Home Latin America I 2003 E-nabling SMEs

E-nabling SMEs

by david.nunes
Antonio Ca'ZorziIssue:Latin America I 2003
Article no.:1
Topic:E-nabling SMEs
Author:Antonio Ca’Zorzi
Title:Program Manager for Business Program – ICT 4 BUS
Organisation:Inter-American Development Bank(IDB)
PDF size:80KB

About author

Antonio Ca’ Zorzi joined the Information Technology Division of the Inter-American Development Bank in 1999 to foster co-financing agreements with other international organizations in ICT- related programmes. He developed the activity of the IADB in the area of e-commerce, providing strategic advice on the Bank’s involvement in this sector and technical support for projects in a number of countries. He is in charge of e-business development at the Division and is managing the ICT-4-BUS programme. Recent publications include a strategy paper on the Bank’s role in promoting electronic commerce in Latin America and the Caribbean and a newsletter on e-commerce. Mr. Ca’ Zorzi has been named in various panels for the evaluation of projects in the area of ICT to be funded by the World Bank. Prior to working for the IADB, he held various posts at executive level with the San-Paolo IMI Bank in Brussels and Luxemburg. Until 1999 he also was Managing Director of Coopération Bancaire pour l’Europe-GEIE, a service company set up by Italian Banks in Brussels. Between 1985 and 1987 he worked with the Commission of the European Union in the area of culture and technology. Throughout his career he has been involved in ICT- based services aimed at medium and small sized business customers of Italian Banks. Antonio Ca’ Zorzi graduated with honours in Contemporary History at the University of Rome, Italy, and later earned a Master’s Degree in Finance at the HEC School in Brussels, Belgium.

Article abstract

Early online business practices were often based on inadequate understanding of how businesses could use Internet-based technologies in their operations. Most did not succeed, but there were quite a few successful experiences, including some in Latin America. Soon, Internet-based applications and services will become a pervasive factor in all aspects of business including for smaller businesses whose internal workings and dealings in the marketplace will be transformed by information systems that interconnect intelligently with those of their customers and suppliers.

Full Article

At a trade fair two prospective commercial partners talk about starting a new relationship. After a while the seller asks the buyer whether he can find the information and a catalog on the web site of the seller. Silence, the seller hesitates a moment and then announces that the web site will be on the air pretty soon. End of the story; End of the business! Needless to say that the seller did not have a web site and that he rushed back to his office with a new task. For today’s business world this story may be a little exaggerated: not all new trade dealings will need the support of a catalogue on the Internet. But, think of it: we take it for granted that you have an email today; how many had one 10 years ago? Tomorrow, in a shift toward a far more complex use of the Internet, a manufacturer will need to have a catalogue on-line, on the Web. The catalogue, then, will surely contain prompts for ebXML – electronic business Extensible Markup Language – standard coding to ensure interoperability with aggregators and other marketplace agents. “And being e-enabled is not necessarily a requirement that applies only to the developed economies” This sort of coding will let the information be used intechangeablely, make it fungible, within the procurement system of a large customer or permit intelligent search agents, Bots, to “understand” the information and insert it into context with other information to respond fully to complex search requirements. And being e-enabled is not necessarily a requirement that applies only to the developed economies: in a recent survey conducted by the Inter-American Development Bank among marketplaces operating in Latin America, one of the respondents informed us that his customers, median to large sized companies, were requiring their suppliers to use this sort of platform in order to conduct business. Everybody recognizes that early online business practices were, in most cases, based on erroneous assumptions and inadequate understanding of how businesses would incorporate and use Internet-based technologies in their operations. Most of the new ventures believed that simply by putting a nice, but often not quite flawless, technological solution online, customers and businesses would flock to them at once. But in truth, they lacked a sound understanding of how technology works for business and, more importantly, what businesses and their industries’ needs were. In the light of this, the predictions of thousands of – highly successful, or so they expected – marketplaces were baseless and proved wrong. However, not all went bust and there are quite a few successful experiences, including some in Latin America. In fact, it is only a matter of time before Internet-based applications and services will become a pervasive factor in all aspects of business operations, be it in administration, in the production cycle, in customer service training or in procurement. Internal efficiency will be boosted by already available knowledge information systems, which allow workers to organize the information on hand according to their needs. While innovation – especially in the areas of “light” web based applications, the XML based semantic web and security – is underpinning the trend toward a more consistent use of the technology, there are still a few hurdles on the way: o Awareness: businesses, especially small and medium sized enterprises (SMEs) still lack sufficient awareness of the potential use and benefits of Information and Communication Technology (ICT). o Financial: costs of solutions and of structural and cultural change can still be prohibitive for most, although the prices are rapidly decreasing o Reliability: the technology has still some way to go before it becomes fully reliable; o Standardization: a minestrone of often competing and non-compatible languages (with their mysterious codes) characterizes the technology arena; o Infrastructure: this is still a problem especially in developing countries; o Security and trust: users are still wary of the protection afforded their data on the Web and of the ability to maintain the privacy of their confidential business information. The importance of these factors can be readily magnified when it comes to developing countries. The “digital gap” is, by all means, an indication of much broader social, economic and political shortcomings. Would it be realistic to wait until these are resolved before engaging the developing countries in ambitious initiatives aimed at enhance digital inclusiveness of their population and, in particular, their small businesses? Certainly not! Whilst technology is not the full answer to the challenge of development, it is definitely part of it. Take an example. In a recent report, the Chamber of Commerce of Santiago stated that margins of SMEs in Chile are running thin and that their participation in the country’s GDP has shrunk considerably in the past few years. According to the Chamber, the most effective way to improve the business efficiency of SMEs and, thus their ability to compete, is to extend their use of ICT based services in areas such as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), etc. In this way, they can improve the quality of their products and services, construct leaner production cycles, adapt quickly to changing market conditions and expand their marketing reach. Chile and a few other countries in the region have been developing online business communities – with varying degrees and approaches of government regulatory and/or financial support. Other countries are still on their starting blocks. The sense of urgency within the business communities of Latin America and the Caribbean, concerning the need for increasing the use of ICT by SMEs, was confirmed by the enthusiastic response to the first Call for Proposals of the ICT4BUS Program. The ICT4BUS Program is an initiative sponsored by the International Development Bank (IDB) Group, which supports the development and demonstration of innovative ICT applications and services geared toward small businesses. In all, the program, which does not aim at substituting private investment, will support between 10 and 15 projects in Latin America and the Caribbean. Of course, SME adoption of ICT cannot rely only on technological innovation. Using ICT efficiently implies that a number of learning steps have been undertaken that have resulted in a deepened understanding of the interconnections between business and technology. While it is not difficult to put a computer on the desk of a small business owner, it is a much more daunting task to help him understand how to use it to the benefit of his or her business. “Whilst technology is not the full answer to the challenge of development, it is definitely part of it.” They will eventually learn by doing, but this will not suffice to develop a meaningful understanding of the technology and its usefulness. The Multilateral Investment Fund, the IDB fund, which supports the ICT4BUS Program, also sponsors, within the framework of an ICT Cluster of Projects other initiatives aimed at strengthening the use of ICT by small businesses in the region. These projects work through awareness building and training activities as well as with initiatives in the regulatory area to enhance trust and security in Internet-based transactions. Are we ready for a new bold move; some bright ideas that would instantly solve the problem? We have seen too many of these and the past few years have shown us, if anything, that Rome was not built in one day.

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