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)
Date: 2004-01-28
Institutions: European Economic and Social Committee
Subjects: Internet, aid to undertakings, electronic commerce, information technology, small and medium-sized enterprises

30.4.2004

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 Economic and Social
Committee and the Committee of the Regions - Adapting e-Business policies in a changing envir-
onment: The lessons of the Go Digital initiative and the challenges ahead’

the European Parliament,

(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 communi-
cation.

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.

environment in many parts of the European Union and thinks
that the Commission's framework for SME-specific e-business
these fundamental requirements. The
policies should reflect
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.

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

The Committee also thinks that a fourth main policy
1.6
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-busi-
ness process among SMEs, and through recommendations and
technological
to reduce the harmful
effects of Spam on e-business.

initiatives at EU level

The Committee welcomes the highly practical approach
1.3
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 require-
ment for effective management of policy initiatives and the
evaluation of their practical impact.

The Committee believes that

1.5
there is still significant
progress to be made with providing a favourable 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.

At

the same time,

the proposals will

2.2
the
consumer. A fair, reliable market, fair competition and the
right use of
increase confidence in e-
commerce, which is so necessary in the development of this
market.

together will

favour

ICT,

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Official Journal of the European Union

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the

realistic

2.3
It is recognised that SMEs, which account for more than
99 % of all businesses in Europe, play a central role in stimu-
lating innovation, growth and employment. Furthermore, effi-
cient use of ICT increases productivity and improves competi-
tiveness. Thus,
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 prac-
tical 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.

ment 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 impor-
tance of channelling many SME e-business policy initiatives
through trusted intermediaries and multipliers. This campaign
to help SMEs deserves the Committee's full support.

The development of

2.4
this dynamic, knowledge-based
economy will impose significant changes on the business envir-
onment facing SMEs – the business processes, business relation-
ships, 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 trans-
formation.

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

2.4.1
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 Euro-
pean 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.

The Committee welcomes

2.5.1
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 encoura-
ging 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 develop-

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.

The Communication states that

the role of public
2.10
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.

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Such an e-business

2.10.1
friendly environment would
include a stable legal and regulatory framework, full liberalisa-
tion of
the telecommunications market with concomitant
reduction in costs and increased availability of services and
service quality, and the widespread introduction of e-govern-
ment 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 transac-
tions.

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 require-
ments. 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.

The development of this framework and the specific
2.11.1
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
In this opinion the
the list of possible targets proposed.
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.
Committee is in line with its earlier opinions in this field (1).

In giving these comments the

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.

Spam or unsolicited commercial e-mail

(UCE) can
3.1.3
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 encour-
aged,
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.

As more SMEs take part in the digital economy, the
3.1.5
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).

(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

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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 sensi-
tive to the limited competencies of some SMEs.

Such G2B (government-to-business) and B2G (busi-
3.1.6.1
ness-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.

However,

3.1.6.2
in some countries, government procure-
ment 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 govern-
ment 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.

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

to reduce

efforts

strate 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
convince most
managers to re-engineer their businesses.

e-business processes

that will

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
organisations.
Special efforts should be made to ensure the number and
quality of such advisors is sufficient for the task. Also, appro-
priate training and consultative initiatives need to be under-
taken to reach SME managers and give them the level of under-
standing they need.

representative

industrial

and

3.2.3
Fiscal incentives, linked to specific measurable initia-
tives, 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.

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

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 Managerial understanding

Businesses ultimately depend on their management
3.2.1
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.

3.2.4
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 –
technology skills and strategic
managerial understanding,
options – should take cognisance of the need to promote social
networks and continuous dialogue among SMEs.

3.3 Skills for e-business

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

3.3.1
to the issue of ICT and e-business skills:

SMEs are at a significant disadvantage when it comes

3.2.1.2
It also wholeheartedly agrees with the Commission
on the need to develop case studies examples that can demon-

— 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.

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— 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.

engaged and stimulated to support e-business adoption and to
see the benefits of e-business for all.

— Also,

in remote areas (where many SMEs are located)
knowledge transfer of new technologies and skills is diffi-
cult.

3.4 Availability of e-business solutions

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 manage-
ment of significant e-business projects.

SMEs can get some of

3.3.1.3
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 compe-
tence centres could be encouraged as well.

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 solu-
tions that can be implemented quickly and easily and are
tailored for their particular needs. Such solutions are scarce
today.

the actual needs of

3.4.1.1
Policy initiatives are required to facilitate the devel-
opment of reliable and appropriate options with existing ICTs
and SME-friendly e-business solutions which go far enough
(1). The Committee
specific needs
towards meeting their
approves of the suggestion in the Communication that SMEs
could team-up with large ICT firms to create solutions that
meet
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 Frame-
work 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).

As the need for ICT consultants increases, it would be
3.3.2
desirable to have controls on the quality of practicing consul-
tants 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 consul-
tants working with SMEs on approved schemes. Policy supports
(e.g. fiscal aid) could be limited to the use by SMEs of qualified
consultants.

3.4.1.2
Despite the announcements and existing program-
ming, 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 exper-
tise and fully trained staff to have any credible participation or
to reap any real benefit from them.

3.3.3
Policy makers have got to come to terms with the
need for more widespread and extensive education of the work-
force 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

A simplification of

3.4.2
the European-wide patenting
process would facilitate the commercialisation of new applica-
tions 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 Commis-
sion's vision. However, the Committee is not sure that the
private sector, as proposed by the Commission, would be suffi-
ciently motivated to implement the plan on a wide-enough
basis.

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3.4.4
To provide a stimulus to innovation and entrepreneur-
ship in the area of SME participation in ICT application devel-
opment, 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-market-
places 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 tech-
nical, economic and legal barriers to entry. The EESC also calls
on the owners and managers of SMEs to be aware of the extre-
mely 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 neces-
sary modernisation of their businesses so that they can face up
to the new and particularly demanding conditions of interna-
tional 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 par-
ticular attention to the special needs of SMEs when imple-
systems, and on the
menting their public e-procurement

Commission to continue with its initiatives to ensure real coor-
dination 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.

SMEs are concerned about privacy and Intellectual
3.5.5
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