Market Analysis of Electronic Business in Switzerland and Comparisons with Europe

A representative market study was carried out to determine the penetration of electronic business in Swiss companies. A random sample was used in which companies were classified by industry and size, thus allowing a systematic extrapolation. We illustrate the importance of information technology for the electronic business by the numbers of computers in use and the corresponding expenditure on information technologies and compare these with figures for a number of other European countries and the USA. Subsequently, we discuss the use of Internet services and of websites, including objectives and success factors for electronic business as well as potential problems with projects in this field. Finally, we classify companies according to the maturity of their achievements in electronic business. 1. OBJECTIVES AND MAIN FINDINGS OF THE MARKET ANALYSIS Electronic business is the integration of IT and particularly the Internet into business processes to change organizations, customer relationships and business. According to some authors, see e.g. [Cunningham/Fröschl 1999], Europe and its companies have problems dealing with both threats and opportunities of electronic business. Is this true for Switzerland? What is the state of the art of electronic business for Swiss companies? Are there projects to reshape the business? What are the success factors and which business objectives have already been met? These and other questions have motivated us to analyse the Swiss market, to evaluate the proliferation of electronic business in Swiss companies, and to grasp some of the experience gained during the implementation of electronic business. Market Analysis of Electronic Business in Switzerland and Comparisons with Europe 55 The analyses in this article are based on a nationwide survey. An information technology market watch on companies has been carried out by the University of Fribourg, Switzerland for a number of years, which has made it possible to do comparisons over time. In addition, the consulting company KPMG brought in its pioneering role in surveying electronic business strategies in Europe. ‘Companies’ here refers to all companies included in the overall total: businesses, administrative institutions, all kinds of associations, and non-profit organisations. The sample for the market study was taken from the Swiss Statistical Office in order to allow a systematic extrapolation by industry and size. Other analyses were made based on absolute numbers without giving answers a specific weight. Methodology and amplitude of the market analysis are given in the Appendix. The main findings of our analysis are: If we compare some ratios, such as the number of computers used or the amount of relevant investment made in Switzerland with figures for neighbouring countries and the USA, Switzerland is found to be in a leading position. We can therefore conclude that the results of this electronic business study in Switzerland will also reflect what is, or will be taking place in other industrialised countries. As a proportion of annual turnover of companies, the extrapolated turnover in electronic business in Switzerland amounts to 2%, with an upward trend. However, companies are also investigating internet technology in order to improve business processes, customer relationships, and service quality. Banks, which were in a leading position up to now with respect to IT, will be outstripped by wholesale trade and insurance business: about 80% of the wholesale companies and over 70% of the insurance companies use the Internet. The lowest use of the Internet is in the retail sector and by manufacturing companies. Companies state that the principal objectives in electronic business are to improve customer relations, to increase order processing speed and to reduce order processing cost. As for process management improvements, electronic business projects have largely lived up to expectations. The most important success factors for electronic business are respect for data confidentiality and security, the setting up of reliable solutions in information technology, and the efforts made with business partners to assure a high level of acceptance. The major obstacles for the implementation of electronic business are a lack of human resources and of technical know-how. In addition, integration difficulties with existing systems and immature software are also major problems. Software solutions for electronic business are very often company owned inhouse developments or further developments of standard solutions. In chapter 2 we illustrate some specific ratios concerning information technologies as a precondition for electronic business. Chapter 3 analyses the results referring to Internet use, the existence of websites, the objectives and success factors of electronic business and problems that have occurred during electronic business projects. Finally, in chapter 4 the companies are classified according to their maturity based on the level of integration of electronic business into business processes. 2. INFORMATION TECHNOLOGIES AS A PRECONDITION FOR ELECTRONIC BUSINESS There would be no electronic business without the appropriate infrastructure. Electronic business is highly dependent on information technology. The state of the infrastructure can show how soon companies will be able to set up an electronic business solution. At the beginning of the year 2000 more than 2 million computers were in use within Swiss companies, which at the same time employed 3.5 million persons. According to the results of our inquiry the number of computers used (without palmtops) has increased by 300,000 units or 17% compared with the year 1998. In figure 1 the computers in use have been classified into the categories of PC, notebook, server and mainframe. Andreas Meier, Stefan Hüsemann, Ambros Lüthi, Daniel Wismer, Harald Häuschen, Kurt Meyer, Pascal Wohlwender 56 The most substantial increase, one of 70% compared to 1998 [Häuschen/Kueng/Wismer 1998], can be found within the category of notebooks. More and more, these machines are replacing desktop PCs. A substantial increase of nearly 50% can also be seen within the category of server.