EN Official Journal of the European Union C 108/23

Opinion of the European Economic and Social Committee on the ‘communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Adapting e-Business policies in a changing environment: The lessons of the Go Digital initiative and the challenges ahead’

(COM(2003) 148 final)

(2004/C 108/02)

On 27 March 2003, the Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 16 December 2003. The rapporteur was Mr McDonogh.

At its 405th plenary session (meeting of 28 January 2004), the European Economic and Social Committee adopted the following opinion by 106 votes in favour, three votes against and one abstention.

1. Introduction and executive summary

1.1 The Committee is supportive of the ‘Adapting e-business Policies in a changing environment: The lessons of the Go Digital initiative and the challenges ahead’ Communication from the Commission, whilst drawing attention to some policy areas that deserve more emphasis.

1.2 It believes that the European Commission has produced an excellent proposal document on the need for Member States and regions to re-orient e-business policies from simply promoting e-commerce to helping Small and Medium Sized Enterprises (SMEs) take full advantage of Information and Communication Technology (ICT) to re-engineer automate and streamline business processes.

1.3 The Committee welcomes the highly practical approach proposed in the Communication to engender this policy support for SMEs – with the inclusion of a framework for SME-specific e-business policies, and the setting-up of the European E-business Support Network for SMEs (EEBSN) to provide focused collaboration between e-business policy makers at national and regional levels across the EU.

1.4 It also welcomes the insistence in the Communication on the need for policy makers to set quantitative as well as qualitative targets, using the SMART [specific, measurable, achievable, realistic and timely] principle. Measurement of progress against realistic and appropriate goals is a key requirement for effective management of policy initiatives and the evaluation of their practical impact.

1.5 The Committee believes that there is still significant progress to be made with providing a favourable e-business environment in many parts of the European Union and thinks that the Commission's framework for SME-specific e-business policies should reflect these fundamental requirements. The EESC calls on the Commission to coordinate the efforts of national governments in implementing open and transparent policies in the area of public sector contracts so as to ensure that SMEs can participate on equal terms.

1.6 The Committee also thinks that a fourth main policy area/challenge could be included – to improve the environment for e-business, for instance through ensuring that commercially essential Internet access is available, through on-going targeted awareness programmes to build trust and confidence in e-business process among SMEs, and through recommendations and technological initiatives at EU level to reduce the harmful effects of Spam on e-business.

2. General remarks

2.1 The Committee believes that the European Commission has produced an excellent proposal document on the need for Member States and regions to re-orient e-business policies from simply promoting e-commerce to helping Small and Medium Sized Enterprises (SMEs) take full advantage of Information and Communication Technology (ICT) to re-engineer automate and streamline business processes.

2.2 At the same time, the proposals will favour the consumer. A fair, reliable market, fair competition and the right use of ICT, together will increase confidence in e-commerce, which is so necessary in the development of this market.

2.3 It is recognised that SMEs, which account for more than 99 % of all businesses in Europe, play a central role in stimulating innovation, growth and employment. Furthermore, efficient use of ICT increases productivity and improves competitiveness. Thus, the realistic approach advocated by the Commission strongly encourages active support for the Lisbon strategy to make the EU the world's most competitive and dynamic knowledge-based economy by 2010. The highly practical approach proposed in the Communication includes a framework for SME-specific e-business policies and the setting-up of the European E-business Support Network for SMEs (EEBSN) to provide focused collaboration between e-business policy makers at national and regional levels across the EU.

2.4 The development of this dynamic, knowledge-based economy will impose significant changes on the business environment facing SMEs – the business processes, business relationships, technology, knowledge and skills required to succeed in this new economy will be different to what small firms have been used to, and they will have to embrace substantial transformation.

2.4.1 To survive and thrive, SMEs, particularly the micro-firms (with less than 10 employees), need an integrated and well organised support mechanism at local, national and European level and within their specific sector, to provide support for each other as they go through this transformation and acquire the knowledge they need to succeed.

2.5 Unless SMEs are assisted in this transformation to a knowledge economy, by tangible support from policy makers, there will be negative effects on business, employment levels and society across the Union.

2.5.1 The Committee welcomes the highly practical approach proposed in the Communication to engender this policy support for SMEs – with the inclusion of a framework for SME-specific e-business policies, and the setting-up of the European E-business Support Network for SMEs (EEBSN) to provide focused collaboration between e-business policy makers at national and regional levels across the EU.

2.6 By calling for Member States to define sector-specific and region-specific e-business policy objectives and by encouraging them to identify appropriate quantitative and qualitative targets, the Commission is forcefully campaigning for specific, measurable, achievable, realistic and timely (SMART) action that will significantly accelerate the efficient adoption of ICT and e-business processes by SMEs throughout the Union.

2.6.1 The Commission is backing its initiative by providing a forum to discuss, support and co-ordinate policy development across the EU (the EEBSN – European E-Business Support Network) and by suggesting a framework for such policies and targets.

2.6.2 In addition to identifying most of the critical policy issues, the Commission has correctly acknowledged the importance of channelling many SME e-business policy initiatives through trusted intermediaries and multipliers. This campaign to help SMEs deserves the Committee's full support.

2.7 The Committee welcomes the insistence in the Communication on the need for policy makers to set quantitative as well as qualitative targets, using the SMART principle. Measurement of progress against realistic and appropriate goals is a key requirement for effective management of policy initiatives and the evaluation of their practical impact.

2.8 SMEs have taken the first steps towards adoption of e-business with computer usage and access to the Internet almost ubiquitous. However, beyond this basic level of ICT the digital divide opens-up: there are substantial differences in the degrees of digital integration between the larger SMEs and the smaller firms (especially the micro-firms with less than 10 employees), and among SMEs there are also significant differences on a regional and sectoral basis. In particular, the early adopters of ICT have made significant progress with e-business, while the late adopters need significant assistance to catch-up.

2.8.1 Hence the requirement for specific policy initiatives to address the particular needs of SMEs and of specific regions and sectors, especially the late adopters of ICT. Unless the digital divide is bridged, the competitive advantage of the large firms and of the firms with a higher-level of ICT integration over SMEs will grow, with the direct risk that SMEs are squeezed out of the market, creating explosive economic and social problems. The Committee is pleased to see that the Commission has noted these differences and has advocated that special attention be given to closing the digital divide.

2.9 When considering e-business and the greater use of ICT, issues concerning trust and security are of particular concern to SMEs, particularly micro-firms. The Committee wants to stress in these general remarks that policy makers must take these concerns into account when developing policies.

2.10 The Communication states that the role of public authorities in promoting e-business is mainly to ensure a favourable e-business environment for enterprises which would lower market access barriers and lower the costs and risks of ICT investment, thus facilitating access to new international markets.

2.10.1 Such an e-business friendly environment would include a stable legal and regulatory framework, full liberalisation of the telecommunications market with concomitant reduction in costs and increased availability of services and service quality, and the widespread introduction of e-government services. The EESC calls on the Commission to continue its efforts to establish an acceptable regulatory framework at global level which will prevent the creation of national barriers and will ensure the necessary security for electronic transactions.

2.10.2 The document goes-on to state that at both European and national levels, many of the necessary steps have already been taken to provide this favourable e-business environment. With these ‘horizontal’ policy elements being taken care of under the eEurope framework and under the aegis of other initiatives the purpose of this Communication is to advocate specific SME policies aiming to promote the use of ICT and e-business processes by SMEs.

2.10.3 However, the Committee believes that there is still significant progress to be made with providing a favourable e-business environment in many parts of the European Union and thinks that the Commission's framework for SME-specific e-business policies should reflect these fundamental requirements. The EESC calls on the Commission to coordinate the efforts of national governments in implementing open and transparent policies in the area of public sector contracts so as to ensure that SMEs can participate on equal terms.

2.11 In the Commission's policy framework the overall objective is to stimulate and support SMEs in the adoption of e-business. The framework as proposed then includes three main policy areas or challenges under which specific policies are grouped. The EESC agrees with the Commission's working framework and broad lines of policy and will be monitoring their implementation with particular interest.

2.11.1 The development of this framework and the specific policies is a matter for the Commission and the policy makers. However, the Committee fully endorses the detailed list of activities contained in the Communication and is impressed by the list of possible targets proposed. In this opinion the Committee also highlights some additional areas of policy that it believes should be included in the framework.

2.12 As mentioned in 2.10.3 above, a fourth main policy area/challenge could be included – to improve the environment for e-business. The Committee might also quibble with the combining into a single policy area of both the development of managerial understanding and the acquisition of e-business skills: perhaps greater clarity would be achieved by separating these two distinct challenges. The following section of the opinion includes comments on these issues and on other areas of the policy recommendations which the Committee believes deserves a special mention. In giving these comments the Committee is in line with its earlier opinions in this field (1).

3. Specific policy issues

3.1 E-business environment

3.1.1 Pressure should be maintained on Member States to ensure that commercially essential Internet access (whether that is deemed to be always-on broadband access, or simply flat-rate high-speed access) is available to a high percentage of SMEs, particularly at regional level, and that the cost of access is in line with competitive EU norms.

3.1.2 All the technology and regulations are in place to provide a secure environment for e-business. However, there is a need for on-going targeted awareness programmes to build trust and confidence in e-business process among SMEs.

3.1.3 Spam or unsolicited commercial e-mail (UCE) can impose great nuisance and cost on recipients, particularly on the scarce resources of SMEs trying to conduct business on the Internet. It also undermines their confidence in the security of the process. Recommendations and technological initiatives are needed at EU level to reduce the harmful effects of this menace on e-business adoption.

3.1.4 While the involvement in e-markets is to be encouraged, the particular problems surrounding reverse auctions need to be considered for policy attention at EU, national and regional levels. Through the reverse auction procurement process, large companies can put undue pressure on SMEs to drastically reduce their profit margin. In extreme cases the viability of the SME can be put in jeopardy. Bad experiences with reverse auctions can adversely affect SME sentiment towards e-business. The Commission should ensure that codes of good conduct are implemented across the EU.

3.1.5 As more SMEs take part in the digital economy, the registration and ownership of domain names becomes an issue. The Committee would urge the Commission to ensure policies are in place that prevent cyber-squatting (hoarding of dormant domain names by companies and individuals which prevents established firms from owning a domain name that fits their registered business name).

3.1.6 Governments should be encouraged to implement e-government services as widely as possible and to implement their public e-procurement processes in a manner that is sensitive to the limited competencies of some SMEs.

3.1.6.1 Such G2B (government-to-business) and B2G (business-to-government) transactions encourage SMEs to make wider use of ICT and e-business. They also demonstrate the effectiveness and usefulness of e-business to SMEs, familiarising them with the technology and the benefits.

3.1.6.2 However, in some countries, government procurement of goods and services is greater than 50 % of all business purchases in the State. Thus, government implementation of e-procurement systems will have a major impact on the adoption of e-business processes by SMEs, and on the ability of all SMEs to share, on an equitable basis, in the economy for government consumption of products and services. It is critical that government e-procurement systems are implemented in a way that is sensitive to the special needs of SMEs. Unless governments make special efforts in this regard, many SMEs will suffer.

3.1.7 To facilitate greater SME participation in e-procurement processes, efforts should be made to reduce the complexity and cost of compliance with EU procurement rules.

3.1.8 Consideration might be given to the development of national or regional portal trading sites – similar to the Singaporean model – to make it easy and efficient for SMEs to participate in the new economy, and to maximise the general economic benefits accruing from the widespread implementation of e-commerce processes.

3.2 Managerial understanding

3.2.1 Businesses ultimately depend on their management and leadership to adopt significant new technology and to change business processes. This is especially true in the case of SMEs. However, most managers in SMEs have a very limited understanding of ICT and its potential benefits and the lack of understanding among SME managers is a major barrier to the adoption of ICT and e-business.

3.2.1.1 The Committee supports the Commission's proposal that policy initiatives should target the improvement of knowledge transfer to SMEs through SME support networks and workshops.

3.2.1.2 It also wholeheartedly agrees with the Commission on the need to develop case studies examples that can demonstrate the benefits and ease of implementation of e-business processes to SMEs. The case studies need to be specific and local enough to the target SMEs to be relevant. It would also be useful to include financial benefit analysis in the case studies. Ultimately, it is the long-term financial benefits of using ICT to implement e-business processes that will convince most managers to re-engineer their businesses.

3.2.2 Besides education in ICT and e-business, which is a long-term policy requirement, SME managers need advice and guidance on the e-business possibilities open to them today. This advice is best got through informed advisors in their support networks, in particular through business representative organisations and industrial representative organisations. Special efforts should be made to ensure the number and quality of such advisors is sufficient for the task. Also, appropriate training and consultative initiatives need to be undertaken to reach SME managers and give them the level of understanding they need.

3.2.3 Fiscal incentives, linked to specific measurable initiatives, should be considered to make it easier for managers to take e-business initiatives in their firms. The tax relief measures could provide support at set-up and for on-going operating expenses, thus helping to make the financial case for greater use of ICT within the SME.

3.2.3.1 The Committee agrees that special care should be taken to harmonise such incentives on an equitable basis across the Union so that fair competition is maintained. Also, it is vital that tax incentives be rigorously monitored to ensure that they are used only for their intended purpose.

3.2.4 Coping with the substantial transformation required of SMEs to succeed in the rapidly emerging new economy will require accelerated and continuous learning. All consideration of policy initiatives to promote learning among SMEs – managerial understanding, technology skills and strategic options – should take cognisance of the need to promote social networks and continuous dialogue among SMEs.

3.3 Skills for e-business

3.3.1 SMEs are at a significant disadvantage when it comes to the issue of ICT and e-business skills: — ICT and e-business professionals are scarce. Much of the available expertise in this field has been attracted to the large firms, who can pay higher salaries for these rare skills. — Economies of scale also work against the SME, who must employ a much higher ratio of IT staff to total employees than the larger firms. — Also, in remote areas (where many SMEs are located) knowledge transfer of new technologies and skills is difficult.

3.3.1.1 So ICT and e-business skills are difficult to secure and very expensive for SMEs. This is a major barrier to greater adoption of e-business processes by SMEs.

3.3.1.2 The knowledge transfer initiatives mentioned above will be useful in helping managers to come-to-terms with some of the strategic decisions to be made. However, there will always be a need for specialised expert advice and support on the implementation and on-going maintenance and management of significant e-business projects.

3.3.1.3 SMEs can get some of this expertise from their support network. Tax incentives and grants can also help with the hiring of expertise and the training of employees - however, any fiscal incentives must be rigorously monitored to ensure that they are used only for the purposes intended. Networking and sharing of expertise among e-business competence centres could be encouraged as well.

3.3.2 As the need for ICT consultants increases, it would be desirable to have controls on the quality of practicing consultants to protect SMEs from unscrupulous and incompetent ICT professionals. It would be useful to have a quality certification process and a code of conduct for ICT and e-business consultants working with SMEs on approved schemes. Policy supports (e.g. fiscal aid) could be limited to the use by SMEs of qualified consultants.

3.3.3 Policy makers have got to come to terms with the need for more widespread and extensive education of the workforce to cope with demands of a 21st Century knowledge economy, heavily dependent on ICT and e-business processes. Existing programmes need to be extended to reach more people in the economy and expanded to include the depth and breadth of education required. This education needs to begin in schools and continue through life-long-learning initiatives, supported by appropriate social networks. The Committee agrees with the Commission's enthusiasm for using e-learning techniques and applications within SMEs as a complement to traditional ways of learning for their staff.

3.3.4 The social dimension to e-business adoption must be considered by policy makers. Society at large has got to be engaged and stimulated to support e-business adoption and to see the benefits of e-business for all.

3.4 Availability of e-business solutions

3.4.1 SMEs need access to affordable and relevant e-business solutions. Despite the fact that SMEs account for more than 99 % of businesses, most e-business applications such as Customer Relationship Management (CRM) systems are tailored for the needs of large businesses. SMEs need cost effective solutions that can be implemented quickly and easily and are tailored for their particular needs. Such solutions are scarce today.

3.4.1.1 Policy initiatives are required to facilitate the development of reliable and appropriate options with existing ICTs and SME-friendly e-business solutions which go far enough towards meeting their specific needs (1). The Committee approves of the suggestion in the Communication that SMEs could team-up with large ICT firms to create solutions that meet the actual needs of the SME sector, but awaits the concrete results of these proposals, which will be judged in the course of time (2). The Committee welcomes the importance attached to the participation of SMEs in the 6th RTD Framework Programme and the support under that programme for the development of open source software and interoperable e-business solutions, which are useful and technically complete enough to be worthwhile and serious solutions for SMEs (3).

3.4.1.2 Despite the announcements and existing programming, there has been no noticeable direct involvement of SMEs in programmes in the course of the 6th RTD Framework Programme to date because the vast majority of SMEs do not have the necessary infrastructure, know-how, technical expertise and fully trained staff to have any credible participation or to reap any real benefit from them.

3.4.2 A simplification of the European-wide patenting process would facilitate the commercialisation of new applications and technology for SMEs. At present the onerous and expensive patenting procedures create a barrier to small-scale and low-cost innovation.

3.4.3 The Commission's idea about promoting e-business interoperability through national test-beds is stimulating. It is an idea that deserves promotion. It would be a valuable asset to SMEs if the idea was implemented as outlined in the Commission's vision. However, the Committee is not sure that the private sector, as proposed by the Commission, would be sufficiently motivated to implement the plan on a wide-enough basis.

3.4.4 To provide a stimulus to innovation and entrepreneurship in the area of SME participation in ICT application development, perhaps policy makers might consider mandating that a certain percentage of government spending on ICT should be placed with SME firms.

3.5 E-marketplaces and e-business networks

3.5.1 E-marketplaces are growing in relevance for SMEs in certain sectors, but many SMEs in those sectors don't properly understand how those Business-to-Business (B2B) e-marketplaces operate nor do they have the ICT infrastructure to take advantage of the opportunity. Policy initiatives are needed to educate the relevant SMEs and to help them overcome the technical, economic and legal barriers to entry. The EESC also calls on the owners and managers of SMEs to be aware of the extremely complex conditions which are taking shape on a global level with the abolition of trade barriers and the use of new technologies and to have the courage to undertake the necessary modernisation of their businesses so that they can face up to the new and particularly demanding conditions of international competition.

3.5.2 The Committee calls on the Commission to consider a quality certification process for e-marketplaces to identify sites that operate best-practice in running their operations.

3.5.3 The Committee calls on the Member States to pay particular attention to the special needs of SMEs when implementing their public e-procurement systems, and on the Commission to continue with its initiatives to ensure real coordination at European level.

3.5.4 Collaborative e-business networks offer many potential benefits to SMEs and the Committee fully supports policy initiatives that encourage them to develop. Besides the direct commercial benefits of combining the strengths of a number of SMEs to bid for contracts more complex or bigger than they could bid for on their own, such networks facilitate the transfer of knowledge and can help bridge the knowledge and skills gaps referred to previously. They can also collaborate to develop e-business applications that meet their particular needs. Policies, including financial support, should be considered to propagate such networks.

3.5.5 SMEs are concerned about privacy and Intellectual Property protection when they get involved in e-markets and collaborative networks. Any security and reassurances that the Commission and policy makers could provide in this regard would facilitate greater involvement.

3.6 Assessment of European efforts to bring SMEs into the digital age

3.6.1 The EESC calls on the Commission to review the three lines of action and progress on implementation at national and European level of the individual actions outlined in the Communication entitled ‘Helping SMEs to Go Digital’ and to draw the necessary conclusions regarding any delays.

Brussels, 28 January 2004. The President of the European Economic and Social Committee Roger BRIESCH

(1) eEurope 2002 – an information society for all, OJ C123, 25.4.2001

Innovation, OJ C260, 17.9.2001

Computer-related crime, OJ C311, 7.11.2001

eLearning Action Plan, C36, 8.2.2002

Go Digital, C80, 3.4.2002

MODINIS, C61, 14.3.2003

e-Learning Programme, C133, 6.6.2003

eEurope 2003 Final Report C220, 16.9.2003