Title: Understanding the potential macroeconomic impact of the implementation of technologies for digital b
1Understanding the potential macroeconomic impact
of the implementation of technologies for digital
business ecosystems in Europe
Characteristics of the Potential users of the DBE
- Lorena Rivera León
- European Commission
- DG Information Society and Media
- http//www.digital-ecosystems.org
2The power of DBE in promoting regional development
- DBE is a powerful instrument for narrowing the
knowledge and wealth gaps among different regions
in Europe
- DBE allows business connectivity and global
talent identification
- DBE allows SMEs to increase their opportunities
to integrate themselves into global value chains
and global production networks
- DBE provides SMEs with more and better
opportunities for upgrading their IT capabilities
3Who are the potential users of the DBE?
- Every business entity in Europe, irrespective of
the size of the enterprise or the sector of
activity
- DBE especially oriented to support connectivity
among SMEs but also between SMEs and large
enterprises around Europe
- There are more than 17 million SMEs in EU-25
(non-financial business economy)
- In 2003, 99.8 of EU-25 enterprises were SMEs.
- 91.4 of micro enterprises 1 to 9 employees
- 7.3 of small enterprises 10 to 49 employees
- 1.1 of medium enterprises 50 to 249 employees
- 0.2 of large enterprises more than 250
employees
Necessity to study European business
characteristics, focusing on SMEs
4Large presence of SMEsSMEs per 1,000 population
in EU-25, 2003
Source Eurostat Industry, Trade and Services,
2006
5Large presence of SMEs
- In average, there are 38 SMEs per 1,000
population in EU-25 (2003)
- Countries above this average are
- Italy, Spain, Czech Republic, Portugal, Hungary,
Slovenia, Cyprus and Luxembourg
- Implementation of DBE would be particularly
beneficial for these countries
- These countries would benefit the most, in
relative terms, from early implementation of the
DBE
6Large presence of micro enterprisesEuropean
enterprises by size (totals), 2003
Source Eurostat Industry, Trade and Services,
2006
7Large presence of micro enterprisesEuropean
Micro enterprises per 1,000 population, 2003
Source Eurostat Industry, Trade and Services,
2006
8Dominance of micro enterprises
- Demography matters, but also the industrial
structure of each country
- In average, there are 35 micro enterprises per
1,000 population in EU-25 (2003), in comparison
with just
- 3 small enterprises per 1,000 population
- 0.5 medium enterprises per 1,000 population
- 0.1 large enterprises per 1,000 population
- Countries above this average are
- Micro enterprises Italy, Spain, Poland, Czech
Republic, Portugal, Hungary, Slovenia, Cyprus and
Luxembourg
- Small enterprises Spain, Portugal, Sweden,
Austria, Denmark, Estonia and Luxembourg
- Medium enterprises Czech Republic, Denmark,
Slovenia, Lithuania, Latvia, Estonia and
Luxembourg
- The industrial structure of these countries
explains the proliferation of SMEs within their
territory
- Political (incentives), economic and social
frameworks can also influence the industrial mix
i.e. Luxembourg
9SME concentration in 5 countriesSME distribution
in EU-25, 2003
- More than 65 of EU-25 SMEs are concentrated in 5
countries
- Italy and Spain have more SMEs (in number) than
20 countries in the EU-25
Source Eurostat Industry, Trade and Services,
2006
10SMEs as drivers of the European economy
Number of persons employed, 2003 ( share of
total)
Value added, 2003 ( share of total)
- SMEs employ about 67 per cent of the European
workforce (EU-25, 2003).
- They employ 69 per cent of the workforce in the
Czech Republic, 79 per cent in Spain, 82 per cent
in Italy, 74 per cent in Latvia and 71 per cent
in Lithuania.
- SMEs generate more than half (57 per cent) of
EU-25 value added.
- They generate 57 per cent of the value added in
the Czech Republic, 68 per cent in Spain and 70
per cent in Italy.
Source Eurostat SBS size class
11Different business/industry structures within the
EU-25
- Special focus on Italy and Spain high importance
of micro enterprises in terms of employment and
value added when compared with the EU-25
averages. - In Italy, micro enterprises account for 47.1 of
total employment and 31.7 of total value added.
- In Spain, micro enterprises contribute to 38.6
of total employment and 26.8 of total value
added.
- In these two countries, large enterprises
accounted for a relatively low share of
employment and value added.
- The use of DBE could be highly beneficial for
these countries.
- In Slovakia, the United Kingdom and Finland large
enterprises have a relatively large presence
within the non-financial business economy.
Source Eurostat SBS size class and Schimiemann,
2006
12A vulnerable SME structureTotal SMEs growth
rate, 1990-2003
- The countries with the largest concentration of
SMEs have seen their number of SMEs decrease
considerably in the last 10 years
- A change in industrial dynamics is not plausible,
given the short period of time
- SMEs large mortality rate due to vulnerability
- DBE as a tool for reducing SMEs vulnerability
Source Eurostat Industry, Trade and Services,
2006 and Observatory of European SMEs
13SMEs serving primarily two sectorsSMEs by
sector, 2001
- SMEs concentrated in two sectors services and
trade
- Manufacturing industry less important by number
of enterprises but relevant in value added and
employment
Note Numbers are presented in thousands SMEs.
Source Eurostat Industry, Trade and Services,
2006 and Observatory of European SMEs
14SMEs structure by country and main activity, 2001
Source Eurostat Industry, Trade and Services,
2006 and Observatory of European SMEs
15SMEs and employment changeChanges in employment
by size class and sector, EU-25 2001-2003
(overall change)
- The overall percentage change is the net result
of gains/losses through movements between
activities, between size classes (enterprises
that grow or shrink), and births and deaths of
enterprises.
Source Eurostat SBS size class and Schimiemann,
2006
16SMEs structure by country and sector, 2003
- SMEs accounted for more than 75 per cent of
persons employed in EU-25 in the construction
sector, and hotels and restaurants. They also
accounted for more than 50 per cent of total
employment in manufacturing, distributive trades
and business activities. - SMEs contributed to more than 75 per cent of
total value added in the construction sector
(EU-25, 2003), and for more than 50 per cent in
distributive trades, hotels and restaurants and
business activities. - The Italian case. Special role of Italian micro
enterprises in distributive trades, real estate,
renting and business activities, construction and
hotels and restaurants. - They provided an absolute majority of sectoral
value added and up to two thirds of the workforce
(share of total employment between 58 per cent
and 67 per cent).
Source Eurostat SBS size class and Schimiemann,
2006
17SMEs by main activity in the 5 largest countries
- SMEs are concentrated mainly in 4 activities
- Business services SMEs are predominant in Italy,
Germany and France
- Construction SMEs are concentrated in the UK
- Manufacturing industry SMEs are dominant in
Italy, with the largest value added in the EU in
2000
- Retail trade SMEs are predominant in Spain.
Note Numbers are presented in thousands SMEs.
Source Eurostat Industry, Trade and Services,
2006 and Observatory of European SMEs
18SMEs and labour productivity
- Apparent labour productivity measure of the
average value added (or wealth created) by each
member of the workforce within an enterprise.
- In 2003, apparent labour productivity in the
EU-25 was highest for energy, mining and
quarrying, and lowest for hotels and restaurants.
- In manufacturing, construction, hotels and
restaurants, and transports and communications,
there is a pattern of increasing labour
productivity according to the enterprise size. - Mainly due to economies of scale.
- Connecting enterprises through DBE will help them
to increase their productivity
- In mining, quarrying and energy activities, micro
enterprises recorded the highest labour
productivity in EU-25.
- In distributive trades, real estate, renting and
other business services, SMEs had higher apparent
labour productivity than large enterprises.
Source Eurostat SBS size class and Schimiemann,
2006
19But... Are these SMEs engaged in e-business?The
e-Business Index 2006 by firm size
- Yes, but with great differentials in comparison
with large enterprises
- Average SME Index equal to 62 for the use of ICT
networks
- Weak use of internal applications and supply
chain integration (especially among micro
enterprises)
- Relatively important use of e-Marketing and
sales
Note Index 100 for Large enterprises.
Source E-business W_at_tch, 2006
20E-business differentials by firm size (small vs.
large enterprises)Connectivity matters for Small
Enterprises!
Source E-business Survey, 2006
21E-business differentials by firm size (small vs.
large enterprises)Connectivity matters for Small
Enterprises!
- There are not large differentials between large
and small enterprises when connecting online with
suppliers and customers.
- 54 per cent of small companies place orders for
supply goods or services online. 38 per cent of
total order up to 10 per cent of goods/services
online, and 16 per cent more than 10 percent. - There are no differences between small and large
enterprises when receiving orders from customers
online.
- The sectors connecting/receiving online orders
from customers more frequently for small
companies are Tourism, Telecommunications and
the Pulp and Paper sector. - Most important sectors for large companies when
receiving orders from customers online are
Telecommunications, Tourism and Consumer
electronics. - Small enterprises in Poland, Finland and the
United Kingdom are those which receive the
largest share of orders from customers online in
the EU-10. The lowest performers are Italy, Spain
and the Netherlands. - 84 per cent of small companies consider that
e-business constitutes a part of the way they
operate, in comparison with 81 per cent of large
enterprises (E-business Survey, 2006).
Source E-business Survey, 2006
22E-business differentials by firm sizeOverall
index (based on firm-weighted data), 2006
- Overall Index ICT networks, e-Integration of
internal processes, e-Procurement and supply
chain integration, e-Marketing and sales
- There is approximately 50 SMEs engaged in
e-business for every 100 large enterprises.
- Benchmarking ICT adoption and e-business by
country is complex. Results could reflect other
factors such as industry structure.
- However, Nordic countries are in general the most
active users of e-business among SMEs.
- Differences are not pronounced and not clear
among countries like France, Germany, Italy,
Spain and the UK.
Note Firm-weighted data express e-business
adoption as of firms within a size-band with a
certain activity.
Source E-business W_at_tch, 2006
23Impact of industry structure in ICT use for
businessE-business index 2006 for 10 EU countries
- Finland is the e-business benchmark in a
comparison of 10 EU selected countries.
- The connectivity between enterprises is quite
advanced in Finland, Sweden and Denmark, compared
to most other EU countries.
- The results of the benchmarking suggest a
pronounced digital divide between small and large
firms.
- In Italy, sectors dominated by small firms are
much more prevalent than in other countries. This
structure is reflected in the score of Italy in
the benchmark. - The DBE, as a non-traditional application of
ICT for business, could help the sectors (and
SMEs) of these countries to overcome the digital
divide.
Note Benchmark based on firm-weighted data
(Indexed values highest score 100).
Firm-weighted data express e-business adoption
irrespective of the size of the company. Results
are mainly determined by the situation in smaller
firms, as there are more small companies than
large ones.
Source E-business W_at_tch, 2006
24SMEs and Open Source SoftwareCompanies using OSS
- OSS systems may help to unlock SMEs from
specific ICT service providers
- The use of OSS increases sharply by firm size
- Operating systems based on OSS are widely used by
large companies (47 per cent). This is not the
case for SMEs (only 13 per cent of total).
Note The total is weighted by employment and
should be read as enterprises comprising of
employment in the 10 sectors. Figures for
size-bands are in of enterprises from the
size-band. SMEs average is the average from
micro, small and medium enterprises.
Source E-business W_at_tch, Survey 2006
25SMEs and Internal Process Integration
- The DBE provides support for management by
enabling transparency of all business processes.
- The DBE also supports collaborative and
cooperative processes within and between SMEs
(i.e. information and knowledge sharing).
- Cooperation means splitting a common task into
sub-tasks which are performed by different SMEs
involved in the cooperation.
- Collaboration means that several SMEs work
together on the same task at the same time.
- The DBE supports cooperation among enterprises
participating in a value chain (or global value
chain)
26SMEs and online cooperation and collaboration
within the value systemPercentage of firms
Source E-business W_at_tch, Survey 2006
27SMEs and B2B online tradingPercentage of firms
- In average, only about 11 of SMEs use software
solutions or internet-based services for
e-procurement.
- There is a massive gap between the percentage of
SMEs placing at least some orders online (53 per
cent) and those that use special software for
this (11 per cent). - Companies which do not use a special software,
place orders mainly through websites or extranets
of suppliers.
- The digital back-office integration of
procurement related processes is not advanced in
these cases.
Notes. The analysis is driven in 10 sectors
food and beverages, Footwear, Pulp and Paper, ICT
manufacturing, Consumer electronics, Shipbuilding
and repair, Construction, Tourism,
Telecommunications and Hospital services.
Source E-business W_at_tch, Survey 2006
28SMEs and supply chain integrationUse of SCM and
ICT links with suppliers
- Supply chain management (SCM) software can help
companies to match supply and demand through
integrated and collaborative interaction tools.
- In average, 11 per cent of SMEs have adopted a
SCM system, in comparison with 34 per cent of
large firms.
- The share of SMEs reporting ICT links with
suppliers is lower than the share with an SCM
system.
- Possible explanation many SMEs have software for
managing their inventory and supplies internally,
without integrating suppliers directly through
the system. - This reveals that they use a form of SCM which is
not interactive between different companies.
Notes. The total is weighted by employment.
Figures in size-bands are in of enterprises
from the size-band.
Source E-business W_at_tch, Survey 2006
29SMEs receiving orders from customers online
Percentage of firms
- In average, 26 per cent of SMEs enable customers
to order products online.
- There is practically no difference between SMEs
and large companies in this respect.
- The e-commerce share is higher in ICT-related
industries (ICT manufacturing, telecommunications)
and in tourism.
- There is a gap between the percentage of SMEs
receiving at least some orders online (26 per
cent) and those that have special software for
doing so (11 per cent). - This confirms that SMEs use rather simple forms
of e-commerce receiving orders by e-mail without
any system integration of the related information
and document flow.
Source E-business W_at_tch, Survey 2006
30Similar drivers for the uptake of e-business
between SMEs and large enterprises
- The most important reason, as stated by SMEs, to
engage in e-business is to gain competitive
advantage. While the most important reason for
large enterprises is Customers expectations. - Suppliers expectations are less important as a
driver of e-business adoption for SMEs. These
results indicate that customers have more
negotiation power than suppliers.
Notes. The total is weighted by employment.
Figures in size-bands are in of enterprises
from the size-band.
Source E-business W_at_tch, Survey 2006
31SMEs drivers for the uptake of e-business
- There are some sectoral differences when
analyzing the SMEs drivers for the uptake of
e-business.
- Customers are clearly the key driving force in
tourism and in ICT-related industries.
- Evidence of the existence of new forms of
ICT-enabled customer service.
- Customers are increasingly being integrated into
planning, decision making and production
processes.
DBE helps SMEs to connect with potential
customers and suppliers
Source E-business W_at_tch, Survey 2006
32Why the SMEs are not yet adopting the DBE?
- The DBE cannot be adopted by 1 single SME.
- A critical mass of adopters within a specific
territory is necessary to guarantee DBE
sustainability
- There is a need of policy development at the
regional level, driven by the regional/local
catalysts
- Regional/local catalysts would ensure that these
actions are taken by the local authorities/governm
ent, industry associations, and any other entity
that has the capacity to influence policy making
in favour of the DBE adoption.