in four phases, together with a description of the project management and communication factors that helped to ensure its success
and communication technologies (ICTS) on pedagogical practice and student learning, namely:(a forming government policies;(
While there are many exemplars of prosaic uses of mobile devices for communication, few examples currently exist of how they might be used as cognitive tools (Jonassen & Reeves,
learning outside a dedicated learning environment and formal curriculum (e g.,, Wood, Keen, Bassu, & Robertshaw, 2003, breast cancer care in the delivery of text images and audiovisual materials to patientsâ€
communication dynamics through the use of mobile devices (e g.,, Ito, 2005 In this paper, we describe a project that endeavours to investigate the use of mobile technologies from a
completing a complex task within an authentic learning environment 3. Implement the use of mobile technologies and authentic tasks in learning activities over a period of 3
environments in higher education 4. What pedagogical principles facilitate the use of m-learning devices in authentic learning
environments in higher education The project used a design-based research approach (e g.,, Reeves, 2000; Reeves, Herrington & Oliver
•opportunities for reflection involving metacognition •opportunities for articulation to enable tacit knowledge to be made explicit
•coaching and scaffolding by the teacher at critical times •authentic assessment that reflect the way knowledge is asses in real life
and design learning environments where mobile technologies could be used in their different subject areas and specialisations
design of each teacher†s learning environment. The approach typically involves a small group of
appointed, and a prototype project website was created. The leadership team, together with professional development and IT experts, met fortnightly for planning and monitoring,
and communication with the team and project reference group was enhanced with the creation of a bimonthly bulletin.
learning environments in higher education m-learning principles What pedagogical principles can guide the use of m-learning
environments in higher education Phase 1 Phase 2 Phase 3 Phase 4 Year 1 Year 2 Yr 2 & beyond
Maths education IT in education Multimedia education Web-based learning Literacy education Reflective practice Adult education
learning environments and project website Effectiveness evaluation of 12 learning environments Effectiveness evaluation of whole
project Peer review of chapters by team & reference group smartphone for use prior to the commencement of the implementations with classes, so that they could
worked within the workshop environment to plan an authentic learning environment that comprised 4-6
communication from one site to another. When teachers had designed their learning tasks, they were able
environment when they were implemented in Phase 3 By the end of Phase 2, the teachers had designed learning environments ready to be implemented in Phase
3, each comprising: an authentic task (to be completed over a period of 4-6 weeks), a range of resources
strategies facilitate the use of m-learning devices in authentic learning environments in higher education One class set (25) of each device was used in this phase to ensure specific affordances were available to
pedagogical principles facilitate the use of m-learning devices in authentic learning environments in higher education?
Effective project management and communication mechanisms helped to ensure that the project stayed on track and met critical deadlines.
project manager throughout the project was effective and sensitive communication with, and between, the project researchers as they investigated their own cases within the context of the New Technologies, New
phase, the substantive value of the website grew, both as an important communication device and as a
What is an authentic learning environment? In A j. Herrington & J. Herrington (Eds. Authentic learning environments in higher education (pp. 1-13.
Hershey, PA ISP Herrington, J, . & Oliver, R. 2000). An instructional design framework for authentic learning
environments. Educational technology Research and development, 48 (3), 23-48 Hoban, G. F. 2004. Enhancing action learning with student feedback.
teachers†action learning within a web environment. In P. Kommers, & G. Richards (Eds.),Edmedia
Mobile communications: Re-negotiation of the social sphere (pp. 131-148. London Springer Jonassen, D. H. 2000.
D. Jonassen (Ed.),Handbook of research on educational communications and technology (pp. 693 -719). ) New york:
Joint Statement on Education and Training in the Information Economy. Retrieved February, 2008 from: http://www. mceetya. edu. au/pdf/infoeconomy2005. pdf
NHS Prescription Services the impact of legacy ICT 1 AUGUST 2013 NHS Business Services Authority The National Audit Office scrutinises public spending for Parliament and
is independent of government. The Comptroller and Auditor General C&ag), Amyas Morse, is an Officer of the House of commons and leads
effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally.
publicâ services Contents Summary 4â Part One 6â The National Audit Office's assessment of government's legacy ICT 6â
The NHS Business Services Authority 8â Prescription Services 8â The service model 11â Part Three 14â
Financial and performance analysis 14â Service and system performance 14â Financial analysis 17â Part Four 20â
Our enterprise analysis of the NHS Prescriptions Service and the management of the legacy system 20â
Enterprise analysis framework 34â Appendix Four 37â National Audit Office reports on government ICT 37â
4 Summary NHS Prescription Services: the impact of legacy ICT Summary 1 The NHS Business Services Authority (the Authority) is an arm's-length body of
the Department of health. NHS Prescription Services is one of the services supplied by the Authority. It calculates how much pharmacists,
GPS who dispense and appliance contractors should be paid as reimbursement and remuneration for medicines and medical devices dispensed to patients from NHS prescription forms
prescription pricing information and communication technology (ICT), and the impact of legacy ICT on the delivery of the NHS Prescriptions Service.
current needs of the fee-paying customers and internal system users, despite the hardware being supported by the supplier on a'best endeavours'basis. 2
engagement with stakeholders regarding risk, cost, prioritisation and funding 1 ttp://www. nhsbsa. nhsh. uk/Prescriptionservices/809. aspx
NHS Prescription Services: the impact of legacy ICT Summary 5 ï The newer CIP system, operational since 2007, has improved the speed and
6 Part One NHS Prescription Services: the impact of legacy ICT Part One The National Audit Office's assessment of
services to digital channels as per the'digital by default'strategy as set out in the
users of digital services have become accustomed. Additionally, the improvement of public services through their redesign can take longer
and when investment is needed to migrate and replace legacy systems. In response, the government said it preferred to
NHS Prescription Services: the impact of legacy ICT Part One 7 Subsequently the Cabinet Office issued further advice6 providing more detail on the
and an enterprise analysis8 measuring how mature the organisation is in managing, operating and maintaining the
ï The prescription processing service operated by the NHS Business Services Authority using the 6 year old Capacity Improvement Programme system and its
8 Our enterprise analysis is performed using a framework containing the seven key areas that most impact
A full description of the enterprise analysis framework we applied during our fieldwork can be found in
8 Part Two NHS Prescription Services: the impact of legacy ICT Part Two The NHS Business Services Authority
2. 1 The NHS Business Services Authority (the Authority) is an arm's-length body of
the Department of health. It was established on 1 october 2005 and became fully operational on 1 april 2006. It brought together five previously separate NHS groups
Prescription Services 2. 2 NHS Prescription Services, which is one of the services supplied by the
Authority, calculates the remuneration and reimbursement due to pharmacists, GPS and appliance contractors for medicines and medical devices dispensed to patients
from NHS prescription forms. The Authority processes more than four million prescription items every working day and payments amount to around £9 billion a
to NHS stakeholders and the general public. For example, the Electronic Prescribing & Financial Information for Practices service (epfip) allows GP practices to interrogate
services form a significant part of the role of the Authority, they are beyond the scope
NHS Prescription Services: the impact of legacy ICT Part Two 9 Prescription pricing ICT 2. 4 The Authority currently uses two ICT systems to process prescriptions:
aim is to transfer all remaining prescription services to the CIP system and decommission the legacy system
pharmaceutical services (Figure 1). The business rules for these customer groups have not yet been added to the CIP system
services, an alternative contractual arrangement set up in 2006 that is slowly being phased out Source: National Audit Office analysis
10 Part Two NHS Prescription Services: the impact of legacy ICT 2. 7 The Capacity Improvement Programme was started in 2005 and the new CIP
2. 8 To meet the capacity demands, CIP implemented high-speed scanning equipment and intelligent character recognition software to capture printed information
2. 9 The EPS provides the Authority's customers with the ability to submit prescriptions electronically as an alternative to paper prescription forms.
Prescription Services. Investing in enhanced electronic submissions through EPS could also be a significant tool in combating known prescription fraud.
NHS Prescription Services: the impact of legacy ICT Part Two 11 The service model 2. 11 Figure 2 shows the components of the prescription pricing service and defines
ï Customers The Authority provides the prescription service to 11,700 pharmacists, 116 appliance contractors and around 47,000 doctors from 8, 000
services and the EPS service was transferred to the NHS Commissioning Board from 1 april 2013 ï In 2011-12, there were 930 full-time equivalent staff operating the prescription
ï Channels NHS prescription forms are submitted by the customers to claim reimbursement for prescriptions dispensed.
of paper prescriptions by post (all legacy customers submit by post) or via EPS From April to December 2012,5. 4 million prescription line items were submitted
ï Services NHS Prescription Services calculates how much its customers should be paid as reimbursement and remuneration for medicines and medical devices
stakeholders and the general public (see paragraph 2. 3 12 Part Two NHS Prescription Services:
the impact of legacy ICT Figure 2 Prescription pricing service model NOTE 1. Information services are beyond the scope of this report
Source: National Audit Office analysis ï Processes In 2011-12 over 960 million prescription items were processed and
NHS Prescription Services: the impact of legacy ICT Part Two 13 2. 12 Figure 3 shows that where the legacy system requires manual input of line items
14 Part Three NHS Prescription Services: the impact of legacy ICT Part Three Financial and performance analysis
3. 1 In this part of the report, we analyse the investment the NHS Business Services Authority (the Authority) has made in the Capacity Improvement Programme (CIP) and
NHS Prescription Services: the impact of legacy ICT Part Three 15 Figure 4 Volume and breakdown of prescription line items
The number of line items processed by NHS Prescription Services has grown by an average of 5
16 Part Three NHS Prescription Services: the impact of legacy ICT Figure 5 Performance against accuracy target
pharmacists and other customers to send prescriptions for payment by the fifth working day of a month.
NHS Prescription Services: the impact of legacy ICT Part Three 17 Financial analysis Expenditure on the prescription pricing service
3. 6 The Authority spent £40. 7 million on operating the NHS prescription services in
18 Part Three NHS Prescription Services: the impact of legacy ICT Figure 6 Comparison of forecast and actual savings
5. Amounts have been adjusted for inflation using the retail prices index Source: NAO analysis of Authority data
NHS Prescription Services: the impact of legacy ICT Part Three 19 central ICT contract and may not therefore represent the true costs.
This represents a programme of investment, funded by the Department of health, to improve the CIP system.
20 Part Four NHS Prescription Services: the impact of legacy ICT Part Four Our enterprise analysis of the NHS
Prescriptions Service and the management of the legacy system 4. 1 In this part, we summarise the findings of our enterprise analysis. Each section
highlights a key finding and the scores we have allocated the NHS Business Services Authority (the Authority) as part of our assessment.
Our scoring runs within the range of one to five, the higher the number the better the performance.
enterprise analysis framework can be found in Appendix Three Strategy and business model Our assessment Key finding Now Future
The Authority is taking steps to improve efficiency and accuracy. EPS provides the best potential benefit
NHS Prescription Services: the impact of legacy ICT Part Four 21 4. 3 Less than 1 per cent of transactions are carried still out on the legacy system and
4. 4 Other demands continue to take priority over the completion of the transition. To
continue to take precedence without effective engagement with stakeholders such as the Department of health, and the NHS Commissioning Board, and the Channel
services and the EPS service was transferred to the NHS Commissioning Board from 1 april 2013 4. 5 The Channel Islands and the Isle of man currently use a different format of
provided to customers in terms of information accuracy and speed. 11 The installation of new scanner equipment will help to improve accuracy at the same time as
10 NHS Business Services Authority Business plan 2012/13, available at http://www. nhsbsa. nhs. uk/Documents/NHSBSAANNUALREPORTS/NHSBSA BUSINESS PLAN -2012-13
11 NHS Business Services Authority Strategy 2012-2017, available at http://www. nhsbsa. nhs. uk/Documents/NHSBSAANNUALREPORTS/Strategy 2012-17. pdf
22 Part Four NHS Prescription Services: the impact of legacy ICT 4. 7 We consider that the paper-based scanning process is a legacy process, and we
NHS Prescription Services: the impact of legacy ICT Part Four 23 4. 11 The Authority has adopted an enterprise architecture approach to ensure
alignment of IT and business services, and the ICT strategy is in the process of being refreshed to improve consistency with the corporate strategy and business plan.
This is being discussed at a senior level within the organisation and with representatives from across the business,
and the replacement of the legacy system will be considered alongside other strategic objectives. An anomaly exists between the
customers currently handled by the legacy system will need to adopt that standard prior to moving to CIP and EPS
transfer the customers and decommission the legacy system 4. 14 The intention is to eventually decommission the legacy system and move all
customers to CIP but we were unable to establish the existence of plans for the
transition of customers and the decommissioning of the old ICT. CIP would also require further development to add the business rules for the work-load currently
transfer the customers and decommission the legacy system 12 Information Standards Board for Health and Social Care, ISB 0052, available at http://www. dmd. nhs. uk
24 Part Four NHS Prescription Services: the impact of legacy ICT 4. 15 Platform support is outsourced to the IT service provider (Capita), and application
acceptance testing environments, for both the CIP and legacy systems Service management Our assessment Key finding Now Future
fee-paying customers and internal system users. Service definitions and service level agreements between the Authority and the Channel Islands and the Isle of man were
NHS Prescription Services: the impact of legacy ICT Part Four 25 Figure 8 ICT performance against availability target
4. 19 The arrangements in place to manage the supplier services are adequate, with regular service review meetings taking place between the Authority's service delivery
26 Part Four NHS Prescription Services: the impact of legacy ICT People Our assessment Key finding Now Future
There are no dedicated environments for end-user training but the systems are straightforward and intuitive to use, with most operator knowledge being required for
NHS Prescription Services: the impact of legacy ICT Part Four 27 4. 25 The IT service provider is responsible for the disaster recovery and perimeter
regarding its ability to cope with future demand 4. 27 Drug tariff information and pricing changes frequently.
-replacing the physical server environment with virtual servers, and upgrading the desktop environment. The new virtual server environment is expected to provide
scalability to respond to the increase in demand, although the capacity of the application has not been measured sufficiently to be able to predict the impact of the
anticipated growth in demand 13 NHS Connecting for Health, Information Governance, available at http://www. connectingforhealth. nhs. uk/systemsandservices/infogov (accessed November 2012
43 28 Part Four NHS Prescription Services: the impact of legacy ICT 4. 30 The proposed refresh of the scanner equipment is expected to increase the
throughput of each scanner from around 17,000 images per hour to 23,000 images per hour at the same time as improving the accuracy of the intelligent character
NHS Prescription Services: the impact of legacy ICT Part Five 29 Part Five The lessons learned from the impact of legacy
enterprise analysis to draw out the key lessons the NHS Business Services Authority the Authority) has learned from the impact of legacy ICT on prescription services
Figure 9 and Figure 10 5. 2 This case study is an example of an organisation that identified issues with its
the remaining customers but the environment is changing; demand for NHS Prescription Services is growing
and there is pressure to reduce costs and improve the efficiency of the prescription service 5. 4 The Authority intends to decommission the legacy system.
This will reduce running costs by removing duplicate infrastructure and development and support effort. However, we found there were no firm plans in place to do this
build a firm basis upon which to engage stakeholders and customers 5. 5 The best potential for accuracy and efficiency improvement appears to rest with
transfer the remaining customers to CIP and decommission the legacy system, and the proportion of prescriptions submitted via EPS increases significantly
30 Part Five NHS Prescription Services: the impact of legacy ICT Figure 9 Enterprise analysis summary assessment
Source: National Audit Office analysis based on the enterprise analysis framework in Appendix Three NHS Prescription Services:
the impact of legacy ICT Part Five 31 Figure 10 Lessons from the prescription pricing service
Lessons Commentary Senior management ownership of IT risk leads to proactive decisions being made regarding the
transfer of the remaining customers from legacy to CIP or EPS Build a clear understanding
used to engage with stakeholders and map out plans to decommission the legacy system Adequate resources should
system to meet demand; the lack of flexibility to adapt to changes of business rules;
32 Appendix One NHS Prescription Services: the impact of legacy ICT Appendix One Timeline History of prescription pricing systems
NHS Prescription Services: the impact of legacy ICT Appendix Two 33 Appendix Two Methodology Our methodology centred on the application of our business analysis toolkit.
enterprise analysis framework (Appendix Three Method Financial and performance analyses including ï Interviews with financial and operational staff
ï Analysis of investment and spend data ï Analysis of service performance and service reporting data
and contract management staff, technical stakeholders and representatives from suppliers ï Document review of ICT and contracting strategies, reviews of the ICT estate, technical
Application of our enterprise analysis framework including ï A workshop of key stakeholders where they self-assessed
and scored themselves against the components of the framework ï Semi structured interviews with corporate service leaders, senior technical staff, system users
to senior stakeholders and compared with self-assessment 34 Appendix Three NHS Prescription Services: the impact of legacy ICT
Appendix Three Enterprise analysis framework Good practice in the management of legacy ICT Strategy and
business model Strategy and business model There is a clear strategy in place for the service, which the organisation regularly reviews
and updates to reflect changes in its business environment and/or exploit new technologies Business case and funding Business case (s) for replacement reflect good
practice (e g. HM Treasury Green Book), are reviewed regularly and challenged, and opportunities are exploited and managed
Ongoing costs Costs of the services are understood fully and managed against a budget and prioritised business demands.
Costs are challenged and optimised, and the value of asset/investments is exploited fully Governance architecture and
standards Technical governance Technical governance arrangements provide strong and effective oversight and direction on the ICT portfolio and the lifecycle of
the legacy system. Regular meetings take place between business and IT to identify and prioritise changes in business requirements and legacy ICT
capabilities, risks and issues, opportunities and threats Enterprise architecture There are clear links and strong alignment between
the IT strategy and business strategy, and the legacy system is supported by a documented comprehensive technical architecture
Data quality and assurance A clear and consistent strategy for data standards and architecture ensures a coordinated approach to continually
Key stakeholders have clear visibility of the level of risk exposure Implementation Lifecycle management The system is readily adaptable to changing business
NHS Prescription Services: the impact of legacy ICT Appendix Three 35 Decommissioning legacy All legacy systems have been identified and
reviewed and improved in partnership with the end-users and/or customers and service delivery performance is compared regularly with target
performance and good practice benchmarks. The dependency of the legacy system on service performance is known,
Management of supplier services Outsourced services are managed actively and regularly market tested to ensure value for money,
which inputs to management decisions about future direction and investment There is a tailored organisation wide training programme with clear success
activities are aligned with the needs of the service and its customers Succession plans are in place for all key roles
36 Appendix Three NHS Prescription Services: the impact of legacy ICT Process Business processes Development or improvement of business processes is
environment using standard protocols or common application programme interfaces. Software versions are current and fully supported with plans in
the production environment exist or can easily be created and removed as required Source: National Audit Office enterprise analysis toolkit
NHS Prescription Services: the impact of legacy ICT Appendix Four 37 Appendix Four National Audit Office reports on government
ICT NOTE 1. For published client reports focused on ICT see next page Source: National Audit Office
38 Appendix Four NHS Prescription Services: the impact of legacy ICT Published client reports, focused on ICT
Shared services in the Research Councils, October 2011 Infrastructure 10 Department for Environment, Food and Rural affairs:
Geographic information strategy, July 2011 11 Home office and National Policing Improving Agency: Mobile technology in
NHS Prescription Services: the impact of legacy ICT Appendix Four 39 People delivering and operating government ICT
14 Department for Environment, Food and Rural affairs and the Animal Health and Veterinary Laboratories Agency:
services through the Business Reform Programme, July 2012 DP Ref 10184-001
ICT, E-BUSINESS AND SMES ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT 2 FOREWORD This report was undertaken by the Working Party on the Information Economy (WPIE), and
carried out in co-operation with the Working Party on SMES and Entrepreneurship. It was prepared for the
second OECD Conference of Ministers Responsible for SMES held in Istanbul 3-5 june 2004 and hosted
which governments may draw in promoting innovative SMES in the global economy Graham Vickery and Ken Sakai, Inho Lee and Hagbong Sim of the OECD€ s Directorate for
Business environment...4 Network infrastructure...4 Trust infrastructure...5 Digital products and information services...5
Skill upgrading...5 Intangible investments and assets...5 Information...5 Government on-line...6 Competition...6
Intellectual property...7 INTRODUCTION...8 I. BENEFITS AND USE BY SMALL BUSINESSES...9 Benefits of ICT and Internet use...
9 ICT adoption and firm performance...11 Use of ICT and Internet among SMES...11
Information and communication technology (ICT) connectivity (PCS and Internet) is very widespread in businesses of all sizes.
firms and the structure of their values chains and operations shape opportunities for small and medium size
enterprises (SMES. Principal reasons for non-adoption are lack of applicability and little incentive to
change business models when returns are unclear. SMES also face generic barriers to adoption including trust and transaction security and IPR concerns,
appropriate business environments for e-business and ICT uptake (e g. to diffuse broadband, enhance competition), and target programmes to overcome market failures to the extent that they are needed in
particular areas (e g. skill formation, specialised information. Governments have a range of SME e -business and Internet use programmes.
Business environment A healthy business environment is fundamental for firms to thrive and benefit from ICTS.
This includes a transparent, open and competitive business framework, clear independent rule of law for all firms, easy set up and dissolution of businesses, transparent, simple and accessible corporate regulation
economic growth, facilitates innovation, and promotes efficiency, network effects and positive externalities. The development of broadband markets, efficient and innovative supply arrangements, and
effective use of broadband services require policies that: promote effective competition and continued to stress liberalisation in infrastructure, network services and applications across different technological
platforms; encourage investment in new technological infrastructure, content and applications; and technology neutrality among competing and developing technologies to encourage interoperability
innovation and expand choice. Public financial assistance to expand coverage for under-served groups and
remote areas could complement private investment where appropriate, provided it does not preempt private sector initiative or inhibit competition. 1
1. OECD (2004), Recommendation of the Council on Broadband Development; OECD (2003) Statement by the
OECD Committee for Information, Computer and Communications Policy, Broadband driving growth: policy responses, 3 october 5
Trust infrastructure Get the regulatory infrastructure right for trust, security, privacy and consumer protection Essential are a culture of security to enhance trust in the use of ICT, effective enforcement of privacy and
between all stakeholders is necessary to reach these goals. Of particular relevance for small firms are low
Digital products and information services These are an increasingly significant part of economic activity and they offer important
opportunities to small firms. Government and the private sector have key roles in facilitating content
availability across all platforms and encouraging local development of new content, including content from public sources
Intangible investments and assets Firms increasingly rely on intangible investments and assets (skills, organisation, software networks) for competitiveness and growth.
However common frameworks to identify, measure and report intangible investments and assets still need to be developed
and be accepted widely. There is a significant role for governments in conjunction with business associations and accounting bodies to encourage
On-line provision of government information and services can increase the efficiency and coverage of public service delivery to small firms,
broadband-based services and content, provide demonstration and â€oepull-through†mechanism for small firms. Government demand aggregation to provide services can help spread new services more widely
Education, general government information and services, and provision of government services to businesses and citizens can all potentially benefit from the use of new high-speed infrastructure and
services, and should be given priority in government strategies Key Policy Recommendations •Move beyond policies for basic connectivity and ICT readiness to facilitate more widespread uptake
and use of complex ICT applications and e-business uptake by small firms. Target programmes where
there are demonstrated market failures (e g. R&d incentives, frameworks for standards, skill formation information and demonstrations on best practice
and promote broadband competition and liberalisation in network services and applications. Where the needs exist,
and without preempting private initiative or inhibiting competition, complement private investment with public financial assistance to expand
coverage for under-served groups and remote areas •Strengthen the infrastructure for trust, security (including spam and viruses), privacy and consumer
Strengthen cross-border co-operation between stakeholders and the development of rules with cross-border application
E-government services to enterprises should be used as a tool to improve efficiency of government interactions and operations with SMES
Competition Governments and competition authorities need to be aware of the impacts of e-business networks
on small firms. Business to business networks are restructuring value-chains with potentially very large lock in effects and impacts on small firms.
Information and communication technology (ICT) and e-business applications provide many benefits across a wide range of intra-and inter-firm business processes and transactions.
communications and quality of services for established and new customers Despite these advantages, rapid growth in businesses†purchases and sales over the Internet has
The situation is similar for small and medium-sized enterprises (SMES), although they lag behind larger firms in Internet transactions
investment and maintenance costs. Commercial considerations and potential returns drive adoption Beyond a certain level of connectivity (PC, Internet access, on-line information or marketing), not all
small-firm systems, network infrastructure and Internet-related support services. Lack of reliable trust and
expand and improve the quality of network infrastructure and legal and regulatory environment, foster technological diffusion and create a favourable business environment.
Beyond these general framework policies, specific policies for SMES have focused on ICT and e-business awareness programmes, business
consultation services and employee and management training to enhance ICT and managerial skills Policies have shifted over time as firms
and economies have moved from concentrating on e -readiness and connectivity, to diffusion and use, and are moving towards mature e-business strategies
which blend broad policies for the business environment with polices for particular areas such as IPRS and
competition. Policy has moved beyond a narrow concept of e-commerce (on-line transactions) to a wider view of e-business integration of internal and external processes, based on technology neutrality.
providing them with information to assess the opportunities and costs of e-business. However there is no
leading or lagging countries) and sectoral distribution of economic activity, as well as size factors 9 I. BENEFITS AND USE BY SMALL BUSINESSES
most small firms, including micro-enterprises with fewer than ten employees, now have at least one
Communication via e-mail and the Internet can help to improve external communication, in either B2c or B2b contexts,
its applications can make communication within the firm faster and make the management of the firm†s
ICT applications such as KMS (Knowledge management System) and ERP (Enterprise Resource Planning) allow firms to store,
respond more effectively to customers. A company-wide electronic data source aims to disseminate employees†professional experience, for example tips for winning a contract, from which others in the firm
communication can reduce information asymmetries between buyers and suppliers and build closer relationships among trading partners (Moodley, 2002.
3. In this document, small and medium-sized enterprises (SMES) are firms with fewer than 250 employees unless
the sale or purchase of goods or services conducted over the Internet, with the goods and services ordered over the Internet,
and payment and ultimate delivery of the goods or services either on line or off line.
The OECD€ s broad definition includes transactions conducted over computer-mediated networks, such as the Internet, EDI (electronic data interchange), Minitel and interactive
In the B2c context, the Internet and e-commerce can be effective tools for better communication
services or technologies can enhance the quality of a firm†s services to customers and attract new customers.
By collecting information on customers†needs, it can be used for product development or innovation. A home page with a direct link to
SMES€ motives for Internet commerce include reaching new/more customers, geographic expansion of market and improvement of service quality
Box 1. ICT use for better internal communications and customer management In SMES, there is often insufficient sharing of business information between managers and
To improve a firm†s responsiveness to customers, client feedback and information on employees†professional experience, such as know-how for winning a contract,
communications and have improved their reputation through swift responses to customers†complaints and an ability to capture clients†(hidden) needs (METI, 2001
access general information about customers and previous correspondence concerning their complaints Another firm with 40 employees, has established a company-wide intranet with an on-line BBS (bulletin
to gain access to new customers and to expand their markets geographically. Internet technology makes it
players with an opportunity to join and compete in a wide variety of supply chains,
substantial capital from larger firms (Sakai, 2002. Moreover, the Internet can convey the ideas of
Extensive use of ICT can allow micro-enterprises with ideas and technologies to remain small and profitable,
and some micro-enterprises have generated substantial global sales by exploiting their intellectual property over the Internet
Use of and investment in ICT requires complementary investments in skills, organisation and innovation and investment and change entails risks and costs as well
as bringing potential benefits. While many studies point to the possibility of market expansion as a major
users, especially when they used communication technologies, including company-wide and/or inter-company computer networks
customised products and better response to client demand. Moreover, it indicates that ICT may help reduce
inefficiency in the use of capital and labour, e g. by reducing inventories, and that the more customers or
firms are connected to the network, the greater the benefits (spillover effects. However, the analysis shows
that complementary investments in skills, organisational change and innovation are key to making ICT work, and that the use of ICT affects firm performance primarily
investments and that without these, the economic impact of ICT may be limited Use of ICT and Internet among SMES
generally higher in larger enterprises, the gap between larger firms and SMES is narrowing. In most OECD
between 60%and 90%(Figure 1). Even in micro-enterprises, the penetration rate is nearly 60%in most
as measured by profit or sales, is associated not with computer use (Bitler, 2001 12 Differences in Internet access in the 21 countries for which data are available seem to be greater
for smaller enterprises. The Nordic countries have a more homogeneous distribution across firms of different sizes,
Note 1. In European countries, only enterprises in the business sector, but excluding NACE activity E (electricity, gas and water
data is the Eurostat Community Survey on enterprise use of ICT. In Australia, all employing businesses are included, with
includes enterprises with NZD 30 000 or more in turnover. Switzerland includes the industry, construction and service
OECD, ICT database and Eurostat, Community Survey on ICT usage in enterprises 2002, May 2003
for better external communications and as a means of obtaining business information. In Japan, the most
common use of the Internet is general information searches (Figure 2). Other uses include communication via e-mail, providing information about a company†s products, services and technologies via the corporate
Web site, order exchanges with regular customers, recruitment and receiving customer feedback. Some SMES purchase some standard materials, office equipment and software over the Internet,
but only a small share conduct B2c and B2b Internet e-commerce for nonstandard products. A study of 484 SMES with
%of the firms with the Internet use it to learn about competitors, customers or suppliers.
include providing product information (56%),setting up a Web page (54%),purchasing goods/services 53%)and building customer connections (48%)(Scally et al.
it still accounts for a relatively small proportion of economic activity for firms of all sizes
the whole economy (see OECD 2002b and 2002c. Purchasing over the Internet is more common than
communications, financial intermediation, real estate, renting and business activities. The surveys of Denmark, Italy Finland and Norway do not cover financial intermediation;
Denmark and Norway also survey personal services 1. Beginning of 2001 for Internet use; purchases and sales refer to 2000, for Canada,
2001, selling over the Internet by micro-enterprises with 5-9 employees declined from 16%to 13%and by
%In Norway, only 12%of micro-enterprises with 5-9 employees engaged in on-line sales in 2001, down from 21%in 1999,
In mid-2003, e-Choupal services reached more than 1 million farmers in nearly 11,000 villages.
External relations with customers as well as internal processes are being linked. Marketing and sales, logistics and delivery, after-sales service, supply chain
applicability to the business, preferences for established business models, and the kinds of electronic transactions SMES are involved in
goods or services did not lend themselves to Internet transactions Figure 7. SMES in Europe:
Does not apply to the type of enterprise/product Micro f irms w ith 0-9 employees
application used by these firms is automation of communications and none had conducted B2b or B2c
Some SMES in transport services also consider that the Internet does not suit their industry.
Very few of its regular customers had used the Internet and some preferred receiving confirmation of their order via fax or telephone
retain their current business model and avoid the risks associated with new investments and new business
models. Strong links with customers and suppliers along the value chain as well as the lack of competition
in the related market may also discourage businesses from introducing new business models which would threaten existing transactions channels
Enabling factors: internal ICT and managerial knowledge SMES generally lack the human technological resources needed for ICT and e-commerce
If firms can access affordable outside ICT services, lack of ICT expertise within the firm is not
e-commerce business model. Without internal technological capabilities, dependence on ICT support services for system maintenance can be dangerous
because firms that conduct e-commerce have to live with the risk of computer viruses and other system failures.
If ICT support services, especially in an emergency, are needed to minimise the loss from a system malfunction, the e-commerce system of the firm
The existence of local ICT services is an important issue, especially for small offices in remote areas or emerging economies, where ICT services
are generally scarce and costly 21 Box 3. A magnet manufacturer†s e-commerce success Ni-roku is a Japanese magnet manufacturer with 12 employees,
although they still do not accept customers outside of Japan In 1996 a company employee bought a personal computer at his own expense to use the Internet
to (potential) customers lured 1 000 visitors to the site during the peak early month.
and are less sure of the expected returns on the investment Some SMES cannot afford to adopt sophisticated ICT solutions (e g. a Web site with a secure
environment for credit card transactions. Some small businesses, especially micro-enterprises with 1-9 employees or the self-employed, may adopt a simple Web site without any e-commerce function if the
cost of basic Internet use is well within their marketing Budget for example, in the United states, typical
Percentage of total investment in Internet e-commerce. N=34 Source: Ernst & young (2001 Logistics services, e g. package collection and delivery, also matter.
While they can be subcontracted to private delivery services, some may charge higher rates to small businesses because of
their location and/or small volume (Phillips, 2002. This is a real concern for small businesses, especially
those in remote districts where private package collection/delivery services may not be available at reasonable cost.
They are concerned more about how to increase their profits by using e-commerce than about costs of
The availability of a wide range of Internet connections and other communication services preferably at competitive prices, is very important in that it allows small businesses to choose different and
appropriate services according to their specific needs and (initial) expectations from on-line activities Fixed telecommunication networks are likely to continue to serve as the primary means of
communication networks is an important policy area for e-commerce readiness, especially in the emerging economies (Box 4). Most OECD countries have a similar number of fixed telecommunication access lines
i e. traditional copper lines and ISDN lines, per 100 inhabitants (OECD, 2003b. The telecommunications infrastructure is also growing rapidly in non†OECD countries,
very rapidly growing and globally competitive IT and ICT-enabled services industry 23 Figure 9. Fixed and mobile phone growth in seven non-OECD countries and the
Increased competition in the telecommunications industry has been driving down access costs For example, prices of leased lines,
significantly in recent years, following widespread liberalisation in the communications sector in Europe Figure 12.
Box 4. Network infrastructure in developing economies For most developing economies the highest priority is to put in place the network infrastructure
and a competitive environment and regulatory framework that support affordable Internet access (Tigre and O†Connor, 2002
Developing countries with widespread access to telecommunications and network services i e. 40 mainlines or more per 100 people) are rare.
Some smaller countries, such as those in the Caribbean Hong kong, china, Chinese Taipei and Singapore, and more developed regions within large countries have
services. For low-income and rural populations, universal access programmes are needed to make adequate telecommunications available in areas where telecommunication operators cannot
%of total revenues to a fund aimed at providing services to those excluded from the market
and investors, not individual customers. Some placed detailed corporate information on the site to illustrate
demand secure transaction environments, SMES are likely to face increasing costs for system protection and security measures (Phillips, 2002.
and business environment is developed not well and these barriers will take precedence particularly for SMES.
and a favourable business environment is established well concerns are similar to those in OECD countries,
Customers do not use the technology 26.9 27.4 26.9 48.5 20.0 47.6 33.6 27.8 32.6
environments are one of the most important. Legal uncertainties and conflicting regulatory environments for cross-border transactions, especially B2c, may affect SMES particularly strongly.
There is neither a harmonised legal framework with rules pertaining to the determination of jurisdiction and applicable law
other (self) efforts, such as insisting on contract fulfilment through available means of communication e g. phone, fax, letters) especially when dealing with a foreign counterpart
customers, cost of engaging in e-commerce, telecommunication costs) were seen also as largely positive for adopting firms
sure of commercial exploitation and the wider business environment 30 In other areas small and large firms had similar concerns,
For example they were positive about costs of engagement (investment costs) in e-commerce and highly positive about their strategies reducing costs to reach customers,
with small engaged firms being almost as positive as large ones (OECD, 2002a 31 III.
targeted range of customers either locally or globally, either in B2b transactions (automobiles, textiles) or
When firms perceive a higher level of market opportunities, they commit more resources to ICTS and e
higher percentage of firms in manufacturing, wholesale and business services receive orders over the Web
%Construction Retail Wholesale Manufacturing business services Distribute information on products Receiving orders Order confirmation Source: European commission (2002a
and business services: 910 Tourism In tourism, an area dominated by SMES in OECD countries, some small tour operators, hotels
expensive) services. Some small travel agencies, making the most of ICT, take advantage of direct on-line sales of (discounted) airline tickets
Since the Internet and many travel-related sites allow on-line customers to compare the price of
air tickets and other travel services, small firms offering best/better prices can win price-sensitive
On the other hand, the number of potential customers, some of whom may prefer a smaller agency†s prices
and services, is not small: in the United states, over 64 million people used the Internet for travel planning, little changed from 2002 due to the slower growth of â€oewiredâ€
last-minute solution for customers. Transaction costs over the Internet can be significantly lower than those
Use of Internet commerce among SMES in the retail industry is lower than in business services
because customers may prefer not to make a purchase at a small on-line shop without knowing about its product/service quality and
level of services from better-known retailers, such as swift and reliable delivery of the purchased items
services, which customers may not receive from larger shops. Some small on-line book retailers have been successful by distinguishing themselves from others through specialisation in particular kinds of
Others have attracted customers worldwide by offering both specialised products and customised services (Box 5 33
Textiles Textile products, along with music and video, books and magazines and software, are among the
B2c e-commerce generally does not justify a small retailer†s investment In the form of EDI linkages, B2b e-commerce has existed long between major retail chains and
The site has attracted customers not only in the United kingdom and Ireland but also throughout the world Australia;
customers who have bought an instrument through the site. Some customers, impressed by the presentation of the
instrument on the site visit the physical shop. The Web site can also be found through Violink, a popular
demands and specifications for justin-time parts delivery. Most suppliers, even large ones, see EDI (and
customers) and customer push has been a major factor in the adoption of EDI by the sector (Iskandar et al
and these benefits of EDI are considered to be largely in favour of their customers To realise larger benefits by streamlining business information and materials flows, as well as to
attempted to integrate different communication networks into a single Internet network. This should allow high quality, high speed and security measures to protect the transmission of confidential data and other
in part due to problems in designing a global business model for these exchanges and in part due to difficulties attracting small suppliers
products of services like tourism, which are intangible in nature and have a high information content,
finance, where firms perceive a higher level of market opportunities, they tend to commit more resources
capabilities and ability to identify business opportunities are greater for SMES than larger firms. In many
-business strategies, awareness raising and consultation services, and management education and training Governments have used many policies to encourage the diffusion of e-business and Internet use
from fostering technological diffusion to creating a favourable business environment with fair and predictable rules.
These are drawn from both general enterprise policy and from ICT policies. The overall policy framework is no different for SMES than for larger firms except for some areas such as competition
where there are differences in impacts between small and large firms. In addition, the policy agenda has
and target smaller enterprises that are potential or low-level users that could further benefit from more extensive use
and communication services at competitive prices is particularly important, as this allows firms to choose
services appropriate to their needs. In particular, broadband, characterised by high-speed, â€oealways-on†connection and two-way capability, allows faster access and delivery of existing on-line services and new
applications and services such as streaming audio and video over the Internet with much higher quality.
In this context, an additional focus on the wireless network infrastructure and the rapid growth of Wifi are
The price and availability of broadband access depends to a large extent on competition in the
incumbent local access networks to competition (e g. unbundling local loops and line sharing) create incentives for new investment in broadband access and drive faster deployment of broadband services
OECD, 2001c. From 1997 to 2001,26 OECD countries introduced or decided to introduce unbundling Unmetered pricing is also important for wider use of broadband.
High-speed services are advantageous when priced on a flat-rate monthly basis and service is â€oealways on†(OECD, 2001b
can choose among various technologies and services for high-speed Internet access. While some large firms use directly connected leased circuits for broadband applications,
smaller enterprises are likely to prefer technologies using a traditional telephone line, such as DSL, as these generally represent the initial
opportunity for SMES to obtain affordable higher speed Internet connections (OECD, 2001b. In developing countries, multi-user services can be a very important tool for increasing coverage and use of
advanced services and could be supported where universal service is difficult to attain (see E-Choupal
example in Box 2 Assessing benefits relative to costs SMES will adopt e-commerce when benefits justify establishing
Firms need to make realistic assessments of e-commerce/e-business opportunities, benefits and costs. Policy measures that,
awareness-raising and consultation services can be beneficial. Such initiatives can also encourage SMES to
and personalised services not provided by larger firms. On the cost side, open source software has been proposed as an economically viable solution for establishing
Financing may be an issue even after identifying beneficial e-commerce/e-business opportunities Many commercial factors inhibit small business debt financing including high transaction costs for small
loans, lack of sufficient collateral and high risk in innovative start-ups and micro-enterprises. To the extent
especially when consultation services are provided to help develop business strategies based on realistic assessments of benefits and costs
that their use of on-line services is secure, reliable and verifiable. Businesses need a legal framework that is
environment are reflected in the 2002 OECD â€oeguidelines for the Security of Information systems and Networks: Towards a Culture of Securityâ€, a revision of the 1992 â€oeoecd Guidelines on Security of
customers, but cross-border transactions with new and unknown partners still present challenges. If there
view, ADR advantages include speed, economy, flexibility and neutrality. It is also more effective for
customers because it provides an easy-to-access redress procedure and may also save travel costs, which
regulatory environments. The 1999 â€oeguidelines for Consumer Protection in the Context of Electronic Commerce†have been disseminated widely
laws to ensure sufficient consumer protection in the on-line environment. The guidelines also complement other government and private initiatives to develop B2c codes of conduct and trustmarks for on-line
Competition issues Ensuring competition and entry opportunities for other market players, particularly smaller ones is an ongoing policy priority.
The open architecture of the Internet does not necessarily result in more open markets, because e-commerce among businesses is initiated usually by dominant companies in value
While Internet commerce provides SMES with opportunities to participate in new supply chains and markets, they may compete
Competition authorities need to monitor possible anti-competitive behaviour as the electronic marketplace evolves. Technological factors also come into play.
Most competition authorities in OECD countries, independently or in co-operation with others in different jurisdictions, have examined how on-line markets,
larger dominant suppliers and customers that could exercise anti-competitive pressures and lock in E-government
E-government, the provision of government services on line, has high priority in many OECD
transparency and expanded provision of information and services (OECD, 2002b. Examples include the provision of government services on-line, the simplification of administrative tasks such as value-added
tax administration and business tax lodgement and collection. These on-line activities can also have significant effects on small businesses as they need to ensure access to government services and obligatory
requirements and interoperability with these services, affecting their choice of systems and software Technology neutrality and the interoperability of a variety of network infrastructures and software is
essential when initiating e-government projects In addition, e-government activities have demonstration effects for SMES by providing them with
invoicing, supply chain management, inventory, logistics and delivery, after-sales services, and other crucial business functions such as knowledge management, and finance.
and focus on self-assessment of opportunities, benefits and costs of e-business. Third is need a to coordinate
of e-business issues with links to related support services, seminars and workshops that demonstrate possible integration of ICTS and e-commerce into SMES€ processes are common (Table 2). Government
Information Economy is a comprehensive on-line resource that is aimed at business people who want a
NET An industry-led, not for profit, national initiative to foster awareness of e-commerce among
Austria Let†s e-Biz The on-line information source established by the Ministry of Economics and the Chamber of
works closely with the E-business Opportunities Roundtable, a private sector initiative, on a series of regional events to help SMES understand
first place, they should help SMES self-assess the costs and risks as well as opportunities related to e
Some government programmes have included one-to-one consultation and support services to develop a customised e-business strategy.
Free consultation, including (limited) access to private services has been available in some countries, while some governments have covered part of charges.
conjunction with ICT and e-commerce awareness and business consultation services. This reflects the recognition of the importance for small business managers and employees of ICT applications and required
information and consultation services with off-line business support services. The Learndirect programme offers both on-line access to ICT training and off-line consultation with trained staff at local Learndirect
demands for ICT skills are dramatically changing and more specialised. Commercial training services may be more sensitive to businesses†changing and specific needs and government training programmes need to
cooperate fully with commercially available services. Governments may also need to encourage a favourable business environment for provision of private ICT training services at a reasonable cost
Business management capabilities are becoming a new category of generic competency in the context of overall management of business processes, rather than ICT technologies alone.
Training programmes therefore need to be focused more on managerial understanding and skills for e-business, such
as how to effectively integrate e-business processes into existing business models and strategies to change organisational structures
economy. One focus is to provide training to a large number of SMES during the period
Spain A programme is designed for micro-enterprises (fewer than 20 employees) in small towns with a special emphasis on training in the use of the Internet, e-mail and new management
At a state level, various training services are available. Business Information Centres and Small Business Development Centres provide free or low-cost up-to-date training.
wide range of e-business environment, Internet and ICT use issues. eeurope 2005, Helping SMES to go
framework policies including access to infrastructure, a seamless legal/regulatory environment, on-line security, authentication and consumer protection
and economies have moved from concentrating on e -readiness, connectivity and awareness, to diffusion and use,
e-business strategies which blend broad policies for the business environment with polices for particular areas such as IPRS and competition
•Focus on facilitating SME participation in B2b product and sector value chains, including technology neutrality and interoperability among different systems
opportunities, benefits and costs, and the development of niche products and services. Reduce discriminatory access to finance,
and improve information regarding financing opportunities These issues may be of particular importance in developing non-OECD countries
•Training programmes for SME managers and employees focusing on both technical and managerial skills need to be provided in cooperation with business and sector organisations
training institution and commercial training services •Continue to ensure open, competitive telecommunication markets that offer a range of
interoperable technological options and network services (particularly broadband) of appropriate quality and price. This is a crucial factor in developing non-OECD countries
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