and finance – component-based
reference solutions for finance applications
Working Group 3: Business applications for customer service – productive system
for processing of customer service demands
In total, more than 60 companies participated in these working groups. Among those,
about 20 software companies actively contributed services (in particular software
components) in-kind. The other companies participated in the consultation process.
The working groups had quarterly meetings, where the project goals, the approach and
the progress achieved were discussed. The concrete work on the pilot solutions was
planned and conducted in bilateral meetings of those companies that cooperated in a
task.
11
Forschungsverbund "Prozessinnovation mit Unternehmenssoftware – PRIMIUM (Research
Association "Process Innovation With Business Software).
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TASK project example:
colamo.org – facilitating real-time mobile collaboration
colamo.org was one of the reference projects in the TASK initiative. Colamo is an
Open Source (OS) project, focusing on the development of middleware (in a Javabased environment) for mobile collaboration tools. Today, the forum for colamo.org
is coordinated and guided by three companies (Neuberger & Hughes, inmedias.it
and Rahlfs+Ross Multimedia).
The main goal of colamo is to enable real-time communication with online-users, by
enabling access to services from different mobile devices (e.g. from Java-compliant
mobile phones). With its transparent and open interface, the solution can be used by
every modern software system for mobile services. The colamo project addresses
existing technical problems in mobile collaboration, such as synchronisation errors,
lack of secure services, and lack of access to real-time collaboration processes. In the
long run, colamo.org aims at becoming the "leading mobile collaborative application
framework that will run on all major mobile platforms' (mission statement).
The idea for colamo and an OS community had existed before the TASK project
started, but gained significant momentum from being selected as one of the three
TASK pilot projects. Workshops were conducted to identify potential contributors,
i.e. software companies in the region which would support this OS approach. About
20 companies actively participated in this TASK working group and helped to raise
awareness for the colamo initiative.
Source: Website of colamo.org (www.colamo.org), interview with Mr Mirko
Ross, Rahlfs+Ross Multimedia GmbH
As a support measure for the work of the three groups, the TASK project set up an online
cooperation platform (www.doit-task.de) to connect software and user companies. The
platform includes a database where software producers, system integrators and
consultants can register and enter information about their services.
The results of the working groups is described in Section 1.5.1 ("Outputs").
Foundation of the TaSK GmbH
When the TASK project ended in November 2006, project participants founded the "TaSK
GmbH – Transferagentur für Software- und Servicekooperationen" ("Transfer Agency for
Software and Service Cooperations"). TaSK GmbH is an integration, communication and
business platform connecting software producing companies and their service providers.
TaSK GmbH provides the following services for members:
1.
Analysis, planning and implementation of distribution and marketing activities
2.
Analysis and access provision to financial services
3.
Support in company and business development
4.
Access to resources
5.
Community management
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TaSK GmbH offers two types of membership:
TaSK Partnership (annual fee of € 5,000). TaSK partners provide the services that
are offered by TaSK GmbH. Partners pay a commission to TaSK GmbH for
contracts that have been established through TaSK. In addition, or as an
alternative, a commission can be agreed for the acquisition of contracts.
Membership in the TaSK Community: Companies can become members of the
TaSK Community for a membership fee of € 1,950. This gives them access to
various services provided exclusively to TaSK members.
TaSK GmbH supports software companies both in their strategic planning processes as
well as in their operational processes. In the strategy domain, TaSK GmbH positions itself
as a "management partner" offering support in company development, business
development and in business process design.
In the operational domain, TaSK GmbH aims at providing support services for all
primary business processes in the value chain of a software company:
Figure: Typical value chain of a software company: operational primary processes
Market
analysis
Product
design
Software
developm.
Marketing,
distribution
Product
implement.,
consulting
Customer
service
TaSK GmbH started with its own market analysis in 2006. It was explored whether the
activities of the TASK project could be continued on a commercial basis. To this end,
explorative interviews were conducted with potential members and customers.
Due to the positive results, the company ltd. was founded in January 2007, and first
contracts were concluded. In 2007, the focus is on company development (brand
development, communication, development of the services). In 2008, TaSK GmbH plans
to focus on expanding the range of services and starting cooperation with related
initiatives and organisations, also in other regions.
5.5.2.2
Communication
External communication
The communication objective for the TASK project managers was to gain the support of
software companies and user companies to participate in the working groups and pilot
projects. This was mainly accomplished by targeted direct personal contacts with
companies. Contacting companies, explaining the project idea and concept to them, and
inviting them to participate, was one of their main activities during the early phase of the
project. One of the selection criteria for the three moderators was that they had proven
contacts with the industry, and that they were in a position to quickly set up a working
group.
In parallel, the project was promoted to a wider audience. Information was mainly made
available on the TASK online platform at the do.it portal (www.doit-task.de). For example,
workshops were announced and presented on the website, and a contact person was
specified for each workshop who would provide further information on the issue on
demand.
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The TASK project participated in the CeBIT 2006 trade fair with an information stand. A
CD-ROM informing about the project (based on content also available on the website)
was distributed to visitors.
Furthermore, the initiative was promoted by MFG Baden-Wuerttemberg as part of its
general communication activities, for example in its brochures (the MFG magazine "do
it!") and in the do-it.newsletter. MFG Innovation, the section of MFG that coordinated the
TASK project, maintains a contacts database with about 93,000 entries and generated
about 23 million contacts in 2006.
All in all, external communication was very focused on gaining the cooperation of
software companies for the pilot projects.
Internal communication
The three working groups were managed by an appointed moderator who had been
selected through an open call for tender. The three moderators reported to MFG BadenWuerttemberg. Working groups had quarterly meetings.
A weakness of the internal communication structure was the lack of coordination and
exchange between the three projects. In essence, the TASK project consisted of three subprojects which were conducted in parallel, without much communication between them.
5.5.2.3
Evaluation
Unsurprisingly, given the comparatively small scope of this project with a total funding
of € 150,000, there was no formal evaluation of the project results. Each of the three
working group moderators submitted a final report to MFG Baden-Wuerttemberg,
informing about the activities and results of the project. The assessment of outcomes and
impacts presented in the next sections, however, is mainly based on interviews with
stakeholders.
5.5.3
Results
Outputs
The work of the three pilot projects resulted in the development of two marketable
software solutions (colomo, e-billing software), and preparatory steps for the
development of a reference architecture for a software supply-chain (focusing on the
development of online customer service solutions).
Groupware tool "colamo": Activities of working group 1 focused on collaboration
in the area of "infrastructure & middleware". To this end, the Open Source (OS)
project "colamo.org" ("Collaborative Mobile Application Framework") was selected
as a reference project. The idea for colamo and an OS community had existed
before the TASK project started, but gained significant momentum from being
selected as one of the three TASK pilot projects. About 20 software developers
participated in the working group, contributing their know-how and ideas for the
development of OS solutions for real-time collaboration via mobile services (see
project example).
e-Billing solution: Working group 2 on "business applications for B2B & finance"
developed a component based software solution for e-billing, which supports
business processes such as electronic invoicing and document archiving. The
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resulting product is sold in the market today. One of the reference companies that
uses this solution was awarded a special prize in the "BestPractice-IT-Award" (for
the highest technological progress achieved).12
Online customer service: Working group 3 on "business applications for customer
service" focused on the development of a reference architecture for the cooperative
development for online customer service solutions. Special emphasis was placed
on using the internet as a communication platform for servicing customers in an
advanced way. This includes applications for informing customers about services,
the automatic generation of offers, and applications for project management and
controlling which create full transparency for customers about the project status. A
prototype of a solution has been developed during the TASK project phase.
Thus it was mainly working group 3 which addressed the original objective of the TASK
project, namely to develop reference architectures for establishing software supply
chains. The activities of working groups 1 and 2 were focused on the joint development
of specific marketable solutions, rather than on developing a generic reference
architecture.
Outcomes
The TASK project demonstrated that improved cooperation within software supplychains facilitates the development of targeted, high quality software solutions,
particularly for SMEs. The project results confirm that improving the conditions for
cooperation in the software industry, notably within regional clusters, has positive effects
in two ways: for the companies themselves, and – as a wider impact – for users of the
developed solutions.
The main effects which the initiative has triggered in participating software SMEs can be
summarised as a sequence of effects, starting with improved work processes and
ultimately leading to improved market performance:
Figure: Effects triggered by the TASK project
Improved work
processes
Improved supply
chain integration
Improved SME
competitiveness
Improved firm
performance
Improved work processes: The cooperation of companies in the pilot projects has
given them the opportunity to test cooperative work processes. SMEs confirmed
that this was a positive experience. Although it cannot be guaranteed to what
extent there will be a sustained effect beyond the project life-time, the positive and
productive experience from the working indicates that companies will probably
continue to cooperate.
Improve supply chain integration: It was the main goal of the TASK project to
enhance cooperation among software SMEs in a sustained way. This has been
achieved. The foundation of TaSK GmbH as a commercial enterprise after the
project ended in 2006 indicates that the idea behind the project was not just theory,
but a realistic business model.
12
The "BestPractice-IT-Award" (www.bestpractice-it.de) is one of the major awards for outstanding
achievements by SMEs from the ICT industry in Germany and Europe. The award ceremony
takes place at the CeBIT in Hanover.
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Improved competitiveness of SMEs: By cooperating and joining competencies,
smaller software companies have better opportunities in competing with large
service providers. While this holds true for most industries, collaborative
processes13 are particularly important in software development; therefore, the
potential of tools that support such processes is probably higher than in other
sectors.
Improved market performance: As the TASK project lasted only for about 18
months, it is too early to assess or even quantify the effects in terms of firm
performance (e.g. revenue, profit). However, all evidence suggests that the
improved competitive positioning of the software companies (due to better
cooperation) will translate into firm performance. The sustained use of the tools
that have been developed during the
Wider effects on the region
The software industry is an important enabler of innovation in user industries, notably of
process innovation. According to e-Business Watch studies, 75% of those companies
which introduced new business processes in 2006 said that their innovation was ICTenabled.14
Against this background, the initiators of the TASK project argued that improved supplychain processes in the regional software cluster would translate into better solutions. In
particular, SMEs in user industries would benefit from this improvement, as they are the
main clientele of smaller software companies.
It is hardly possible to provide concrete evidence on whether and to what extent this
objective has been achieved after such a short period of time (TASK was only launched in
2005) and considering the limited scale of the TASK project.
There is some evidence that the project has actually made a difference, however:
Two solutions developed by the TASK working groups are actually being used
and further developed; for another solution, a prototype was developed.
The project has demonstrated that the concept of software supply-chains is
feasible, although it is complex and requires a significant preparatory effort, in
particular for specifying modules and developing reference architectures. This
positive finding will encourage further research and work of universities in this
field and stimulate further pilots.
13
Note the difference between "cooperation" and "collaboration": Cooperation means the division
of labour into tasks so that each person is responsible for a specific portion of work.
Collaboration refers to the mutual engagement of participants in an coordinated effort to solve a
problem. In cooperation, coordination is only required when assembling partial results, while
collaboration is more of a coordinated, synchronous activity.
14
European Commission, DG Enterprise & Industry: The European e-Business Report 2006/07, p.
66. Available at www.ebusiness-watch.org/key_reports/synthesis_reports.htm.
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5.5.4
5.5.4.1
The key innovative aspect of the TASK project is the practical application of the
underlying concept of "software supply-chains". In this concept, smaller software
companies cooperate and collaborate in the development and marketing of solutions
based on a carefully developed cooperation model, rather than on a project-by-project
base. The concept has been occasionally discussed in research and literature,15 but has
only rarely been put to a practical test.
The concept recognises that the way in which organisations acquire and develop software
is changing, and, as a result, the economics of systems delivery has to change too.
Establishing supply-chains might be one strategic response. However, there are several
unanswered questions that have to be dealt with. For example, whether it is possible, "…
technically and organisationally, to design the requirements, process and architecture
together", what will be the gains, "how will the gains (losses) be appropriated and
distributed", and "what are the organisational implications".16
The TASK project cannot finally answer these questions, but it was a first effort to pilot
these issues. Working group 3 in particular started with the design of requirements,
processes and architectures for a software supply-chain.
5.5.4.2
Facilitators
The following factors have facilitated the implementation and success of the TASK
initiative:
Strength of the regional software cluster: Baden-Württemberg is one of the
leading European IT and software clusters. Thus, there was "critical mass" to
generate an interest in this initiative and to find companies to participate.
Systematic approach: The TASK project was well embedded within the regional
technology transfer programmes and networks. It was conducted in the framework
of the "do.it" IT and media initiative" of Baden-Württemberg, which strives to
create and sustain an ideal environment for its prospering IT and media sector. It
resulted from research activities supported by PRIMIUM, the regional research
association.
Sector-specific approach: By explicitly focusing on the supply chains of regional
software SMEs, the TASK project was able to address specific requirements of
companies and of the regional economy.
Cooperation of SMEs: The working group moderators report that the software
companies they addressed were mostly cooperative and interested in the project. It
was not hard to get them to participate.
15
See, for example, Farbey, Barbara & Finkelstein, Anthony (2000): "Exploiting software supply
chain business architecture: a research agenda". Paper, University College London, Department
of
Computer
Science,
Gower
Street,
London
WC1E
6BT,
UK.
http://www.cs.ucl.ac.uk/staff/A.Finkelstein/papers/supplybrief.pdf
16
ibid.
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Barriers
The TASK project was confronted in particular with following challenges:
Legal issues: Liability turned out to be a critical and complex issue for cooperation
and collaboration in software projects. If several companies contribute to a
software solution in a collaborative environment, in case of technical problems, it
can be difficult to decide whom to hold responsible.
Conflicts of interest: Although most SMEs were motivated and eager to
participate, unavoidably, there are conflicts of interest in joint projects. Solving
these issues was a key function of the project moderators. Therefore it is important
to have a third party moderator in such cooperation projects, rather than just
letting the project participants sort it out for themselves.
Finding users for prototypes: A major challenge was to find user companies for
testing prototypes of software solutions.
Vague instructions for projects: The moderators were given much personal
freedom to design their projects. However, as one of the moderators argues, "more
specific assignments would probably have been advantage, as it would have made
the work easier for us."17
5.5.4.3
Learning points
The following lessons can be learned from this pilot initiative:
The need for unbiased moderators: The project confirmed the critical importance of
having an unbiased third-party moderator in cooperation initiatives, particularly during
the set-up phase. Without a neutral moderator, there is a high risk that a working group
will be blocked by conflicts of interest (see above) among the companies involved.
Concept of software supply-chains is promising: Overall, the project results are quite
promising. The concept of software supply-chains could be a viable business model for
SMEs to stay competitive.
Need for reference models and architectures: The results of working group 3 (on online
customer services) clearly showed that it is necessary to specify modules and develop an
architecture for cooperation within the supply chain. This preparatory effort must not be
underestimated, as many issues have to be addressed and clarified in advance, such as
possible conflicts of interests, the process design and the use of standards, and liability
issues.
"Repackaging" of software solutions: In software-supply chains, companies will often
have to contribute only parts (modules) of their existing solutions and products as an
input to a joint project. This may require a change of mindset among firms, as they
normally sell the full product, package or service to customers. However, not everybody
within the supply chain can do everything – they have to agree on how to share the work
(and business). This is a similar issue as in cooperative SME initiatives in manufacturing,
for example in the furniture industry, where companies move towards specialisation.
Larger scale pilot projects needed: The time and budget for the project were insufficient
with regard to the objectives, notably to fully develop an architecture and organise an
17
Interview with Manfred W. Petz, moderator of working group 3, September 2007.
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industry supply-chain based on this model. The foundation of TaSK GmbH after the end
of the project is a prove that stakeholders believe in the concept as a viable business
model. However, they say that the complexity of the issue requires larger scale pilots and
adequate funding. This is also a recommendation for future initiatives of this type.
5.5.4.4
The TASK initiative is characterised by the following strengths and weaknesses:
Strengths
(+) Systemic approach: The project was well embedded within the regional development
programme and innovation strategy of Baden-Wuerttemberg. The chosen industry is a
very important sector in this region – by itself and as an enabler for innovation in other
industries. The project objectives reflect this context.
(+) Focus: By explicitly focusing on the supply chains of regional software SMEs, the TASK
project was able to address very specific needs.
(+) Marketable outputs: The software architectures that have been developed by the
working groups during the project phase have led to marketable solutions that are
being used by regional software companies. This is in contrast to many other projects
(e.g. in the RTD field), where market deployment is not achieved.
Weaknesses
5.5.5
(-)
Inadequate budget / project life-time too short: The funded period of the TASK project
was probably too short to achieve a sustained impact. If no initiative had been taken to
continue the activities after the end of the project (via TaSK GmbH), the longer-term
effects would be questionable.
(-)
No exchange between the working groups: A major shortcoming of the project was
that there was no interface to exchange experiences between the three working groups.
References
Research and interviews for
(www.empirica.de). Main sources:
this
case study were conducted
by empirica
Telephone interview with Mr Manfred W. Petz, Innovations Management,
Managing Director of TaSK GmbH, September 2007
Telephone interview with Mr Mirko Ross, Rahlfs+Ross Multimedia GmbH (and
contact person for the colamo.org community), September 2007
Websites of the TASK pilot initiative (www.doit-task.de) and of TaSK GmbH
(www.task.de.com)
"TaSK GmbH – Leistungsprofil, Nutzen und Beteiligungsmöglichkeiten an der
Transfer Agentur für Software- und Servicekooperationen." Company presentation,
held at the kick-off event of TASK-Community MFG, 15 November 2006.
TASK Leistungskatalog 2007 (TASK service portfolio 2007). 1 November 2006.
Website of colamo.org (www.colamo.org) and CD "colamo.org – Guided Tour",
presented at CeBIT 2007.
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5.6
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The Digital Future Initiative (Greece)
Fact sheet
language):
Psifiako Mellon
Digital Future
Broad range of sectors
Geographic focus:
Greece (whole country)
Start date:
October 2006
End date:
December 2008
Initiated by:
Ministry of Development
Implemented by:
General Secretariat for Industry
Funding:
Total public sector contribution: € 75 million (about 50% of total
costs). 75% of these contributions are funded by the European
Regional Development Fund.
Contact person(s):
Ms Anagnostou , Director of Informatics,
Ministry of Development, General Secretariat for Industry,
Informatics Department, 119 Mesogeion Ave,
10192 Athens, Greece
Tel: (0030) 210 6969810 - 6969187
Greek Operational Programme for the Information Society
Website(s):
www.psifiakomellon.gr
Abstract
SMEs are increasingly aware of the opportunities offered by advanced ICT solutions and
thus develop more sophisticated ICT requirements. However, they are still in need of
technical and financial assistance in their way up in the e-business ladder, typically
because of the high costs of such an endeavour.
Against this background, and considering that Greek SMEs, in general, still need to boost
their ICT modernisation efforts, the Greek Ministry of Development launched the
"Psifiako Mellon" (Digital Furture) Programme in October 2006, in continuation of the
successful "Epihirite Electronica" (Operate Digitally) programme.
In contrast to the preceding initiative, "Digital Future" focuses on the more advanced and
ICT-minded SMEs which demonstrate an interest in innovating their business processes.
Digital Future aims to support those SMEs by (a) subsidising the development of
information technology solutions to serve their activities, (b) increasing the level of IT
professionalism within enterprises, (c) developing new digital products and services and
(d) increasing the number of jobs in technology-related sectors. The programme supports
ICT-related investments of companies. It is co-funded by the European Regional
Development Fund and will probably run until December 2008.
5.6.1
Today, e-business has become one more element of modern business practices that is
proved necessary for their competitiveness. However, small and medium sized
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enterprises (SMEs) are often unable to accommodate e-business methods to their business
processes because of the limited financial, technological, and human resources available.
Greek SMEs, in particular, are in great need of a boost in their modernisation efforts. This
need has long been recognised by the Ministry of Development, which has launched a
number of initiatives aiming to mainly assist the very small firms and the small firms to
accommodate ICT in their business practices. During this time, however, it became
apparent that state subsidies and grants could have a multiplier effect if spent on the
more advanced SMEs who are more aware of the opportunities offered by ICT solutions,
but still lack the technical, financial, and human resources necessary to accommodate ebusiness practices to their daily operations.
Thus, the general perception that Greek SMEs need financial and technical assistance in
order to benefit from ICT, the availability of public funds, and the perceived success of a
previous Programme with similar scope ("Epihirite Electronica" – Operate Electronically),
triggered the Greek Ministry of Development to continue this programme with the
'Psifiako Mellon' (Digital Future) initiative. The main difference between the two
programmes is that Digital Future targets SMEs with 15-250 employees in all sectors of
economic activity, whereas Epixeireite Electronica focused on the vast majority of micro
enterprises with up to 10 employees.
"Digital Future" aims to strengthen Greek SMEs' participation in the Information Society
through
subsidising the development of information technology solutions to serve their
activities,
increasing the level of IT professionalism within enterprises,
developing new digital products and services and
increasing the number of jobs in technology-related sectors.
Digital Future is part of Measure 3.2 of the Information Society Operational Programme, a
Programme set up within the Third Community Support Framework Programme for
Greece and responsible for the design and implementation of the national strategy
towards the information society. Digital Future is thus co-financed by national and
European Structural funds. The public sector contributes with 45-55% to the total budget
of the Programme. 75% of the public sector's contribution comes from the European
Regional Development Fund.
Target groups
The initiative is deliberately designed to address the needs and expectations of ICTminded firms from a broad range of sectors. However, there are a number of criteria
which companies need to comply with in order to be eligible for funding:
Firms must have their primary business activity is in manufacturing, tourism,
commerce, or services.
Firms must have commenced operations before 1/1/2003.
Their base of activity should be within Greek territory.
They should maintain C" Class Tax records.
Their mean profits, before depreciation and taxes, for the period 2003-2005 should
be positive.
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They comply with both the following two conditions: (a) during 2005 they were
employing between 15-250 employees; and (b) they comply with the set of criteria
set by Recommendation 2003/361 of the European Commission regarding the
definition of SMEs.
The budget of each project proposal should be between 100,000 and 800,000 Euros
and should not be less than 40% of the enterprise sales revenue for 2005.
Targets
The policy has no specific measurable targets or outputs. It has two main overall
objectives, one direct and one indirect. The first direct objective has been to create a
favourable e-business environment in the country and assist the more dynamic, ICTminded Greek SMEs establish more efficient and cost-saving business processes. The
second indirect objective relates to industrial policy considerations. The significant
amount of public funds spent on e-business policy, is expected to give a boost to the
Greek ICT industry and increase the number of jobs in technology-related sectors in the
country.
In the design phase, policy makers had a regional dimension in mind. The plan was that
50% of the total budget of the initiative would be spent on firms in peripheral regions.
Resources
Although when originally announced (Ministerial Decision of 25/7/2006), the public
budget for the Programme was only € 16 million, the Minister reserved the right to
further increase public funding should funds became available and investment plans
submitted received positive evaluation. Thus, the revised total public sector budget of the
initiative announced in April 2007 came up to € 75 million.
The public sector contributes with 45-55% to the total cost of the Programme (including
private funds). 75% of public sector's contribution to the Programme is financed by the
European Regional Development Fund.
According to the implementation guidelines, at least 25% of private funds should come
from companies' own resources. The rest could come from other sources, e.g. bank loans.
In the proposal preparation phase, almost always companies required the assistance of
specialised consultants to deal with the practicalities and bureaucracy of proposal
preparation. Consultation fees are covered by the Programme and beneficiaries can
recover these initial expenses. In the implementation phase, most medium size
companies carry out the required activities using own human resources and the technical
assistance of their technology vendors and providers.
5.6.2
Activities
5.6.2.1
Implementation
The General Secretariat for Industry at the Ministry of Development is the administrative
body responsible for running Digital Future. The choice of activities upon which the
Programme would focus had been a matter of long discussions between the Secretariat
and other stakeholders, in particular the Association of Greek IT Companies. As experts
in the field, officials of the Association were called to express their views on the ICT
needs of the more advanced Greek SMEs and on the ways in which they could fulfilled
under this new initiative.
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Grants for SME projects
Digital Future subsidises ICT-related investment plans of SMEs aiming at
the improvement of information management and the integrated electronic
support of inter and intra-firm processes. This objective will be achieved through
the installation and operation of Information Systems for integrated support of
business processes (e.g. ERPs, CRMs, CAD, etc).
the promotion and use of modern information systems for the integrated support
of business processes (e.g. with the use of the ASP model)
the strengthening of collaborative electronic commerce and the networking among
collaborators, suppliers and customers with the use of modern tools supporting
electronic transactions
the creation, management and distribution of electronic content
The programme subsidises the following types of services: expenses for equipment and
software, costs for installation and customisation of applications, the creation of digital
content, and consultancy services of external service providers.
Companies are eligible to receive grants covering between 45% to 55% of the estimated
total cost of their projects. The Programme launched only one call for proposals in the
third quarter of 2006. The list of selected projects was announced in April 2007. 841
investment plans out of more than 1000 plans submitted, were positively evaluated and
entered the implementation phase. All selected projects should be completed within 12
months.
The total budget of these plans (including private funds) amounts to € 154 million, of
which total public funding amounts to € 72 million. The average funding provided per
project is more than € 250,000. According to the implementation guidelines of the
Programme, at least 25% of private funding should come from companies' own
resources. The rest could come from bank loans.
Of all plans selected for subsidisation, 464 come from the Attica region and 322 from the
rest of the country. Proposal submission is conducted electronically and the Programme's
website is updated regularly by the Informatics Department of the General Secretariat for
Industry at the Ministry of Development.
Although the duration of projects normally is up to 12 months, the General Secretariat for
Industry at the Ministry of Development, which oversees the implementation of the
whole initiative, estimates that a short extension period is likely to be given to grant
holders to complete their projects. However, as Digital Future is co-funded by the
European Regional Development Fund through the Third Community Support
Framework Programme, this extension period should not exceed the official end of the
3rd CSFP at the end of 2008.
Evaluation criteria for project proposals
Regarding the implementation process, the Secretariat set up a mechanism for the
evaluation of proposals. The evaluation process included two steps. The first step
included four stages. The first stage disqualified companies that did not meet the
aforementioned typical criteria of eligibility and/or lacked the required supporting
documentation. The second stage disqualified companies that did not meet the solvency
test. All remaining proposals passed on the third stage where they were evaluated based
on two sets of techno-economic criteria, as follows:
Group A: Criteria regarding enterprises' performance record over the last three years
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1.
Existing technological and production capacity (tangible and intangible assets)
(20%)
2.
Rate of annual revenue change over the last three years (6%)
3.
Rate of change in profits before taxes and depreciation over the last three years (6%)
4.
Mean ratio of current assets to short term liabilities (6%)
5.
Borrowing burden of year 2005 (short term borrowing liabilities/total sales) * 100
(6%)
6.
Change in full-time personnel over the last three years (6%)
Group B: Criteria regarding the quality of the proposed investment plan (50%)
7.
Documentation of the necessity of the investment – level of compliance of the
investment with identified business needs (15%)
8.
Completeness of the investment plan and project management (10%)
9.
Expected benefits (10%)
10. Qualitative characteristics of the proposed investment plan: Extension of proposed
technological solution, interoperability, feasibility of proposed technical plan,
maturity of infrastructure (15%)
The first step concluded with the forth stage which included an in-depth examination of
the financial part of the proposal. In the second step of the evaluation procedure, the full
list of proposals (both disqualified and approved), along with all necessary
documentation, was passed on to an Advisory Committee consisting of members of the
Secretariat and a representative of the Information Society S.A.18 The Committee's role
was to go through the work done in Step 1 and confirm or amend the results. This step
involved severe cuts in the original budget of projects, to control for over-pricing
behaviour on the part of applicants and vendors.
The Secretariat issued detailed guidelines in printed and electronic form for all the critical
stages in the Programme: the proposal submission phase, the evaluation process, and the
implementation of projects. The evaluation guide, in particular, informed both applicants
and evaluators about the scope and details of the evaluation procedure. Similar
guidelines were issued to inform beneficiaries about the main administrative and
financial issues of the implementation phase. These included:
Administrative procedures for the signing up and management of contracts;
Monitoring procedure of projects during implementation;
Required technical and financial information to support project implementation;
Administrative procedures for the award of subsidy, including in-situ technical
and financial certification of project implementation and/or completion by the
Ministry Secretariat;
Payment procedures;
18
Information Society S.A. is a public, non-profit company which, in various ways, provides
technological and know-how support to public and private beneficiaries of the Information
Society Operational Programme to implement projects funded by initiatives of this Programme.
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Project example:
Epsilon & Epsilon Medical S.A.
Epsilon & Epsilon Medical S.A. is a medium-sized Greek company with about 70
employees. It is located in Athens and its primary activity is the import and
distribution of medical equipment supplies. The company maintains its own ICT
department.
Epsilon & Epsilon Medical already participated in the "Epixeireite Electronica"
programme, using the opportunity to set up an intranet and an ERP system.
During this time, it became apparent that the ERP system could become more
effective if it were equipped with a CRM component. The company has numerous
customers in the Greek public and private medical sector. Company officials believed
that marketing activities would benefit from CRM, for example to follow-up
procurements and sales to particular groups of customers. The system would enable
the firm to group customers based on their procurement profiles, and thus support
targeted marketing campaigns. In fact, the need for a CRM system was identified as
soon as ERP system was completed and in use.
Participation in Epixeireite Electrica was completed in time, and the company was
left with positive impressions from the whole grant scheme. The Digital Future
programme provided a new opportunity for procuring a CRM system. Epsilon &
Epsilon Medical is now better aware of its specific requirements, and has gained
experience with the bureaucracy of proposal preparation and follow-up. Its new
proposal was approved. Currently, the ICT department and the selected CRM
vendor are setting up a tailor-made CRM solution.
5.6.2.2
Communication
The General Secretariat for Industry actively addressed representatives of trade
organisations and company associations to inform them about the policy and its
objectives. Information and documentation is available and posted regularly on the
Programme's website. The Programme has been set up and operates in a fully electronic
environment using an Electronic Document Management and Monitoring System.
Proposals were electronically submitted by the candidate beneficiaries in order for the
whole procedure to be simplified and accelerated to their benefit. The Secretariat
operated an on-line helpdesk with a FAQs section aiming to assist applicants in the
preparation and monitoring of their proposals and to sort out last minutes queries. Still,
the Ministry requires that proposals are submitted in printed form (two full copies with
complete documentation) to the General Secretariat for Industry (Informatics
Department) in order to be evaluated.
5.6.2.3
Evaluation
The results of the policy initiative have not yet been evaluated. However, this is an
activity that should be undertaken in the future in order to form a more complete idea of
the policy impact and its multiplier effects.
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Results
Outputs
The Programme launched only one call in the third quarter of 2006 and the list of selected
projects was announced in April 2007.
In quantitative terms, 841 investment plans out of more than 1000 submitted were
positively evaluated for implementation. The total budget of the selected projects
(including private funds) amounts to € 155 million, with public funding amounting to €
72 million. This figure is very close to the original public sector contribution allocated to
the programme.
In qualitative terms, the Secretariat argues that the type of projects selected for funding
are of high quality and in line with the policy's primary objectives. That is, they are
projects that do not simply "spend" on technology. Instead, they are tailored to specific,
identified, and well-documented needs of the more advanced SMEs that seek to use ICT
to reorganise their business processes in a cost-saving and efficient manner.
Outcomes
The design of policy was driven by the assumption that an increased flow of funds into
firms with identified and sophisticated ICT needs would have multiplying effects not just
for the beneficiaries themselves, but for the whole economy. It has been assumed that
such a targeted flow of funds would trigger further investments by ICT-minded
companies. It would create a critical mass of firms equipped with sophisticated ICT
infrastructure and solutions that would then trigger a snow-ball effect, as pressures to
adopt similar business practices would pass on from early adopters to their peers.
Previous initiatives, such as Epihirite Electronica, shared similar objectives in terms of
enhancing the adoption of e-business practices among SMEs. However, their approach
was to create rather than to respond to already identified business needs. Creating some
market pressure on companies has proved a much more effective mechanism than pure
awareness raising activity. There has been significant evidence in the business literature
that shows how this could be done in the case of large firms acting as "pioneers" for this
purpose.
Digital Future has been an innovative policy initiative that addressed to a targeted and
knowledgeable population of enterprises. The innovative element of the policy has been
that it followed a bottom-up instead of a top-down approach. It tried to respond, in a
friendly and efficient manner, to existing market demands (i.e. SMEs' already identified
ICT needs) rather than create new unfulfilled ones. In this way, market pressure is now
expected to be passed on from innovative SMEs to their business partners and
collaborators.
In addition, the amount of funds invested, in both absolute and relative terms, has been
very large not only for Greek but also for European standards. The Secretariat is
optimistic that the initial assumptions behind the policy will eventually come true and
that the initiative will positively affect all major business processes of beneficiary
organisations.
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5.6.4
5.6.4.1
Facilitators
A factors that has greatly facilitated the design and implementation of the programme is
the involvement of the Association of Greek IT Companies in the choice of solutions
activities for funding. The Association was seen as "the voice of users" in the design
process. Given their long experience in the field, members of the Association were able to
make valuable contributions and suggestions for the finalisation of the main contents and
activities of the initiative.
Barriers
The severe cut in the original budget of most projects during the evaluation phase is a
factor that is likely to impede their implementation and possibly reduce the industrial
impact of the initiative as a whole. The Secretariat claims that such reductions were
necessary to rationalise investments and protect beneficiaries from over-pricing of ICT
service providers.
The ICT industry, obviously, believes otherwise. They argue that budget cuts had
administrative rather than technological reasons, and thus may create big problems in the
implementation phase, possibly leading to semi-executed projects.
5.6.4.2
Learning points
Digital Future can provide some useful guidance for the design of similar activities in the
future. The Greek environment is dominated by SMEs with ambiguous ICT capabilities
and a generally low interest in e-business practices. For these reasons, most policies up to
now had an "awareness raising" character aiming to cultivate demand among SMEs even
for basic ICT use. Digital Future, however, adopted a different approach. It was driven by
a demand-pull rather than supply-push perspective. By deliberately targeting mediumsized firms with some level of ICT sophistication it envisages to create some market
pressure among SMEs which often proves much more effective than pure awareness
raising.
5.6.4.3
The Digital Future initiative is characterised by the following strengths and weaknesses:
Strengths
Focused approach: The focus on more advanced SMEs is probably the strongest point of
the initiative. Its innovative character is expected to trigger a snow-ball effect that will
continue after the end of subsidies, due to pressure and promotion from early adopters to
peers. In addition, the programme operates in a fully electronic environment which
further enhances transparency and timeliness in the subsidisation process.
Weaknesses
Administrative burdens: On the other hand, the programme did not manage to
overcome the burden of increased bureaucracy often associated with public subsidisation
schemes. Thus, although in theory the whole initiative followed clear objectives and
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should have a straightforward implementation plan, in practice no SME alone could deal
with the highly bureaucratic processes of having to fill in complicated application forms
and collect dozens of supporting documents, without the assistance of a specialised
consultant.
5.6.5
References
Research and interviews for this case study were conducted by Anastasia Constantelou,
Assistant Professor in the Department of Financial and Management Engineering,
University of the Aegean ([email protected]). Main sources:
Website of the programme: www.psifiakomellon.gr
Interview with Ms Anagnostou, Director of Informatics, General Secretariat for
Industry, Ministry of Development, 10/10/07
Interview with Mr Yannis Siros, Managing Director, Hellenic Association of IT
Companies, 11/10/07
Interview with Ms Olympia Argyropoulou, Responsible for CRM project
implementation at E&E Medicals, 11/10/07
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5.7
CITAX – The Construction IT Alliance eXchange
(Ireland)
Fact sheet
language):
CITAX: The Construction IT Alliance eXchange
CITAX: The Construction IT Alliance eXchange
construction
Geographic focus:
Ireland
Start date:
July 2006
End date:
January 2008
Initiated by:
CITA – Construction Information Technology Alliance
Implemented by:
CITA members in partnership with Enterprise Ireland and
private companies from construction sector and IT solutions
providers for the industry
Funding:
€ 101,250
by Project participants
€ 101,250
by Enterprise Ireland
Contact person(s):
Mr. Alan V. Hore and Mr. Connor Ryan
Industry Led Network Scheme and Construction Information
Technology Alliance
Website(s):
http://www.cita.ie/member_benefits/citax.htm
Abstract
Construction industry is an important part of the Irish economy. With its high
concentration of employment and contributions to GDP it has been the principal factor in
Irish economic performance for the last 30 years. Though Ireland has been enjoying long
term economic growth and stability, creating demand for the construction sector, the
industry has essentially remained unchanged over the last few decades. The activities
within the sector are largely configured around the traditional project model in which
trade people, professionals, contractors and clients work in short term, lowest bid
contractual arrangements. In addition, the industry is known for its conservative culture
with a relatively high resistance to change. Despite being a major business sector within
the economy, the take-up and use of IT has been significantly less than in other
industries. Furthermore, the electronic documents exchange or any electronic cooperation
between companies in the industry is very fragmented and in most instances not
interoperable.
To address those issues, in July 2006, a sectoral organisation Construction Technology
Alliance (CITA) obtained funding for their project known as the Construction IT Alliance
eXchange (CITAX). The initiative has been backed and sponsored by the government
agency Enterprise Ireland, under an Industry Led Network Scheme (DETE, 2006). A twoyear funding contract was signed, that involves 25 CITA members organisations
participating in a project built on five separate but collaborative modules: Design,
Trading, Electronic Tendering, Project Collaboration and Computer Aided Measurement.
Each module focuses on the exchange of data between network members and seeks to
verify that significant measurable economic benefits can be achieved by collaborating
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team members, through redesigned processes, using readily available IT tools. This is
done by analysing and reaffirming the inefficiencies in current processes and by
demonstrating the benefits to be obtained in a new environment, through a live pilot
project.
The overall aim of the project is to facilitate more efficient business transactions between
companies in the Irish construction sector by the deployment of readily available ICT
tools, in particular construction business processes tools, and to radically improve the
productivity of these business processes.
An innovative approach of CITAX initiative is that it is one of few strictly sectoral
initiatives. Furthermore, its strength lies in the fact that it involves both IT providers and
companies from the constriction sector. The active role of companies from the sector shall
guarantee that the results of the project will spread to those firms, their suppliers,
customers and partners. As a result, the project has a wider impact that goes far beyond
the direct beneficiaries - the companies that participate directly in project. The initiative
wants to prove that the benefits of wide-spread ICT deployment within construction
sector will benefit all companies that participate in electronic exchange and cooperation.
Therefore, Irish construction sector will gain in competitive advantage by cost saving and
increased efficiency through the entire project chain and be better prepared for any
economic downturn.
5.7.1
Construction is an important sector of the Irish economy. It is one of the country's largest
and most valuable. It represents 17% of Ireland's GDP, which is close to double the
European average, and employs directly and indirectly nearly 15% of the national labour
force.
The Irish construction industry has been buoyant for the last decades thanks to continued
economic growth but industry representatives and researchers state that due to its
fragmentation and delay in the diffusion of modern technologies, such as IT, it is not fully
efficient and not well prepared for less prosperous time. As the demand for construction
products is heavily dependent of the main economic cycle, the companies in the sector
typically resort to short term strategies, such as limited investments and lack of
improvement in business processes. Consequently, the activities within the sector are
largely configured around the traditional project model in which trade people,
professionals, contractors and clients work in short term, lowest bid contractual
arrangements.
The industry is also known for its conservative culture with a relatively high resistance to
change. Although the larger industry players undertake construction internationally, the
vast majority of work is done by local or national SMEs. These firms are project-centred
and characterized by short-term partnering between teams with varying levels of process
maturity and innovation capability. Furthermore, the sector is mostly driven by the
pressures of time, cost and programme, rather than quality and value in the delivery of
its products and services.
Innovative activity in the sector is additionally inhibited by low profit margins and an
inequitable distribution of technological risk and financial reward. Typically, the
financial risk is transferred down the supply chain through contractors to the designers,
while the technical benefit is transferred up the supply chain towards the client.
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Consequently, R&D investment is very low compared to every other industry. There is
nearly no investment in research into process improvement or innovative management
practices. On the whole, the sector has invested too little in capital, human resources and
R&D, with investment in ICT technology lagging even further behind. Today, to a large
extent the industry continues to rely on 1970 technologies. Such short term strategies
have been counter-productive to a long-term development and innovation culture.
Not surprisingly, the above problems hamper the spread of IT. Despite being a major
business sector within the economy, the take-up and use of IT has been significantly less
than other industries. Furthermore, the electronic documents exchange or any electronic
cooperation between companies in the industry is very fragmented and in most instances
they are not interoperable. This results in operational inefficiency, lower productivity,
inaccuracy and delays and higher costs.
Furthermore, there are many millions of documents currently exchanged on paper in the
construction industry, each having to be re-keyed as they pass between different
locations and computer applications. In addition, existing standalone software has
facilitated improved electronic functionality with the use of Computer Aided Design
(CAD), Enterprise Resource Planning (ERP), Project Extranets, Computer Aided
Measurement and wide variety of project management tools. However, the use of these
tools is very fragmented and in most instances they are not interoperable. Modern IT
developments are not wide spread in the construction sector. Thus, there is a significant
opportunity to enhance the efficiency of this collaboration.
It has been recognised by the government and industry leaders that fragmented industry
would gain in efficiency if working together. The sector is comprised mostly of a wide
range of small and medium with only few larger contracting companies. With specialist
service providers they collaborate to deliver projects to industrial, commercial, private
and public customers. Better communication and collaboration between partners is
needed in order to increased competitive advantage.
To address the existing problems, in July 2006, Construction Technology Alliance (CITA),
initiated an Industry-Led Networks Pilot Initiative - CITAX. A two-year funding contract
was signed, that involves about 25 CITA Members organisations and a government body,
Enterprise Ireland. As of today, there are more than 90 companies participating directly
and indirectly in this network undertaking. Early consultation with the CITA
membership organisations identified five core areas that required particular attention.
Those findings led to identification of five core modules for the project:
Design,
Trading,
Electronic Tendering,
Project Collaboration,
Computer Aided Measurement (CAM).
Each module focuses on the exchange of data between network members and seeks to
verify that significant measurable economic benefits can be achieved by collaborating
team members, through redesigned processes, using readily available ICT tools. This will
be done by analysing and reaffirming the inefficiencies in current processes and by
demonstrating the benefits to be obtained in a new environment, through a live pilot
project. Each module has a Project Leader drawn from industry with a good cross section
of companies from different disciplines participating in the each group, including the
support of a main building contractor and an academic institution.
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The overall aim of the CITAX project is to facilitate efficient working between companies
in the construction industry and to actively encourage the Irish construction sector to
take full advantage of current and emerging ICT. CITA aims to collaborate on a number
of key projects aimed at applying IT solutions to existing processes in order to drive
efficiency and performance.
The objectives of the initiative include:
To inform the Irish construction sector of relevant IT developments,
To establish and disseminate best practice in the use of IT in the construction
sector,
To encourage IT related research and training collaboration between the Irish
academic sector and the leading firms in the Irish construction sector,
To establish and maintain links with relevant national and international
organisations,
To encourage the strategic use of IT by all firms in the Irish construction sector,
To improve products, services and processes in the construction industry by
fostering better exploitation of ICT at all levels,
To collect and disseminate examples of the base technologies and practices. This
should lead to an increased use of information technologies in all aspects of
construction – including e-commerce, design, engineering, procurement, project
management accounting, HR management and Smart buildings,
To influence appropriate professional organisations to increase the interoperability between the various software systems,
The longer term objective of the network is to develop a platform for the design and
development of open standards that would be promoted within the Irish construction
supply chain
Target groups
This policy initiative focuses on one specific sector; construction. It addresses the specific
needs and expectations of the companies operating within this particularly relevant
industry in the Irish economy. Though at this stage the key players in the project are the
members of CITA, the policy outcomes are to reach all the businesses involved in
delivery of the construction projects; from architects and design offices, manufacturers
and suppliers of building materials to all parties involved in working on the building site.
The project aims at facilitating the collaboration of the following groups:
Small contractors at the bottom of the chain to the bigger companies that manage
projects,
Materials suppliers, machinery manufacturers, sub-assemblers,
Client community, both public and private sectors,
Design community,
Universities and technological institutions,
Professional associations,
IT providers for construction sector.
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Targets
The CITAX initiative seeks to demonstrate that significant measurable economic
improvements can be achieved by using readily available ICT tools to radically improve
business processes in the Irish construction industry.
This specific project seeks to deliver tangible business benefits to participant companies
such as supply chain optimisation and a development of a common platform and a
collaborative tool kit that all IT companies and companies operating in the Irish
construction sector could subscribe to and use.
The major outcomes to be produced are as follows:
Module 1 – Design:
Re-affirm the inefficiencies that currently exist in the production and exchange of
CAD drawing in the construction design process.
Demonstrate by the adoption during a stage of a live pilot project that CAD
drawings can be more efficiently exchanged by the adoption of the CITA CAD
Layering Convention.
Module 2 – Trading:
Develop an acceptable eXtensible Markup Language (XML) standard for electronic
exchange of purchase orders, delivery notes and supplier invoices specific to the
industry.
Demonstrate by the adoption of a live pilot project that purchasing data
transactions can be more efficiently exchanged between trading network members
by the adoption of an XML standard.
Module 3 – Electronic Tendering:
Re-affirm the inefficiencies that currently exist in the exchange of tender
documentation in the construction industry.
Demonstrate by the adoption of a live pilot project that tender's elements can be
more efficiently exchanged between trading network members in an online
environment.
Module 4 – Project Management:
Re-affirm the inefficiencies that currently exist in the exchange of project
information in the construction industry.
Demonstrate by the adoption of a live pilot project that project information can be
more efficiently exchanged between network members in a secure online
environment.
Module 5 –CAM:
Re-affirm the inefficiencies that currently exist in the production of Bills of
Quantities.
Demonstrate by the adoption of a live pilot project that Building Information
Modelling can cause the production of Bills of Quantities to become more efficient.
A number of sub targets have also been identified:
Identify suitable software for future use,
Identification and description of current business processes,
Help the Industry to keep pace with ICT developments,
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Set standards and protocols.
Resources
The project is a co-funded project, with Enterprise Ireland funding 50% of eligible
expenditure only. Table below lists the organisations who agreed to partake in the project
together with the lump sum contribution that they agreed to contribute to the project.
The project will be lead by five Enterprise Ireland clients (listed at the top of table).
Exhibit: List of participant members and their contributions to project
Contributed by
Funding in €
CCH Architects
22,500
Sentrio Technologies
22,500
Paradigm Technologies
22,500
Intergrated Facilities Solutions
22,500
Bruce Shaw Partnership
22,500
HKR Architects
4,500
Nicholas O"Dwyer
4,500
VMRA Consulting Engineers
4,500
Delap and Waller
4,500
CRH plc
4,500
RGC Technologies
4,500
Kingspan
4,500
National Building Agency
4,500
Building Software Services
4,500
PJ Hegarty
4,500
John Paul Construction
4,500
Project Management Limited
4,500
Michael McNamara & Co.
4,500
Boyd Creed Sweett
4,500
OLM Consultancy
4,500
Dedicated CAD Systems
4,500
Mulchay McDonagh & Partners
4,500
Rohcon
4,500
COINS
4,500
PVF Limited
4,500
Total
202,500
The co-funded nature of the project will necessitate participant organisations identifying
an individual or individuals to contribute time to the project over the next 2 years and to
maintain timesheets on the project. This time will then be invoiced to CITA Limited on a
quarterly basis based on a proportion of the overall lump sum agreed. CITA will in turn
repay these sums back to member participant, and then CITA will be in a position to
claim 50% of these payments and other payments from Enterprise Ireland to cover the
management and administration costs for the project.
The figure however of €202,500 is a definitive maximum contribution by the member
participants, of which 50% will be claimed from Enterprise Ireland. This claim however
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will only be successful if the paperwork and timesheets are all in order and payments to
members are verified and validated by the grants section of Enterprise Ireland.
5.7.2
Activities
5.7.2.1
Implementation
The policy initiative has a clearly structured implementation plan, describing tasks,
schedule and responsibilities of actors involved. The implementation process is on the
way from June 2006 and it is conducted through five separate but collaborative modules:
Design, Trading, Electronic Tendering, Project Collaboration and Computer Aided
Measurement.
The modules specifically focus on the exchange of data between network members in five
different areas where the e-business benefits are identified. Each module focuses on the
exchange of data between network members and seeks to verify that significant
measurable economic benefits can be achieved by collaborating team members, through
redesigned processes, using readily available ICT tools. This is done by analysing and
reaffirming the inefficiencies in current processes and by demonstrating the benefits to be
obtained in a new environment, through a live pilot project.
The five modules
In more details the implementation within modules are as follows:
Module 1 (Design) focuses on the production and exchange of two-dimensional CAD
drawings during the design process and will demonstrate by the adoption during a stage
of a live pilot project that CAD drawings can be more efficiently exchanged by the
adoption of the CITA CAD Layering Standard.
Module 2 (Trading) concentrates on a development of acceptable eXtensible Markup
Language (XML) standard for electronic exchange of purchase orders, delivery notes and
supplier invoices. The longer term objective is to develop a platform for the design and
development of a collaborative tool kit that all IT companies and companies operating in
the Irish construction sector could subscribe to and use. This group is in the process of
getting the software companies to adopt a common standard. At the same time, the
analyse of the existing purchasing processes, estimate costs of current processes, define
message standards and estimate cost of revised process takes place. Significant work has
been done already; the group is now at the stage of putting a standard in place, while
working on getting industry's agreement.
Module 3 (Electronic Tendering) studies the current practices and assess the
inefficiencies that currently exist in the exchange of tender information. The group is
assessing the cost of transferring information in the traditional way versus transferring
information electronically to demonstrate that tender information can be more efficiently
exchanged between parties. The results will be published for the overall benefit of the
industry with the view to ultimately improving productivity, eliminating wastage of
time, resources and costs. Subsequently, a further costs analysis will be carried out when
tender data is exchanged electronically between all parties involved in a tendering
process. Ultimately the aim is that this will verify that significant measurable economic
benefits can be achieved by collaborating network members by the adoption of an online
tendering system.
Module 4 (Project Collaboration) identifies the inefficiencies that currently exist in the
exchange of project information in the construction industry. It will in near future
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demonstrate by the adoption of a live pilot project that project information can be more
efficiently exchanged between network members in a secure online environment.
Module 5 (Computer Aided Measurement): after having completed an assessment of
inefficiencies in current practices in the industry, the team is now identifying the most
suitable software readily available that could be adopted. Next step will be to test it in a
pilot study. The delivery will be measured in terms of time expended measured against
different levels of personnel normally employed in the sector, all valued at comparable /
common real and current costs. The cost of IT deployment will also be assessed.
Seven stages of implementation have been set for each module. The following table
includes all activities with their milestones and deadlines.
CITAX process model
Work to be
completed
Status report to be
completed
Key Milestone
dates
Project start up & prepare
module plan
End 3rd Q 2006
October 2006
24th November 2006
Analyse existing business
processes & operational
boundaries
End 4th Q 2006
January 2007
28th February 2007
Software identification
End 1st Q 2007
April 2007
25th May 2007
Process re-design
End 2nd Q 2007
July 2007
26th September 2007
Testing
End 3rd Q 2007
October 2007
30th November 2007
Implementation pilot
End 4th Q 2007
January 2008
27th February 2008
Benefit evaluation
End 1st Q 2008
April 2008
30th May 2008
Document final report
End 2nd Q 2008
July 2008
31st July 2008
Up to date, all module teams have been focusing on the analysis of existing business
processes and operational boundaries. The participant companies completed a
questionnaire to identify internal practices. Their responses were used to document
existing processes. Based on this evidence, the project teams highlighted inefficiencies in
those processes, and is calculating the associated costs. Many of the module teams had
already highlighted opportunities that future collaboration should bring. The work to
compile a software register has also been completed.
Furthermore, the standards used in the construction sector have been identified and
mapping excise has been conducted.
5.7.2.2
Communication
The following communication instruments are being used to make the CITAX initiative
known to industry's members and to communicate the ongoing progress:
Attendance at Specialist Working Groups,
Presentations of solutions / recommendations,
Website: http://www.cita.ie/member_benefits/citax.htm,
Symposiums,
Quarterly reports on programme activity,
Progress reports,
Publishes minutes from meetings,
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General Meetings and project's boards meetings,
Workshops,
E-mails
The policy initiative is actively addressing its target groups in order to inform them about
the policy and it is believed that the chosen means of communication are adequate for the
target groups.
The following example is about a communication project planned for November 2007. It
illustrates the type of activities CITAX project initiates and documents for the benefit of
participating companies.
Project example:
Mobile Technology in Construction – an Information Event
Mobile computing is an emerging technology that is expected to have a significant
impact on civil engineering and the construction industry in general. Thus, in
November this year 2007, the CITA in cooperation with the Irish Internet
Association (IIA) and Online-Marketing.ie will organise an information event that
will highlight and examine the importance of mobile computing in the construction
industry.
Speakers at the event will highlight the potential of mobile technologies, as well as
outline successful implementations. In addition, Alan Hore, director of CITA, will
be on hand to provide attendees with a progress report of developments in the area.
The IIA and Online-Marketing.ie present a half day training course on Email
Marketing. Email continues to be an outstanding customer communications tool
despite the challenges of deliverability, in-box stand-out and list member dormancy.
In this course, attendees will be shown how to improve results by addressing the
challenges that all e-mail marketers face. This course will clearly explains the
advantages of running comprehensive email marketing campaigns as part of online
marketing mi strategy.
5.7.3
Results
Outputs
Up to date, all module teams have been focusing on the analysis of existing business
processes and operational boundaries. The participant companies completed a
questionnaire to identify internal practices. Their responses were used to document
existing processes. Based on this evidence, the project teams highlighted inefficiencies in
those processes, and is calculating the associated costs. Many of the module teams had
already highlighted opportunities that future collaboration should bring. The work is of
high quality and the outputs are in line with the timetable and targets agreed.
As of September, 2006, other outputs of the ongoing CITAX initiative up to date are:
Four CITAX symposiums have been organised (September & November 2006,
February & September, 2007 respectively).Total participation amounted to some
150 plus persons and delegates from the industry
A software register has also been completed
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The standards used in the construction sector have been identified and mapping
excise has been conducted
About 100 companies, CITA members have been reached and advised about the
project's various activities and achievements
Project progress is well documented and advertised via different awareness rising
and dissemination activities: High-quality presentation materials, regular
newsletters, comprehensive workshops, quarterly project's reports have been
produced, dedicated website is kept up to date
Outcomes
As the initiative is still ongoing and only half way through, it is not possible yet to
anticipate what the final outcomes and wider effects of this initiative will be for the
individual businesses and whole industry. The impact will only be known after the
initiative has completed its work according to the scheduled work plan. However, even if
the CITAX project is successful, its impact on the industry would probably not be seen
earlier than one to three years after the end of the project.
At this point, the project participants strongly believe that significant measurable
economic benefits would be achieved by collaborating trading network members and
that is planned to be proved through a live pilot projects. It is also strongly felt that the
findings of the CITAX initiative would be highly beneficial to the large number of the
companies and the industry. Also if this project is successful, it could lead to bigger and
more substantial projects in the future under the Industry Led Network Initiative.
5.7.4
5.7.4.1
The initiative concentrates on specific sector which is still quite unique as there are very
few e-business initiatives in Ireland with sectoral focus. This project is an example of the
innovative ICT programme addressing the particular sector needs.
Additionally, it is Industry Led Network Initiative. The project was created and is
delivered via cooperation of the organisation from construction sector. It is interesting
that it started from a business case, showing that there is a need for the construction
companies to use IT in order to increase efficiency. This suggests an innovative approach
when the specific problems observed lead to a project that seeks adequate and
measurable solutions. It does not originate from general policy framework. This could be
looked upon as creative and innovative element of the CITAX project.
An innovative approach of CITAX initiative is also that it involves both IT providers and
companies from the constriction sector. The active role of companies from the sector shall
guarantee that the results of the project will spread to those firms that are cooperating
with them - their suppliers, customers and projects partners. As a result, the project is
supposed to have a wider impact that goes far beyond the direct beneficiaries - the
companies that participate directly in project.
The CITAX is based on a belief that innovation in construction is about the adoption of
new working methods widely supported by ICT. To stimulate and support the different
forms of ICT deployment through the whole industry this initiative takes collaborative,
interactive and experimental approach. Those words are not usually associated with
policy development but CITAX maybe proving that it represents the best way to deliver
what industry needs in order to improve.
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5.7.4.2
Facilitators
Besides the wide spread agreement that the construction industry needs to increase its
efficiency and productivity to face increasing competition and participate any economic
down turn, the following factors enhanced the effects of the CITAX initiative and could
contribute to its success at the end, for example:
CITA has already over 130 members with wide network connections within
industry. The members work to ensure promotion of the CITAX initiative and its
outcomes to the rest of construction companies;
the creation of a broad partnerships between the construction companies from
different sub-sectors and ICT providers brings to one table the ICT developers and
those in need of technology. This collaboration from an early stage ensures that
there will be technology developed that is most suitable for industry needs.
Barriers
There are few general and some more sector specific factors that have had an adverse or
slow-down effect on the CITAX initiative. It is also recognised that the same factors can
possibly reduced the benefits of implementing project's findings among the businesses
within Irish construction sector.
Barriers and challenges that the project has to overcome include for example,
a lack of awareness about the potential benefits of ICT usage among the companies
in construction sector
highly fragmented industry with conflicting interests between its members who
see each other as rivals and competitors
lack of forward thinking in general, low innovation culture and short term
planning in the construction sector
budget/founding constraints
5.7.4.3
Learning points
Looking at the CITAX initiative in Ireland, some specific learning points emerge from the
case study. These can be useful inspiration to other policy makers in construction and
other sectors.
Sectoral focus is very important. Developing an e-business policy/ initiative requires
sectoral understanding that only industry can provide. Though deployment and use of
ICT provides a variety of opportunities for business growth and development, it needs to
concentrate on companies and sector specific needs. Policymakers should identify the
opportunities afforded by ICT that are particularly relevant to the sectoral setting and
support it. Only then the ICT developments specifically addressing the stakeholders'
needs could be accepted widely and caused desired effects.
In order to make progress, a sector wide approach is needed. Innovation and e-business
implementation in the construction sector will be a complex activity. While few can
champion an innovation, broader adoption in the sector will require the involvement of
many external parties and shareholders. Single firms are very limited in their ability to
innovate without the co-operation and alignment of the "Construction Community".
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Typically, an innovation will only receive wide acceptance and dissemination if it is
acceptable to a variety of shareholders including regulatory, standards, legal, contractual,
labour, safety and environmental authorities.
The initiative then must ensure collaboration and continuing commitment among the
project's participants. All participating companies needed to identify representative
personnel and their availability. At the kick-off a team-building session took place to
ensure the importance of project and the interdependencies were understood. Then the
project core teams agree realistic commitments and assign clear responsibilities. Planning
for roles and required commitments includes also draft for contingencies with
identification of alternative personnel
Effective and dedicated management is part of the success of a project. Involvement of
broad number of stakeholders causes many organisational problems. Additionally, it
needs to consistently highlight the "win-win" outcome for the participants that may have
individual and conflicting interests. Effective management and administration of the
project is also necessary for good marketing and the spread of information about the
policy to be widely known and approved of in the industry.
Clear objectives and targets as well as defined time scale are necessary factor for
successful project. The CITAX initiative follows clear objectives and has a straightforward
implementation plan, both defined at the beginning. The participants meet on regular
basis and are able, so far, to stick to the agreed timetable. This helps the delivery of the
outputs and makes cooperation between the 25 project participants that come from
different organisations rolling smoothly. The contingency measures for identified risks
had been put in place also at the beginning of the project.
The initiative is supposed to generate market pressure and promote its outcomes to the
industry. The main participants of the project, once adequate standards are found and
agreed, would implement them and passed the knowledge to their partners, suppliers
and contractors.
Live pilot project is a significant part of policy as an excellent way to show real benefits
of the e-business for the specific industry. It would be more convincing than research
only. The pilot and testing phase would put to test in physical environment what is
believed to be beneficial. CITAX management believes that once the pilot project
documents the benefits drown from ICT deployment with construction project, the
industry would be more willing to subscribe to technology.
5.7.4.4
Strengths
(+) Clear targets: Having clear objectives and specific targets has helped to keep focus
and make all parties work together.
(+) Focus on specific modules when e-business applications should have biggest impact.
(+) Cooperation of IT providers with industry members to find required sector specific
solutions
(+) Continued level of commitment from the project participants
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Weaknesses
5.7.5
(-)
Limited time and financial resources
(-)
Limited number of participants at the project
References
Research and interviews for this case study were conducted by Aneta HerrenschmidtMoller ([email protected]) on behalf of the study team. Main sources:
Website and brochures of the CITA / CITAX initiative http://www.cita.ie/ last
accessed in August 2007
Enterprise Ireland, http://www.enterprise-ireland.com/ (last accessed in September
2007)
Department of Enterprise, Trade and Employment, http://www.entemp.ie/ (last
accessed in September 2007)
Irish Internet Association, http://iia.ie/ (last accessed in September 2007)
e-Mail communication with representatives of the CITA; Mr Conor Ryan and Mr
Alan Hore, July-September 2007
Interviews with Mr Conor Ryan, CITA financial director and Mr Alan Hore
project's director, August 2007
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5.8
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DDTA – Digital Districts in the Textile and Clothing
Sector (Italy)
Fact sheet
language):
"Distretti Digitali del Tessile Abbigliamento" DDTA
Name of the initiative
(English):
Digital Districts in the Textile and Clothing Sector
Manufacturing: Textile and Clothing
Geographic focus:
National (central management);
Regional by Regione Puglia and Regione Campania
Start date:
July 2004
End date:
Originally December 2007, extended to December 2008
Initiated by:
Ministry of innovation and Technologies (presently Department for
Innovation and Technologies – DIT – of the Ministry for Reforms ad
Innovation in the Public Administration) by Innovazione Italia
S.p.A., Regione Campania, Regione Puglia
Implemented by:
Regione Campania, Regione Puglia
Funding:
€ 28 million
Contact person(s):
€ 11 million
by CIPE
€ 17 million
by Regional co-financing
Department of Innovation and Technologies
Director – Dr. Paolo Donzelli
Project contacts: Dr. Tiziana Trojani
Innovazione Italia S.p.a
Coordinator: Dr. Danila Sansone
Project Manager: Dr. Giuseppe Rizzi
Technological expert: Dr. Nicola Salvi
Technical Secretariat: Dr. Cristina Galeazzi
Tel.: +39 6 45446801; +39 6 45446832
Fax: +39 6 45446800
Framework programme for the development of the Information
Society in the South of Italy
Website(s):
http://www.ddta.it
http://www.innovazionepa.gov.it/
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Abstract
The DDTA initiative ("Digital Districts in the Textile and Clothing sector") is part of the
framework programme for the development of the Information Society in Southern Italy.
The main objective of DDTA is to increase competitiveness of the Italian T/C districts
through the adoption and usage of standard low-risk open solutions, requiring limited
investments, in value chain operations. DDTA aims at defining and implementing a
model for the digital integration of SMEs operating in T/C districts supply chains and this
model is expected to be replicated in other T/C districts across the country. The overall
budget of the policy is € 28 million.
An interesting aspect of this policy initiative is its design, which combines central
management with local/regional implementation. At the central level, activities are
carried out in the area of standardisation, definition and validation of ICT solutions for
the T/C sectors, as well as communication and promotion to potential beneficiaries.
Central co-ordination ensures savings and economies of scale; it also makes it easier to
link with other national and international initiatives and institutions, e.g. standardisation
bodies. Local implementation is essential to respond to local needs and to bring services
close to the target beneficiaries.
DDTA is a user-oriented programme specifically tailored for the district-based
organisation of the T/C sector, which is typical of the Italian economy The final objective
is to ensure interoperability not only to firms active in the same districts but also among
different districts, trying to overcome both technological (different systems) and cultural
barriers. The choice to develop and release applications as open source software is a
major innovation point of this initiative. Cooperation with the European initiative TexWeave facilitates access to leading-edge results in the field of standardisation for the T/C
sector.
The project started in 2004 and was expected to end in December 2007; it will be extended
until end 2008. By mid 2007, the activities managed at central level had reached most of
their objectives, while the implementation at regional level had not yet started. The
provision of services (training, consultancy and services provided through the web
portal) will start in late in 2007 and will continue after the end of the project through the
regional District Service Centres (DSCs). Sustainability over time of these DSCs is
expected to be one of the major results of the initiative.
5.8.1
Background
DDTA is part of the framework programme for the development of the Information
Society in Southern Italy, funded by the Inter-ministerial Committee for Economic
Planning (CIPE) following resolution n.17/2003.
This policy initiative was launched by the Department of Innovation and Technologies
(DIT19) and has been implemented by the Department with the support of Innovazione
19
DIT (Department of Innovation and Technologies) is a department active within the Ministry
for Reforms and Innovation in the Public Administration
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Italia20 and the regional governments of Campania and Puglia. A technological partner
(ENEA21) is also involved in the initiative.
The textile and clothing (T/C) sector, which is highly relevant for the national economy, is
facing high and increasing competition both at the domestic and at the international
level. Several regions of southern Italy (Abruzzo, Puglia, Campania, and Sicily) are
relatively specialised in T/C activities, which account for about 10% of the employment
there, with a high proportion of women. Differently from other manufacturing sectors,
the T/C sector has mostly developed locally in these southern regions. Only few leading
companies from other Italian regions have established their own subsidiaries there;
instead they do business with local SMEs as third parties, manufacturing high-range
brands (based elsewhere) and often operating in the black economy.
Globalisation and competition from low labour cost countries have forced Italian leading
manufacturers to a process of serious restructuring and re-location policy in the last two
decades. This process has deeply affected the southern T/C districts which are in a
situation of relative weakness; these areas have recorded falling employment and decline
of production in the past years. There is common consensus that small local
manufacturers need support in order to contrast and emerge from the black, to better
qualify their workers and develop product and process innovation to gain
competitiveness.
The rationale for this specific policy measure is that, in response to the challenges
illustrated above, the efficient adoption of relevant technologies is essential to compete
on the global market. The main objective of DDTA is to increase competitiveness of the
Italian T/C districts through the adoption and usage of low-risk open solutions, requiring
limited investments, in value chain operations. This may also bring to the definition of
new organisational model for districts, where geographical proximity is no longer the
main requirement for co-operation.
DDTA starts from the consideration that the adoption of ICT and e-business among SMEs
is constrained by limited investment capability and by cultural barriers. For this reason, a
major pillar of this initiative is the organisation of training and consultancy services
provided to the beneficiaries.
A particularly interesting aspect of this policy is its design, which combines central
management with local/regional implementation. Central co-ordination assures savings
and economies of scale in management and communication; it also makes it easier to link
with other national and international initiatives and institutions, e.g. standardisation
bodies. Local implementation, however, is essential to respond to local needs and to
bring services close to the target beneficiaries.
In this sense, the initiative can be regarded as a pilot. It will be interesting to see if this
approach can become a benchmark in policy design, particularly with regard to the
effective coordination of initiatives in various regional districts belonging to the same
economic sector, avoiding duplication of efforts while, at the same time, assuring tailored
support to local SMEs.
20
Innovazione Italia is a business company, the ownership of which is shared between Sviluppo
Italia and DIT (Department of Innovation and Technologies). The mission of the company is to
implement the Information Society programs in Italy
21
ENEA is a public agency operating in the fields of energy, environment and new technologies
to support Country's competitiveness and sustainable development. http://www.enea.it/
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Objectives
Against this background, the DDTA initiative has the following objectives:
to facilitate SMEs' access to systems of digital integration;
to create a network among districts of southern Italy with a view to supporting the
diffusion of managerial and technological best practices in the usage of ICT;
to implement already existing service centres in the district areas or to create new
structures to supply companies with supporting services in the areas of process
and product innovation, market intelligence, ICT usage.
Target groups
DDTA addresses two primary target groups:
the regional governments. By mid 2007, two regional governments have been
addressed by DIT; activities will be expanded to other regions where T/C districts
are located;
small and medium T/C manufacturers located in regional districts, addressed by
the measures implemented at regional level.
As the project includes standardisation activities and the set up of a web portal for the
provision of services to T/C firms, "secondary beneficiaries" can be identified in those
companies that will benefit from these project outputs after the end of the project. All
applications will be developed and released as open source software, and will be made
available also to T/C companies not directly participating to DDTA.
Targets
DDTA set targets at:
the central level, i.e. targets concerning the activity of the main implementation
body, DIT–Innovazione Italia;
the regional level, i.e. targets concerning the regional projects carried out by
Regione Puglia and Regione Campania.
The main target at the central level is that DDTA is expected to define and implement a
model for the digital integration of SMEs operating in T/C districts supply chains and
that this model can be easily replicated in other T/C districts across the country. In order
to reach this general target, a few operational targets have been set. They are:
The definition and diffusion of interoperability standards
Running a pilot project for the validation of ICT solutions for the T/C sector.
Development of a web portal providing information and services to the
administrations implementing the initiative (currently, the two regional
governments of Puglia and Campania).
The main target at the regional level is to train and assist T/C SMEs in implementing
digital integration in their business processes. SMEs, both single companies and
consortia, were invited to submit a proposal focused on technological development and
demonstrating good potential for economic and financial sustainability over time. A
technical team selected projects that were in line with the overall objectives of DDTA. The
number of beneficiaries SMEs was not fixed a priori.
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In order to assist SMEs and, ultimately, to reach DDTA strategic goals, the regional
administrations have set the following targets:
for Regione Campania: the realisation of 5 District Service Centres (DCSs), 5
district web portals and 1 regional portal to supply ICT services to SMEs. The areas
of applications include: e-commerce, e-procurement, virtual fairs, workflow
management, ERP, e-learning, e-invoicing, e-signature, FAD, CRM, PEC, district
databank, events. DCSs will act as ASPs (Application Service Providers), supplying
wide variety of application services in a local area. A prototype for the
communications between SMEs, training actions and incentives to the companies
have also been set as targets.
for Regione Puglia: the creation of 1 District Service Centre at regional level with
the realisation of a web portal supplying e-business services (e.g. sales-supporting
services – company directories, catalogue, auction management) and supporting
services (e.g. eCRM, eCollaboration, eLearning).
Resources
The overall budget of the policy is € 28 million. About € 11 million are provided by CIPE
resources, about € 17 million by regional co-financing. The budget for the central action
project (DIT) is about € 2.7 million (CIPE resources).
The value of the project for the region Campania is € 22.12 million (5.06 through CIPE
resources, 17.06 through POR22 resources), the value of the project for the region Puglia is
€ 3.16 million (CIPE resources).
The DSC will rely on already existing infrastructures in the various industrial districts.
5.8.2
Activities
5.8.2.1
Implementation
DDTA activities are carried out at two levels: the central level (by DIT) and the regional
level (by the two regional governments of Puglia and Campania). The main action lines
are illustrated below.
22
POR stands for Piano Operativo Regionale (Regional Operational Plan). It is the regional plan for
for managing European funding in Objective 1 (less prosperous) Regions
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Action lines
Standards
Regional
level
Set up DSCs
Issue tenders
Web portal
Training and
services to TC
SMEs
Communication
Central level
Software
solutions
SMEs in T/C districts
At the central level, DDTA consists of the following action lines.
Definition and diffusion of interoperability standards
Through the co-operation with ENEA, the project team identified and analysed the
existing standards through benchmarks and collection of most successful
national/international initiatives to be tested through the DSCs (District Service Centres).
The achievements from this first activity consist of a clear and up-to-date scenario of the
state of the art and trends of interoperability standards, IT solutions and initiatives in
progress. This ensures that the regional governments implementing the initiative adopt
the most suitable and common standards, maintain relations with other organisations for
the definition of a national/international standard, promote the extension and
improvement of the sector coding. The beneficiary's regional governments have been
provided with the achieved results that will be also diffused through the portal's
initiative.
A major pillar of DDTA is that the adopted standards will be in line with those adopted
by the European initiative Tex-Weave, promoted by Euratex at CEN (Comité Européen
de Normalisation / European Standardisation Committee). The aim of Texweave is to
provide the T/C sector with a framework for interoperability based on XML Schemas and
Internet.
Pilot project
The pilot scheme for the validation of ICT solutions for the T/C sector is organised along
four lines of action:
development of tools (open source) and methods to guarantee the compliance to
European standards for digital integration;
development of a demonstrative software and an implementation guide to support
SMEs in the implementation of standards; the outputs will be part of a starter kit
that will contain a set of tools to facilitate the understanding and the adoption of
standards for digital integration.
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development of a project of integration of one or more services provided by
regional DSCs;
development of Tex Weave: optimisation and extension of Tex Weave's results.
Web portal development
The design of the initiative's portal has been completed; the realisation will be given in
charge to an external supplier through a call for proposal to be launched in September
2007. The temporary project site is online (http://www.ddta.it); accessible on
authentication, it makes available to regions and their suppliers updated results and two
services: the online dictionary of standards and the technological help desk.
As a result of a concerted action with the regional administrations, the web portal will be
provided with an application of service discovering of the services offered by DSCs.
Furthermore, it will supply integrated services identified trough the line of action n. 3 of
the pilot scheme, and open source software to test standards' conformance to European
specifications.
Implementation at regional level
In Campania, the public tender for the realisation of 5 DSC was concluded on May 2006;
the initiative is under implementation. The experimentation of the first services is
expected on October 2007. In Puglia, the public tender procedure was concluded on
March 2006; the initiative is under implementation. The experimentation of the first
services will start within April 2008. A pilot scheme with the involvement of a focus
group of SMEs will be launched in September 2007. DCSs rely on and exploit existing
infrastructure and facilities, while specific human and technological resources are
dedicated to DDTA:
At the regional level, DDTA issued a call for proposal, aimed at involving SMEs. SMEs,
both single companies and consortia, were invited to submit a proposal focused on
technological development (ICT infrastructure, adoption of e-business applications, and
skill development) and demonstrating good potential for economic and financial
sustainability over time.
A technical team selected proposals for projects that were in line with the overall
objectives of the initiative. The amount of a single project could not exceed the amount of
€ 25,000 for micro and small enterprises and of € 50,000 for medium-sized firms,
including purchasing of ICT technology and infrastructure, as well training and
consultancy. Out of this amount, 50% is funded under the policy initiative and 50% by
the participating enterprise.
Out of the eligible companies, about 300 firms were selected in regione Campania. Then,
the technical team decided to make an assessment over the sample in order to identify
the most suitable candidates to the starting phase of the policy. The rationale for this
decision is that a group of pioneer companies, with a relatively strong attitude towards
innovation and the adoption of technology may act as catalyst within their value chain,
thus facilitating the subsequent inclusion of other actors. Moreover, working with eliterate companies is likely to facilitate the technical development in the initial phase of
the implementation. Finally, as the T/C districts are facing a very difficult market
situation and a relevant share of companies is ceasing activities this analysis was also
aimed at limiting the risk of beneficiaries disappearing on the way. Not surprisingly, the
analysis highlighted that the most suitable companies were those over a size threshold of
about 50 employees and € 4 million turnover; more interestingly, they were also the
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"youngest" ones. Presently about 25 companies have been selected for the pioneer phase.
They have already undergone some training activities.
Project example:
Network of DSCs in Campania - The challenges
Five different DSCs have been established in the various regional districts involved
in the DDTA initiative. Each DSC is expected to provide assistance, service and
applications suiting the specific and differentiated needs of the beneficiaries SMEs
within a district. The decision to set a distributed network of centres has been driven
by the peculiar situation of these highly disadvantaged areas. Micro and small firms
are difficult to reach, have limited time and resources and can rely on very poor
infrastructure. Therefore, only centres really close to the beneficiaries can allow easy
access to the initiative. Moreover, as a technical manager said "we expect that once
established in the area, these centres will act as technological catalyst and attract
investments of the TLCs operator as, in most cases, we still lack broadband in these
areas".
DSCs' activities have just started; therefore it is not yet possible to draw
conclusions about the effectiveness of the adopted approach. A point of strength of
the adopted approach is that it proved to be effective in involving SMEs and
winning their resistance. However, at this date (September 2007) only about 25
firms have been potentially selected for the pioneer phase. This low ratio –combined
with the high mortality rate of TC firms in the area- - raise concerns about the
overall cost-benefits and the scale of the DSCs' network structure. This will need to
be monitored over time in order to make an overall assessment of the initiative.
5.8.2.2
Communication
A pillar of DDTA is the methodological and technical support provided to the regional
government implementing the policy at district level. This includes also the
communication activities aimed at involving relevant stakeholders, raising awareness
and delivering relevant information. The set up of the project web portal is the main
mean of communication towards relevant stakeholders. Activities by DIT include:
organisation of workshops, conferences at national level focussed on specific
territories/issues, organisation of communication activities during sector exhibitions,
publishing and promotional documentation: leaflets, brochures supporting the events;
other occasional publications relative to projects in progress.
At regional level both Regions Campania and Puglia envisaged communication activities
in their policies. Campania has financed specially appointed funds for communication
and training activities, while Puglia has defined a plan of events and dissemination
activities.
The planning of the communication actions has been concluded; the communication plan
will be launched soon. Both Regions have started communication activities towards
sectoral industry associations.
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Evaluation
In this policy initiative an evaluation scheme has been defined. Periodic evaluation
reports aim to evaluate the state of the project in terms of activities, output and milestone
achieved.
Some quantitative indicators to measure the outcome of the initiative are also envisaged,
but they will be a subject-matter of a forthcoming concerted action among the regions
and the central group.
5.8.3
Policy results
Outputs
So far, outputs have been partially achieved.
Research in the standardisation field will end by December 2007; by now, intermediate
results are already available. An extension of the research phase has been planned for
2008, when DSCs are effective.
The pilot project will be set off in September 2007. With respect to the initial planning,
contents of the pilot scheme are radically changed to better adapt to enterprises' needs.
The project portal planning phase has been concluded; the technical portal for the
involved organisations is already available, the portal addressed to the SMEs will be
active in September 2007, once the outputs form the previous activities are available.
Service centres at regional level are at a very initial stage; pilot services are expected to
start in September 2007. Training activities are running (September 2007) in Regione
Campania with the group of about 25 small firms selected for the pioneer phase
However, the communication plan has started yet neither at national nor at regional level
Outcomes
As DDTA is still ongoing, it is not possible to draw conclusions about the outcomes and
indirect effects. In particular, no effect is visible within the beneficiaries SMES as they
have not been directly involved in the initiative yet.
However, it can be expected that the design of the initiative and the user driven approach
will produce business benefits on work processes and skill development. Services
provided by DSCs, such as e-invoicing, and e-procurement will enhance automation of
business process that will turn into savings in costs and resources. Individual consultancy
services and training should positively influence the adoption of e-business practices.
Due to the average size and organisation of the target firms, it can be expected that the
simplest applications and e-business services will be adopted on a relatively large scale.
Finally the way towards the adoption of international interoperability standards is
expected to enhance competitiveness of the beneficiaries firms
Wider effects on the region
DDTA generated great expectations within the target groups and the local industry
associations. Enhanced expertise in business practices is expected to contribute to
strengthen the district competitive position. However, this kind of effects cannot be
assessed at this stage.
Positive effects that DDTA has already produced include:
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As for SMEs, discipline induced in the participating organisations. The criteria that
were adopted for selecting companies to be involved in the pioneer phase
(motivation, attitude to innovation, capability to produce a business plan) forced
the potential candidates to identify skills, to develop a strategy and -more
generally to analyse and assess their own resources.
Sustainability over time. A major concern when designing the initiative was if and
how DSCs could continue their activity after the end of the project. Each
implementing organisation has been requested to produce a business plan to
ensure the sustainability of the DCS. To reach this goal, it has been envisaged that
services will be supplied for free for a six month period; afterwards a gradually
increasing tariff plan will be applied. Participating organisation have been selected
on the basis of their availability to contribute.
5.8.4
5.8.4.1
The approach adopted by DDTA is quite innovative in the Italian scenario.
The main best practice element is the set up of an organisational model that combines a
top-down with a bottom-up approach. This model is based on the central (government)
coordination of activities implemented at regional district level. Central coordination
allows increased efficiency of the action and facilitates collaboration with international
stakeholders, e.g. in the field of standardisation. The bottom-up approach of the regional
implementation assures a close link with the target beneficiaries which allows the
provision of services actually tailored to customers' needs. The mode of co-ordination of
the activity is also a relevant aspect. So far, most of the policies supporting SMEs have
been developed at regional level, with very little co-ordination and know-how sharing,
not to mention the risk of duplication of efforts. DDTA is the first governmental initiative
for the creation of a network of highly specialized DSC offering specific and crosssectional services for T/C enterprises, with the aim to ensure interoperability among
different districts. In this perspective the model developed by DDTA is expected to be
replicated in other regions and districts.
DDTA is a user-oriented programme. e-Business services are being developed in cooperation with the beneficiaries, i.e. the targeted SMEs. A very important activity is
providing consultation and training support to the companies within the programme in
order to encourage and accelerate their digital integration in the value chain. DDTA
organises a broad range of communication activities to actively inform the participating
companies on other services and funding opportunities which might be helpful for them.
The initiative is sector-specific. It has been tailored to the district-based organisation of
the T/C sector which is typical of the Italian economy. The programme focuses on T/C
with the aim to support the diffusion of international operability standards taking into
account the peculiar features of the district organisation. The final objective is to ensure
interoperability not only to firms active in the same districts but also among different
districts, trying to overcome both technological (different systems) and cultural barriers.
Another innovative element is the approach towards beneficiaries, SMEs. Experience
from similar initiatives in the country highlighted that many SMEs are initially attracted
by the potential benefits of this kind of initiatives but then give up their participation due
to organisation and resource problems. This risk is particularly high in the T/C sector due
to the specific market situation. The decision of DDTA to go for a selection process based
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on attitude and motivation should ensure that the initiative can be successfully
concluded by the participating companies
Finally, DDTA is innovative from a technological point of view as applications will be
developed and released as open source software Service delivery through ASPs will cut
down the complexities and costs of such software. In addition, the issues of upgrading
will be eliminated from the end-firm by placing the onus on the ASP to maintain up-todate services, 24 x 7 technical support, physical and electronic security and in-built
support for business continuity and flexible working.
5.8.4.2
Facilitators
Factors and activities facilitating this policy initiative are:
the use of existing or new local networks for promotion and/or delivery of services.
In particular, the strong connection between the DSCs and the local Chambers of
Commerce
the delivery of information and services in a way specifically adapted to the
stakeholders' needs and expectations
the approach is based on multiple actions and tools addressing various targets and
issues (individual support, training, services)
due to the typology of beneficiaries, tutoring actions aimed at supporting adoption
and usage of standards and ICT tools
Barriers
Factors that may hamper the implementation of the policy initiative, include
The lack of confidence among different territorial stakeholders represents the main
obstacle to the network connection of enterprises. The prevailing attitude among
the majority of companies it is based on mutual mistrust and a vision of
managerial models poorly oriented to collaboration
Possibly divergent interests among firms belonging to the same district
The weakness of Italian SMEs which are facing one of the most critical moment
due to the increasing international market competitiveness, specially from Eastern
countries, which affects in particular traditional sectors.
5.8.4.3
Learning points
The experience of DDTA is very meaningful in the Italian scenario as this initiative is
trying to adopt a systemic approach and to develop a model that can be easily replicated
in other T/C districts. The main learning points arising form the DDTA initiative are:
Broad involvement of stakeholders: including Central and Local Administrations,
standardisation bodies, industry associations and enterprises representatives
Organisation: it is the first governmental initiative for the realisation of an interregional
network of DSCs for T/C enterprises
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Infrastructures: development of open source software solutions which will be made
available to other relevant industry stakeholders
Services: development of innovative services for T/C companies (for instance: semantic
web, e-Knowledge for the e-Business, data-mining in support of the e-knowledge)
5.8.4.4
Although this initiative is too young to assess its effects, some strength and weakness
points can be drawn form the analysis of the activities carried out so far and form the
plans for the future action lines.
Strengths
(+) Leveraging a snow-ball effect: The initiative is expected to triggered a snow-ball
effect as pioneer firms acting as catalyst are expected to involve their business
partners
(+) Low costs of infrastructures and alignment on shared standards: The decision to
use and improve existing and internationally recognised standards (Tex Weave) and
the requirement for open source software and free applications.
(+) Involvement of local stakeholders at institutional and commercial level: Active
role of the Chambers of Commerce and professional associations; marketing plan
(initial free supply of services and gradual tariff plan) oriented to the increasing
involvement of SMEs.
(+) Support to SMEs emancipation: Development of methods/tools (starter kit) and
tutoring actions directed to facilitate the use of standards among SMEs in a full selfgovernment with regards to the Service Centres.
Weaknesses
(-)
5.8.5
High mortality rate of T/C SMEs in the target areas: the first results of a detailed
analysis on the territory edited by the DSCs' executors pointed out that, in the last 24
months, the number of T/C regional enterprises included in the market
segmentation during the preliminary planning, diminished on average more than
the 40%.
References
Research and interviews for this case study were conducted by Databank
(www.databank.it). Main sources:
Interview with Mr. Giuseppe Rizzi, Innovazione Italia
Interview with Mr Paolo Donzelli, DIT
Interview with Mr Giacobino, Regione Campania
Website of the initiative (http://www.ddta.it/)
Puglia Regional Governement, Bando di gara per la Progettazione, realizzazione e
sperimentazione di un Modello di centro di servizi regionale supporto della filiera
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tessile e abbigliamento in Puglia. Bid for design, implementation and testing of a
model for a Service Centre supporting the value chain of the T/C sector in Puglia,
available at http://www.bur.regione.puglia.it/
Campania Regional Governement, Disciplinare tecnico per la realizzazione dei
Distretti Digitali del Tessile Abbigliamento in Campania, Technical specifications
for the implementation of digital T/C Districts in Campania, available at
http://www.sito.regione.campania.it/
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5.9
The Digital Netherlands Initiative
Fact sheet
(native language):
Nederland Digitaal
•
Phase I: Nederland Digitaal – Baanbrekend met ICT (NDB);
Nederland Gaat Digitaal (NGD)
•
Phase II: Nederland Digitaal in Verbinding (NDiV)
(English):
Digital Netherlands
Phase I: Agriculture & fisheries, Manufacturing, Construction, Wholesale
and retail, Transport and logistics, Health and social services;
•
Phase I: Digital Netherlands – Groundbreaking with ICT; The
Netherlands Go Digital
•
Phase II: Digital Netherlands Connected
Phase II: Construction, logistics and wholesale (including maritime);
human health; creative industries; industry; food and agriculture.
Geographic focus:
National, with regional co-ordinators
Start date:
Phase I: 2002
Phase II: 2007
End date:
Phase I: 2006
Phase II: on-going
Initiated by:
The Dutch Ministry for Economic Affairs (EZ)
Implemented by:
Specialised agencies of EZ: Syntens, Media Plaza, SenterNovem, ECP.nl,
HBD.nl, and Nederland Breedbandland.
Funding:
Phase I
NDB: € 4.4 million (20032006)
by EZ via its specialized agencies.
NGD: € 33.5 million (20032006)
by EZ via its specialized agencies
Phase II:
NDiV: an estimated € 15
million (2007 - 2009)
Contact person(s):
by EZ via its specialized agencies.
Syntens:
•
Ms Monique Fledderman, Project Manager of Digital Netherlands
Connected
•
Mr Peter Koudstaal, Project Manager of Digital Netherlands Groundbreaking with ICT and The Netherlands Go Digital, Syntens
Tel.: +31 (0)88-4440444 (main switchboard)
Links with other
initiative(s):
The initiative is part of the broad, concerted nation-wide ICT policy agenda.
Website(s):
http://www.ndiv.nl
http://www.syntens.nl/nederlanddigitaal
http://www.syntens.nl/werkboeken
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Abstract
"Digital Netherlands" is a long-running public policy initiative aimed specifically at
improving SME performance by using ICT. The initiative is financed by the Dutch
Ministry for Economic Affairs, made available free of charge (or for very low fees) to the
participants (i.e. all SMEs interested), and is carried out by the Ministry's specialised
agencies. It was launched at the end of 2001 and started effectively in 2002.
The first phase of the initiative was completed in 2006 and included two parallel
programmes: one focusing on the broad adoption of ICT among all SMEs; the other
focusing on the more innovative uses of ICT by SMEs from specific sectors. Currently in
its second phase, the programme has been adapted to the new needs of SMEs,
considering that most of them have incorporated already, at least to some degree, ICT in
their individual production processes.
Activities organised as part of the initiative fall primarily in one of the following
categories: awareness rising, information dissemination and specialist assistance.
Important factors that have contributed to the success of the initiative are the close cooperation between policymakers and trade and employers' organisations in planning the
deployment of the programme, the step-by-step approach of the programme, its lowthreshold character (free-of-charge activities), and the delivery of independent, unbiased
advice to companies.
5.9.1
The Digital Netherlands initiative is aimed at SMEs and has been implemented in two
stages. The first stage consisted of two parallel programmes, namely Digital Netherlands –
Groundbreaking with ICT (original name Nederland Digitaal – Baanbrekend met ICT,
henceforth NDB) and The Netherlands Go Digital (original name Nederland Gaat Digitaal,
henceforth NGD). Both programmes ran from 2002 to 2006. The follow-up initiative –
Digital Netherlands Connected (original name Nederland Digitaal in Verbinding, henceforth
NDiV) – started in 2007. The information in this article covers both stages of the Digital
Netherlands initiative.
In 1999, the Dutch government defined the broad policy lines for the development of a
new generation of networks and related services. The broad adoption of ICT by citizens
and companies was regarded as essential for the social and economic development of the
Netherlands and for promoting the country's international competitive position. Thus, a
national ICT policy agenda was defined. The objectives of the nation-wide ICT policy
agenda are scrutinized annually and, if necessary, adapted to new developments and
their corresponding requirements.
As a result of the national ICT policy, a strong new infrastructure was established and
broadband penetration grew, among both individual users and firms, placing the
Netherlands among the frontrunners in this field. By contrast, ICT were only marginally
used by firms, the SMEs scoring particularly low – at the end of the 1990s, only 10% of
the Dutch companies had an online presence.
The Ministry for Economic Affairs assessed that ICT were essential to increasing firm
productivity and to promoting the competitive position of Dutch firms on the
international market. As such, the first programme meant to promote the fast adoption of
ICT by firms was launched – SpOED (also meaning "urgent" in Dutch), an acronym for
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Stimuleringsprogramma Opkomst Elektronische Diensten (Programme promoting the
emergence of electronic services), the precursor of the Digital Netherlands initiative.
Digital Netherlands was a public policy initiative aimed specifically at SMEs23. It was
launched at the end of 2001 and started effectively in 2002. The prominent place given to
SMEs in this umbrella policy mirrors the important role played by SMEs in the national
economy. Two parallel action lines were defined for SMEs:
The Netherlands Go Digital (henceforth NGD; original name Nederland Gaat
Digitaal, later renamed Nederland Digitaal, translated Digital Netherlands), with a
budget of € 33.5 million for the period 2003-2007, and
CIC Uitstraling, later renamed Digital Netherlands – Groundbreaking with ICT
(henceforth NDB; original name Nederland Digitaal – Baanbrekend met ICT), with
a budget of € 4.4 million over the same period.
In defining the strategy and deployment of the policy initiative, the Dutch Ministry of
Economic Affairs co-operated closely with its specialised agencies (some of which were
created specifically for this purpose), as well as with trade and employers' organisations.
Both programmes of the policy initiative employed largely similar methods to encourage
the adoption of ICT by SMEs. The major difference between the two programmes is that
whilst NGD focused on ICT adoption by SMEs in a broader sense, the second
programme, NDB focused on more innovative uses of ICT by SMEs from specific sectors.
Gradually, however, the two programmes grew towards each other.
In 2007, after the completion of the two programmes, the line of action has been set
forward as a single programme aimed at SMEs, under the new name of Nederland Digitaal
in Verbinding (Digital Netherlands Connected). The new programme, with a budget of
approximately € 15 million for the period 2007-2009, has preserved its sectoral approach
and is likely to change to a more integrated vision of e-business.
Target groups
Throughout its different phases, the target groups and beneficiaries of the initiative
varied. The sectors addressed by NDB from 2002-2006 were: transport and logistics,
healthcare, ICT multimedia, mobile communication, construction and installation, ICT
embedded systems, software engineering and financial services. NGD had a broader
scope, targeting all SMEs.
The follow-up phase, NDiV, which started in 2007, focuses more on an integrated vision
of e-business. However, the programme of Syntens singles out a number of priority
sectors, namely constructions; logistics and wholesale (including that for the maritime
sector); healthcare; the creative industries; manufacturing and food; and agriculture. The
potential target group of the second phase of the project, NDiV, is an estimated 80,000
SMEs.
Targets
The purpose of NGD, to acquaint SMEs with ICT and their economic potential, was
defined in rather broader terms than that of NDB. NDB aimed specifically:
to increase the number of early adopters of ICT among SMEs;
23
The definition of SME in policy documents is sometimes given as firms with between 5 and 200
employees, and other times as firms with between 10 and 250 employees.
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to promote the alignment of the use of ICT innovative solutions by SMEs with the
demand and market; and
to stimulate the uptake of (proved) successful ICT solutions by late adopter SMEs
(the so-called late majority and laggards) in order to increase their productivity
and generally improve the business processes.
In the second stage, which started in 2007, the focus will be on a more integrated concept
of e-business, including the sharing of information on products and orders between
partners in the (digital) value chain, for example in logistics, projects, in modelling and
design processes, simulation, or providing specific sectoral knowledge.
In addition, special attention is paid to promoting broadband, new publishing
techniques, security (awareness and prevention of cyber crime), electronic payments,
standards, the use of open source and the use of RFID. Also, NDIV aims at doubling by
2009 the percentage of SMEs that have integrated ICT in their production process and at
stimulating the creation of digital value networks.
Resources
The programme, at both its stages, was financed by the Ministry of Economic Affairs
through its specialised agencies. NDB had a budget of € 4.4 million for the period 20032006; NGD had a budget of € 33.5 million for the same period. The budget of NDiV,
which was launched in 2007, is estimated to be € 15 million.
5.9.2
Activities
5.9.2.1
Implementation
The digital initiative, at its first stage, consisted of two programmes, NGD and NDB,
which ran between 2002 and 2006. The second stage of the digital initiative consists of a
single programme, NDiV, which started in 2007.
Organisational set-up
The initiative is financed by the Dutch Ministry for Economic Affairs, made available free
of charge (or for very low fees) to the participants (all SMEs interested), is carried out by
the Ministry's specialised agencies, and is aimed at improving SME performance by using
ICT solutions. The agencies involved in carrying out the digital initiative for SMEs
include Syntens, Media Plaza, ECP.nl, Nederland BreedbandLand, and SenterNovem.
Syntens is an independent innovation network for entrepreneurs. It organises
workshops for SMEs. Upon request, Syntens experts can draft strategic business
analysis with and for SMEs regarding the adoption of ICT, the use of the internet,
and the digital value chain. Instruments used by Syntens include scans, sectorspecific programmes, as well as a workbook. More recently, Syntens adopted a
new, ICT-enabled means of communicating with the SMEs: online, real-time chat
via the organisation's internet site.
Media Plaza organises NDiV seminars (six being planned for 2007).
ECP.nl, the Dutch public-private platform for the digital economy and society,
puts together working groups and initiates projects on various subjects relevant to
the digital initiative.
Nederland BreedbandLand is the national independent platform aiming to
promote broadband as a catalyst for social and economic development. Nederland
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BreedbandLand makes available broadband and mobile communication
applications to SMEs via value chain and sector-oriented projects.
SenterNovem, as the main agency for sustainable development and innovation,
manages two parallel and related innovation initiatives: innovation vouchers and
innovation performance contracts (see below).
Not part of the digital initiative for SMEs, but directly related to it, are other initiatives of
the Ministry for Economic Affairs, also meant to boost the innovative potential of SMEs
and increase their competitiveness. One of the parallel initiatives, administered by
SenterNovem, is the innovation-voucher project – SMEs can apply for free research
vouchers with which they can hire external expertise. The initiative is also meant to
create new or closer ties between research and business, stimulate the transfer of
knowledge between the two; and increase company know-how.24
Activities and instruments used
The programme, at both its stages, employed comparable implementation instruments,
including organising workshops and a series of seminars; dispensing customized
strategic business advice; and producing and distributing printed and digital
information.
At its first stage (2002-2006), the programme, and in particular NGD, focussed more on
creating awareness among SMEs about the potential of adopting and incorporating ICT
in the production process. During the same stage, NDB used the same implementation
instruments whilst focusing on more innovative uses of ICT by SMEs from specific
sectors (such as advice on the subject of state-of-the-art ICT solutions and Next
Generation Scenarios, or NGS, for SMEs).
NDB was carried out primarily by Syntens, on behalf of the Ministry for Economic
Affairs, and focused on SMEs in the following sectors: transport and logistics; healthcare;
ICT multimedia; mobile communication; construction and installations; ICT embedded
systems; software engineering; and financial services. The programme set forward the
goals of a larger, non-SME-specific ICT programme known as Competing with ICT
competencies (original name Concurreren met ICT-Competenties).
Gradually, the two programmes grew more towards each other. Eventually, in 2007, after
the completion of the first stage, the initiative was set forward as a single programme for
SMEs. Also during the second stage of the initiative, NDiV, the instruments employed
are likely to be similar to those employed during the first stage, except its new cluster
approach. This time, however, they will be adapted to the needs of SMEs which have
incorporated already, at least to some degree, ICT in their individual production
processes.
Given the premise, the initiative is now also actively facilitating the setting up of ICTenabled networks of SMEs (e.g. sectoral value chains).
24
Another initiative administered by SenterNovem is the Innovation Performance Contract:
"InnovationPerformanceContracts (IPC) is a new policy instrument designed to stimulate
innovation in small and medium-sized enterprises (SMEs). It aims at facilitating collaboration
and the transfer of knowledge within a group of SMEs. Participants may belong to the same
supply chain, region, or sector, or they may have a specific theme in common. In 2007 the IPC
subsidy scheme has a budget of EUR 17 million." Source:
www.senternovem.nl/english/products_services/encouraging_innovation/innovationperformancecontract
s_ipc.asp
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The programme will be carried out by the agencies mentioned earlier in this section in a
concerted effort to include SMEs from all sectors. The focus will be on a more integrated
concept of e-business, including the sharing of information on products and orders
between partners in the (digital) value chain, for example in logistics, projects, in
modelling and design processes, simulation, or providing specific sectoral knowledge. In
addition, special attention is paid to promoting broadband, new publishing techniques,
security (awareness and prevention of cyber crime), electronic payments, standards, the
use of open source and the use of RFID.
Project example:
TCI Group
The TCI Group started off as a provider of ICT services for the Nederlandse Aardolie
Maatschappij. Within 14 years, the TCI grew from four to a 100-staff company.
More divisions were added to the company, some as a result of mergers and
acquisitions. With them, the range of clients diversified to include public
organisations, not-for-profit organisation, and later SMEs. Certain divisions of TCI
specialized further in order to improve the way they meet the demands of certain
categories of clients (such as SMEs).
In order to improve their services further, TCI was interested in introducing a
digitised order and information system. Syntens was involved in advising on a new
digitised value chain approach to be introduced.
The implementation of the new digital systems provided better oversight of activities
carried out by the firms' suppliers, easier (instant) customer access to all
information regarding their orders at all stages, the possibility to compare offers and
follow the progress of their order; clearer and shorter communication lines between
client, firm and supplier; improved productivity and customer service; an overall
clear and time-saving solution.
Source: Syntens,
www.syntens.nl/SYNTENS/Innoveren/algemeen/ketenmanagement/praktijk
verhaal/Digitale+snelweg+tussen+fabrikant+en+klant.htm
5.9.2.2
Communication
The main means of communication of the initiative are:
Websites, which provide information on all aspects of the policy
Information material such as brochures, reports, information CDs, video material;
"How-to" and step-by-step manuals (e.g. on smart co-operation in value chain
networks).
The information is distributed to SMEs via industry associations, chambers of craft or
commerce, and special events such as workshops, seminars, fairs, debates and
congresses.
A new addition to the initiative's page on the Syntens internet site is the online chat
function. SMEs can use this function to contact directly online experts of the agencies.
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5.9.2.3
Evaluation
An evaluation of Digital Netherlands was carried out by Dialogic and published in
200625. The results were satisfactory. Main conclusions of the evaluation report state that
the participants:
used more ICT than non-participants,
were satisfied with the programme and
were taking part in more than one section of the programme.
However, the evaluation also brought some critique to the fore:
only negligible increase in numbers of early adopters among the SMEs were
recorded,
there was only negligible own innovative output from participants,
there were some complaints about the high indirect costs (3 executive agencies
involved)
there were some complaints about the cumbersome administrative construction (3
executive agencies involved).
high investments and low or too slow return on investment.
5.9.3
Results
Outputs
During the first stage of the initiative and as part of NDG, about 3,500 workshops and
strategy sessions were organised by Syntens. About 100 Syntens employees were
involved in carrying out the policy. 85 sector organisations were involved in the
distribution of the information material and the organisation of the various activities of
the initiative.
An estimated 27,000 companies took part in the programme. However, the programme
has probably reached far more organisations via the dissemination activities carried out
by sector organisations.
Customised advice was provided to numerous SMEs by Syntens.
Step-by-step manuals were published and made available to those interested, both online
and in printed form (on topics such as how to set up a company internet site).
Outcomes
This section refers primarily to the first phase of the programme, including NDB and
NGD, both completed in 2006. Phase two of the programme has started only recently, in
2007. As such, no evaluation of phase two has taken place yet.
25
Bongers, Frank et al, Dialogic, Evaluatie Nederland Gaat Digitaal en CIC Uitstraling/NBDI,
Project number, 2005.098-0611, Utrecht, The Netherlands, May, 2006,
www.dialogic.nl/modules/cms/item01.aspx?itemId=315; and
www.dialogic.nl/files/Dialogic%20(2006)%20-%20Evaluatie%20NGD%20en%20CIC%20%202005.098-0611.pdf
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The evaluation of phase one of the digital initiative was carried out by Dialogic and
published in a report26. The report reveals that, at the time of the evaluation, Syntens had
a recognition rate of 29% among SMEs; its programmes 10% (lower than the targeted
25%); and 3-4% of SMEs have actually taken part in these programmes.
At the beginning of the initiative, only approximately 10% of SMEs had an online
presence. At the end of phase one, almost all SMEs had an online presence.
Overall, participants in both NGD and NDB expressed their appreciation for and
satisfaction with the programmes, the way in which they were conceived and carried out,
and the professionalism of the staff that carried them out. They also expressed the wish
the programmes be continued. The participants also mentioned that the adoption of ICT
resulted in cost reductions; improved productivity and production quality; and higher
turnover and added value. They were consistently positive about the effectiveness of ICT
adoption in the production process.
However, participants also mentioned that, whilst ICT solutions solved a number of old
problems, it also created a set of new ones. ICT-related bottlenecks could include
relatively high investment costs, insufficient in-house skills, shortages in the supply pool
of specialised staff, insufficiently developed networks, limited interoperability.
The evaluation carried out by Dialogic also revealed a number of differences between the
ways in which SMEs made use of the NDB and NGD.
The objectives of NGD were realised earlier than originally planned. Contributing
external factors included the strong growth of internet access and of electronic business
registered during the same period as NGD. An estimated 70% of the participants to NGD
did not use any other kind of subsidy available to SMEs. This confirmed that the
programme achieved its goal to address the needs of the group of (mainly smaller) SMEs
difficult to reach via any other policy initiative available at the time.
NDB, although it enjoyed a similar level of user satisfaction, met with a certain amount of
difficulty in identifying its target group of early adopters. Its more experimental
character also translated in higher transaction costs than NGD. The beneficiaries of the
programmes also tended to be relatively larger SMEs. More aware of the opportunities
available to them, they also tended to use various other incentive schemes beside NDB.
The lesson learned during the first phase of the digital initiative were taken into
consideration in drafting the plans for the follow up. The low-threshold character, a
major success factor of the first stage of the initiative, is preserved. More focus is
achieved by merging the two initiatives into one. From the point of view of the
organising agencies, the first phase of the digital programme provided them with
valuable lessons ranging from project management to new ways to harness the power of
the internet and the use of digital self-tests; and to the need for a sector-oriented
approach. That should also result in improved co-ordination between the organising
agencies, and between front and back offices.
26
Bongers, Frank et al, Dialogic, Evaluatie Nederland Gaat Digitaal en CIC Uitstraling/NBDI,
Project number, 2005.098-0611, Utrecht, The Netherlands, May, 2006,
www.dialogic.nl/modules/cms/item01.aspx?itemId=315; and
www.dialogic.nl/files/Dialogic%20(2006)%20-%20Evaluatie%20NGD%20en%20CIC%20%202005.098-0611.pdf
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The effect of the first phase of the digital programme was not restricted to its participants
or beneficiaries. Spill-over effects can already be detected at enterprise (micro) level, and
also nationally and at policy-maker level. One such effect was the accelerated ICT uptake
among SMEs in general.
However, given the largely informative (NGD) and experimental (NGD) character of the
first phase of the digital initiative, it is during and after the second phase of the digital
initiative that the wider effects will become even more evident. The second phase
corresponds to a higher degree of ICT maturity and adoption among SMEs. The lessons
learned during the first phase can be translated into more effective outreach and
implementation plans by the organising agencies. The increased focus on value chain
integration and network creation between SMEs, and between SMEs and knowledge
organisations is likely to have a far wider impact than just on the participating
organisations. That is certainly the case with the new transversal priorities of the second
phase of the digital initiative, as well. They include standardisation and security
measures, electronic invoicing and various e-Government initiatives (e.g. electronic
filing).
5.9.4
5.9.4.1
ICT were and are seen as one of the important enablers of innovation. The Dutch
Ministry for Economic Affairs performed a very important role in facilitating the
adoption of ICT by SME through its digital initiative. The first stage of the digital
initiative was particularly relevant to smaller SMEs (although not only to them), often
lacking the means (financial, training, knowledge) to become early technology adopters.
The digital initiative at its first stage aimed primarily to acquaint SMEs with the new
concept of ICT, their adoption, and their potential to improve firm performance. In itself
pioneer work, the digital initiative employed a number of approaches to maximise the
effectiveness of the programme.
The "cafetariamodel": One such method was the so-called "cafetariamodel", used
successfully in NGD and also in NGD. Broadly speaking, the "cafetariamodel" could be
equated with the modular programme. Instead of a monolithic construction, the
programme is offered to those interested as a suite of stand-alone programmes, making it
possible for participants to select those that best fit their needs.
Right level of customisation: The digital initiative did not rely only on mass
customisation, as the "cafetariamodel" could be interpreted. It went further and combined
it with actual customised advice in the shape of strategic advice issued to selected
participants. The success of the customised strategic advice lay in its structured,
integrated and closely monitored character. Applicant SMEs were required to submit a
sound business plan to be assessed by Syntens. Once approved, Syntens would draft and
issue the corresponding strategic advice, in close co-operation with the SME.
Subsequently, Syntens experts would be involved at all stages of its implementation, by
monitoring, advising, and were necessary, fine-tuning the original plans.
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Facilitators
The following factors have facilitated the policy implementation and helped to
strengthen its effects:
Stakeholder involvement at an early stage: the close involvement of trade and
employers' organisations (and thus closer to the grassroots) in planning the
deployment of the programme
Step-by-step approach of the programme
Delivery of free-of-charge activities: making the modules of the programme
available free-of-charge proved a highly effective method, lowering the threshold
for all participants, thereby boosting the appeal, reach and effectiveness of the
initiative.
Unbiased advice: the delivery of independent, unbiased advice to companies.
External factors which facilitated the policy implementation included the strong growth
of internet access and of electronic business recorded during the same period as NDB and
NGD.
Barriers
The policy was confronted with the following challenges:
Financing issues: Many SMEs shrink back from making investments in ICT, in
particular if substantial initial investments are required for a technology.
Furthermore, there are uncertainties about the return on investments (uncertainty
about the pay-back-period, lack of success stories and thus difficulty to
demonstrate the business case in favour of a technology).
Lack of awareness: initially, there was still a lack of awareness for e-business
issues among the companies targeted by the programme. This made it difficult to
attract interest for the topic.
5.9.4.3
Learning points
The first phase of the Digital Netherlands initiative was evaluated by Dialogic, a Dutch
innovation policy consultancy, also as part of a European comparison of the Dutch ICT
policy for SMEs27. This report presents a number of conclusions and learning points. Most
of these lessons learned and recommendations have already been considered and
implemented in the second stage of the initiative (NDiV).
The key recommendations made in this evaluation report are:
1.
27
Policy should be focused even more specifically on the effective and efficient
use of ICT and e-business among SMEs. In this regard, the focus should be on
enhancing knowledge of non-technical aspects of ICT such as organisational
Batenburg, R et al, Dialogic, A European comparison of the Dutch ICT policy for SMEs, Project
2006.063, February 2007, http://ec.europa.eu/enterprise/ebsn/policies/national/netherlands/documents/pdf/aeuropeancomparison_en.pdf
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renewal, improving products and services, optimising operational processes,
and implementing supply chain digitalisation.
5.9.4.4
2.
The knowledge exchange among SMEs in networks (including knowledge
networks) should be promoted, regardless of whether they are organised on a
regional or industry-specific basis, under the guidance of experienced and "ICTneutral" advisors.
3.
The knowledge transfer between knowledge organisations (in particular
colleges and universities) to SMEs should be enhanced, for example in public–
private cooperative ventures that clearly serve mutual interests.
4.
The participation of SMEs and their trade organisations in EU research
programmes should be supported, as well as in similar programmes and
arrangements that are presently available and become available, for example by
pre-financing project applications and creating networks.
5.
Various sources of information and advice for SMEs should be integrated as
much as possible, in particular in the fields of ICT, e-business and supply chain
digitalisation, for example by bundling them in web portals or specialised
information centres.
Strengths
(+) Progressive/step-by-step approach: The initiative combined instruments to raise
awareness, enable learning, support the appropriation and adoption. This was
accompanied by specialist and strategic advice. This logical approach increased the
initiative's success.
(+) Differentiated approach: During the first phase of the initiative, the difference in ICT
awareness and adoption among SMEs was taken into consideration and two separate
programmes were set up accordingly.
(+) Win-win-situation: The focus on a specific e-business application with a clearly visible
benefit for all stakeholders led to a "win-win-situation" and created momentum for the
initiative.
(+) Leveraging a snow-ball effect: The initiative managed to triggered a snow-ball effect:
uptake is likely to continue after the end of the policy, due to pressure and promotion
from early adopters to peers.
Weaknesses
(-)
Organisational issues: The large number of organisations involved in carrying out the
digital initiative was perceived as a costly and cumbersome construction.
(-)
Dependency on SMEs willingness/ability to invest in new technologies: The limited
budgets for ICT investments, and the uncertainties about the return on investment,
were critical barriers for a wider of faster diffusion.
(-)
Lack of quantifiable output indicators and monitoring during the first phase of the
digital initiative. That made interim evaluations and fine-tuning more difficult, as well
as assessing the wider final impact of the first stage of the policy.
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References
Research and interviews for this case study were conducted by Gabriela Bodea, TNO
(www.tno.nl). Main sources:
Batenburg, R et al, Dialogic, A European comparison of the Dutch ICT policy for
SMEs, Project 2006.063, February 2007, http://ec.europa.eu/enterprise/ebsn/policies/national/netherlands/documents/pdf/aeuropeancomparison_en.pdf
Bongers, Frank et al, Dialogic, Evaluatie Nederland Gaat Digitaal en CIC
Uitstraling/NBDI, Project 2005.098-0611, Utrecht, The Netherlands, May, 2006,
www.dialogic.nl/modules/cms/item01.aspx?itemId=315 and
www.dialogic.nl/files/Dialogic%20(2006)%20%20Evaluatie%20NGD%20en%20CIC%20-%202005.098-0611.pdf
European Trend Chart on Innovation, Conference on e-Business and Innovation,
26 – 27 May 2005,
www.trendchart.org/reports/documents/Workshop_CountryBriefing_2_2005_Netherlands.
pdf
Gennip, C.E.G., Secretary of State for Economic Affairs, speech delivered on 20
November 2006, www.ez.nl/content.jsp?objectid=148853
Julianus, Jan Dr., Senior policy advisor, Ministry of Economic Affairs, The
Netherlands, The Dutch Policy approach to ICT and eBusiness stimulation of
SMEs, PowerPoint presentation, 2007
Ministry for Economic Affairs, The National ICT Action Plan 2005-2006, Beter
presteren met ICT, Vervolg Rijksbrede ICT-Agenda 2005 – 2006
Ministry for Economic Affairs, Budget 2007,
http://begroting.minfin.nl/rijksbegroting_nl/4a8bb4f4450044ee96df49af5f45bca2x248x859
79x49.php?cycl=2007&fase=mn&hfds=40.6
Ministry for Economic Affairs, The Netherlands Connected, Policy framework for
the electronic communication, Nederland in verbinding, Beleidskader voor de
elektronische communicatie, 11 August 2006,
www.ez.nl/dsc?c=getobject&s=obj&objectid=139993&!dsname=EZInternet&isapidir=/gvis
api/
Ministry for Economic Affairs, Parliamentary Q&A regarding the budget for the
year 2007, Wijziging van de begrotingsstaten van het Ministerie van Economische Zaken
(XIII) voor het jaar 2007 (wijziging samenhangend met de Voorjaarsnota), Lijst van
vragen en antwoorden,
www.ez.nl/dsc?c=getobject&s=obj&objectid=152304&!dsname=EZInternet&isapidir=/gvis
api/
Relevant websites
ECP.nl: http://www.ecp.nl/
Media Plaza: http://www.mediaplaza.nl/mp.php/overheid/nldigitaal
SenterNovem:
http://www.senternovem.nl/english/products_services/encouraging_innovation/index.asp
Syntens: http://www.syntens.nl/SYNTENS/Projecten/Regelingen/NDIV/NDIV.htm
List of acronyms
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EZ: The Netherlands Ministry for Economic Affairs
NDB: Digital Netherlands – Groundbreaking with ICT (original name Nederland
Digitaal – Baanbrekend met ICT)
NGD: The Netherlands Go Digital (original name Nederland Gaat Digitaal)
Acknowledgements
The case study was reviewed and validated by
Mr Peter Koudstaal, Project Manager of Digital Netherlands - Groundbreaking with
ICT and The Netherlands Go Digital, Syntens
Ms Monique Fledderman, Project Manager of Digital Netherlands – Connected,
Syntens
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BuildingSMART (Norway)
Fact sheet
Name of the initiative:
BuildingSMART
Construction and building sectors, architects, engineering,
entrepreneurs, facility management.
Geographic focus:
Norway with international scope through the IAI alliance
Start date:
2004
End date:
(ongoing)
Initiated by:
The International Alliance for Interoperability (IAI)
Norwegian Homebuilders Association
Innovation Norway.
Implemented by:
The Federation of Norwegian Construction Industries
Association of Consulting Engineers
Association of Architects
Norwegian Construction Products Association
The Organisation of Timber and Building Materials Merchants
Association of Technical Entrepreneurs
The Norwegian Joinery Manufacturers Association
Norwegian Master Builder Association
Statsbygg - The Directorate of Public Construction and Property
National Office of Building and Technology and Administration
Funding (annually)
Contact person(s):
€ 5.5 million
Norwegian Homebuilders Association and
member companies
€ 1 million
by Innovation Norway
€ 0.5 million
by the Buildingcost Programme of the
Ministry of Local Government and Regional
Development
Mr. Jøns Sjøgren
Postboks 7186 Majorstuen, 0307 Oslo, Norway
Mr. Roald Magne Johannessen
Innovation Norway
Akersgt. 13, 0104 Oslo, Norway
The International Alliance for Interoperability (IAI)
http://www.iai-international.org/
The BIT Programme (Norway)
Website(s):
http://www.buildingsmart.no
http://www.buildingsmart.com
http://www.bit-forum.no
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Abstract
In Norway, the building and construction sector is the 3rd largest landbased business
sector with 8.4% of the production value. The construction industry consists of a large
number of small businesses and has the lowest rate of IT technology take-up. It suffers
from inadequate quality and up to 30% of typical costs are related to non-building
activities. Research has shown that the same data is entered into a computer programme
at least seven times during a building project, increasing costs and sources of errors.
Society is witnessing new pressures on the built environment – planning and
infrastructure, energy consumption, sustainability, security issues and capital.
buildingSMART is a unified and international concept introduced and supported by the
International Alliance for Interoperability (IAI) for modernising the construction sectors
and arenas.
The main objective of buildingSMART is to increase the interoperability and
transparency in order to improve effectiveness, quality and security. Introducing open
standards in business processes and product directories it also aims at lowering the
barriers for innovative SME suppliers to enter the construction markets.
buildingSMART represents one of 7 business sectors that are co-funded by the public
Norwegian e-business development programme BIT (Business Intelligence Technology),
organised by Innovation Norway. The requirements for public, financial support from
the BIT programme are business sector ownership, collaborations and contributions,
innovative and demand driven activities, use of approved reference models, standards
and concepts and strategic, long term perspectives and decisions.
The BIT programme and buildingSMART are strategic initiatives financially supported
both by the Ministry of Trade and Industry and the Ministry of Local Government and
Regional Development.
buildingSMART has introduced the Building Information Model (BIM) and the global
ISO standard IFC - Information for Construction protocol. IAI is developing and
encouraging the use of BIM and IFC for its 600 members. The IFC standard is
implemented in core software systems for the construction sector.
5.10.1
Background
A 2004 report by NIST (US National Institute of Standards and Technology) concluded
that the annual costs to the capital facilities industry amount to 1-2% of the industry's
revenue.28 As contributing factors to this excessive cost burden were quoted the lack of
standard file formats for representing building-related data, the continuation of paperbased business practices, and inconsistent technology adoption among all the
participants in the design, construction, and occupation and maintenance phases.
Sector studies by e-Business Watch (www.ebusiness-watch.org) also pointed at an
unexploited potential of ICT usage in the construction industry, which could enhance
process innovation and productivity improvements.
28
Study: "Cost Analysis of Inadequate Interoperability in the U.S. Capital Facilities Industry"
http://www.bfrl.nist.gov/oae/publications/gcrs/04867.pdf
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In particular, there is a need for smarter processes in managing the project lifecycle of
construction projects. Buildings are typically designed and built by temporary, projectbased organisations of small firms. Project management, including communication and
data exchange among these firms, is therefore critical to the success of every project. ICT
can support companies in addressing this goal. However, until recently, ICT has been
applied in piecemeal fashion to individual tasks rather than to the entire process.
The key issue in the Architecture, Engineering, Construction and Facility Management
(AEC/FM) sector, is the lack of interoperability - the ability to share information, from the
inception of a project, when a client starts defining a brief, to when the users occupy the
new facility and expect data about the building for asset or facility management.
The need for change is urgent.
One solution of this issue can be the open global ISO standard IFC - Information for
Construction protocol. The IAI has developed a comprehensive Building Information
Model (BIM) based on this standard, which also integrates geographic information
system (GIS) data.
Using BIM facilitates helps to improve the information flow in construction industry
projects thus enabling better product quality and value for money investment. Intelligent
building models for example can test thermal performance, automatically determine
authority code compliance or be used directly for automated assembly manufacturing.
The IAI is the custodian of the Model and offers support to all participants in the project
life cycle.
Objectives
Against this background, the objective of the buildingSMART initiative is to improve
work-flows and productivity in the building and construction industry by the "smart" use
of new technologies in all phases of building projects. buildingSMART aims at the
dynamic and seamless exchange of accurate information on the built environment among
all members of the building community, and throughout the lifecycle of a facility. Thus,
buildingSMART promises to support a "smarter process for managing the project
lifecycle".
buildingSMART in Norway
In Norway actors from the whole supply chain joined forces in order to exploit this
potential and initiated the Norwegian buildingSMART programme.
Norway, with a population of 4.6 million and a cohesive construction industry, is among
the countries taking the lead on interoperability. It embraces the data standards proposed
for the industry by the IAI – International Alliance for Interoperability. The IAI follows
its mission by defining, promoting and publishing specifications for Industry Foundation
Classes (IFC).
More and more companies request from ICT service providers that their solutions must
be compatible with IFC specifications. Furthermore, construction authorities announce
that IFC data will be compulsory for many projects. Software companies are therefore
intensively working on integrating IFC interfaces into their solutions.
Target groups
The direct target group of the initiative are companies and professionals in the building
and construction industry, including architects, engineers, entrepreneurs and facility
managers.
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Indirectly, the initiative also addresses software solution providers (because their
programmes must have the respective interfaces to be compatible with the proposed
standards) and the public sector as a major customer of the building industry.
Business organisations within these sectors are another target group.
Public building authorities as well as other national, regional and local planning and
approval offices for constructions and buildings also are important when it comes to
modernising this industry.
Targets
buildingSMART has set itself a number of targets that are also in line with key challenges
the world's and Norway's construction industry are faced with.
Save time & money by achieving more efficient building processes.
Ability to capture design & construction data for subsequent use in operations &
facilities management
Improve the quality by reducing the need for rework
Reducing the use of energy, materials, and other resources.
Better predictability of cost & schedule in building projects
Avoid construction conflicts through simulation
Creating of a truly common market for construction products and services and
information.
Handling of "the low cost economies" challenge.
Developing construction sector into a knowledge economy sector at all levels of the
supply chain.
Strengthening relationships through the supply and procurement chains.
Owners shall "own" project data that are currently generated by many parties in
many formats
Resources
Funding (annually)
Source
€ 8.6 million (total)
€ 5.5 million
Norwegian Homebuilders Association and member companies
€ 1.0 million
Innovation Norway, BIT Programme
€ 0.5 million
the Buildingcost Programme of the Ministry of Local Government and
Regional Development
€ 1.2 million
Statsbygg (governmental property body) for IDM development
€ 0.4 million
various Governmental funds for energy planning etc.
Financial resource
From the figures above, around 30% of the annual funding is public money. 70% is
provided by the companies involved in the buildingSMART projects, mainly in terms of
time.
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Organisational resources
buildingSMART is a concept and brand organised under the IAI association. IAI is an
alliance of organisations dedicated to bring about a coordinated change for the
improvement of productivity and efficiency in the construction and facilities
management industry (Building Smart). IAI has more than 600 members in 62 countries,
which represents substantial resources for development of models, standards and
disseminations activities. IAI has 10 geographical chapters with national forums. The
Nordic chapter is chaired by Mr. Jøns Sjøgren, the Norwegian Homebuilders Association
(contact person for this case presentation).
The Norwegian ICT and software association ICT-Norway support relevant project
processes.
Software resources supporting IFC. An increasing number of software vendors for CAD,
ERP etc. are making their solutions IFC compatible.
Knowledge and information resources. A range of buildingSMART compatible models,
standards and documentation are available.
Models, standards
•
BIM= Building Information Model
•
IFD= International Framework for Dictionaries (also called BARBI)
•
IFC= Industry Foundation Classes (dictionary). (ISO 16739)
•
IFG= Industry Foundation classes for GIS
•
IDM= Information Delivery Manual
IAI International Conferences. Annual conference for networking and project
processing.
IFCWiki Web: The IFCWiki web is set up by the German Research Center in
Karlsruhe (Forschungszentrum Karlsruhe), supported by the IAI German Speaking
Chapter.
R&D, Education and Training. IAI have R&D supporters who produce scientific
research papers about IFC related R&D projects, Our members are also involved in
education/training courses for the use of IFC in problem solving situations.
5.10.2
Activities
5.10.2.1
Implementation
buildingSMART is an international concept supported by the International Alliance for
Interoperability (IAI). It is a "brand" for a dynamic set of interrelated collection of
elements, such as information models (BIM), data models (IFC), standards, methodology,
technology, software etc.
The initiative dates back to 2004, when the North American Board of the IAI established a
Marketing Subcommittee to investigate and make recommendations around a clearer,
less technical message to the construction industry. The subcommittee recommended
adopting an approachable concept, buildingSMART, as a vision of a smarter lifecycle
process for the built environment.
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The 4 BIT project types
4
Cross-business projects
3
International projects
Common platforms with international partners
2
This chapter relates to the
implementation of the
buildingSMART concept in
Norwegian as a sector
project under the BIT
programme (BIT project
type 2).
Sector projects (vertical value chain)
Standards, integration and business development
1
Business area projects (horizontal)
ERP – CRM – business specific systems
Since some buildingSMART elements are international standards (e.g. the IFC) and are
related to specific national processes, selecting the optimal implementation process
depends upon the target groups (architects, facility managers etc.), the selected work
processes and the type of project.
BIT platform framework
Business platform (companies)
Business models / - processes / - rules / - services
Technology platform (ICT suppliers)
Integration
Portals
Product
databases
ERP
CRM
Sector specific
systems
Implementation activities
in Norway by and large
follow a "carrot and stick"
approach. One of the most
powerful tools are to
demand
IFC-compatible
documents when e.g. issuing tenders. Statsbygg (see
project example below) –
the governmental giant in
construction – is increasingly putting a focus on the
use of information models
according to BIM and data
models according to IFC.
Standards platform (per sector)
Business
processes
Product
information
Other sector
specific information
During the second half of 2007, 13 companies are testing buildingSMART in pilot
projects. Competing construction companies are also collaborating in the exchange of
data according to the BIM model.
To get a picture of the use of buildingSMART compatible systems, the Nordic and Dutch
research councils have financed the Erabuild-project "Review of the Development and
Implementation of IFC compatible BIM", due November 2007.
By now, the buildingSMART standards platforms are in place and the next step is to
establish a technology platform including IFC compatible software.
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IFC offers solution providers a certification process to ensure that their applications
confirm to the data model standard. This process consists of two steps:
First, tests are conducted. To this end, 300 test files are available, which can be used
to model standard situations and processes. If it can be demonstrated that a
programme supports these test cases, the first degree certification is awarded.
Second, software programmes are tested with IFC data for complete buildings.
These data are real and have been provided by beta-testers. If the programme
supports these IFC data, it is fully IFC certified.
buildingSMART promotes the compliance of software programmes with IFC
specifications.
The third platform level of the BIT and buildingSMART framework represent the most
complex part of the implementation: integrating buildingSMART -compliant data and
methodology with the various and business-specific business models and processes.
Project example 1:
Statsbygg
Statsbygg is the Norwegian Directorate of Public Construction and Property.
Statsbygg's tasks are the implementation of the policies adopted by parliament and
the government within the public construction and property sector.
Statsbygg and buildingSMART have entered a partnership for mutual benefits:
buildingSmart concept, BIM models and IFC standards were needed to increase the
utility value of its buildings for tenants and users and to significantly reduce
construction and operating costs and building damage. On the other hand,
Statsbygg has invested more than € 1.1 million of the organisation's 2007 R & D
funds in the development and use of BIM and IFC in its projects. The national
Building Cost Programme (www.byggekostnader.no) is also funding open BIM
(IFC) projects with € 2 million over a four year period.
Municipal planning and construction departments are planning to use electronic
applications via BIM and information exchange linked to GIS and IFC.
The National Office of Building Technology and Administration (BE) is running a
Norwegian building code rules sets model checker for IFC models submitted through
the ByggSøk eSubmission portal at www.byggsok.no.
One main lesson to be learned from this was that the IFC standard should be further
developed by the IAI. Further to this, the awareness and use of the IFD object library
among relevant stakeholders should be increased. Finally, the Information Delivery
Manual (IDM, used to promote information exchange requirements for business
processes in the sector) should be standardised and internationalized.
The success of buildingSMART depends on 1) the authorities acceptance and
support of the new methods and technology 2) the building industries willingness to
use the new technology and to push it further 3) the eagerness and capacity of the
software vendors to deliver new tools for new purposes and to secure good IFC data
import and export functions.
The way ahead: 1) Statsbygg will issue contracts to contractors in the form of BIM
models based on IFC. 2) Statsbygg will require that BIM models are used
throughout the construction process. 3) Statsbygg will require that contractors
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supply a complete BIM model for use in facility management and operation after the
construction phase.
The goals for the coming years are: 2007 - at least 5 BIM projects. 2008 - BIM (IFC,
IFD, IDM, ...) as main policy for projects above EU threshold. 2009 - BIM
assessments are carried out for 'all' projects (within practical limits).
Project example 2:
AHUS – A hospital project in Norway realises value through
an IFC approach
In the development of the New Akershus University Hospital, near Oslo, is
harnessing IFC-BIM software is used to to achieve a range of aims. The primary
purpose for the C.F. Møller Architects in creating the IFC-BIM based object model
was for planning purposes and to set up object libraries. The hospital has over 1,000
unique rooms in which 60,000 articles are deployed. Of these, 20,000 were drawn in
CAD. With work on a scale like this, the object libraries have proved a key tool.
Secondly, responding to a demand for being able to implement major changes to the
project in short time, the IFC-BIM model and the method of working with libraries
helped to improve efficiency radically while keeping quality. A new 3D model of the
136.000 m2 hospital, was completed in only three months. This speed of work was
only possible thanks to the BIM model approach. Quantities are taken off the model.
Consistency between the BIM-model and the room database is automated and
considered largely foolproof. Additionally, information will be transferred from the
model to the facility management system.
Thirdly, the new entrance building is being used for comprehensive testing of IFCs
on a project. This testing includes the participation of the client, the engineers and
the contractors. This part of the project is a integration of the IFC-BIM philosophy
in a real-life building project. IFC-compatible applications are used to test the digital
building prototype, among other things, visualisation, construction, clash-detection,
energy consumption, accessibility, the electrical system, air-flow etc. Together with
the contractor the project also test 4D-simulation and cost and has developed an etrade system.
The hospital will be in full operation in 2008. Despite the technical challenges such
as the complex facades, flaws in some of the applications, the lack of IDMs, IFDcodes and objects from manufacturers – the use of IFC-BIM has been central to the
progress of the hospital project. And the use of IFC as a standard for seamless
exchange of intelligent objects has demonstrated its potential in efficiency and
quality improvement.
References: www.cfmoller.com, www.nyeahus.no (Norwegian text only)
5.10.2.2
Communication
The objectives of buildingSMART, and how to participate in the initiative, is mainly
communicated by the IAI through its various communication channels.
The major platform for the initiative is its annual international conference. The 4th
International buildingSMART Conference took place in London on 18 April 2007
(http://www.buildingsmart.org.uk).
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5.10.2.3
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Evaluation
The BIT programme (including buildingSMART) was evaluated early 2007. The
evaluation was conducted by the organisation NIFU-STEP with web surveys, interviews
of participating companies, project managers and funding organisations. The evaluation
concluded:
e-Business processes should have a strategic position in Innovation Norway.
In the next phase of buildingSmart, Semantic technologies should be used to map
related topics and documents – in order to enable seamless manoeuvring in
libraries, models, product catalogues and web-pages.
buildingSMART represent large international market opportunities for building
industry and software vendors that are early adaptors of implementing
international standards.
It is vital to get hands-on experience with the buildingSMART concept because the
demonstrator effect is needed to convince the industry.
5.10.3
Results
Outputs
The largest information gap in the chain of building information occurs between the
design / construction of a building and the handover to those who will be responsible for
operation and maintenance.
The following actions and services have been derived from the Norwegian
buildingSMART participation:
IDM Information Delivery Manual. The aim of the IDM is to promote the information
exchange requirements for business processes within the building construction
industry (for more information cf. http://www.iai.no/idm/index.html).
IFD Library (Dictionary). The IFD Library for buildingSMART is an object
terminology library for the building and construction industry (for more
information cf. http://www.ifd-library.com/).
IFG IFC for GIS. IFG allows for intelligent communication between GIS standards
and CAD systems using IFC. The IFG project was initiated by the Norwegian State
Planning Authority (Statens Bygningstekniske Etat). The aim of the project was to
provide geographic information created by using GIS systems within the
framework of the IFC (for more information cf. http://www.iai.no/ifg/index.html).
IFC ST-5 Structural Timber Model. A model for the optimisation of computer based
cooperation between design and fabrication of timber structures (for more
information cf. http://www.iai.no/ST5/index.html).
IFC EL1 Electrical installations in buildings (Functional parts). A model for the
optimisation of computer based cooperation between design and electrical
installations in buildings (for more information cf. http://www.iai.no/EL1/).
IFC EL2 Electrical installations in buildings (Selectivity calculations). Model for
computer based calculations of electrical installations in buildings (for more
information cf. http://www.iai.no/EL2/).
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ESP IFC for Early Design. A project for testing the Building Planning Guide and the
Construction Programme in the Bodø College, a tertiary education institution
within the Arctic Circle.
EPM in Singapore. Automated Code Checking based on intelligent IFC2x objects,
which allows automated approval of building plans over the Internet (for more
information, see www.epmtech.jotne.com/newsletter/ew101/singapore.html).
The IFC/IDM Product model
The outputs above have partly been organised as network activities and Sub-Projects.
The Sub Projects (SP) aim to target specific barriers in the implementation process and to
support efficient work processes.
Other outputs from the Norwegian buildingSMART activities include Organisational
structures, information elements, knowledge projects, evaluations and presentations.
This encompasses among other things:
The buildingSMART coordinator, a full time project coordinator financed through
public funding.
The "Seeing is Believing"-presentation, a 45 min. multimedia presentation of the
BuildingSMART approach which is being used globally.
Web pages with information resources. See links on www.buildingsmart.no.
Further outputs include software solutions such as:
The EDMmodelServer™/IFC, a service product for building owners, contractors
and product owners to use IFC, IDM and IFD Library to cut transaction cost and
errors in projects. Co-funded by Innovation Norway and the supplier EPM
Technology.
The EXPRESS Data Manager, a software development kit for the efficient
implementation of the IFC BIM. Co-funded by Innovation Norway and the
supplier EPM Technology. Co-funded by Innovation Norway and the supplier
Data Design Systems.
Additionally, BuildingSMART has produced business models and supporting systems,
including solutions for eCollaboration, eProcurement, eSubmission and ePlanCheck.
Outcomes
The buildingSMART concept has supported the following improvement processes
creating better buildings and constructions with lower cost and better quality
reducing processing costs (planning and production) by up to 30%
reducing documentation approval time from weeks to seconds by use of e-plan
checking procedures.
increasing the reliability and quality in planning, budgeting, collaboration and
coordination for contractors and sub-contractors
enabling more efficient inspections, maintenance and management as to
environmental aspects and commercial transactions (leasing, sales etc.).
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creating international business opportunities for suppliers of construction
services and software vendors
opening the eyes of public and private players for more effective operations in the
construction and building sectors
supporting the discussions on introducing standards (IFC etc.) as required formats
for construction planning documents
increasing cross-sectorial and interoperability/integration options with related
sectors (transport etc.) and systems like ERP.
supporting the discussions on introducing standards (IFC etc.) as required formats
for construction planning documents
Wider effects on the economy and the sector
Impacts of buildingSMART are expected both on regional and sectoral construction
projects and the suppliers involved as soon as the awareness and spread of the global
standards underlying the programme increases.
In more detail, constructions and buildings based on buildingSMART standards are
expected to affect several sectors and issues including:
The public sector: use of simulation and interactive 3D models for city- and
landscape planning reduces planning- and approval time.
Energy and environment issues: buildingSMART compatible tools can support the
planning of energy saving constructions.
Safety and security: visual buildingSMART compatible tools can simulate escape
routes and support virtual training programs for safety and security topics.
The health sector: buildingSMART compatible simulation tools can help creating
better hospitals by simulating complex constructions and building logistics
5.10.4
5.10.4.1
The innovations in buildingSMART are mainly within the categories of process
innovations and product innovations.
Process innovations are new ways of organising the internal and external workflow with
appropriate information systems. For example, when 3D design models created by an
architect can be imported directly into the contractors data system for construction
purposes, and later on the same electronic information can be used for maintenance and
facility management, this can have strong positive effects on costs, time and data quality.
Product innovation: New software products have been developed to support the new
workflows and processes, both for CAD and ERP systems. New business opportunities
have emerged, e.g. in the fields of electronic workflow applications (such as the
EDMmodelServer™ from EPM Technology) and also in the field of implementation
support services (such as the EXPRESS Data Manager from Data Design Systems).
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5.10.4.2
Facilitators
The construction industry organisations are now supporting the implementation of the
buildingSMART project. The buildingSMART coordinator in Norway, Mr. Jøns Sjøgren,
is employed by the Norwegian Homebuilders Association.
IAI represent international networks in the standardisation processes.
Research and academic institutions like Sintef Byggforsk (SINTEF Building and
Infrastructure) and NTNU (The Norwegian University of Science and Technology)
supporting the buildingSmart activities by dissemination and promotion activities,
international network, knowledge and project resources.
Innovation Norway (co-funds buildingSMART under the BIT programme) gave birth to
the buildingSMART project. Innovation Norway co-funds selected sub-projects and
promotes buildingSMART in international fora, e.g. the eBSN network.
Barriers
The barriers that are obstructing the implementation of buildingSMART are mainly in the
categories of lack of awareness (of the new standards and software tools) and
management priorities. As to management priorities, a hot construction market with
recruitment problems makes it difficult to prioritize time and resources to replace/update
business system train new processes and procedures. Further barriers are:
A low interest in innovation and more efficient work processes in the construction
sector.
Scarce resources for promoting the benefits of buildingSMART, including reference
projects and tools.
A lack of human resources in the companies for system updates and training.
A lack of e-skills in the workforce, i.e. construction personnel is often not familiar
with e-Business operations and needs motivation, training and user support.
A need for introducing IFC as a required standard for construction documents.
5.10.4.3
Learning points
Norway has focused a lot on involving both the Government and the industry. There are
many challenges ahead, but here are some lessons learned:
Start with owners of constructions and buildings and help them to seethe potential
for improved sustainability (less energy consumption, less construction material
usage, less waste…) offered by BIM, IFC and related solutions.
Motivate medium-sized software developers by highlighting the new business
opportunities that are at hand.
Use hands-on presentation means to make the complex programme structure
comprehensible to many. The multimedia presentation "Seeing is Believing" was
used to demonstrate the BuildingSMART approach to a good effect.
Motivate the government – as owners of property and construction projects in
order to be more efficient in planning and approval processes.
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Motivate educational institutions to see the potential offered by new roles and new
ways of providing knowledge, to include this into their curricula.
Make construction authorities and companies aware that approaches such as the
one used by buildingSMART represent a future concept of business processes in
the construction sectors and that a strategic approach with a long term perspective
must be used to change the related work processes.
5.10.4.4
Strengths
The most important assets of the buildingSMART concept/brand are the branding itself,
the global acceptance of the BuildingSMART concept through the IAI network and the
approval of IFC as an ISO standard.
Further, the 10 IAI global regions with the buildingSMART concept on every regional
agenda, represent a critical level of organisational dissemination.
Also, the basic funding of the secretariat and the supporting projects helped to secure a
critical level of operations in Norway.
Weaknesses
The main challenges for buildingSMART in Norway are:
Difficulties in integrating trade products in the information models and planning
software (backward integration).
A lack of resources for awareness raising and training of the workforce in the use
of new tools and work processes. A classic mistake in introducing new tools is to
underestimate the time and resources needed to motivate and train the users.
5.10.5
References
Research and interviews for this case study were conducted by Mr. Bård Krogshus,
Infosector (www.infosector.no). Main sources:
http://www.buildingsmart.org.au
http://www.buildingsmart.no/
http://idm.buildingsmart.no/
http://buildingsmart.byggforsk.no/
http://test.barbi.no/ifdbrowser/
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5.11
The Digital SME Programme (Portugal)
Fact sheet
language):
PME Digital
Digital SME
Industry, building industry, commerce, tourism, services and
transport
Geographic focus:
Mainland Portugal
Start date:
December 2001 (1st phase: RIAT)
April 2004 (2nd phase: SIED)
End date:
February 2003 (1st phase: RIAT)
December 2006 (2nd phase: SIED)
Initiated by:
Ministry of Economy Affairs and Innovation
Implemented by:
IAPMEI – Institute for Support to Small and Medium-Sized
Enterprises and Investment (for all other projects)
ITP – Portuguese Tourism Institute (for Tourism projects)
Funding:
€ 20 million
Contact person(s):
Ms. Ana Raposo
Ministry of Economy Affairs and
Innovation
IAPMEI – Institute for Support to Small and Medium-Size
Enterprises and Investment
Rua Rodrigo da Fonseca 73
1269-158 Lisboa, Portugal
Tel.: 213 836 000
Community Support Framework (2000-2006)
Incentives Programme for Economic Modernisation (PRIME)
Website(s):
http://www.prime.min-economia.pt
http://www.iapmei.pt
Abstract
The emerging digital economy requires companies to be ever more flexible and efficient.
The "Digital SME" initiative was launched to support small and medium-sized
enterprises in Portugal to cope with this challenge.
The initiative promoted the adoption of e-business applications among SMEs. It
considers e-business to be a key instrument to enhance the contact, cooperation and trade
between buyers and sellers. This includes the potential to improve customer service, to
facilitate and increase sales, to smooth order and payment processes, to improve
distribution and delivery processes, and to raise awareness for new business trends in
general.
"Digital SME" aimed at increasing the access and use of e-business technologies by SMEs
in order to enable them to innovate their internal working processes, organisation and
their exchanges with business partners, and thus to seize new business opportunities.
The policy initiative was presented in December 2001 by the Ministry of Economy Affairs
and Innovation. It was split into two phases, each one with dedicated objectives:
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RIAT: Networks of Information and Technical Assistance (2001 – 2003): this phase
focused on providing consultancy services and accompanying a representative group of
SMEs, for a period of a year, to promote their competitiveness and economic growth.
SIED: Incentive Scheme for Digital Economy (2003 – 2006): this phase supported
specific projects which aimed at stimulating the participation of SMEs in the digital
economy.
5.11.1
In today's global economy, data exchanges and transactions between companies, their
suppliers, customers and cooperation partners are increasingly being digitised. This
enables companies to save costs (e.g. by reducing error rates in data exchanges) and, at
the same time, to improve their customer servie (e.g. by delivering products or services
faster). ICT-enabled process innovation concerns all business functions, from
management to production, marketing, logistics and customer service. Therefore, the
right use of ICT for doing business becomes an important factor for a company to create
competitive advantage, to reach customers in new markets and ultimately to secure
sustained profits and growth.
While there is broad agreement about the strategic importance of ICT across all sectors,
even for smaller companies, many operational challenges and barriers for SMEs remain.
This includes financial challenges (to make the necessary investments), but in particular
organisational challenges, because the successful usage of ICT often requires to change
business processes.
Against this background, the Portuguese Government launched in December 2001 the
Digital SME initiative to support small and medium-sized enterprises in coping with
these challenges. The initiative is part of the "Incentives Programme for Economic
Modernisation" (PRIME), which aims at stimulating the participation of SMEs in the
digital economy in its broadest sense, going beyond the promotion of e-business
technology adoption.
Digital SME has been implemented in two phases. Phase 1 (from 2001 to 2003) focused on
the implementation of the "RIAT" networks (Networks of Information and Technical
Assistance). Phase 2 (from 2003 to 2006) was named "SIED" – Incentive Scheme for Digital
Economy.
The mission statement of Digital SME was to enhance the participation of Portuguese
SMEs in the digital economy. This covers the following objectives:
To reinforce the technical and technological capacity of SMEs and the
modernisation of their structures;
To support SMEs in innovating their internal organisation and improving their
work processes and human resources;
To promote a higher degree of digital integration between firms ("from action to
interaction");
To enhance access of SMEs to internal and external markets, e.g. using ICT to foster
exports;
To stimulate the adoption of innovative and cooperative business attitudes.
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The Digital SME initiative is integrated with the Community Support Framework (20002006), as part of the Incentives Programme for Economic Modernisation (PRIME), Axis 1:
"Enterprise Stimulation", Measure 3: Improving Business Strategies.
Target groups
Digital SME targeted micro, small and medium-sized enterprises, in accordance with the
definition of the European Commission (Commission Recommendation 2003/361/EC29).
The second phase (SIED) particularly addressed the following sectors:
Several manufacturing sectors;
the building industry;
retail;
tourism;
transport services.
Resources
The Digital SME initiative required resources (financial, technical, human) mainly for the
development and provision of a diagnosis (at company level) and for an incentive
scheme. This integrated measure required a total funding of approximately 20,000,000 €.
According to the PRIME Management Office, the total budget for the RIAT phase was
about € 8,570,000, including funding from the public sector of about € 6,460,000.
The total budget for the second phase (SIED) was about € 47,300,000, including grants
from the public sector of about € 16,700,000 (to co-finance private sector contributions
from the participating companies). In this phase, funds were mainly used for project
grants. Out of 755 applications received, about 425 projects were initially approved and
ratified, but finally "only" about 356 were contracted (receiving grants of about €
14,600,000 in total).
Funding
Contributed by
For period
About € 6.5 million
Phase I (RIAT):
Dec. 2001 – Dec. 2003
About € 16.7 million
Phase II (SIED):
2003 – Dec. 2006
29
The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises
which employ fewer than 250 persons and which have an annual turnover not exceeding 50
million €, and/or an annual balance sheet total not exceeding 43 million €.
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Exhibit : Ratifications of SIED by area of investment
Number of
Projects
Area of Investment
Management systems applied to the Value Chain
Total grants
(€)
Average grant
per project (€)
140
5,472,000
39,000
Tools for E-Commerce Business-to-Business
98
4,179,000
43,000
Structural and Organisational Modernisation
70
2,551,000
36,000
Tools for E-Commerce Business-to-Consumer
36
1,841,000
51,000
Other E-Commerce Tools
13
505,000
39,000
Trade and Marketing
15
433,000
29,000
8
384,000
48,000
16
339,000
21,000
Marketplaces Creation
5
311,000
62,000
Facilities and Equipments Modernisation
7
199,000
28,000
Marketplaces Enrolment
3
151,000
50,000
Creation and promotion of electronic catalogues
3
94,000
31,000
Business Cooperation
3
71,000
24,000
Tools for Internal Communication
5
54,000
11,000
Systems of inscriptions and on-line reservations
2
50,000
25,000
Systems of recognition, authentication and
security
1
27,000
27,000
425
16,661,000
39,000
Tools for contends Management
Websites Creation
Total SIED
Source: SiPRIME (August, 2007)
5.11.2
Activities
5.11.2.1
Implementation
Structure of the programme
The Digital SME initiative was presented by the Ministry of Economy Affairs and
Innovation in December 2001. Activities were implemented in a five-years period until
the end of 2006. The initiative started with a pilot project and was then conducted in two
main phases with slightly different objectives:
Pilot: Presentation of a pilot project complemented through the creation of a specific
Incentive Scheme;
Phase I (RIAT): Development of seven Networks of Information and Technical
Assistance (RIAT), intended to provide personalised consultancy and
accompaniment of a representative group of SMEs during a year;
Phase II (SIED): Creation of an Incentive Scheme for Digital Economy (SIED) to
support projects with the purpose to encourage the participation of SMEs in digital
economy.
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Exhibit: Structure of the Digital SME initiative
Selection and Creation of 7 RIATs
RIATs
Promotion and Awareness-Raising
Selection and Characterization of SMEs
Pre-Diagnostic of SMEs
Creation of Action Plans
SIED
SMEs
Projects’ Implementation
SMEs
Market
Phase I: RIAT (2001 – 2003)
For the implementation and maintenance of the networks of Information and Technical
Assistance (RIATs), a call of proposals was presented. The call specified the main
objectives of a RIAT as follows:
To provide information, training and technical services;
To contribute for the awareness-raising under the importance of digital economy;
To support the access of SMEs to incentives schemes and the development of
projects within this area.
To achieve these objectives, RIATs were assigned in particular to conduct the following
activities:
Awareness raising about the benefits and potentialities of digital economy;
Identification and selection of participating SMEs;
Strategic diagnosis of the selected SMEs;
Providing training and technical assistance to them.
In response to the call, 14 proposals were received, out of which seven were selected,
based on their merit and added value for the implementation of the intended action. A
specific call of proposals was opened to select a RIAT for the tourism sector.
The set-up of each RIAT was closely supported by public institutions with strong knowhow in supporting SMEs (e.g. IAPMEI and AdI), under the supervision of the Ministry of
Economy Affairs and Innovation. Each RIAT presented a leader organisation responsible
for the management of the promoters. The synergies among these organisations should
enable them to involve the expected number of SMEs in the planned action.
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Exhibit: The 7 RIATs – Networks of Information and Technical Assistance
1
2
3
Designation
"DIGITAL CENTRE"
Promoters
CEC, INESC Inovação, Instituto de Novas
Tecnologias (INOV)
Economic Sector
Habitat, Leisure and
Food
Trade and Services
Leader: CCP
(Confederação do
Comércio e Serviços de
Portugal)
CCP, Associação Comercial de Aveiro,
Associação Comercial de Braga, Associação
Comercial do Distrito de Beja, Associação
Comercial e Industrial de Barcelos,
Associação dos Comerciantes do Porto,
Associação do Comércio e Serviços da
Região do Algarve, Associação Empresarial
de Comércio e Serviços dos Concelhos de
Loures e Odivelas, Oni Telecom Infocomunicações, S.A.
"AIP"
AIP, AIMMP, APEMETA, APIC
Furniture, Wood,
Pottery, Tanning,
Ornament Rocks,
Environment, Civil
Construction,
Business Tourism
and Provision
Industry
Textile,
Metallomechanics,
Cork, Civil
Construction and
Furniture
Leader: CEC (Conselho
Empresarial do Centro)
"DIGITAL
COMMERCE"
Leader: AIP (Associação
Industrial Portuguesa)
4
"NET SMEs"
Leader: AEP
(Associação Empresarial
de Portugal)
5
"TEAM NET"
Leader: UERN (União
das Associações
Empresariais da Região
Norte)
6
"DIGITAL DESTINY"
7
Leader: ANRET
(Associação Nacional
das Regiões de Turismo)
"IN FASHION"
Leader: CENESTAP
(Centro Estudos Têxteis
Aplicados)
APICER, ASSIMAGRA,
Faculdade de Ciências e Tecnologia da
Universidade Nova de Lisboa
AEP, APIMA, Associação Portuguesa das
Indústrias de Malha e de Confecção,
APCOR ,AIMMAP, AICCOPN, Associação
Portuguesa dos Comerciantes de Materiais
de Construção, Universidade de Aveiro
UERN, UEP, ADRAVE, ADRVC, ADRAT,
NERVIR, ACISAT, NERBA, Associação
Industrial do Minho, Associação Industrial
de Lousada, AIDA, APEEC, Associação
Promotora de Ensino Profissional para o
Alto Tâmega (EPC - Escola Profissional de
Chaves), CENESTAP, IDITE – Minho,
Instituto Politécnico de Bragança, Instituto
Politécnico de Viana do Castelo, Oficina da
Inovação, Universidade do Minho, UTAD
– Universidade de Trás-os-Montes e Alto
Douro
Information and
Communication
Technologies,
Transports and
Services
ANRET - Associação Nacional das Regiões
de Turismo; INESC INOVAÇÃO
Tourim
CENESTAP - Centro de Estudos Têxteis
Aplicados; APICCAPS – Associação
Portuguesa dos Industrias de Calçado,
Componentes, Artigos de Pele e seus
Sucedâneos
Fashion Cluster
Each RIAT focused on specific economic sectors (e.g. fashion, tourism, ICT, furniture,
wood working industry) in order to provide personalised services adjusted to the specific
requirements of an industry. Moreover, some RIATs had a local or regional dimension, as
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they concentrated their approach on those specific geographical areas where a sector was
particularly important (e.g. the "TEAM NET" RIAT addressed in particular SMEs in the
Northern regions of Portugal).
According to PRIME Management Office, the established RIATs have completed their
mission as planned. However, some RIAT leaders, as AEP, have continued to provide
supporting services such as training and technical assistance beyond the end of the
Digital SME initiative, considering the importance of this service for SMEs.
Currently (in 2007), the responsible policy-makers (e.g. AdI and IAPMEI) are conducting
an evaluation of the RIAT phase, focusing on the wider impact on the Portuguese
economy and, in particular, on the business activities of the targeted SMEs.
Project example:
RIAT – AEP (Portuguese Business Association)
The first phase of Digital SME (2001 – 2003) embraced the implementation of 7
Networks of Information and Technical Assistance (RIAT) intended to provide
personalized consultancy and accompaniment of a representative group of SMEs
during a year.
The created networks intended to encourage the participation of SMEs in digital
economy, favouring its competitiveness and economic growth. Therefore, each RIAT
was set up as a cluster, in order to stimulate the cooperation and the exchange of
good practice.
The responsible policy-makers defined that only non-profit organisations related to
the business environment, entities of the technological and scientific system,
universities and other entities of the educational system, as technological schools,
were entitled to manage these networks. The selected organisations should provide a
wide range of information, assistance and training services in the field of e-business.
The Portuguese Business Association (AEP), situated in Porto, has developed from
2001-2002 a RIAT particularly addressed to industrial sectors, such as textile,
mechanical engineering, civil construction, cork and furniture. The manager of this
RIAT was Eng. Gonçalo Medeiros.
This initiative was seen as an excellent opportunity to support the target SMEs in
developing their e-business services, with the objective to enhance their economic
growth in an increasingly competitive market.
The network reached approximately 200 SMEs with its activities such as awareness
seminars, advisory services, e-business diagnosis and personalized action plans (for
each selected SME).
In general, this RIAT presented a wide range of benefits both for the coordinator
organisation (AEP) and for the participating SMEs. However, the AEP RIAT also
faced some difficulties. For example, Mr. Gonçalo Medeiro points out the lack of
incentive schemes for digital economy activities (SIED was presented only in 2005),
and insufficient activities to raise awareness for the importance of this action. Due
to the time gap between the first and the second phase of the Digital SME initiative,
the action plans could not be supported on short notice, and the development
remained unclear for too long.
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Phase II: SIED – Incentive Scheme for Digital Economy (2003 – 2006)
The second phase of Digital SME was initially planned to start in 2003; however,
formally, it was only approved in April 2005.30
SIED was designed as a complementary measure to the RIAT activities. It supported
specific e-business SME projects, focusing on both the technological infrastructure of
SMEs and their organisational innovation, including modern management techniques.
The objective of this incentive was to facilitate and consolidate the participation of
Portuguese companies in global markets by improving their skills in doing business
digitally.
SIED provided grants that corresponded to 30% of the eligible expenses, with a possible
increase of 5% (in case of projects located in specific areas). To receive a grant, projects
had to comply with the following requirements:
Represent a minimum eligible investment of € 15.000 and a maximum eligible
investment of € 350.000;
Exclude all expenses incurred into before the application date (except for advances
related to down-payments up to 50% of the purchasing price of each item, and for
studies and projects carried out less than one year before);
Be implemented within a maximum period of two years;
Prove to have guaranteed the project's financing sources.
During the SIED phase, a lot of private and public associations and SMEs applied for
funding and received grants. In total, 755 applications were received. 425 projects were
approved and ratified (http://www.qca.pt/fundos/download/BalMinimis_06.pdf), and 356
were contracted to receive a grant.
According to PRIME Management Office, the project proposals were selected and
evaluated based on the firms' level of integration and involvement in the digital
economy. In this context, the following scale was used to classify projects:
Level 1 projects – online presence: presence on the internet, but mainly in a static /
"passive" way, i.e. the main goal of the company is to publish information and
promote itself online.
Level 2 projects – interaction: presence on the internet or other digital
communication channels, involving some communication and exchange, but with
a limited degree of process automation.
Level 3 projects – transaction: presence on the internet or other digital
communication channels, with interaction between the company and its customers,
suppliers, and/or business partners based on automated data exchange
mechanisms.
Out of the 425 approved projects, 18 focused on online presence (Level 1), 254 on
interaction (Level 2) and 153 on transaction (Level 3). The majority of these projects focus
on the implementation of management systems (e.g. software), tools for e-commerce (e.g.
business-to-business and business-to-consumer), as well as the modernisation of internal
structures (e.g. channels of communication and work processes).
30
Decree nº 382/2005 that established the guidelines of the Incentive Scheme for Digital Economy.
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SIED project example:
Deomarsol, Aquecimento e Energia Solar, Lda.
Deomarsol, Aquecimento e Energia Solar, Lda. is an SME created in 1985 that
operates in the field of renewable energy and acclimatisation. It is located in
Antanhol, Coimbra (approximately 100 km from Porto). Currently, the company
counts on with an international trade department, specialized on the establishment
of business partnerships with foreign markets.
In 2006 Deomarsol presented a project proposal to the SIED programme with the
intention to improve its technical capacities through the adoption of an innovative
management software.
The project was approved in December of 2006, started in January 2007 and is
scheduled to be completed in June 2008. The total costs are about € 145,000. SIED
contributes a grant of about € 24,000.
With this project, Deomarsol aims at enhancing the modernisation of its
organisational structures in the field of e-business, as well as the global optimisation
of its services. Key objectives are the development of an e-commerce platform, to
improve technical and technological processes, and to increase business activity in
foreign markets.
It is expected that the project will help the company to increase national and
international trade, , while at the same time improving internal processes.
However, project coordinator Ms. Heloísa Oliveira says that the people involved in
the project "will need specific training to improve the impact and ensure the success
of the planned actions". As the project represents an important challenge for the
company, it is crucial to ensure appropriate conditions, notably with regard to skills
and competences.
5.11.2.2
Communication
Digital SME was presented and promoted by the responsible policy-makers using
specific communication tools such as press releases, public presentations, websites and
leaflets31. Moreover, each RIAT coordinator was in charge to promote its benefits and
advantages thus to involve the SMEs in the planned activities.
In the first phase (RIAT), approximately 200 SMEs were reached by each network (7),
which means that a total of about 1,400 SMEs were contacted. This is in line with the
target specified in the guidelines of the initiative that each network should be able to
reach 200 SMEs with its planned activities, such as awareness seminars, training sessions,
strategic diagnosis and action plans. Mr. Gonçalo Medeiros, representing the AEP RIAT,
states that this figure was seen as ambitious at the beginning; however it was possible to
accomplish the target.
The best available indicator for the policy's reach in the second phase (SIED) is probably
the number of project proposals received (755).
31
Digital SME Leaflet: http://www.prime.mineconomia.pt/PresentationLayer/prime_Publicacao_01.aspx?activeitem=10&activesubitem=1&idioma=1&publicacaoid=5
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5.11.2.3
Benchmarking Report
Evaluation
Digital SME is integrated in the Operational Programme for Economic Modernisation
(PRIME) of Community Support Framework III (http://www.qca.pt/english/home/index.asp).
The PRIME management office has issued annual evaluation reports (from 2000 – 2006)
about the implementation of the programme and its specific measures (DIGITAL SME
being one of them). These reports are available for public consultation on the PRIME
website (Portuguese version only).32
Ms. Conceição Moreno from the PRIME Management Office considers Digital SME as an
"innovation in terms of Portuguese public policy in the field of the digital economy". She
points out that the initiative involved a broad range of stakeholders, notably SMEs
themselves, but also business associations, technology centres and training organisations.
The approach focused on networking, cooperation and knowledge sharing.
5.11.2.4
Results
Outputs
In the first phase – RIAT – seven sectoral networks were founded: CEC, CCP, AIP, AEP,
UERN, ANRET and CENESTAP. These networks focused on the following activities:
Awareness raising about the benefits and potentialities of digital economy;
Identification and selection of candidate/target SMEs;
Strategic diagnosis of the selected SMEs;
Training and technical assistance.
Action plans to develop concrete project proposals.33
In the second phase – SIED - approximately 437 projects were approved with the purpose
to stimulate the participation of SMEs in the digital economy, as well as to reinforce its
technical and technological capacities and organisational structures.
Outcomes
Digital SME has been a pilot initiative to promote e-business adoption among Portuguese
SMEs. It offered a wide range of opportunities for the beneficiaries in particular, and had
positive effects for the Portuguese economy in general. Effects include:
Stimulation of the Portuguese digital economy through the development of specific
initiatives and projects in this scope;
Enlargement of the internal and external Portuguese market (for example, Ms. Ana
Raposo (IAPMEI) states that it is expected that the majority of the participating
SMEs will increase their trade activities);
Promotion of supply and advisory services and training in the field of e-business,
mainly as a result of the RIAT activities;
32
PRIME Publications: http://www.prime.mineconomia.pt/PresentationLayer/prime_Publicacao_00.aspx?activeitem=10&activesubitem=-1&idioma=1
33
The overall purpose of developing strategic diagnosis and action plans was to foster the
presentation of concrete project proposals to SIED programme. Therefore, the two phases were
seen has an integrated approach since the first phase was a preparatory stage for the following.
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Creation of tools for strategic diagnosis, providing a concrete analysis of the SMEs
level of integration in digital economy;
Involvement of approximately 1400 SMEs in sectoral networks of Information and
Technical Assistance (200 for each RIAT);
Implementation of 425 SME projects with the general aim to modernise the SMEs
organisational structures in the field of e-business;
Improvement of the SMEs organisational structures in terms of technological knowhow, work processes and human resources management, such as:
•
Market recognition;
•
Reduction of the fixed and variable costs of transport, product promotion
and production;
•
Acceleration of buy and sale processes of buy and sale, allowing an
improved return of the investment;
•
Development of competences and skills in order to optimize the
investments, to react in a faster way to the technological changes, as well as
to anticipate these changes;
•
Analysis of the market current and future trends thus the costumers' level of
satisfaction;
•
Differentiation through the adoption of innovative business approaches and
practices;
•
Simplification of national and international commercial exchanges,
especially the exportation.
Wider effects on the economy and sectors
In a way, the Digital SME initiative played a pioneer role in Portugal, as it was the first
initiative that directly focused on promoting the Portuguese digital economy. It
accomplished its objectives, notably by involving a large number of SMEs and other
business associations. This helped to raise awareness and to gain momentum.
The main vehicle to achieve a wider effect in the economy was the establishment of the
RIATs which acted as multipliers. The initiative endorsed the optimisation of commercial
trades and contributed to straighten national and international markets.
However, since the second phase of Digital SME – SIED – has only ended in December
2006, its wider effects will only become visible in a few years. In fact. the final evaluation
is still under way; it will provide better evidence on the outcome of this initiative.
5.11.3
5.11.3.1
The main innovative elements of the Digital SME initiative, at least in the Portuguese
policy context, can be summarised in the following points:
Two-phase approach: Development of the policy within two different but
complementary phases – RIAT and SIED – which endorsed a broader involvement
of the target group;
Different levels of sophistication: SIED supported projects at three levels of ebusiness sophistication (presence –> interaction –> transaction). This facilitated the
organisation of support measures.
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Sectoral networks: Creation of 7 sectoral networks – each with approximately 200
SMEs – to disseminate the advantage of e-business, to provide personalised
technical, information and training services, as well as to assure the development
of concrete projects in the scope of digital economy;
Create synergies: Creating a mechanism that enables exploiting synergies among
SMEs and other economic agents, such as business associations, entities of the
technological and scientific system, universities and other entities of the
educational system.
5.11.3.2
Facilitators
Growing interest in e-business among economic agents;
Opportunity to reach new markets and increase national and international
business;
Use of existing networks for promotion and/or delivery of services;
Establishment of broad public-private-partnerships between SMEs and business
associations, entities of the technological and scientific system, universities and
other entities of the educational system.
Promotion of specific supporting services adapted to the end-users expectations.
Barriers
Lack of training and know-how in the field of e-business;
Lack of awareness related to the advantages and opportunities of participating in
digital economy;
Lack of resources (financial, human and technical) to fully exploit the potential;
Communication difficulties between the stakeholders and the end-users (SMEs),
especially on the beginning of the policy (RIAT phase) and during the transition
phase from RIAT to SIED;
Time gap between the two phases which, in some cases, contributed to the loss of
interest in developing concrete project proposals for submitting them to the SIED
programme;
5.11.3.3
Learning points
Broad involvement of stakeholders: The necessity to actively involve all relevant
stakeholders in an initiative is commonly recognised. In this case, 7 organisations were
deeply committed to develop networks of Information and Technical Assistance (RIAT)
aimed at providing personalised consultancy and accompaniment of a representative
group of SMEs, thus to support the development of specific projects to stimulate its
participation in digital economy.
Importance of ICT in international trade: In a context of intense competition, innovation
and globalisation, ICT facilitate commercial exchanges in international markets. Exportoriented SMEs have practically no choice but to adopt e-business.
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Transparency of objectives and ease of participation: The policy, especially on the
second phase (SIED), presented clear objectives and had a straightforward
implementation plan. This transparency was appreciated also by the participating SMEs.
There are clear rules how to become eligible for support, and all steps during the
implementation ran very smoothly.
Importance of awareness raising: It is still important to raise awareness among small
companies for (new) e-business developments and opportunities, particularly in
technologically less advanced economies.
5.11.3.4
Strengths
(+) Clear targets: Having clear objectives and specific targets has helped to keep focus and
make all parties work together.
(+) Personalised and sectoral approach: The organisational structure of the initiative made
it possible to provide tailored services adjusted to sector-specific needs and
requirements of the targeted SMEs. Each RIAT was focused on specific economic
sectors.
(+) Distinction of different sophistication levels: SIED supported projects at three levels
of e-business sophistication (presence –> interaction –> transaction). This facilitated the
organisation of support measures.
(+) Organisation in two phases: The division of the policy in two complementary
approaches allowed the involvement of a broad range of organisations from different
economic sectors (e.g. Industry, building industry, commerce, tourism, services and
transport) within several supporting activities.
Weaknesses
5.11.4
(-)
Insufficient promotional effort: The communication of the policy to target group was
insufficient at the beginning of its implementation, which limited the involvement of
the target groups.
(-)
Insufficient information regarding the policy's "next-steps": The transition phase from
RIAT to SIED was quite long and somewhat unclear. For SMEs, it was difficult to see
how their work with one of the RIATs could possibly lead to a project proposal in SIED.
This may have reduced the overall impact of the initiative, as several SMEs gave up
developing project proposals to present under SIED Programme.
(-)
The "grant trap" – interest in money, not in action: Some SMEs demonstrated a lack of
commitment to complete the planned activities. It appears that they were more
interested in receiving a grant than in actually accomplishing the project they had
proposed. This is evidenced by some of the project action plans which were quite
incomplete.
References
Research and interviews for this case study were conducted by INOVA+ Serviços de
Consultadoria em Inovação Tecnológica (www.inovamais.pt). Main sources:
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Telephone interviews with:
§
Ms. Conceição Piedade, PRIME Management Office
§
Ms. Ana Raposo, Institute for Support to Small and Medium-Size Enterprises
and Investment
§
Mr. Gonçalo Medeiros, Portuguese Business Association
§
Ms. Heloísa Oliveira, Deomarsol, Aquecimento e Energia Solar, Lda
Community Framework Programme III, http://www.qca.pt
Incentives Programme
economia.pt
for
Economic
Modernisation,
http://www.prime.min-
Institute for Support of Small and Medium-sized Enterprises and Investment,
http://www.iapmei.pt
Portuguese Tourism Board, http://www.iturismo.pt
Ministry of Economy and Innovation, http://www.min-economia.pt
Recommendation
2003/361/EC
regarding
the
SME
http://ec.europa.eu/enterprise/enterprise_policy/sme_definition/index_en.htm
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definition,
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5.12
e-SLOG – e-Commerce in the Slovene Economy
(Slovenia)
Fact sheet
language):
e-SLOG (Elektronsko poslovanje slovenskega gospodarstva)
e-SLOG (Electronic Commerce in Slovene Economy)
Agriculture & fishing; manufacturing; electricity, gas and water
supply; wholesale and retail; tourism, including hotels and
restaurants; transport and logistics; financial services (banking,
insurance); public administration and defence
Geographic focus:
Slovenia
Start date:
February 2001
End date:
May 2006
Initiated by:
Chamber of Commerce and Industry of Slovenia
Implemented by:
Bank of Slovenia
Chamber of Craft
Government Center for Informatics (within Ministry of Public
Administration)
Ministry of Finance
Public Agency of the Republic of Slovenia for Entrepreneurship
and Foreign Investments
Statistical Office of Republic of Slovenia
Tax Administration of Republic of Slovenia
The Bank Association of Slovenia
Funding:
There was no budget. All institutions and organisations that were
involved in the project, were working without any funding.
Chamber of Commerce provided the infrastructure for carrying out
the project. It also covered the material costs in the amount stated
bellow.
by Chamber of Commerce and Industry of
Slovenia
€ 20,000
Contact person(s):
Zupančič, Dušan
Dimičeva 13, 1000 Ljubljana
Samo Grčman
Dimičeva 13, 1000 Ljubljana
e-Taxes project
e_CORE project
CBRGD Phare project e-SLOG for SMEs
Website(s):
http://www.gzs.si/e-poslovanje
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Abstract
e-Business studies have shown that issuing paper invoices is not cheap (0.50 € per
invoice). In addition, the exchange of paper invoices is too slow to allow for a "just in
time" inventory strategy. Before e-SLOG some larger companies have already introduced
the electronic exchange of documents into their business, however the implementation of
such solutions has always been time consuming and expensive. Also, such solutions have
never been standardised and had to be adjusted to every new partner. At that time, GS1
EANCOM standards were the only available standards for electronic business messages.
However they proved to be too complicated, and their implementation consequently too
time consuming and expensive.
Against this background, the e-SLOG project aimed at developing simpler standards for
electronic business messages and at promoting e-business among SMEs. The resulting eSLOG standards, a simplification of GS1 EANCOM, were developed in cooperation
between the Chamber of Commerce and Industry of Slovenia, large agriculture,
manufacturing, electricity, wholesale, retail, transport and financial companies, and
representatives from the public administration.
The project is unique in two aspects. The first is in the special approach of e-SLOG, where
large companies were used as pioneers in using the standards, while market pressure
than ensured that SMEs were quick to follow. This novel approach created a selfsustaining momentum that spread the usage of e-SLOG standards among companies.
The success of the initiative has been such that the standards are now used by
approximately 3000 companies of all sizes in Slovenia.
The second aspect is that the initiative had almost no funding and all the participating
companies covered their own costs. The only funding was provided by the Chamber of
Commerce and Industry of Slovenia, an amount of 20,000 € for material costs and the
necessary administrative infrastructure. This allowed to expand the project's initial
mission from the development of standardised electronic documents for B2B e-commerce
to also include the development of standardised electronic documents for payment traffic
between private companies, banks and public institutions. The lack of funding also
enabled the project's team to focus more directly on their work and less on the
documentation, which would prove the donor that the money was properly spent.
5.12.1
The policy was launched in 2001 by the Chamber of Commerce and Industry of Slovenia
because of the needs of Slovene business sector. At the time the implementation of ecommerce was always time consuming and expensive: it took on average 6 months for
two enterprises to form common standards, harmonize their documents and develop a
working application. The only viable standards at the time were GS1 EANCOM
(standards for electronic business messages based on UN/EDIFACT - a set of
internationally agreed standards, directories and guidelines for the electronic interchange
of data), which however proved to be too complicated and therefore too expensive to
implement for Slovene companies. An additional driving factor was the cost of
exchanging paper invoices (0.50 € per e-invoice) and their impracticability for "just in
time" inventory strategy. All those factors worked in favour of developing new, more
practical standards. The Chamber of Commerce and Industry of Slovenia and its partners
therefore established the initiative around the following main objectives:
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Preparation and implementation of basic standard electronic documents
Preparation and implementation of solutions for safe e-business using electronic
signatures
Implementation of open technological solutions for large, meddle-sized and small
enterprises
Promotion of e-business
The end goal of the project was not only to enable SMEs to conduct business
electronically with other companies, but with public administration and financial
institutions as well. The cooperation with the Government Center for Informatics enabled
the exchange of knowledge gained in its projects that had introduced e-business in
Slovene public administration. The Chamber of Commerce and Industry of Slovenia,
main coordinator of the e-SLOG project, was also present in the E-CoRE project led by the
Statistical Office of the Republic of Slovenia, which aimed to standardise the exchange of
statistical data between public institutions and private companies for the needs of many
different users. The e-Taxes project, conducted by the Tax Administration of the Republic
of Slovenia, on the other hand used some of the results of the e-SLOG project to establish
an internet portal for issuing tax declarations.
Target groups
The main beneficiaries of the initiative are enterprises in transport and logistics, energy
providers and telecommunications companies, which issue a lot of invoices. The sectoral
focus of the initiative is not intentional and was built-in by the companies which were
involved in its development (i.e. energy providers, wholesale and retail companies,
pharmaceutical companies, software developers and banks).
Targets
The initiative strived to achieve the following targets:
Preparation of content and documentation of standard documents for business to
business e-commerce.
Education of project's members on the usage of business to business standards
Producing recommended technological solutions for e-connecting,
Preparation of guidelines for the implementation of digital certificates in
companies and instructions for archiving of electronic documents.
Establishing a unified digital certificates system (for verifying the authenticity of
electronic documents)
Preparation of content and documentation of standard documents for payment
traffic between private companies, banks and public institutions.
Resources
There was no budget. All institutions and organisations involved in the project covered
their own costs and worked without any funding. The only exception to this was the
contribution by the Chamber of Commerce and Industry of Slovenia, an amount of 20,000
€ for material costs. The Chamber also provided the project team with the necessary
infrastructure.
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5.12.2
Activities of the policy initiative
5.12.2.1
Implementation
The project was led by a Project Council, which directed and controlled the activities of
the project, while the work was carried out by four working groups (Working Group for
Business Content Standards, Working Group for Technological Solutions, Working
Group for Electronic Signature, Working Group for Payment Standards). The work in
each working group was organised as a sub-project and based on a detailed plan,
consisting of a task description and a work plan. Outside companies that were interested
in the project were organised in two groups of more than 90 associated members (that is
The Group of Associated Users and The Group of Associated Providers). The first one
was composed of companies interested in using e-SLOG, while the second one comprised
of software providers interested in integrating e-SLOG in their e-business applications.
Interestingly almost all companies in the Associated Users group were large companies.
Only in the Associated Providers group SMEs were more numerous. That is significant as
it means that SMEs had very little influence on the course of the project. Any company
interested in the project could easily become an associated user or provider simply by
signing a membership form without any fee to pay. The collaborating institutions were
linked together in a group called Partner Institutions. They were active in working
groups and could also attend meetings of the Project Council. In addition they promoted
the project among Slovene companies and together with the Project Council directed and
controlled the activities of the project carried out by previously mentioned working
groups. The associated users and providers on the other hand were informed about the
direction of the project twice a year by means of conferences organised specifically for
this purpose.
Project example: e-Commerce between ŽIMA and Merkur
The following case tells about the experience of ŽIMA, a middle-sized brush factory,
and Merkur, a large retail company, with e-commerce based on e-SLOG standards.
The implementation of standards and e-commerce forced Merkur to standardise its
internal documents, which in turn improved efficiency of the business. Merkur has
promoted the standards among ŽIMA's managers, and offered expert advice on how
to integrate them in e-commerce. ŽIMA introduced e-commerce in 2006 and based
it on two applications that support e-SLOG standards. The first one called
Pantheon, a product of Datalab34, automates accounting, managing finances, stocks
and other business processes. When an order is received, Pantheon creates an order
confirmation according to an e-SLOG scheme. The latter is than transferred to
Merkur by means of an application rented from the application service provider
ZUPO. Both applications are off-the-shelf solutions, thus further reducing the costs
of implementation of e-commerce for ŽIMA.
Before the introduction of e-commerce, ŽIMA employed two people to manually
enter data from orders on paper into the company's information system. With the
introduction of e-commerce those two workplaces were made redundant and no
longer exist. Now, the data for each order are entered only once: a Merkur
commercialist or ŽIMA sales representative scans the OCR code of a missing article
and types in the number of pieces that must be ordered. In other companies that also
buy ŽIMA's products, this procedure is done exclusively by the sales
34
Software company
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representatives. However, since those companies are not linked electronically with
ŽIMA, all orders and order confirmations must also be issued on paper. Even so, the
processing of orders is significantly improved. Stimulated by the results, the
company is now considering an upgrade of their system to automatically identify
any departures of their goods from Merkur's stores and their arrivals.
As can be seen large companies can play a vital role in persuading others to adopt ecommerce. The story also shows the importance of software vendors and application
service providers who work as mediators between companies that use different ebusiness applications based on the same or on different standards. Instead of
developing a new software solution for every company, they can integrate e-SLOG
standards into their products, which in turn vastly reduces the costs of such
applications, making e-commerce more affordable for smaller companies. In addition
this example proves that e-commerce does pay off even if the company does not
conduct it with all of its customers.
5.12.2.2
Communication
The communication plan of the project was prepared by the Chamber of Commerce and
Industry of Slovenia on a yearly basis and consisted of:
Setting up website that informs about the policy
Creating and publishing information material like brochures, reports
Distributing information to the companies via Chamber of Commerce and
Industry of Slovenia, Chamber of Craft of Slovenia and Public Agency of the
Republic of Slovenia for Entrepreneurship and Foreign Investments
Using TV / radio broadcasts, commercials
Conducting information workshops in companies and regions
Organising two conferences yearly for associated users and providers
Presenting e-SLOG's results on other conferences on e-commerce
5.12.2.3
Evaluation
The Working Group for Business Content Standards used a simple procedure to validate
the results of its work: every new scheme and update was first published in a technical
magazine and then presented at the bi-annual conference for associated users and
providers. After the conference the associated users and providers used e-mail to send
their comments on the results to a special group composed of e-SLOG's stakeholders
within GS1 Slovenia. Based on those proposals the first design of an upgraded version
was developed. This was then first examined by working group members and then by
associated users and providers. Only when all had verified it was it officially published
as the next version of the standard. Other working groups followed a similar procedure
for validating their results.
At the end of the project at a regular yearly conference attended by members of all
working groups and associated members it was formally concluded that the project has
achieved all its targets. The project was considered a success since the content standards
for electronic business documents were successfully developed and already implemented
by its members.
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5.12.3
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Policy results
Outputs
The Working Group for Business Content Standards has prepared contents and
documentation of standard documents for conducting e-business between companies (i.e.
complex invoice, simple invoice, complex order, simple order, order confirmation,
despatch advice and control document).
e-SLOG schemes are written in XML (extensible markup language), a general-purpose
markup language, which primary purpose is to facilitate the sharing of data across
different information systems, particularly via the Internet. This makes e-SLOG schemes
particularly easy for programmers to understand and implement.
The group first developed a scheme for complex e-invoices. It started from the GS1
EANCOM standard for e-invoices and simplified it, retaining only those parts that were
judged essential to the needs of Slovene enterprises. The resulting standard for complex
e-invoices, which contained only 20% of original GS1 EANCOM standard, was named eSLOG EANCOM. This scheme was then rewritten in XML. It enables to make several
orders with one invoice, which is than paid at the end of the month. The scheme however
was still too complicated for the majority of smaller companies and was therefore
simplified even further. The resulting simple e-invoice scheme was five times shorter
then the previous one. The procedure was than repeated for complex and simple order,
while order confirmation, despatch advice and control document were developed only
by shortening GS1 EANCOM and rewriting it in XML without any latter simplification.
The Working Group for Technological Solutions has prepared a reference book of
possible technological solutions when connecting complex information systems (usually
found in large organisations) based on the same technological platform, complex
information systems based on different technological platforms or simple information
systems (usually found in small organisations) that do not allow for an automation of
business processes. Additionally it has also prepared recommendations for e-business
service providers and a template for contracts between enterprises and service providers.
The Working Group for Electronic Signatures has prepared instructions for using digital
certificates, security requirements for applications that use digital certificates, manuals on
how to use electronic signatures in companies, a tool kit for verifying software solutions,
and instructions for electronic archiving.
Finally, the Working Group for Payment Standards has prepared schemes of standard
electronic documents for payment traffic between companies, banks and public
institutions (that is schemes of payment order, recall of payment order, debit notice,
payment notice, bank account status, bank statement and inquiry).
The project has realised all of its targets with the exception of the e-SLOG register, that
was planned to contain the names of companies that use e-SLOG standards, information
on versions of standards they use, their e-mail addresses, electronic signature keys etc.
The register aimed at simplifying the process of gathering information needed to
establish electronic commerce between companies that already use e-SLOG. The
information should have been provided by software vendors, which would have
reported it for each of their clients. The register would have been available on the web
site of the Chamber of Commerce and Industry of Slovenia. However the software
providers were against the realisation of this target, since they feared that it would enable
their competitors to take over their clients.
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Nevertheless, the idea of the e-SLOG register has not been abandoned. In February 2007 a
new initiative has been launched aiming either to integrate the e-SLOG register into the
Slovenian Business Register or to open the existing tax register which already contains
this information. The information for the register in this case would be provided by the
user companies and not the software providers. Thereby their objections would be
bypassed.
It is estimated that e-SLOG standards are used by about 3,000 companies based on the
numbers provided by the application service providers. The number of companies using
e-SLOG has been growing exponentially in the last years.
Outcomes
e-SLOG standards have simplified the implementation of business to business ecommerce among Slovene companies, reduced their operating costs, the number of
mistakes made when data are being copied manually from one paper document to
another, and increased the speed of business transactions enabling a just in time
inventory strategy.
The standards have been integrated into pre-written business operating systems that
automate all aspects of company management (accounting, finances, tracking materials,
issuing orders etc.). As a result every document that can be used in e-commerce is
automatically composed according to e-SLOG standards by those systems. It has been
estimated that investments in these applications have paid off after an average 6 months.
Smaller companies can also use computer based services offered over a network by
applications service providers. The later only charge customers the installation of their
application for electronic commerce, the installation of a database server, the training of
users, a yearly membership fee and a monthly leasing fee for the software. Such
arrangements do not require any initial investments and is therefore extremely suitable
for small companies that cannot afford large investments in hardware and software, as
they are usually necessary when a company starts on e-commerce. In addition, the
application service providers also automatically transform any documents from one
standard to another, if the companies engaged in e-commerce transactions use different
standards. As a result, many companies are not even aware of standards they use in
electronic commerce.
Companies mostly use e-SLOG schemes for invoicing, ordering and order confirmation,
whereas schemes for control order and despatch advice are only rarely used. While the
standards have mainly positively affected the connections between large companies and
their smaller partners, and between cluster companies, many small companies are still
unaware of their existence or the benefits of e-commerce in general.
e-SLOG standards have contributed to the diffusion of e-commerce in Slovenia and
thereby lowered the costs of retail companies and their suppliers, increasing their
competitiveness. The results of e-SLOG have also helped other e-business projects.
A critical mass of users has been achieved and the usage of e-SLOG standards is now
spreading by itself. Under the contract between the Chamber of Commerce and Industry
of Slovenia and GS1 Slovenia, the later has taken over the maintenance of the e-SLOG
standards. Under this maintenance the standards are constantly updated to ensure their
long-term compatibility with the original GS1 EANCOM standards. In addition the
further development of e-SLOG standards is planned.
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5.12.4
5.12.4.1
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The project incorporated two innovative elements:
Involvement of large companies in order to stimulate e-commerce in SMEs:
Large companies are more interested in e-commerce than SMEs because they have
many small suppliers. Therefore they can make the biggest cost reductions if they
expand it on their smaller partners. As a result e-SLOG standards have been
developed mainly in cooperation with large companies, but with SMEs interests in
mind.
Implementation of the project without any budget: Every member of the project
covered its own costs. Therefore, the project members could focus entirely on
executing the project without loosing any time on acquiring the money, potential
quarrels because of it, or lengthy documentation, to prove to the funding entity
that the money was properly spent. This allowed to expand the project's initial
mission from the development of standardised electronic documents for B2B ecommerce to also include the development of standardised electronic documents
for payment traffic between private companies, banks and public institutions.
The project also incorporated the following good practices:
Attracting numerous companies of different brands and sizes to the project: The
majority of companies were attracted to the project by the quality of the initial
results, because they could cooperate without any costs, and because of the
reputation of the Chamber of Commerce and Industry of Slovenia among the
project's members. The Chamber's good contacts to Slovene companies also helped
to promote the project.
Ensuring international compatibility: The project's members were careful to
ensure the compatibility of the e-SLOG standards with the more widely used GS1
EANCOM and technological standards in other EU countries
Cooperation with an international non-profit organisation dedicated to the
design and implementation of global standards and solutions: A contract
between the Chamber of Commerce and Industry of Slovenia and GS1 Slovenia
was signed under which the latter took over the maintenance of the standards free
of any charge.
Obtaining support from the state: The support of the state was significant because
it allowed for a better promotion of the project and exchange of experiences gained
in projects enforcing electronic exchange of documents in public administration.
5.12.4.2
Facilitators
The facilitators that helped the initiative to be successful were:
The use of existing or new local networks for promotion: The Chamber of
Commerce and Industry of Slovenia linked up with the Chamber of Craft and the
Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign
Investments in order to use their connections for promotion of the project.
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The provision of independent, unbiased advice to companies: In connection with
e-SLOG, an e-Invoicing project was prepared. The project organised animation
workshops for promoting e-invoicing among SMEs and local enterprise centers
and consultancy training in the implementation of e-invoicing (especially for einvoicing based on e-SLOG standards). The latter produced consultants which still
provide e-commerce advise to SMEs.
The delivery of services in a way specifically adapted to the stakeholders' needs
and expectations: To adapt e-SLOG standards to the needs of different companies,
complex as well as simple schemes of business documents and communication
standards were defined.
Barriers
The main barrier that obstructed the implementation of the initiative was the lack of
awareness and commitment among the target companies. Usually IT specialists in a
company were well informed about the benefits of e-commerce while its leadership was
completely ignorant. Even when the company's management was invited to participate
in conferences and workshops organised to promote the e-SLOG project and e-commerce
in general, IT specialist were sent instead.
5.12.4.3
Learning points
Two main lessons can be learned from this case study:
A broad involvement of stakeholders is helpful: In e-SLOG this was achieved by
means of a consultation process among stakeholders which lasted until a
consensus was achieved. As a result the consultations sometimes lasted several
months, however when the targets were agreed upon their execution was simple
and fast.
Generation of market pressure is important: According to experiences made in
the course of e-SLOG, creating market pressure on companies is a much more
effective way to promote an e-Business standard than using pure awareness
raising measures. In e-SLOG this was achieved by using large firms as "pioneers".
Nevertheless an additional awareness raising strategy among small companies,
especially among their management, would probably positively supplement the
market pressure.
5.12.4.4
Strengths
The approach chosen by the initiative had the following main strengths:
(+) Win-win-situation: The focus on specific standards for business to business ecommerce and payment traffic between companies and banks with a clearly visible
benefit for all stakeholders led to a "win-win-situation" and created momentum for
the initiative.
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(+) Leveraging a snow-ball effect: The initiative managed to trigger a snow-ball effect:
the use of e-SLOG standards uptake is continuing after the end of the policy, due to
market pressure and promotion from early users.
Weaknesses
The approach chosen by the initiative had the following main weaknesses:
(-)
5.12.5
No-budget approach: Besides the already mentioned positive effects, the no-budget
approach had a major disadvantage, too: it slowed down the deployment of the
project. Due to the lack of a budget, the project had no fixed timetable. The project
team worked for free and was composed of people who were employed in member
companies. Most of the work had to be done on top of their day-to-day business. The
amount of time they could dedicate to the project depended on their good will (and
the good will of their management!).
References
Research and interviews for this case study were conducted by researchers from the
Faculty of Social Sciences of the University of Ljubljana. Main sources:
Telephone interviews with
§
Zoran Oprin (contact person for e-commerce at Žima) from 29th of June to 8.
of August of 2007
§
Marko Svetina (contact person for e-commerce at Merkur) on 29th of June of
2007
§
Branko Šafarič (contact person for e-SLOG at GS 1) on 14th of May 2007
§
Dušan Zupančič (contact person for e-SLOG at Chamber of Commerce and
Industry of Slovenia) on April – July 2007
Various e-SLOG working papers and brochures (2002 - 2007)
e-SLOG Website: http://www.gzs.si/e-poslovanje (17.4.2007)
Ahčin, Damjan Ahčin (2005): Model of Electronic Business for Enterprises (Model
elektronskega poslovanja za podjetja)
ASISTENT
(2007):
What
is
e-SLOG
(Kaj
http://www.asistent.si/modules.php?name=News&file=article&sid=138
About CREA. http://www.crea.si/WWW/Pages/InfoEng.aspx (11.5.2007)
GS 1 website: http://www.gs1.org/about/activities.html (11.5.2007)
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je
eSlog)?
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5.13
The CANARIE eBusiness Programme (Canada)
Fact sheet
CANARIE eBusiness Programme
Grocery Distribution and Sales; Pharmacies; Food Services
Provision; Livestock Production; Livestock Processing;
Construction Materials Logistics; Performing Arts; Sporting
Goods Sales; Maritime Products Sales; Tourism; Automobile
Leasing; Hydro Power Generation and Distribution;
Pharmaceuticals Manufacturing; Biotechnology
Manufacturing; Metals Marketing; Food Processing; Printing
and Publishing; Design and Fashion; Plastics Production;
Construction; Software Development; Insurance Sales;
Supply Chain Management for several Manufacturing
Sectors
Geographic focus:
Canada
Start date:
April 1, 1999
End date:
March 31, 2007
Initiated by:
Industry Canada; CANARIE
Implemented by:
CANARIE
Funding:
€ 20 million
by CANARIE
€ 27 million
By Firms in Private Sector
Contact person(s):
Susan Baldwi
CANARIE Inc.
4th Floor 110 OcConnor St. Ottawa ON K1P 5M9, Canada
Tel.: +1 613-943-5399
e-Mail: susan,[email protected]
Website(s):
http://www.canarie.ca
Abstract
Canada has a very open economy, relying on exports for much of its economic growth.
Present and future growth in Canada is very much SME-dependant. Canadian businesses
in the SME category account for a much higher share of employment than, for example,
in the USA.
The goal of the CANARIE E-business Programme was to help Canadian industry become
more competitive through assisting organisations, especially small and medium sized
enterprises (SMEs), to develop and deploy e-Business strategies and applications. Of
special interest were strategies and applications that related to such business models as
supply chain management, sell-chain management, customer relationship management
or e-government initiatives, and that could exploit the capabilities of broadband
networks.
The "Communities of interest" concept was at the core of the approach. Communities of
Interest could be any group of companies with a common purpose or in similar
businesses such that initiatives taken could benefit the whole community. A second key
component was the requirement that each consortium submit a 5-year business plan
addressing the sustainability of the proposed initiative. CANARIE experts worked with
project teams for several months to develop the community and the business plan.
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5.13.1
Benchmarking Report
Canada has a very open economy, relying on exports for much of its economic growth.
Present and future growth in Canada is very much SME-dependant. In the USA, SMEs
(defined as firms with fewer than 500 employees) make up roughly 20% of total firms. In
Canada the ratio is reversed with 80% of Canadian businesses in the SME category.
Canada's eBusiness policies have developed as a governmental response to initiatives
born within the Canadian private sector. The gestation point was the E-Business
Opportunities Roundtable and the process has been a close collaboration between private
and public sector entities. Since SMEs are so central to the Canadian economy and since
eBusiness is an essential component for improving productivity and sustainability among
SMEs, this initiative became an important priority for Canada.
The Canadian E-Business Opportunities Roundtable was a voluntary, private sector-led
initiative formed in June 1999 by Nortel Networks and the Boston Consulting Group
Canada to develop a strategy for accelerating Canada's participation in the Internet
economy. Its goal was to establish Canada as a globally recognised e-business leader to
promote a higher quality of life for Canadians through economic growth, job creation and
more convenient access to information. The Roundtable was composed of members from
business, academia and government.
CANARIE was selected as the best option for an Internet-based networking approach
focused on "communities of interest and funded the e-business programme described
herein between 1999 and 2004.
Target groups
The CANARIE policy targeted any and all industrial sectors. The programme was a call
for proposals from private sector consortia focused on developing new eBusiness
solutions targeted at one or more industry sectors. In the event, 14 projects were
approved involving 24 distinct industry sectors and sub sectors.
The "Communities of interest" concept was at the core of the approach. "Communities of
Interest" could be any group of companies with a common purpose or in similar
businesses such that initiatives taken could benefit the whole community.
For example, in the steel industry, broad Requests for Proposals (RFPs) are issued. Small
specialty steel companies had difficulty responding. Within this project, the SMEs were
assembled into a "community" which, by means of internet-based templates, could then
combine forces to bid on RFPs that would have otherwise been unreachable individually.
SMEs could not have developed the necessary networking tools themselves, but in
concert with CANARIE support, a critical mass of required resources and expertise was
assembled and the tools and networks developed.
Targets
The targets and outcomes were defined on a project-by-project basis as research and
development objectives. CANARIE endorsement for the project proposal combined with
the required 5-year business plan for each project was designed to make access to private
sector investment possible for SME collaborators during the project execution phase.
In the "Canada's Online Product Registry" project, the Electronic Commerce Council of
Canada (ECC, now named GS1) developed Canada's online, standardised registry of
product data and images for the grocery, pharmacy and food services sectors.. The target
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was to develop an Internet-based system replacing burdensome paper – based
requirements and enabling any SME grocery wholesaler or supplier in Canada to obtain
simple access for sales and marketing to every grocery store in Canada.
In the "IQX (Internet Quotation Exchange) Generic Financial Services Engine" project,
every insurance broker in Manitoba was targeted and linked into a database that
delivered quotations from all insurance companies for all risk classes.
The benefits to SME partners were project specific but always included lower costs,
enhanced productivity and faster processes.
There were several general targets and requirements which are summarised below:
The project was innovative or unique in concept, design and application;
The project had an impact on the state of the art and the evolution of e-business in
Canada by building on prior developments and investments and by bringing ebusiness applications to a new level;
In the project's planning for the period beyond CANARIE support, the solutions
being developed demonstrated good potential for sustainability and ongoing
diffusion and economic activity.
Resources
14 projects were funded with a total budget of roughly 40,000,000 €, 40% from CANARIE,
60% from private sector partners. CANARIE programme analysts worked with each
consortium over an average period of eight months prior to the submission of the
developed proposal. Approvals were the responsibility of a Senior Steering Committee.
The approved R&D projects were delivered within the project consortium with
development of e-business solutions shared as appropriate by consortium members.
All funds were used to develop innovative and commercially-viable e-business solutions
for SMEs in specific sectors or sub sectors. Contract terms specified a repayment
obligation based on sales of products developed within the project. To date, some
5,500,000 € has been repaid.
Another 36,000 € was provided by CANARIE for project results diffusion workshops
promoting solutions to investors, to sector – based SMEs and to SMEs in other sectors.
Funding
Contributed by
For period
€ 20,000,000
Industry Canada; CANARIE
Apr. 1999 – Mar. 2004
€ 27,000,000
Private Sector Project Members
Apr.1999 – Jun. 2007
Human Resources
Contributed by
For period
3 person years
CANARIE
Apr. 1999 – Mar. 2004
52 person years
Private Sector Project Members
Apr.1999 – Jun. 2007
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5.13.2
Activities
5.13.2.1
Implementation
Benchmarking Report
There was no fixed date for project submissions; any submission between April 1999 and
March 2003 was eligible for consideration. The first step in the process was an invitation
to submit an "expression of interest", a document of between 5 to 10 pages.
CANARIE assigned project analysts with private sector SME business backgrounds and
business administration degrees at the masters' level to review project submissions.
CANARIE also engaged a consultant who was a former CANARIE board member and
also a former IBM executive responsible for SME incubation and innovation.
Project analysts selected projects that had potential and then began working in detail
with project proponents for these proposals to develop a full project statement of work.
This statement of work included: a technology development plan; the definition of all
project partners and their roles; and a five-year business plan focused on the
sustainability of the products proposed for development.
The statement of work was submitted to the Senior Steering Committee, made up of
private sector business leaders recognised for their understanding of the importance of ebusiness and for their commitment to assisting SMEs in this regard.
This group reviewed all submissions and recommended one third of projects submitted
for funding that were subsequently approved at the Board of Directors level. The Board
of Directors is composed of roughly one half educational or research institutions and one
half industry members.
Project example: CCTP Project
The CCTP's goal was to accelerate the adoption of e-business technologies within
Canada's manufacturing sector. It provided a cost-effective electronic order
management solution for small and medium-sized enterprises.
The Platform demonstrated its ability to connect to all suppliers and customers of an
SME regardless of their size. The Platform was also able to connect to 5 different
types of ERP system and could interface with any back-end accounting system.
Three organisations – CME, ecmarket and CANARIE Inc. joined forces to create the
Collaborative Community Trading Platform (CCTP).
CME's position in the manufacturing community as a leading business network
provided the perfect infrastructure for the delivery of the programme, allowing
interested companies easy access to the programme and supplying a forum through
which users can receive support and share information.
Brent Halverson, President and CEO, ecmarket, explains, "SMEs are a difficult
market to reach for software companies and, as a result, have been at a competitive
disadvantage with respect to e-business technology for years. Our partnership with
CME and CANARIE allows us to cost-effectively access and support Canadian
SMEs with our unique e-business solution."
"SMEs don't have a lot of time. By pre-qualifying with the CME, then the follow-up
with a CCTP specialist, there is a very quick turnaround," explains Mr. Braby of
ecmarket.
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Whereas take-up within the Canadian SME community was less than initially
hoped, this project developed a much clearer view of the issues facing SMEs and of
the constraints to their adoption of e-business solutions.
The project demonstrated that CCTP is a cost effective tool for a broad range of sub
sector SMEs to connect to most ERPs for any size supplier or customer.
The official collaboration among the founding partners, CANARIE, CME, and
ecmarket has ended but both the CME and ecmarket continue to promote the
product and to foster its adoption within Canada's SME community.
As of this date, over 500 SMEs have entered into the consultative process regarding
implementation of the CCTP and 40 have adopted or are in the process of adopting
CCTP. This ratio reflects the fact that not enough SME executives in Canada in
manufacturing at the SME level were able to appreciate the CCTP value
proposition. In most cases, a CAD multi million dollar investment in machining
tools is a far easier sell than an investment of between CAD $ 30,000 and $ 40,000
in software such as the CCTP.
CCTP is now being targeted at larger firms and is finding its way into Canadian
SMEs through "trickle down" as the large firms implement CCTP in their supply
networks.
The original CCTP approach to the SME community would have been more
successful had it been better resourced. The budget of CAD $ 4 million should have
been doubled to ensure a broader take up within Canada's SME community at large.
5.13.2.2
Communication
Communications instruments used included the CANARIE Web Site; presentations at
numerous Canadian conferences and Trade Association meetings; extensive direct
marketing campaigns through E-mail and conventional mail; networked marketing was
accomplished through provincial organisations and industry associations channels;
CAnet 4 days were held across the country in conjunction with regional and university
partners to launch this and other CANARIE programming. Several thousands of SMEs
were reached.
5.13.2.3
Evaluation
Projects were eligible from any industry sector interested in collaborating with a
community of interest on network – based e-business solutions. This flexible approach
enabled the best ideas to be brought forward, one third of which were funded after a
careful screening and review process. The project development process took an extended
period of time to ensure adequacy of the proposal including the business plan.
After the completion of its contributions phase, the programme was evaluated formally
and very positively by an external consulting firm. One major conclusion from the
evaluation report states: "The adoption of IT by SME participants appears to have been
accelerated through the Programme. This result, albeit for a small number of SMEs, is in
contrast to the general findings of the Canadian e-Business Initiative which reported
growth in SME adoption of Internet business solutions peaking between 2000 and 2001
and slowing in 2002."
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The survey also confirmed the high level of satisfaction of participants with the
CANARIE programme: meeting project needs (73%); enhancing the quality of
products/services (76%); developing new products/services (68%); developing new
partnerships (75%); increasing revenues (33%); increasing the number of high quality jobs
(58%); increasing the uptake of network applications (46%); and, changing service
delivery costs (30%).
5.13.3
Results
Outputs
The CANARIE programme call generated over 40 applications from SMEs to launch cofunded e-business projects, each containing a five-year business plan and focused on a
unique "Community of Interest".
14 project submissions were approved; 14 "Communities of Interest" were created around
specific projects; and 14 new network-based e-business solutions for SMEs were also
created.
Each project demonstrated a strong increased utilisation of commercial internet networks
both within the project and for SME target customers. Indeed, business processes
software was developed to facilitate the use of Internet networks by SMEs in 60% of the
projects.
Expanded client bases for SME project partners were achieved for projects that developed
products for sale to SME customers.
The range of expansion is from limited (initially a few clients in the Manitoba Insurance
sector – 100% of a small universe) to very broad (electronic clipboard sold through
channel partners such as Rogers, HP, and Microsoft). The insurance sector project is now
Canada-wide.
With respect to Canada's Online Product Registry more than 80% of companies in the
grocery, pharmacy and food services sectors have signed up, and products from the
hardlines and general merchandise sectors are now coming online.
Outcomes
Survey results showed increased revenues and increased high quality employment for
56% and 89% of respondents respectively as a consequence of participation in e-business
projects. Many of the participant interviewees also indicated that the number of
employees in their firms had increased as a result of the CANARIE project. Often this
increase in employment was attributed to an expansion in their R&D programme and the
acquisition of new skill sets required for the "go to market" phase.
All of the participants interviewed are working on the "go to market phase" using their
own funds or non-CANARIE funds or have already reached the phase and, as in the case
of ECCnet, have operational systems being used by industry. Several of the participants'
"go to market" phases involve exporting the product or service.
The adoption of IT by SME participants appears to have been accelerated through the
Programme. This result, albeit for a small number of SMEs, is in contrast to the general
findings of the Canadian e-Business Initiative which reported growth in SME adoption of
Internet business solutions peaking between 2000 and 2001 and slowing in 2002.
Solutions developed allowed SMEs to operate without needing to learn or hire basic
skills at a whole other level of sophistication.
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Phase 3 has created over 25 e-business offerings, and most have created new
communities of interest, which are a prerequisite for this type of offering. Collaboration is
the backbone of a community of interest and the key ingredient to a successful e-business
offering. Half of the participants interviewed indicated that the probability of working on
a new venture with the same community of interest is very high.
The levered contribution for e-business projects amounts to 56% of total project costs.
Accessing traditional sources of financing was often difficult at the beginning of the
projects and participants moved to partnerships with other companies and to venture
capital. For example, one project that initially partnered with a software company that
made a CAD 500,000 investment now has four venture capital firms putting up capital.
Networks and partnerships have expanded throughout. Most teams have identified new
markets, new channel partners, new investment partners, etc.
The higher revenues and employment point to companies being more competitive
through their participation. One company stated, "We wouldn't exist without CANARIE
and are definitely more competitive. CANARIE has leveraged what could be a billion
dollar business. We employ 23 people and we are going to hire more. So, yes, the
CANARIE funds have made a tremendous difference." Another benefit was the discipline
involved in participating in CANARIE, such as developing a business plan, identifying
the type of skills required to successfully complete the project as well as where to get the
identified skills for the "go to market" phase.
Although individual project results are not available for reasons of commercial
confidentiality, CANARIE states that clear incremental differences for suppliers and
users of technologies were developed. Employment growth, revenue growth, investment
attraction, lower costs, higher productivity, and expanded markets, are among the
quantifiable indicators cited.
The projects have reached critical mass in terms of sustainability beyond the supported
phase. 13 of the 14 funded projects are ongoing and growing without further government
assistance. Several project teams have agreed 7 have already made royalty-based
repayments of assistance obtained in the project.
5.13.4
5.13.4.1
The three key innovative elements that were central to programme success were the
communities of interest focus, the 5 year business plan requirement to define
sustainability and the royalty-based repayments of CANARIE contributions.
Communities of Interest tend to be sector-specific.
One example is the IQX Generic Financial Services Engine Product project which was
designed for the Retail Insurance Industry in Manitoba, a Canadian province. The project
created a single shared database enabling insurance brokers to obtain insurance rate
quotes from all the participating insurance companies for all risk categories. In this
context, the retail insurance brokers in Manitoba constitute the "Community of Interest".
A second example is the ECCNET project Canada's Online Product Registry which was
designed for the retail grocery sector supply chain across Canada. The project designed
an electronic system for recording all product information related to every product sold
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in each and every Canadian grocery store. This eliminated the requirement for
wholesalers to complete multiple versions of a 17 page form for each product and for
each grocery store on their customer list. The new system deposits the information
completed once by the SME for each product, into a shared database that every grocery
store in Canada can access. Whereas SMEs could only market to a restricted list of
grocery stores previously (because of administrative overhead costs) their list of
customers is now nation-wide, and they can compete against nation-wide wholesale
chains. This project is currently being expanded (with no government financial support)
to include the pharmaceuticals and hard goods sectors in Canada, two additional
"Communities of Interest".
Other "Communities of Interest" include: the steel industry supply chain; distributors and
receptors of university – developed technology; SME – focused information technology
service providers, etc.
One best practice was the provision of experienced expertise in the development of the
statement of work for the project and in the development of its compulsory 5-year
business plan. CANARIE engaged an outside consultant (a retired, senior, experienced
manager from IBM with extensive SME supply chain expertise) to work directly with
consortia during the proposal planning and preparation phases, thereby ensuring the
business viability of the research and development projects proposed.
A third innovative element was royalty-based repayments of CANARIE contributions
(up to 125% of the original contribution) for each approved e-Business project.
Repayment was a feasible programme option because the commercial viability of each
project had been carefully developed and assessed within the project's five-year business
plan and because the project was targeted at a clearly defined "Community of Interest".
5.13.4.2
Facilitators
The provision of outside expert advice to develop statement of work and business plan
was critical to the ultimate success of the selected projects. Many projects were dropped
by mutual agreement at an early stage because they were either poorly constituted or Illconceived. The discipline of a market test applied at the outset and expert advice on
project design and development generated a vastly-improved set of submissions for
funding.
In addition, a colloquium of all 14 project leaders was held near the end of the active
contributions phase of the programme. This session led to overcoming barriers within
multiple projects as consortia benefited from each other's experience.
Barriers
Budgets were small and programme timeframes limited. The CANARIE e-Business
programme is not ongoing and terminated in March 2007. Although clearly successful in
developing innovative e-Business solutions, the programme has assisted only a small
fraction of the potentially interested SME applicants. Had additional funding been made
available for a continuation of this programme, many more "Communities of Interest"
could have been created and more e-Business solutions launched in several other
industrial sub sectors within Canada.
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5.13.4.3
Learning points
Three main learning points emerge from this case:
Creation of "Communities of Interest". The "Communities of Interest" concept
was at the core of the approach. "Communities of Interest" could be any group of
companies with a common purpose or in similar businesses such that initiatives
taken could benefit the whole community. The "Community of Interest" brought
together a team that achieved "critical mass" in terms of project development and
results exploitation.
Requirement for a 5-year Business Plan. A second key component was the
requirement that each consortium submit a 5-year business plan addressing the
sustainability of the proposed initiative. CANARIE experts worked with project
teams for several months during the project design and development phase to
develop the community and the business plan. The business plan assessment
weeded out weaker projects early on in the process and strengthened the
commercial viability and sustainability of accepted projects.
The cost-shared, repayable, and open call nature of the Programme. The open
call, cost-shared, and repayable nature of the programme meant that any sector
was eligible for support. It also led several consortia to seek and receive private
sector investment support in terms of loans or venture capital. The CANARIE
project approval endorsement was critical in achieving private sector leveraged
financial support. As is demonstrated by the repayment levels achieved to date
(almost 50% of the initial CANAIRE investment), approved projects were
commercially viable and sustainable.
5.13.4.4
Strengths
(+) The open call nature of the programme gave rise to the submission of a broad range
of good ideas across all industrial sectors.
(+) The cost sharing nature of the programme (50% funding support) weeded out weak,
non-viable consortia unable to generate matching funding.
(+) The provision of expert advice in submission preparation generated high quality,
viable proposals and provided needed endorsement for obtaining outside financing
from the private sector.
(+) The 5-year business plan requirement meant that all approved proposals had a solid
business base and were likely to be sustainable as has proven to be the case for most.
(+) The Communities of Interest requirement assured that the key collaborators within
each sub sector joined the project team and that target markets were identified
clearly at an early stage in project development.
(+) The repayable contributions element brought further commercial discipline to submissions and demonstrates the quality of the projects approved. Current repayment
levels based on royalties related to project sales are just under € 4,000,000.
Weaknesses
(-)
The programme had a limited time frame. Its success suggests the viability of an
ongoing programme. CANARIE did not have the authority to co-invest in the
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projects (through deferment of royalty payments for example) which would have
resulted in even greater success for some consortia.
5.13.5
(-)
The programme had a limited budget that meant only one in three submissions were
approved.
(-)
The colloquium that brought all consortium leaders together to share experiences
was held near the end of the programme. In hindsight, this group should also have
been convened at the outset and mid points of the programme for maximum
benefits to all concerned.
References
Research and interviews for this case study were conducted by Allan Martel Consulting
([email protected]). Main sources:
All of the material pertaining to CANARIE's e-business programme can be found
on the CANARIE Web Site: www.canarie.ca
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5.14
Supply Chain Logistics Metrics (Canada)
Fact sheet
Supply Chain Logistics Metrics
Aerospace, Automotive, Pharmaceuticals, Food Processing
Geographic focus:
Canada
Start date:
October 2005
End date:
October 2007
Initiated by:
Industry Canada
Implemented by:
Government of Canada - Industry Canada; Transport Canada;
Canada Customs; International Trade; Human Resources
Development
Provinces – Ontario; Quebec; Alberta; British Columbia
Associations – Manufacturers and Exporters; Retail Council;
Supply Chain Logistics; GS1; Automotive; Pharmaceuticals;
Aerospace
Funding:
Contact person(s):
€ 300,000
by Industry Canada
€ 150,000
by Trade Associations, Provinces
Philippe Richer
Industry Canada
235 Queen Street, Ottawa ON, Canada K1A 0H5
Tel.: +1 613-941-3361
Mr Scott Gibson
Astrazeneca Corporation
Toronto, Canada
Tel.: +1 905-803-5760
Website(s):
http://www.strategis.ic.gc.ca/logistics
Abstract
The Industry Canada Innovation Agenda concluded that Logistics and Supply Chain
Management (SCM) is expected to contribute dramatically to the productivity growth of
Canadian firms in the next few years.
Whereas investment in manufacturing production processes in Canadian firms can be
justified through reference to cost savings related to clear performance metrics, the same
cannot be said for proposals relating to logistics and supply chain measurement. In the
absence of clear metrics to assess performance improvement, investment in this critical
component of innovation was lagging, leading to a lack of international competitiveness
across several industrial sectors.
The objective of this programme was to develop a hands-on tool for Canadian firms to
benchmark themselves to their supply chain partners, competitors and sectors both
within Canada and with US firms and sectors.
Supply chain specific analysis has been completed for the following sectors at a micro
level: Manufacturing, Pharmaceutical, Automotive, Aerospace, Retail and Consumer
Product Goods. Sector coverage includes: 250 manufacturing sub sectors, 30 wholesale
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and 70 retail sub sectors. Sector specific analysis at a micro level is a key lesson learned in
producing useful output for industry. Macro-level analysis is not nearly as useful to
firms.
The tool kit calculator has been developed and six benchmarking reports completed.
Interest in the tool kit from Canadian industry has been strong with at least 5,000
downloads monthly on the tool kit site and reports sent to well over 50,000 firms within
Canada.
5.14.1
Investment in process improvement must be justified through a business plan with
demonstrable payback within acceptable timeframes. In the absence of clear metrics to
assess performance improvement, investment in this critical component of innovation
was lagging, leading to a lack of international competitiveness across several Canadian
industrial sectors.
Indicators of this gap include:
The Canadian manufacturing sector has a 35% supply chain agility gap compared
to the U.S.
Canadian firms have logistics costs that are 11% higher on average than the U.S.
Despite all of the benefits associated with logistics innovation, only 16.4% of
Canadian manufacturers implemented innovative practices in logistics between
2002 and 2004, versus 35% in the U.S.
Canadian manufacturers, retailers, wholesalers and logistics service providers need
quality information on logistics and Supply Chain Management (SCM) costs as well as
performance indicators in order to provide best practices and benchmarks, to justify
investment and innovation, and to monitor industry performance.
Many initiatives of this type take a macro analysis approach looking at size of firm (e.g.
SMEs) as the analytical thrust. This type of analysis often generates little of practical
value from the perspective of the individual firm. Sector focused analysis is important
insofar as it gets beyond cost and efficiency indicators to examine the key elements
within each sector that drive logistics and SCM.
The development of a supply chain perspective on an individual sector-wide basis
enables firms within the sector to see the Big Picture over multiple years. As an example,
for Pharmaceuticals this included the manufacturing, wholesale and retail sub sectors.
Any firm operating at the manufacturing, wholesaling, or retail level in the Canadian
pharmaceuticals sector can see the benchmarked results of their direct competitors, their
suppliers and their customers. They can also determine whether competitors are really
improving logistics internally or simply shifting costs to their supply chains and/or
customers.
The level of detail for the analysis was at a sub sector level – 350 sub sectors. The real
issue here is that each sub sector has different characteristics and nuances that must be
addressed in detail in order to supply the data needed to build the internal rationale
necessary to justify investment. Studies at a more macro level (even slightly more macro
in character) are useless for investment decision-making at the level of the individual
firm.
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Since Canadian manufacturers are strongly export-focused, the analysis was also
conducted for the 6 corresponding industrial sectors in the US.
Target groups
There were three groups targeted comprising thousands of individual firms:
6 Industry Sectors including 350 sub sectors – Automotive, Aerospace,
Pharmaceutical and Chemical, Retail and Consumer Products, Electronics and
Manufacturing.
SMEs selling to large corporations as part of a supply chain that is dictated by their
customer or "channel master".
Large firms with supply chains (as a means of filtering down to SME suppliers
within the chain).
Although not an initial target group sector, on publication of project results, one of
Canada's largest banks indicated that it would now insist on a logistics and SCM
component as part of the business plan for any prospective corporate borrower.
Targets
The principal target was and remains to provide an assessment tool along with
supporting performance measurement data for each of the six sectors at a sufficient level
of detail such that the information and tools could be used in any and all of the 350
industrial sub sectors. This means an outreach programme involving tens of thousands of
Canadian firms, mostly SMEs.
A second target was and remains the narrowing of the supply chain agility gap and the
costs gap for Canadian firms when compared to the USA.
A third target was and remains to increase the number and ratio of Canadian
manufacturers implementing innovative practices in logistics to narrow the gap with
equivalent US firms.
Resources
Funding
Contributed by
For period
€ 300,000
Industry Canada
Oct. 2005 – Oct. 2007
€ 150,,000
Association Partners (SCL, CME, RCC)
Dec. 2005 – Oct. 2007
Contributed by
For period
5
Industry Canada
Oct. 2005 – May 2007
2
Association Partners (SCL, CME, RCC,
Pharmaceuticals, Aerospace, Automotive) and
Transport Canada
Oct. 2005 – Oct. 2006
Person Years
Key infrastructure – Formation of an SCL Industrial Research Committee made up of 25
Supply Chain Management Executives from the identified 6 priority sectors.
There was no requirement for a financial contribution from SMEs.
Associations funded their own involvement in this project including hosting
dissemination conferences and seminars for their members. The Supply Chain Logistics
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Association (SCL) was also able to increase its revenue through the increased level of
attendance (often a 100% increase over normal levels or more) generated by the interest
in the project at Association Conferences. A Canadian bank also sponsored each of these
six conferences.
5.14.2
Activities
5.14.2.1
Implementation
Industry Canada (IC) initiated this project in October 2005 in response to perceived
requirements stemming from the Industry Canada Innovation Agenda published earlier.
The association responsible for supply chain and logistics issues in Canada is the Supply
Chain and Logistics (SCL) Association of Canada. The SCL Board of Directors identified
the 6 key industrial sectors for which key performance indicators (KPI) were required
through a survey of its corporate members conducted in October 2005. The SCL became a
key project partner with the establishment of a new Industrial Research Committee (IRC)
composed of 25 supply chain executives from the identified 6 priority industrial sectors
in Dec 2005.
Subsequently, the SCL IRC consulted broadly within its member base (throughout
January 2006) for all 6 industrial sectors identified as priorities to determine:
Information needs
Key performance indicators required
Data and Report Formatting and Specific Tools required
The SCL IRC also determined the requirement for US benchmarking and key
technologies to be included. These technologies included:
Collaborative planning, forecasting and replenishment (CPFR); a business
practice that combines the intelligence of multiple trading partners in the planning
and fulfilment of customer demand. By linking sales and marketing best practices
such as category management to supply chain planning and execution processes,
CPFR increases availability while reducing inventory, transportation and logistics
costs.
Global supply chain visibility is becoming increasingly important, particularly as
manufacturing is moved offshore. With supply chains lengthening it's becoming
more important to have visibility of your products while they are in transit.
Transportation between the manufacturer and the region of the product's final
destination has become a major component of the supply chain and the visibility of
that product in transit is crucial to managing logistical issues.
Successful inventory management involves balancing the costs of inventory with
the benefits of inventory. Many small business owners fail to appreciate fully the
true costs of carrying inventory, which include not only direct costs of storage,
insurance and taxes, but also opportunity, depreciation and obsolescence costs.
Industry Canada (IC) developed the economic modelling, supply chain analysis reports.
SCL reviewed the supply chain analysis and interpreted same to generate industry trends
based upon the data in the analysis over the same period. The Canadian Manufacturers
and Exporters Association (CME) and the Retail Council of Canada (RCC) also validated
the trends identified for their specific sectors and sub sectors between May 2006 and
September 2006.
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This process resulted in the 6 individual sector-focused supply chain reports which were
presented at various industry fora and delivered electronically through IC and partner
Web sites (IC, CME, SCL, RCC) between Oct 2006 and May 2007. The distribution is
ongoing with, for example, the Export Development Corporation (EDC) having recently
distributed project information via its newsletter to thousands of Canadian exporting
firms. The next phase in the project was the development of the assessment tool by
Industry Canada based upon feedback from firms during the presentation of the supply
chain reports. This task was completed between Jan 2007 and May 2007.
Project example: AstraZeneca Corporation
AstraZeneca is a pharmaceuticals importer and distributor based in Toronto,
Canada. AstraZeneca compared its performance in various supply chain business
processes against Canadian competitors' performance as reflected in the
benchmarking analysis competed within the study.
AstraZeneca concluded that its performance was consistent with the practices of
Canadian competitors and that almost all firms within the Canadian sub sector were
performing at roughly the same level.
AstraZeneca is now making subtle changes (fine tuning) in its business practices
related to supply chain logistics in order to obtain a small margin of competitive
advantage.
The best returns on business process improvement are being obtained in the areas of
inventory turns and inventory carry (weeks of supply). There is less room for
improvement in areas such as service to the customer where AstraZeneca's order
index metric is recognised as already well developed.
The bottom line is that participation in this project enabled AstraZeneca to set its
investment priorities for business process improvement within the context of a
benchmarking analysis.
AstraZeneca has yet to use the specific tool that was developed in the project but will
soon use the tool as a means of calibrating their progress to date and to obtain a
more definitive and precise definition of their comparative status and progress in
business practices improvement.
5.14.2.2
Communication
The Communications Plan associated with this project is very robust. Through the IC
Strategis site, thousands of Web Page views are occurring monthly with no visible drop
in interest thus far. Information dissemination has taken place through partner
associations via conferences, seminars, E-mail newsletters, articles in association trade
press, association web site linkages to Strategis (the IC site), etc.
The media coverage also included various publications in different journals, such as the
Canadian Business Magazine, the Canadian Transportation & Logistics Magazine, the
Gestion & Logistique Magazine and others.
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5.14.2.3
Benchmarking Report
Evaluation
The integrated and interactive design of this project has meant that information needs,
key performance indicators required, data and report formatting as well as the specific
tools required have been selected by target industry groups themselves. The
interpretation of the data collected has also been completed in concert with the SLC IRC,
the CME and the RCC to ensure that the industrial trends identified were both accurate
and meaningful.
The assessment tool itself was developed based upon feedback from firms during the
presentation of the supply chain reports through associations to individual industry
sectors. This process of collaborative "fine tuning" at each stage has ensured that the
project is meeting real priorities among industrial clients and partners.
The data analysis will be conducted every two years on an ongoing basis with
subsequent actions determined in large part by shifts in industrial trends as identified in
the data collected.
Additionally, every two years Statistics Canada will monitor project progress by means
of its Innovation Survey of Canadian manufacturers. These data will enable evaluation of
gap reductions compared to US equivalent firms.
5.14.3
Results
Outputs
Results are as planned. 50,000 SMEs have downloaded the tool and/or received the
reports through their key associations. There are at least 10 channel masters (i.e. large
firms such as Wal Mart that set the terms and conditions for all members of their supply
chains, including, at times, forcing the adoption of new technologies and processes)
implementing performance measurement in supply chain management with their
Canadian and US suppliers. One bank is now requiring performance measurement in
supply chain management as part of the business plan submission for business lending.
Business process improvement is tied directly to performance measurement. The firms
that measure landed cost, shipment delays and documentation issues on a corporatewide basis achieved significantly larger improvements in performance than did firms
that measured only locally and/or inconsistently.
The analysis was conducted at the sector level enabling the production of performance
metrics specifically targeted to firms in that sector or sub sector. Benchmarking of sectors
against general manufacturing trends was also developed.
Output indicators measured in terms of reaching SMEs are summarized below:
There are now 20,000 page views monthly on the project Web Site, up from 8,000
monthly prior to circulation of the logistics reports
Over 50,000 managers have received the documents through associations
Extensive media coverage has reached an estimated 65,000 Canadian executives.
Several large firms have adopted this system successfully and subsequently extended it
to their external supply chains.
Canada's two largest industry associations became and remain active partners promoting
this initiative strongly to their members.
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Media have described this initiative as ground breaking and overdue among other
positive comments. Within IC and Transport, this is a key process innovation project.
EDC just distributed this to thousands of its exporter firm clients.
A large Canadian bank has posted the reports on their internal website for use by their
Account Managers.
Outcomes
The assessment tool and the benchmarking data and analysis at the micro level have
enabled executives responsible for supply chain logistics management within Canadian
firms to develop sound business cases to support the required internal investments to
improve several important business practices. The sub sector based data analysis, trends
identification, and benchmarking enables firms to assess relative improvement and to set
investment priorities.
22 presentations to over 4,000 industrial associations' members and 20,000 Web Page
views monthly have improved skills development in SLC and logistics performance
measurement. As described above, firms that measure their business processes
outperform those that do not, generally by a wide margin.
A Canadian supply chain sector council has just been put into place to coordinate
curricula in Canadian universities and colleges including specific programs based upon
the tools developed in this project. New graduates will be able to apply these tools within
their new firms from the get go. In preparing business case using this project's data and
analysis, corporations learned how to do performance measurement and analysis.
Several partners extended the work from internal process improvements to focus also on
their external supply chains. Companies can now see the Big Picture (manufacturing,
wholesaling and Retail) in their sub sector, enabling them to assess through
benchmarking what their investment priorities in SLC and logistics should be.
At least ten channel masters are now insisting on performance measurement based on
these tools in their supply chains. One large Canadian bank now requires SLC and
logistics analysis as part of business plans submitted for lending approval. Most
innovations taking place are inter-firm not intra-firm meaning that the results are
considered to be e-business process improvement.
This project has laid the groundwork for improving the competitive position of
thousands of Canadian firms within the six industrial sectors analysed. Actual
improvements at the firm level are just coming on line and will be measured in the next
Statistics Canada Innovation Survey.
The project has made an incremental difference –media reports, and feedback from
individual firms through trade association partners has been overwhelmingly positive.
The project has reached critical mass with thousands of firms (mostly SMEs) now aware
of this initiative and reviewing the trends and tools developed. SMEs with good business
practices gain a competitive edge when supplying commodities to large firms locally and
in export markets.
All collaborative partners are still actively involved. Updating of the analysis and
reporting on progress is scheduled on an ongoing basis for every two years. A global
study is now getting under way with the same partners. Further initiatives are also under
consideration including RFID tagging, environmental foot printing, etc.
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5.14.4
5.14.4.1
Benchmarking Report
This project was highly collaborative with industry experts determining priorities for
data collection, trends analysis and reporting, and tools development.
The sector focus at a micro level enabled the generation of results that individual firms in
the 350 sub sectors can use to evaluate their performance and to make the internal
business case for investment to rectify problems identified.
The examination of manufacturing, wholesaling and retail in the sectors analysed
enabled all firms to see the Big Picture for their sector.
5.14.4.2
Facilitators
This project created a broad public-private partnership for all phases of the work.
Industry set the priorities. Industry Associations acted as disseminators for project results
and provided the fora for feedback to the project team from association members. Web
site delivery of the reports and tools and exceptional support from trade media
distributed project results widely.
Most importantly, the analysis was designed for use by individual firms in the target
sectors.
Barriers
When the choice was made to conduct this analysis at the micro level for 350 targeted sub
sectors, this meant that there would be no focus on collecting data at the size of firm level,
specifically for SMEs. Similarly, regional data were not selected as being useful to
industry. Insofar as this project did not conduct macro level analysis, it is of limited use
to policy analysts within government agencies but of great use to firms themselves.
National statistical information gathering time requirements mean updating of the results
of the project can only occur every second year.
5.14.4.3
Learning points
Lessons pertaining to project success include:
Sector specific analysis is the most important strategic factor. The analysis must
take place at the micro level in order to accommodate the variations in context for
SMEs operating in an industrial sub sector. I8n so doing, the tools developed are
directly useful to each SME operating in the sub sector.
Partnership with strong industry associations is key for industry outreach.
Priorities were set by industry; communications channels were opened through
industry associations; project promotion and credibility came through associations'
endorsement.
The use of the Internet for outreach allowed both low cost and efficient distribution
to thousands of SMEs as well as allowing specific quantitative tracking of interest.
This complemented print media distribution through business and trade journals.
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Heavy promotion through media and associations led to broad SME involvement.
Tens of thousands of Canadian SMEs were reached during this programme –
perhaps the most extensive reach in Canadian business history.
The resulting model is potentially broadly applicable and could be applied in other
countries, including some EU countries that have access to detailed input-output
tables, occupations and innovation KPI.
Lessons pertaining to successful adoption of project results:
In order to benefit from the productivity of logistics and SCM, individual firms must
develop their own personal action plan. The final step in a business case is to make
recommendations and develop a roadmap for implementing the proposed action plan.
The roadmap exercise consists of documenting the long-term perspective into specific
action items linked to deliverables, performance indicators objectives, return on
investment and a project time frame.
For some firms, the first roadmap action item could be an internal evaluation of their
logistics KPI with some participation in associations and networking activities. For
others, it could be implementing a pilot project with a customer and a supplier. In all
cases, a well-documented roadmap allows firms to gain the support of all their
stakeholders for their logistics and SCM competitiveness strategy and to solicit their
involvement in the implementation phases of the firm's logistics and SCM action plan.
5.14.4.4
Strengths
This project had both a clear focus and quantitative outcome targets. By allowing
industry itself to set priorities, to develop trends based upon data collected and to
disseminate results through its trade associations, "ownership" of the project transferred
to industry. Since the subject matter related to a critical component of competitiveness, it
was a priority and continues to be a priority for all partners.
Ever increasing interest and adoption of results in unanticipated sectors such as banking
give proof to the momentum that continues to build around this project. The plans for
further work among project collaborators are also eloquent testimony to the trust and
value added created herein.
Weaknesses
There are few weaknesses in this project. Updating frequency is determined by
availability of current data, meaning that updates can only be conducted every two years.
The process itself is not transferable to all jurisdictions because of data collection
requirements that specify detailed input-output tables, occupations and innovation KPI
collected at the national level.
The decision to conduct the analysis across 350 sub sectors eliminated the possibility of
producing data related to size of firm.
Sector coverage was limited to 6 industrial sectors. While this was reasonable for this
study, expanded analysis into other sectors would also likely prove useful and should be
contemplated.
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5.14.5
Benchmarking Report
References
Research and interviews for this case study were conducted by Allan Martel Consulting
([email protected]). Main sources:
Interviews with Mr Philippe Richer, Industry Canada
Industry Canada Strategis – www.strategis.ic.gc.ca/logistics
Supply
Chain
and
Logistics
www.sclcanada.org/index.php?id=21
Association
of
Canada
Canadian Manufacturers and Exporters Association – www.cme-mec.ca
Retail Council of Canada – www.retailcouncil.org
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5.15
The Sectoral B2B Networks Initiative (Korea)
Fact sheet
language):
B2B
B2B Pilot Project
Steel production, Ship building, Paper manufacture, Logistics,
Retail, Ship supplier, Credit insurance sector and more (total 48
sectors)
Geographic focus:
South Korea
Start date:
February 2000
End date:
Open
Initiated by:
Ministry of Commerce, Industry and Energy
Implemented by:
Korea e-Business Association
Funding:
about € 83 million
(105.6 billion Won)
Contact person(s):
by Ministry of Commerce, Industry
and Energy
Mr. Seok Tae Ryoo
Ministry of Commerce, Industry and Energy
3 Joongang-dong, Gwacheon-si, Gyeonggi-do, 427-721,
Republic of Korea
Tel.: +822 2110 5154
Overall Measures for Promoting e-Commerce
Website(s):
http://www.ebiznet.or.kr
Abstract
The Korean government has been strategically promoting e-business since the
Fundamental Law for e-Business was enacted in 1999. In line with this, the need to
improve industrial competitiveness by establishing B2B networks among major
industries was recognised. To this end, the Ministry of Commerce, Industry and Energy
launched their B2B Pilot Project in 2000 targeting Korean key industries such as
electronics, car manufacture, ship building and steel production.
The B2B Pilot Project was designed to lay the groundwork for e-business and encourage
the private-sector-led standardisation of e-business, to create effective business networks
within the sectors by adapting common systems among competitors and thus increase
the overall competitiveness of Korean industry.
Up to now, about 83 million EUR (105.6 billion Won) of funding has been made available
by the Ministry. The B2B Pilot Project supports the establishment of B2B networks in
selected business sectors. So far 48 business sectors have benefited from the policy
initiative.
Rather than supporting individual companies, the B2B Pilot Project aims to establish
standardised B2B infrastructures, which can be utilized by all companies in a given
industrial sector. Applicants are required to form a consortium at the sectoral level, with
the respective business association as a nucleus. In this way, the project promotes the
SMEs' voluntary participation in e-business and avoids double investment in B2B
network establishment from individual firms. Additionally, it allows companies which
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are not directly involved in the pilot project to benefit from the sector specific B2B system
and therefore also has an effect on the industry sector at large.
5.15.1
Korea is one of the most advanced countries in terms of Information Technology. The
number of regions with fiber-optic cables almost doubled between 1997 and 2000 and the
number of internet users has increased by a factor of more than 10 to 19,040,000 which is
about 40% of the total population. At a glance, the expansion in e-business investment
among the 200 biggest Korean companies was far more than the international average
and the e-commerce market showed a similar fast growth. However, digitisation of
information in industrial sectors did not match the Korean average. The external
indications such as investment or market scale confirmed the fast growth in e-business
among industrial sectors but actual transactions by means of information technology are
still the exception rather than the rule.
One of the reasons can be found in the lack of collaboration among companies in the
same business sector. They tend to see one another only as a competitor, even though
there are many ways to increase productivity through collaboration. Another negative
business practice in Korea is the so called "transaction without document", which is
commonly used to avoid the payment of tax. It impedes business transparency, which is
an essential precondition for e-business. Another reason is that despite an existing
hardware infrastructure, there is a shortage of software infrastructure such as
standardised processes, IT personnel or electronic payment systems. Additionally, unlike
large companies, small and medium enterprises are unwilling to invest in the
development of e-business due to uncertainty of outcome and high cost.
To address these problems, the government launched an initiative called "Overall
Measures for Promoting e-Commerce" in 2000. It encouraged each ministry to formulate
its own policies in their respective areas to facilitate coordinated policy actions. Within
this framework the Ministry of Commerce, Industry and Energy initiated the B2B Pilot
Project in the same year. In the following year, the "National Strategy for e-Business
Advancement" was established allowing the B2B Pilot Project to be expanded.
The main objectives of the B2B initiative are to establish the groundwork for e-business
including the private-sector-led standardisation of e-business, to create effective business
networks within a given sector by adapting collaboration among competitors and thus to
increase the overall competitiveness of Korean industry in the era of a digital economy.
Target groups
In the first year (2000), the B2B Pilot Project specifically targeted nine industries which
are considered to be the backbone of Korean Industry: electronics, car manufacture, ship
building, steel production, machinery, textiles, electricity supply, biochemistry and retail.
It was expected that the successful establishment of B2B networks in these sectors would
also have an impact on industry as a whole, rather than investing in other smaller sectors.
In the framework of the "National Strategy for the e-Business Advancement", one year
after the start of the B2B Pilot Project, it was decided to open the initiative to all sectors
and to increase the number of target sectors to 50. From the second year on, business
sectors were selected based on their proposals and expected impact.
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Resources
The total budget of the initiative was 88 million EUR, which was funded by the Ministry
of Commerce, Industry and Energy in a six year time frame from 2000 to 2006. A budget
of that size was seen as a necessity in order to build a fully fledged e-business
infrastructure. The Fundamental Law for e-Business, which was enacted in 1999, allowed
for the allocation of the budget. In this law, it stated that the government should plan and
implement measures in order to lay the foundations for e-business in Korea.
5.15.2
Activities
5.15.2.1
Implementation
The B2B Pilot Project has a two-fold approach. On the one hand, it aims to establish a
database and standardised B2B network for each selected sector. On the other hand, it
aims to build integrated platforms between sectors and to connect them to overseas
markets. In the first case (intra-sector B2B network and database establishment), the
ministry announced a call for proposals in the beginning of each year from 2000 to 2005,
targeting not individual companies but business associations in different sectors. In this
way, the policy aimed to maximize the number of participating companies and thus
make a larger impact on the sector. It also aimed to promote collaboration between
companies engaged in the same type of business. Since 2006, the policy initiative has
focused on improving the usage of B2B networks rather than engaging new sectors.
In order to join the B2B initiative, applicants were required to form a consortium,
consisting of a business association as a managing organisation, its member companies
and a network developer. Proposals were selected according to their impact on the sector,
the expected outcome and the potential to connect different sectors and overseas markets.
For each sectoral project, the initiative provided funding for 70% of the cost to build a
database and to standardise e-business procedures. The initiative was designed to
provide support for three years but whether or not the funding would be continued was
decided by an evaluation at the end of each year. The B2B initiative also built sectorspecific e-business models which met the needs of each business sector. For example, in
the ceramic and the optical goods industries, where most of the firms are SMEs, the
initiative developed an electronic directory and cooperative buying system, whereas in
the paper manufacturing sector, the initiative developed a sales-focused system, which
linked a handful of manufactures to many wholesalers.
To facilitate the expansion of the network, the B2B initiative then established a connection
service between the sectors for transaction and constructed an integrated platform for
general services such as logistics, payment and insurance. The initiative also connected
the established networks to G2B and giant buyers such as Samsung IMK enhancing the
networks to the national level. Furthermore, the B2B initiative provides the electronic
documents relay service and recently started the Global Data Synchronisation Network
(GDSN) service in order to connect domestic networks to overseas markets as well.
As mentioned earlier, the Ministry of Commerce, Industry and Energy formulated the
policy initiative and financed the B2B Pilot Project. The Korea Institute of Industrial
Technology Evaluation and Planning, which is an affiliate organisation of the Ministry, is
in charge of the deliberation of the action plan and evaluation of its outcomes. The Korea
e-Business Association, a private organisation, deals with management of the B2B
initiative including administration work, technical support, and the organisation of
seminars and training programs.
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Project example:
Ship Supplier - KTMarine
KTMarine is a supplier of goods required on-board ship. Located in Busan, the
biggest port in Korea, KTMarine trades mainly with Japanese ships. Recently its
customers required KTMarine to join "Shipserve", the international ship suppliers'
e-commerce system. KTMarine was able to enter the system through KMeC, the
B2B network established with support from the initiative.
In addition to standardisation of business documents and the establishment of an
inventory database, the project in this sector focused on connecting domestic
companies with overseas ship suppliers' networks. The objective was to meet the
specific needs in this sector, whose business partners are mostly from overseas.
At first, it was not easy to familiarize with the new system, but now the increase of
in business is visible. KTMarine is convinced that costs can be reduced by up to
30%.
Project example:
Korea Paper Manufacturers' Association
Korea Paper Manufacturers' Association is a managing organisation for their
industry's B2B project. The paper manufacturing sector is considered to be one of
the most successful B2B projects in terms of transaction volume.
With support from the initiative, one intermediary e-Marketplace, five sales eMarketplaces and an international paper trade e-Marketplace were developed. They
provided purchase and sales facilities, security, payment, logistics, electronic
documents and catalogue services. Through these services, the whole purchase and
sales process was brought on-line.
After two years of the project, most of the participating companies were unsure
whether to continue or not. However, when a large firm among them decided to open
a customized e-sales marketplace, the rest followed. The large firm set the trend and
put market pressure on the other companies.
The role of the leading firm was critical in paving the way to a successful B2B
system. Benchmarking another B2B case in the Steel industry was also very helpful
in designing the customized e-Marketplace.
5.15.2.2
Communication
To reach their target groups, the ministry and the organisations involved not only posted
a call for proposals on their respective websites but also ran publicity in three daily
newspapers.
For those participating companies, the B2B Pilot Project website (http://www.ebiznet.or.kr)
is a central point to share information and to circulate reports regarding the ongoing
projects and general B2B trends. It also provides news and announcements from the
supervising organisations.
Workshops, seminars, an expert committee, a working committee and field assessments
were set up to facilitate effective communication among the organisations. These enabled
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them to follow the progress of the projects in each business sector, to identify obstacles
and to adjust the implementation of the projects accordingly.
5.15.2.3
Evaluation
The impact of a policy initiative like the B2B Pilot Project is difficult to measure as its aim
is to build infrastructure at national level. To take into account not only financial results
but also improvements in terms of process and learning, the Balanced Scorecard (BSC)
tool was introduced and adapted to the specifics of the B2B Pilot Project. The BSC
evaluation released in June 2007, which assessed 27 sectors, shows that the outcomes in
paper manufacture, credit insurance, non-steel metal and watch industries were very
successful, whereas e-learning, foundry, mineral and franchising businesses brought
unsatisfactory outcomes.
Another evaluation scheme was applied to decide whether to continue the project in a
given sector at the end of each year. This scheme assesses the outcome of the established
B2B infrastructure and its usage, adequacy of the B2B model, possibility of the future
usage and impact on the industrial sector. The construction, toy and jewellery
manufacturing sectors did not meet the expected output and the support was brought to
an end after one year and furniture manufacturing and oil retailing ceased after two
years.
5.15.3
Results
Outputs
The B2B Pilot Project aimed to establish B2B networks for 50 industries. So far 48
industries have benefited from the B2B initiative. Since 2006, the initiative focused on
stabilizing and maintaining the established networks rather than engaging with new
sectors.
From 48 industrial sectors, 1,400 companies participated in the B2B Pilot Project and out
of which approximately 70% are SMEs. The standardised database of products,
transactions and companies reached 7,300,000 cases. It is also estimated that around
60,000 companies are utilising databases or e-marketplaces established through the
initiative.
The amount of B2B transactions among the companies supported during the first four
rounds reached about 42 billion EUR (53 trillion Won) in the year 2005. This is 16.7% of
the domestic B2B transactions in the same year.
In terms of the volume of transactions, the initiative had a larger impact on the backbone
industries such as car manufacturing, ship building and steel industries. This is because
companies in these industries are generally large and thus have better investment power,
already developed internal systems and have informed personnel to actively participate
in the project. Also they dominate the market as main suppliers and/or buyers in the
supply-chain. Accordingly, their small and medium-size business partners also benefited
from the e-transactions.
With regard to e-business infrastructure, in establishing standardised databases and
raising e-business awareness, the initiative was productive, especially in industries such
as tool, watch, new ceramics and machine equipment, from which large number of SMEs
participated in the projects. They developed a collaborative system of purchase and sale
on the internet and it shows high usage. This was made possible because of the
standardisation process, which SMEs on their own could not afford.
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Another successful example is the credit insurance sector. It is one of the projects that has
been funded through the B2B initiative and at the same time a service that is available to
all participating companies across every sector of the B2B initiative. The project
connected the Credit Guarantee Fund with 15 banks and 23 e-Marketplaces and
introduced an electronic purchasing card system, which enables companies to buy raw
materials in e-Marketplaces on credit. In this way, buyers have better purchasing power
whilst payment is guaranteed for sellers. This project worked as a facilitator increasing
transaction through e-Marketplaces.
However, not every sector was successful. Construction, furniture manufacturing, oil
refining, toy and jewellery manufacturing industries did not meet the expected targets
and the government support lasted only one or two years instead of three.
Outcomes
The outcomes of the B2B Pilot Project vary from sector to sector. In the business sectors
such as machinery equipment and paper manufacture, where a transaction model was
developed and the stock information became available real-time, the purchasing process
was significantly cut down. Consequently, efficiency was improved. In the major
industries like car manufacturing, retail and ship building, large enterprises and SMEs
share their product information in the respective network systems, set up as a
collaborative model. Though the specifics and functions are different in each network
system, these systems allow SMEs to interact with more than one business partner at the
same time. As a result, they were able to run their businesses more efficiently and thus,
increased their competitiveness.
The initiative worked as a driving force behind a boost in domestic e-commerce. The
number of domestic B2B transactions and the proportion of e-commerce to overall
business is increasing every year. By introducing a B2B network in those sectors, the
initiative reinforced competitiveness of the participating companies and also inspired
other companies in the sector, which did not participate in the project, to positively
consider adopting e-business. The transactions which occurred in e-Marketplaces were
secured by the Credit Guarantee Fund and therefore they were safer and buyers had
better purchasing power than with conventional transactions. This has attracted more
companies to join and added to the sustainability of the system.
5.15.4
5.15.4.1
The B2B Pilot Project supported the establishment of B2B networks, which can be utilised
by any company in a given sector rather than sponsoring individual enterprises directly.
To this end, it was required that the applicants form a consortium composed of a
managing organisation, in most cases a league or an association of the same business,
member firms and a B2B network developer. In this way, the initiative motivated other
enterprises in the sector to join the B2B network which then created private-sector
driving force. This also enabled the consortium to come up with a particular B2B
network, which was tailor-made to the demands of a given business sector.
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5.15.4.2
Facilitators
Sector based approach and cross sectoral approach: the initiative adopted both the
sector based approach and at the same time, a cross sectoral approach so that the
common services can be provided without double investment.
Establishment of B2B system for common usage: the B2B network was designed
in a way that it could be utilized by all the companies in a given sector. It
facilitated large participation of companies and therefore generated greater impact
on the business sectors than a policy initiative focused on supporting individual
SMEs.
Role of the business association in the consortium: Business associations as a
managing organisation of the project in each business sector played a crucial role
in that they formulated the sector specific B2B system and collected the needs of
individual firms to integrate them into the system.
Credit insurance sector: The successful establishment of the B2B network in the
credit insurance sector accelerated the number and amount of transactions in the eMarketplace by enhancing credit for buyers whilst securing payment for sellers.
Barriers
Legal issues such as absence of tax reduction: Legal advantages such as tax
reduction could have increased participation.
Lack of IT understanding from a business side and vice versa: The business
sectors had difficulties in understanding how to apply Information Technology to
their business whereas system developers knew little about how different the
business process is from sector to sector. This lack of understanding took time and
resources to solve.
Conventional business practice: Conventional business practices such as a
tendency to trade only with acquainted companies and transactions without
documents hindered many SMEs from participating in the B2B network.
Low level of informatisation in individual SMEs: A lack of IT personnel and
software in SMEs delayed the process of B2B network establishment.
5.15.4.3
Learning points
Understanding business culture: Each business sector has its own way of doing
business. Introducing e-business does not only mean the transformation from paper to
computer but also the transformation of business practices. Thus, it is essential to
understand their business culture to bring SMEs to e-business.
Understanding the procedure of B2B network building: The initial phase of the project –
standardisation and building common databases – took a long time with high costs.
Without fully understanding this procedure, it can be very frustrating for the
participating SMEs and some may even drop out from the project. Therefore, it is
important to make every participant understand how the process of establishing a B2B
network works.
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Practical approach: In order to draw SMEs into the project, it is important to show them
that e-business means "profit" rather than to give them an abstract slogan such as "ebusiness is a future-oriented and effective way of doing business."
5.15.4.4
Strengths
(+) Generating large impact on industry as a whole: The large scale and budget of the
policy initiative generated a great impact on Korean industry in general. The
standardised database and B2B network established through the project covered 48
business sectors.
(+) Fostering a collaborative atmosphere: By supporting the establishment of B2B
network which is open to all companies in a given sector, the initiative fostered a
collaborative atmosphere among companies, who used to consider one another only
as competitors. In this way, it prevented double investment from individual
companies and motivated the private sector to join the B2B network at small cost.
(+) Potentiality of expansion: There is great scope for future use of the standardised
database. In each sector, the customized B2B network can be developed and
expanded according to demands of its business process.
(+) Modernisation of business practices: Through participating in B2B networks, some
of the conventional business practices were overcome and transparency of the
business process was increased.
Weaknesses
(-) High initial cost: The cost for the initial phase was relatively high. It also took a long
time until the results were visible. In some cases, this frustrated the participants.
(-) Extra cost for adopting the B2B network at the individual enterprises: the B2B
network, such as the e-Marketplaces, required individual firms to connect their own
internal system to a common system in the business sector. The costs for the
necessary adaptation and customisation of their own systems had to be borne by the
companies themselves.
(-) Lack of success in business sectors without a strong central point: The business
association in each sector played an important role in the project. Thus business
sectors without strong leadership, such as construction, furniture manufacturing, oil
refining, toy and jewellery manufacturing, showed less success than other sectors.
5.15.5
References
Research and interviews for this case study were conducted by Hyeyoung Kim
([email protected]).
Korea e-Business Association, http://www.ebiznet.or.kr
"Final Report of B2B Network Project Support Group", May 2004, Korea e-Business
Association
"B2B Guidebook" I(July 2003), III(July 2005), IV(September 2006), V(July 2007),
Ministry of Commerce, Industry and Energy and Korea e-Business Association
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Information Material "Sector Based B2B Network Establishment Project", October
2006, Ministry of Commerce, Industry and Energy, Digital Innovation Division
"Overall Measures for Promoting e-Commerce – The current development and
future plan", prepared for the 3rd Committee Meeting, August 2000, Ministry of
Commerce, Industry and Energy
"BSC Outcome Report on B2B Pilot Project – Final Report", June 2007, Korea
Information Service, Inc.
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Sectoral e-business policy initiatives:
common characteristics and differences
This Chapter provides an overview of the results of the first and second study phase, i.e.
the identification of policy initiatives that broadly complied with the search criteria (see
Section 1.2 on methodology). During the initial search phase, about 75 relevant policy
initiatives were identified and found potentially relevant for this study. Out of those,
about 45 initiatives – whose characteristics met the selection criteria in the best way –
were selected for phase 2 and looked at in more detail. A short description of these
policies was presented in the interim study report.
This collection of policy initiatives can be regarded as a representative synopsis of
different efforts and approaches used to promote e-business adoption in Europe and
beyond. More than that, the initiatives are probably indicative of innovation policy
design in the countries covered.
To some extent, the existence (or non-existence) of e-business policy initiatives also reflect
different political cultures and attitudes, i.e. to what extent and in what way
interventions of the public sector in favour of the development of specific industries are
adequate (see country background information in Section 6.3).
6.1
Types of initiatives covered
Programme or project level
A challenge for this study was to define its actual scope. It is hardly possible to draw a
precise borderline of what should be considered as a "sectoral e-business policy initiative"
and what should be left out. Moreover, the question was raised whether the study should
focus on initiatives at the "programme" or the "project" level.35
To simply make a choice is hardly possible. There are more types of initiatives than just
programmes and individual projects or action lines (within programmes). In some cases,
a framework policy has more than two layers – in others, an initiative is horizontally
linked with other projects or initiatives. Finally, there are stand-alone initiatives without
any links to a larger programme.
To cope with this complexity, the study team opted for a flexible, pragmatic approach: in
case of multi-layer initiatives, the focus of analysis depended on the content of the
programme. If the whole programme is about e-business, the study looked at the
initiative at "programme level". If only a specific action line was about e-business, then
the study focused on this action line (or project) within the larger programme.
For this reason, the scope of initiatives covered differs widely. The study includes
comparatively small projects (e.g. TASK) as well as large scale framework programmes
(e.g. the Korean "Sectoral B2B Networks" initiative, or the Italian DDTA programme).
Other initiatives focus on specific issues and fall neither into the "programme" nor
"project" category (e.g. the Slovenian eSLOG initiative).
35
The question was raised at the initial presentation of the study at the eBSN Steering Group
meeting in Oulu, December 2006, by Paul Skehan from Eurochambres.
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Main types of initiatives
Notwithstanding this complexity, the policy initiatives can broadly be grouped according
to their links with other programmes or initiatives (i.e. whether they are part of a larger
programme or not), and according to the focus of their activities (see Exhibit 6.1-1).
In terms of their focus, many of the initiatives include different activities which address
more than one item of the list. For example, there are initiatives that combine work on
standards with grants for pilot projects where SMEs adopt standards for e-business;
others combine awareness raising activities with a grant scheme for concrete e-business
projects.
Exhibit 6.1-1: Classification scheme for policy initiatives
Classification by
Main categories
•
Framework policy / action plan
(covering diverse action lines)
•
Integrated project / initiative
(vertical integration as an action within a framework programme)
•
Linked project / initiative
(has strong horizontal links with other projects / initiatives, but is not
part of them)
•
Stand-alone project / initiative
(without links to a framework programme or other initiatives)
2.
•
Focus of the
activities
Support schemes
(provision of grants for individual companies)
•
Networking / cluster-building
(typically providing grants for cooperative projects)
•
Awareness raising
(typically with a focus on information dissemination to many
companies)
•
RTD
(e.g. support for the develop of new e-business solutions)
•
Standards for e-business (definition, implementation)
(typically bringing together different stakeholders to agree on
standards for e-business processes in specific sectors / settings)
•
Provision of ICT training
•
Legal action
(e.g. tax incentives, regulatory framework initiatives)
1.
Policy level –
links with other
programmes
6.2
The time perspective – duration and scope
Duration
Out of the about 45 initiatives that were described in more detail in study phase 2, only
about ten had been completed. About 30 are still on-going and about 5 had just started (in
mid 2007). Thus, overall, a majority of sectoral policies has been implemented quite
recently. Out of those policies that are still on-going, about 5 are expected to end in 2007.
Some of the remaining ones are designed as open end initiatives and will thus continue
for several years.
The length of time over which the selected policies roll out varies considerably, normally
in a range from 1 to 6 years. Most of the initiatives are expected to last 2 to 5 years.
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Several initiatives are designed as open-end initiatives, or are regularly renewed
depending on a positive evaluation of the achievements.
As for the 15 case studies featured in more detail in this report, the duration, start and
end time also vary (see Exhibit 6.2-1). 11 of these sectoral initiatives were still in progress
in mid 2007. This was to be expected, as the sectoral policy approach is a more recent one;
however, it obviously challenges the assessment of outcomes and, notably, impact of
these initiatives.
Many of the initiatives have a duration of 5-6 years, which is quite long compared to
many earlier e-business awareness raising initiatives. The longer implementation periods
reflect the ambitious objectives and the complexity of underlying issues. In fact, in some
of the shorter projects reported that the short time span was experienced as a challenge or
even weakness, as the goals could not fully be addressed during the life-time of the
initiative (see, for example, TASK).
Exhibit 6.2-1: Start and end date* of the analysed policy initiatives
2000
2002
2004
2006
2008
2010
VERSO
ICT-SMEs 2010
ALFA
PROZEUS
TASK
Digital Future
CITAX
DDTA
Digital NL
buildingSMART
Digital SME
eSLOG
B2B Networks
CANARIE
SCL Metrics
* Some initiatives are open-end or have not specified an end date. They may continue after 2010.
Funding
Just as for their duration, the scope of the policy initiatives differs widely in terms of their
funding from the public sector. There is no clear correlation, however, between the
duration and the average funding per year (see Exhibit 6.2-2).
Initiatives can be grouped in three categories: the majority of comparatively small
projects and programmes with a budget (public sector funding) of less than € 1 million
per year; a few medium-sized initiatives, where the public sector contributes € 1-5 million
per year; some large scale programmes involving public sector funding of more than € 5
million per year.
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Exhibit 6.2-2: Profile of the sectoral policy initiatives: funding per year vs. duration
15
Funding per year (K€)
VERSO
10
B2B Nets
DigNL
DDTA
DigSME
5
CANARIE
ICT-SMEs
CITAX
buildingS
TASK SC Metr.
0
0
PROZ.
ALFA
eSLOG
3
6
9
Duration (in years)
Notes: The size of the bubble is indicative for the total funding provided by the public sector over
the whole implementation period (but not strictly proportional)
The colour indicates the sectoral focus: orange = focus on a specific industry; blue = several sectors
addressed
6.3
Geographic distribution
Different backgrounds for policy design
Sectoral approaches to e-business policies are not equally used in the countries covered
by the study. While a number of relevant initiatives were found in some countries
(notably in Italy, but also in France, Germany and Korea), only few or even no such
initiatives were found in other countries. The distribution of policy initiatives across
different regions is as follows:
Exhibit 6.3-1: Geographic distribution of the policy initiatives identified
Countries
EU – former EU-15
Initiatives
identified
during Phase I
Selected for
Follow-up
(Phase 2)
Case studies
49
31
10
EU-12 (new Member States since 2004)
9
4
1
Europe – non-EU
2
2
1
North America (USA, Canada)
3
3
2
Asian countries
11
3
1
TOTAL
74
43
15
While it cannot be excluded that the study team and supporting correspondents in the
countries covered failed to identify existing initiatives (notably at the regional level), an
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even spread of sectoral policies across countries was not to be expected. A closer look at
the economic and policy background in the countries monitored36 indicates that a high or
low incidence of sectoral e-business policy approaches is strongly linked with the
following factors: the economic structure of a country, its political culture, and its
overall approach to information society policy design. To illustrate how the different
backgrounds are linked to the topic of this study, some examples are discussed in the
following section.
The Nordic approach to Information society policy
Only few sectoral e-business initiatives were found in the Nordic countries. At first sight,
this comes as a surprise, considering their advanced position in the usage of ICT.
However, this should not be mistaken as an indication of a general lack of ICT or ebusiness related programmes. The Nordic countries have long taken a proactive and
highly systemic approach to information society development, where specific actions or
programmes are typically embedded in larger scale policy frameworks. In Finland, for
example, a large number of technology programmes (including ICT programmes) have
been developed, many of which are run by Tekes (a national funding agency which the
Government implemented for managing technology and innovation programmes). Many
of these programmes focus on cooperation and networking, often involving research
organisations (universities), the private sector and specific stakeholders depending on the
topic. This systemic approach requires continuity in terms of policy planning and
implementation (longer-term frameworks, organisational structure for policy
implementation); it facilitates the exploitation of synergies between individual
programmes.
Few programmes, however, appear to have an explicit sectoral approach as defined for
this study. Examples were found in Finland ("VERSO" and "KITARA"), which focus on
linking R&D efforts to sector specific requirements.
e-Business in the "e-Japan Strategy"
A large framework programme is also important in Japan. Japan had launched in 2001
the "e-Japan Strategy" with the ambitious goal "to become the world's most advanced IT
(information technology) nation by 2005", which reflects similar ambitions and initiatives
in Europe. in 2003, the "e-Japan Strategy II" specified that policy would now focus on the
effective IT utilisation in seven leading areas: medical services, food, lifestyle, SME
financing, knowledge, employment and labour, and public service.
However, this generic sectoral approach to e-business is limited to the transactions
between the government and citizens in the national health care system (medical
services), protection of the food chain (food), lifeline and emergency services (lifestyle),
commercial transactions (SME financing), internationalisation of education and culture
content (knowledge), labour market mobility (employment and labour) and egovernment (public service). Beyond this scope, the e-Japan Strategy II clearly states the
government expects the private sector, especially SMEs, through free and fair
competition to be the driving force in creating a network society.
36
In countries where no relevant policy initiatives were identified, the study team (in cooperation
with correspondents from those countries) took a closer look at the general approach and
background to information society policy in the country, aiming at identifying the factors that
explain the lack of sectoral e-business policies.
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Furthermore, the relative absence of sectoral e-business policies in Japan is primarily due
to the legacy of past e-business initiatives and a policy debate on how to regulate and
promote e-business. The main legacy factor is EDI. In retrospect, the international success
and admiration Japanese companies received through the 1970s and 1980s locked them
into a closed EDI e-business format that would become their Achilles heel in the open
Internet e-business format emerging in the 1990s. The policy debate revolves around
whether economic policy or market forces should rectify this dual e-business situation.
The USA – a market-driven approach
In contrast to the large volume of e-transactions and activities in the private sector, the
study correspondent reported that there are hardly any sectoral e-business policies to be
found in the United States. The U.S. is probably different from many other countries in
terms of the role of government plays in e-business. The U.S. approach to e-business in
SMEs is very much market-driven, leaving this in the hands of the private sector and
academic institutions (whose research is often supported by the government). This can be
explained from the following perspectives:
Strategic factors related to high political level decisions: there is a strong common
belief in the U.S. that no public resources should be used to support private
enterprises, and especially support to a particular sector is viewed as
discriminative or unfair. Thus, sectoral approaches are not considered appropriate.
Factors related to the degree of e-business maturity in the country: The U.S. has
long passed the initial stage in which broad scope initiatives are necessary to raise
awareness. The limited e-business initiatives tend to focus on specific areas of
applications (e.g. e-signature, e-invoicing, and Internet tax) rather than on
industrial sectors.
Factors related to the specific industry structure of the country: the sectoral
approach is more adopted in non-public initiatives, e.g. initiatives initiated by
industry associations and universities.
The following legal initiatives, however, are related to e-business developments:
Internet Tax Nondiscrimination Act: The Internet Tax Nondiscrimination Act,
Pub.L. 108-435, is the current U.S. federal law that bans Internet taxes in the United
States. Signed into law on December 3, 2004, by President George W. Bush, it
extended until 2007 the then-current moratorium on new and discriminatory taxes
on the Internet in an effort to promote and preserve the commercial, educational,
and informational potential of the Internet. This law bars federal, state and local
governments from taxing Internet access and from imposing discriminatory
Internet-only taxes such as bit taxes, bandwidth taxes, and email taxes. The law
also bars multiple taxes on electronic commerce. This policy is relevant to ebusiness in the sense that tax is an important part of online transactions and
business processes.
E-Signatures Act (Electronic Signatures in Global and National Commerce Act):
The U.S. Congress enacted the E-Signature Act to facilitate the use of electronic
records and signatures in interstate and foreign commerce by ensuring the validity
and legal effect of contracts entered into electronically.
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India: focus on ICT sector itself
Growth of ICT has been very rapid in India since the early 1990s when the Indian
economy was significantly liberalised. India's emergence as a powerful global player in
the ICT services market has further boosted the view that the ICT industry and economic
development go hand in hand. However, policy measures have largely been limited to
promoting the ICT (services) sector itself, notably the export of ICT services. In contrast,
the adoption of ICT among user industries has not been actively promoted by policy
initiatives yet.
Another aspect in this context is that e-commerce is perceived to be a business practice;
therefore its promotion is not considered to be a part of government policy initiatives.
This viewpoint was reported for several countries.37 In fact, it is felt that as capital costs
go up and companies are forced to operate in a situation of tight margins, this factor will
be a key driver for many SMEs to adopt e-business practices. Up to now, most SMEs,
despite their large number, continue to be constrained in terms of lack of finance, poor
access to technological and marketing inputs and low productivity. This would, in fact,
call for support actions to accelerate the catching-up process.
6.4
Sectors addressed
The roughly 45 policy initiatives described in the first study phase can be broken down
into three main groups (see also Exhibit 6.4-1).
First, there are policies which address several or even a broad range of sectors. In
these initiatives, the sector-specific approach may not be obvious at first sight, as it
is more on the level of individual projects (within the policy programme) where
sectoral aspects become important.
A second group of initiatives focuses on specific manufacturing industries; in
particular, initiatives aiming at cooperation and innovation in the textile and
automotive industries were identified.
Other sectors: finally, there are several initiatives that focus on sectors other than
manufacturing, notably on construction and tourism.
37
A similar argument was made by this study's correspondent for the USA. The Swedish
correspondent noted that in Sweden e-business was regarded as "business as usual", which
would not need or justify anymore specific support programmes. Resources are now
concentrated to other public sector activities, such as e-health.
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Exhibit 6.4-1: Sectors addressed by the policy initiatives identified
Name of the policy
Various sectors
(miscellanea or
non specified)
Various
manufacturing
sectors
Automotive
Textile
Other
manufacturing
sectors
Construction
Tourism, retail
and other
services
•
Programme for fostering the Information Society (Bulgaria)
•
CANARIE (Canada)
•
eCommerce Special Implementation Initiative (China)
•
VAMOS (Finland)
•
ICT-SMEs 2010 (France)
•
Psifiako mellon - Digital Future (Greece)
•
Digital Netherlands - Groundbreaking with ICT (Netherlands)
•
Nederland Breedbandland programmes (Netherlands)
•
Innovate with ICT Programme (Netherlands)
•
e-SLOG (Slovenia)
•
Sector based B2B networks (Korea)
•
Avanza Pyme (Spain)
•
The Digital SME programme (Portugal)
•
National ICT Strategy – Objective 6: Growing eBusiness in Malta: Kick-start (Malta)
•
Cluster Initiative Upper Austria (Austria)
•
Collaborative Community Trading Platform - Introducing the paperless supply
chain (Canada)
•
Supply chain logistics project (Canada)
•
e-fyn Strategy 2004 - 2008 - promoting IT take up in SMEs (Denmark)
•
KITARA (Finland)
•
PROZEUS (Germany)
•
Strategic Enterprise Management (SEM) Model pilot project (Korea)
•
QI-PME Programme: Innovation for SMEs (Portugal)
•
ALFA (France)
•
BAIKA (Germany)
•
NRW Auto (Germany)
•
ICT to support competitive advantage of automotive components (Italy)
•
DDTA – Digitalisation of Districts in the Textile and Clothing Sector (Italy)
•
i-CAST (Integration of ICT in the value chain (Italy)
•
ICT driven innovation (Italy)
•
Textile-Business (Italy)
•
SEAMLESS (Slovenia)
•
Digitalisation of agro-food supply chain (Italy)
•
Digital innovation and human resources development in the district of fitted
furniture in the province of Matera (Italy)
•
Pole for post-genomic research and personalised medicine in the area of Cagliari
and Pula (Italy)
•
GEBWG-Global e-Business Working Group (UK)
•
CITAX (Ireland)
•
buildingSMART (Norway)
•
TASK - Software Supply Chain Initiative (Germany)
•
VERSO - Vertical Software Solutions (Finland)
•
Digitally integrated management of tourism and environmental resources in the
Regione Abruzzo (Italy)
•
Improving the competitiveness of the retail sector in Galicia (Spain)
Policy initiatives in bold are featured as case studies in this report.
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Programmes covering several sectors
Many of the initiatives that address several or a broad range of sectors focus on
facilitating data exchanges not only within but also across sectors (e.g. "ICT-SMEs 2010"
in France). Others aim at fostering SMEs' competitiveness in general (e.g. "Digital SME"
in Portugal). In some cases – for example "Digital Netherlands" and "Vamos" (Finland) –
a policy addresses some sectors, but not in the sense that they are really sector-tailored; it
is more an operational choice. In other cases, the focus is on technological solutions or
applications – for instance in the Dutch Broadband initiative. These policies target sectors
that are morel likely to need or to benefit from the proposed solutions, without really
being sector-specific in their approach.
Focus on manufacturing
Some initiatives focus on manufacturing in general, addressing issues that are common to
manufacturing firms but are not necessarily industry-specific. Examples are logistics (as
in the case of the "Collaborative Community Trading Platform" in Canada or "Strategic
Enterprise Management" in Korea).
About half of the initiatives identified address a specific industry. The sample comprises
a variety of sectors; the choice is normally related to the industrial relevance in the
respective country or region. For instance, several of the regional policy initiatives
identified in Germany and France address the automotive supply industry. In Italy,
several initiatives have been found in the textile sector, others are in the food and
furniture industry.
Other sectors addressed
Several initiatives have been launched in the construction industry, typically aiming at
improving data exchanges in a project-based business environment, for example through
agreement on standards among the stakeholders involved in construction projects.
Surprisingly few initiatives were found in the tourism industry; however, this sector is
already quite advanced in using ICT and e-business, at least as far as the marketing of
destinations and their links with travel agencies and tour operators is concerned.
Initiatives to promote the further digital integration of the whole tourism supply chain
(e.g. the new trend of "destination management") are typically industry-led.
Few initiatives were identified in the "creative industries" – i.e. the ICT and media
industries – themselves. A notable example featured in this report is the "TASK"
initiative, which aimed at piloting software supply chains in a regional software cluster in
Germany. Another interesting examples of innovative sectors addressed was
bioinformatics.
All in all, however, it appears that the most traditional sectors are more represented than
the innovative ones. The relative importance of these industries in the regional economies
explain and justify the large share of resources allocated. Furthermore, it reflects that
many SMEs are active in most of these sectors; many of the initiatives focus on
strengthening the competitiveness of SMEs from these sectors in the region.
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6.5
Activities and approaches
A key objective of most policy initiatives identified is to facilitate and promote e-business
adoption in SMEs. The underlying rational is that e-business know-how will be
important for many SMEs, as otherwise they risk to be eliminated from the value
networks in which they operate. It is expected that business processes in these networks
will increasingly be conducted digitally. Companies that cannot cope with the respective
technical requirements can no longer connect to their customers, suppliers and business
partners.
While all initiatives explicitly or implicitly focus on this overall objective, they differ in
their specific goals and the approaches they take to address them. Basically, activities
conducted within the sectoral initiatives identified can be grouped into three main
categories:
Activities focusing on establishing or enhancing B2B networks;
Support activities for individual companies, typically by means of grants;
Activities to enable e-business by improving framework conditions, for examples
research projects to develop ICT solutions, or initiatives to develop standards
Activities focusing on establishing B2B networks
The most 'sophisticated' initiatives aim at facilitating data exchanges between companies
in a sectoral value chain or even in cross-sectoral exchanges, by promoting agreement
among stakeholders regarding data exchange formats and processes. This way, initiatives
aim at establishing or enhancing sectoral networks, often in combination with the set-up
of online trading portals, standardisation initiatives and the support of SMEs in adopting
e-solutions for connecting to large companies. Policy often acts as a neutral coordinator
or moderator. Such initiatives usually aim at the actual use of e-business technologies
rather than on developing those technologies (in contrast to RTD programmes). Examples
of this type are:
the CANARIE e-Business Programme in Canada
the ICT-SMEs 2010 Action Plan in France
the sectoral B2B network initiative in Korea
the eSLOG initiative in Slovenia
various sectoral initiatives in Italy
Support activities for individual companies
Many initiatives focus on providing support to individual enterprises, rather than aiming
to coordinate large-scale projects involving many companies. This approach can be
regarded as a bottom-up strategy, assuming that the supported SME projects will lead to
imitation among peers and thus trigger a snowball-effect. The communication of these
specific projects conducted with individual enterprises is therefore very important.
Support measures typically involve grants (co-funding) for SMEs for implementing
specific ICT solutions. Examples presented in this report are
PROZEUS (Germany)
The Digital SME initiative (Portugal)
Digital Future (Greece)
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Activities to enable e-business by improving framework conditions
Several initiatives address ICT-related issues which do not constitute "e-business" by
themselves, but aim at improving the framework conditions for practising e-business.
Typical examples are initiatives to improve the ICT infrastructure and to develop ICT
skills in the company. A special case in this category are RTD projects which aim at
developing innovative e-business solutions, often adapted to the needs of SMEs. These
initiatives can be quite advanced in terms of the complexity of topics and issues
addressed. Examples among the sample of policies assessed are:
The KITARA and VERSO research projects in Finland
Some initiatives focus on the developing a framework for the wide deployment of
specific applications or processes, which will then enable and pave the way for further
applications.
The eSLOG initiative in Slovenia has established a framework for e-invoicing
While some of the initiatives fall mostly within one of these categories, others combine
activities from several categories. Examples of such "blended" initiatives are:
the BIT Programme in Norway, which supports the development of IT-solutions
and conducts concrete implementation projects with companies
the Digital Netherlands programme, with a wide range of instruments used
A portfolio of policy approaches
Summarising the observations in this and the previous section, Exhibit 6.5-1 suggests a
portfolio of different e-business policy approaches. Initiatives can be positioned depending on their sectoral focus (high vs. low) and their activities (the chosen approach, i.e.
whether they concentrate on supporting single firm projects or supply chain initiatives).
Exhibit 6.5-1; Five types of sectoral policy initiatives – by sectoral focus and approach
3
Sectoral focus
highly
relevant
Type 1
2
Type 3
1
Type 2
Type 5
side
aspect
Type 4
0
0
Single firm
support
1
Mixed
approach
2
Networking
projects
3
Firm focus ---> value chain orientation
Source: empirica / Databank / IDATE (2007)
In Type 1 policy initiatives, a sectoral approach is essential for the design; activities are
geared towards strengthening sectoral value chains by achieving agreement among
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stakeholders on specific issues. Type 1 was the 'archetype' and model that led to this
study, as it triggered interest among the eBSN community. Therefore, many of the
initiatives featured in this report are examples of this type, notably the French initiatives
(ICT-SMEs 2010, ALFA), the buildingSMART and CITAX initiatives with their focus on
exchanges in the construction industry, DDTA (addressing the textile industry in Italy)
and TASK with its focus on software supply chains in Germany. The CANARIE and B2B
Networks programmes also fall in this category.
In Type 2 initiatives, sectoral characteristics also play a role in the design of the
programme, but to a lesser extent than for Type 1. Activities do not focus on establishing
networking projects, but include relevant elements that go beyond implementing grant
schemes for individual enterprises. For instance, they may support "twinning" projects
which involve a manufacturer and its retail business partner, or they address framework
conditions such as the deployment of e-standards. The example presented in this report is
the PROZEUS initiative.
In Type 3 initiatives, sectoral characteristics are relevant as well, but the activities then
focus more on the individual firm rather than on value chains and networks as whole. An
examples is the Digital SME initiative in Portugal which first developed sectoral
networks (RIATs) that supported companies in the respective industry, followed by a
grant scheme for specific firm projects (SIED).
Type 4 initiatives are quite different from Type 3 with regard to both criteria. Sectors are
only peripherally relevant; instead, they focus on specific or general issues identified as
action points to enable electronic data exchange between companies, for instance
standards for specific business process. An example is the eSLOG initiative in Slovenia
which focuses on the eInvoicing framework as a means to promote e-business in general.
Type 5 initiatives have a more traditional approach, as they typically focus on providing
ICT-related support to individual companies and to raise awareness, using a broad range
of instruments and channels. Sectoral aspects may play a role in parts of the activities, for
instance when addressing companies or organising information events and material. The
Digital Netherlands and the Digital Future programme are examples presented in this
study.
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Annex: The eBSN –
the European e-Business Support Network
The European e-Business Support Network for SMEs (eBSN) was established in 2003 by
the European Commission, in response to high-level political focus on the important role
of ICT in boosting the competitiveness of the overall EU economy. Particular attention
has been paid to the role of SMEs, as well as to improving the effectiveness of public SME
policies in fostering competitiveness by promoting the productive use of ICT.
Learning from each other – exchanging best practices
The eBSN builds upon the results of the "Go Digital" initiative (2001-2003), an umbrella
policy covering many activities to support SMEs in using ICT for doing business. In 2002,
the benchmarking study on "national and regional policies in support of e-business for
SMEs" found many successful policy initiatives in Europe, but pointed out that their
efficiency could be further enhanced by learning from each other and sharing best
practice and information material. Similarly, in its conclusions on the impact of the eeconomy on the competitiveness of European enterprises of 6 June 2002, the Industry
Council invited the EU Member States and the Commission to "intensify dialogue,
exchange regularly experience, identify specific goals for e-business policies and to share
best practices".
Objectives of the eBSN
The eBSN was founded to address this goal, by improving co-operation and using
synergies within the European e-business policy community. Activities of the eBSN focus
on networking and the exchange of good policy practice. More specifically, the objectives
are:
To bring together decision makers in the fields of e-business, with a view to
sharing information and discussing strategic policy orientation;
To validate existing e-business policies and to agree on targets for future actions;
To provide a "one-stop shop" for information about regional, national and
European initiatives and funding possibilities for SMEs;
To organise special meetings of governmental e-business experts as a platform for
sharing practical experience and identifying future challenges.
The eBSN is open to all relevant policy initiatives in support of e-business for SMEs in the
Member States, the Candidate Countries and the EEA EFTA States which are willing to
share experience and information, as well as to e-business experts and representatives of
the business community. A standing invitation for expression of interest to join the eBSN
is available.
A success story
The eBSN has become a success story. It has constantly grown and is, in 2007, a network
of about 175 members, who are involved in similar policy initiatives and regularly meet
to exchange their experiences. National initiatives account for about 55% of the members,
regional initiatives for about 45%. A goal is to increase participation in the new Member
States and Candidate Countries.
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With its activities, the eBSN is an important pillar of the ICT and e-business related
policies of DG Enterprise and Industry, in combination with other policy pillars (for
example the European e-Skills Forum, work on standardisation and interoperability,
policies in support of a favourable legal environment for e-business, and the Sectoral eBusiness Watch).
The eBSN structure
The eBSN Steering Group consists of representatives of the European Commission, the
participating countries, academics and the business community. The Steering Group
decides on the objectives and modus operandi of the network and the practical
arrangements to foster cooperation, and specifies the overall policy priorities for action.
The Steering Group meets about twice a year, on invitation of the European Commission.
The eBSN web portal (http://ec.europa.eu/enterprise/e-bsn/index_en.html) links all
identified stakeholders and initiatives, and offers further information, statistical data and
best practice examples.
As its main forum for exchange, the eBSN organises up to four thematic workshops per
year. These bring together interested stakeholders to deepen the dialogue on specific ebusiness-related issues. Recently, workshops have focused on ICT solutions for SMEs, the
deployment of e-standards, and sectoral policy approaches. Workshops provide an
opportunity for sharing learning points from good policy practice. Workshops are hosted
and organised by eBSN members, often taking place in the country that holds the EU
Presidency. In total, 15 eBSN workshops have been held in 2003-2007.
Current focus of work
Since 2005/06, eBSN has focused on the following thematic priorities:
Sector-specific approaches: identify which sectors are most promising for ebusiness support measures, and whether sectoral policy initiatives are more
efficient than others;
e-Business for micro-enterprises: discuss policies in this field and what should be
the way forward;
Improving e-business solution for SMEs: review the specific needs of SMEs and
identify good policy practices in helping SMEs to find appropriate solutions;
e-Invoicing and e-procurement: identify public policies and public-private
partnerships that aim at further promoting the efficient usage of e-procurement
and e-invoicing in SMEs.
Contact
European Commission, Enterprise and Industry Directorate General
eBSN Coordinator: Ms Iordana Eleftheriadou
Web: http://ec.europa.eu/enterprise/e-bsn/index_en.html
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Bid Sectoral e-Business Watch

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