Successful E-Commerce Implementation for SMEs


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Why do some firms flourish with the implementation of E-Commerce (EC) strategies while others flop? What are the critical factors that influence the successful adoption of EC? What external conditions are most conducive for a successful deployment? To find out, click our paper here.

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Successful E-Commerce Implementation for SMEs

  1. 1. E-Commerce What makes implementation a success in SMEs By Sandy Chong Creativity | Passion | Growth
  2. 2. Creativity | Passion | Growth Electronic Commerce (EC) has changed and is still changing the way business is conducted around the world. It is one of the most important mediums for facilitating sharing of business information within organisations and between business partners. Despite the economic downturn and the burst of the “dot-com” bubble, EC is expected to continue its significant growth. In the US alone, the second decade of EC would boost online sales from $172 billion in 2005 to $329 billion in 20101, while Asia Pacific’s B2B EC is forecasted to grow rapidly at a Compound Annual Growth Rate (CAGR) of 59 per cent2. In Australia, EC is estimated to be worth $11.3 billion dollars annually3. Notes: 1. Forrester Research (2005), US eCommerce Forecast: Online Retail Sales To Reach $329 Billion By 2010, Forrester Research, 14 September, available at:,7211,37 626,00.html (accessed September 2005). 2. IDC (2004), IDC Predicts Double Digit Growth of Asia/Pacific Internet Buyers from 2003 to 2008, IDC North Sydney, 6 August, available at: 1/4 43 (accessed September 2005). 3. Australian Government Information Management Office (2005), “E-Government: Australia’s approach”, keynote address by Special Minister of State Senator The Hon. Eric Abetz, Commonwealth of Australia at the Nikkei 5th Strategic Conference on e-Government, Tokyo, 28-29 July. E-commerce: Successful Implementation in SMEs 2
  3. 3. Creativity | Passion | Growth The benefits of utilizing EC include unsuccessful, there will be severe level of satisfaction with EC increased sales and profitability, repercussions to small businesses who implementation was more likely to be increased productivity, reduced possess limited resources. high when respondents were from a inventory-related costs, improved larger company. Larger firms have the service quality and increased A study was conducted on SMEs in added advantage of a more skilled competitiveness. More specifically Australia and Singapore to understand workforce on average, which though, small companies can benefit their experience with EC enhances the utilization of new disproportionately from the implementation. Factors that technologies and contributes to opportunities offered by IT and EC. contribute to the success of EC overall efficiency and efficacy. implementation are identified here. For example, the Internet makes firm Perceived Readiness size irrelevant; it allows smaller companies to extend their Factors influencing EC Amongst Singaporean SMEs, this was geographical reach and secure new adoption and found to be the most significant customers in ways formerly restricted factor contributing to overall to large firms. In Australia, SMEs implementation satisfaction of EC adoption. SMEs constitute 95 per cent of the total often lack financial and technological market while half of Singapore’s Fig. 1 shows the factors that resources, hence there are workforce is employed in SMEs. This is contribute to the overall satisfaction constraints on their implementation a testament to the importance of and success of EC implementation. efforts and this leads to some SMEs on the economy of emerging ineffectiveness and dissatisfaction markets. I. The internal environment with EC. It is therefore no wonder that EC is a Size of Firm On the other hand, firms with major policy issue for governments. adequate resources are more involved However, if EC implementations are For Singaporean SMEs, the perceived in the requirements and design phases Fig. 1: Factors influencing EC adoption and implementation Internal Environment Size of firm (+) Variety of Observability (+) Communication Perceived Readiness (+) Channels (+) Overall Satisfaction with EC Adoption Customer Pressure (-) Customer Pressure (-) Perceived Readiness (+) Perceived Readiness (+) External Environment E-commerce: Successful Implementation in SMEs 3 E-commerce: Successful Implementation in SMEs 3
  4. 4. Creativity | Passion | Growth of EC implementation. This to be less affected by their customers. encourages more realistic expectations and a more satisfying Supplier Pressure experience for the adopting firms. The level of satisfaction with EC Observability adoption was found to be positively related to the pressure This refers to the ability of firms to felt by the adopting companies from observe the benefits of EC (e.g. their suppliers. The correlation differs through the success of other in that the adopting firm is now much companies). When the benefits of EC less vulnerable because it controls the are more visible to adopting SMEs, company-supplier relationship. higher levels of confidence, optimism and satisfaction are expected in their Suppliers (who utilize EC) exert a implementation efforts. pressure on their clients (to adopt EC) only if those clients are important to Variety of Communication Channels their business. When clients, too, adopt EC, the volume of transactions In Australia, the use of a greater between the two will increase. Hence variety of communication channels to the more their business flourishes, the communicate EC information helps to more satisfied the adopting company encourage the firms’ trading partners is with their EC implementation. to adopt EC as well. This increases the awareness about EC, strengthens Needless to say, suppliers would have business links and improves overall to provide their customers with user confidence. Thus, SMEs should educational support and incentives so consider adopting multiple as to reap mutually beneficial communication channels to influence rewards. It is therefore important to employees and trading partners to note that supplier pressure should not adopt EC. be resisted by SMEs. Rather, it should be viewed as an opportunity to Within the company, on-the-job- improve its EC capability. training is the most popular communication channel used to Level of Governmental Support disseminate EC-related information within the company, as hands-on Although many firms are disappointed experience is more effective than with the level of governmental mass training. Outside the company support, firms that think otherwise though, it has been found that the tend to be satisfied with their EC most effective means of influencing experience. This is of course over and trading partners is to set an example. above the educational support This involves the use of electronic provided the private section. In other medium to communicate with their words, governmental support is partners. expected to be more advisory- oriented than anything else.! II. The external environment Customer Pressure The pressure felt by companies (from their customers) was found to be negatively related to their overall satisfaction of EC implementations, This article is an abridged version of a That is to say, if a firm often feels research paper submitted to the pressured by its customers, it will Journal of Enterprise Information tend to feel that its performance and Management, 21(5), 2008 – Success in systems are inadequate in satisfying electronic commerce implementation its customers. However, firms that – a cross-country study of small and adopt EC on their own initiative tend medium-sized enterprises. E-commerce: Successful Implementation in SMEs 4
  5. 5. About Us Verity Consulting is a boutique international marketing & communication consultancy specializing in corporate training, senior executive coaching and business advisory services. For more information about Verity’s global services and innovative business solutions, contact us at: +61 4 02211373 (Australia) +65 8337 7178 (Singapore) About the Author Dr. Sandy Chong Curtin Business School Curtin University of Technology Western Australia, Australia Principal consultant Verity Consulting Pty Ltd Copyright © 2010 Verity Consulting Pty Ltd. All rights reserved.