By Trevor Marshall

There is many an “e” in the modern tech world: e-mail, e-commerce, e-business.

But economists and industry experts warn we are ignoring a crucial e-initiative, and doing so at our own peril.

It’s the e-economy, and its champions believe Canada’s future economic success and standard of living will depend on it.

Those proponents, including the federal government, Canadian business and trade associations, academics and technology providers, are working together to encourage all companies to drive towards building a broad-based Internet-enabled economy, in which information and communications technologies (ICTs) are commonly used to spur product and process innovation across the economic landscape.

Yet, a report published in September by the Canadian e-Business Initiative (CeBI) warned that, despite a strong start over the past decade, Canada risks slipping from its position as a world leader in moving the economy online, and that the results of that are potentially disastrous.

NOT YOUR PARENTS’ ECONOMY
The e-economy is built on the use of the Internet and other computing technologies throughout Canada’s economic and social fabric. “Business and society as a whole need to use these technologies to foster growth and wealth creation, to make Canada more competitive, to innovate our businesses and to make our society more inclusive,” said Richard Simpson, the director general of electronic commerce at Industry Canada.

“Think of it as a series of concentric circles growing outwards,” said Ron McClean, executive director of information services and technology for the Schulich School of Business at York University, in Toronto. He said the e-economy encompasses e-commerce, in which the Internet is used to process transactions, plus an Internet-powered back-office, processes such as supply-chain management, real-time inventory control, etc.

But the e-economy goes further.

In Fast Forward 5.0: Making Connectivity Work for Canada, CeBI calls on governments and the business community to extend these existing networks to new
programs, such as healthcare and education, and to new partners, such as suppliers and distributors, to increase the overall use of technology-based solutions.

“The use of technologies for distance education in general has been very innovative and produced efficiencies in the education sector. We need to build on that to create better platforms,” Simpson said. “(Meantime) the need to improve the quality of healthcare and reduce cost is clearly at the base of the whole policy issue that underlies our healthcare system.

“It’s good for all Canadians because increasingly our standard of living depends upon our ability to compete internationally,” he said. “In society as a
whole, what these technologies can deliver is a platform providing for more equitable distribution of public services and opportunities.

We’re looking at this as a way that Canadians can maintain and enhance their standard of living in future years, but also improve their quality of life.”

ECONOMIC HURDLES
But if an e-economy promises many benefits, achieving one means overcoming a number of challenges.

For a start, the e-economy is, by definition, global, and that introduces competitive issues. Other countries are evolving in this direction, including the economic juggernaut to the south. “When you’re on the Internet and you’re trying to buy something from a retail outlet, you don’t know if that business is in Canada, or the United States or England,” said Nancy Hughes Anthony, president and CEO of the Canadian Chamber of Commerce and a CeBI co-chair. “As soon as you are in a Web environment you are a global player.”

Also of particular concern is the rate of e-business adoption among Canada’s small- and medium-sized enterprises (SMEs), those companies, each with fewer than 500 employees, which comprise 99 per cent of the businesses in Canada.

SMEs are using basic online tools such as e-mail but their take-up of more sophisticated Internet-based solutions is slower than many would like.

One problem is the learning curve.

“People just don’t have time to deal with this kind of stuff because they’re busy doing what they’re doing in their business,” said Hughes Anthony.

McClean said when it comes to this type of innovation, Canadian SMEs are risk-averse. “They’re not likely to tackle anything new unless there’s good incentive to do so,” he said.

SUCCESS STORIES
CeBI contends that regardless of company size, the business incentive for the use of ICTs is compelling: increased revenue and lower costs.

The group has compiled a portfolio of case studies that bear this out. “Some of the firms surveyed as part of these studies reported revenue increases of up to 40 per cent, and some of them show profit increases of 150 percent,” said Terry Walsh, presidentof Cisco Systems Canada and CeBI’s other co-chair.

Fortunately, Canada is not starting from scratch. Over the past several years, governments and the private sector have collaborated on initiatives to ensure all Canadians can get online, through programs such as Ottawa’s Connecting Canadians agenda, the Broadband Task Force, SchoolNet and CeBI. Canada has done an outstanding job of building out a very, very good infrastructure: in fact, we are now the most connected country in the world,” Walsh said. “The infrastructure is in place, [next, we have to address] what we’re doing with it. Otherwise it is like having a good road system but no cars.”

LOOKING FOR A PLAN
The consensus is that to move beyond infrastructure building, an established and collective course of action is required. In Fast Forward 5.0, CeBI argued it’s imperative that the federal government “pursue a strategic plan to build an innovative 21st Century economy based on the recognition
of the role and importance of ICTs in that economy.”

“Once the government has stood up and given us the mandate, it’s much easier for [businesses] to get behind this because they know it’s a national priority,” Walsh said. “We need that rallying point.”

Beyond that, governments must create and maintain a framework favourable to the growth of the e-economy.

“There are some fundamentals we need to keep strong,” Simpson said. “One of those is to make sure we have the right legal, policy and fiscal environment to promote investment in innovation (based on information technologies).”Selling that environment to Canadians will require continued awareness building of the benefits of the e-economy, using tools such as the case studies that CeBI has developed. “What we’re looking for business to do is help get the message out through the networks that they have already established,” Industry Canada’s Simpson said. “Networks like the Chambers of Commerce, Boards of Trade, Canadian Manufacturers Association, the Canadian Federation of Independent Business — all of these associations and business groups can promote the importance of making that online investment decision.”

Education and training are also essential.

Hughes Anthony said the Canadian Chamber of Commerce has had good success in working with the academic community. “There is a huge opportunity at a community level for colleges and universities to work with the small business community in a very flexible way and provide the kind of fast, hands-on education that is needed,” she said. “And we’ve seen community colleges in particular pick this up.”

Walsh said large enterprises already engaged in the e-economy can help smaller partners get onboard. “We need to encourage them to deal with us this way,” she said, “so that if you’re a small business selling something to Cisco, you have to engage with us through an e-commerce approach: we’re just not geared to deal with people in any other way.”

ENSURING SECURITY
Those not yet embracing the e-economy also may be hesitating due to security and privacy concerns. Consumer awareness and concern about both issues is increasing, and Fast Forward 5.0 cites a September 2003 report from the Canadian Bankers Association in which just eight per cent of SMEs surveyed felt “extremely confident” about their level of online security.

But, Hughes Anthony said, “there are a lot of business initiatives out there that give us more of a degree of confidence about a secure environment…and I know a number of Canadian companies that are making this their business. It’s a huge market opportunity.”

UP TO US
Evolving to the e-economy will require all stakeholders to make significant investments, made up of time, training and technology.

But proponents are adamant this is something that must be done.

If Canada’s economy does not evolve in this way, “we’ll find that we have a lower income and standard of living because we’re not competitive with other countries,” Simpson said. “(And) without using the power of these technologies to ensure economic opportunities are distributed around the country and that public services and other benefits are made available to all Canadians, we’ll find that we have a more inequitable society as well. Not only will we have less wealth created in the aggregate, but we’ll find the benefits of the economy are becoming more and more concentrated in certain regions and certain groups.”

In the end, Hughes Anthony said, it’s up to us. “We see in some of [CeBI’s] studies that there are tremendous efficiencies that can be gained, and there are in some cases also tremendous customer impact that can be gained. We only have ourselves to blame if we’re not moving to these kinds of solutions.”