Building National and Regional Building National and Regional ICT BrandsICT Brands

How to Build a Successful eCommerce Strategy – Lessons from Ireland

Presentation by:

Adrian Devitt Forfás

02 December 2002

Role of ForfásRole of Forfás Advisory Board for Industrial and Enterprise Development and

Science, Technology and Innovation Advises Minister for Enterprise, Trade and Employment on the

development of state policies to stimulate enterprise and employment

Comprehensive view of Industrial Policy

Images of IrelandImages of Ireland

OLD “Poorest of the Rich” – The Economist (1986) Characterised by high levels of unemployment

and outward migration

NEW The Celtic Tiger Silicon Isle Fiber Hub of Europe

Where Ireland has come from.Where Ireland has come from.Irish GDP per Capita as a % of EU Average for 1960-99 (EU = 100)Irish GDP per Capita as a % of EU Average for 1960-99 (EU = 100)

60

80

100

120

140

1960 1973 1986 1999

Ireland UK

How to Build a Successful eCommerce Strategy How to Build a Successful eCommerce Strategy – Lessons from Ireland– Lessons from Ireland

Acceptance of the Importance of the ICT Sector to Future Economic Development

Establish where you are now: eBusiness eGovernment Information Society

Going Forward Develop Sectoral Strategies Promote a Positive eBusiness Environment

Acceptance of the Importance Acceptance of the Importance of the ICT Sector to Future of the ICT Sector to Future

Economic DevelopmentEconomic Development

GDP growth 9.3% p.a. over 1995-2001 Advanced/knowledge-intensive sectors:

Contributed 45% of annual growth Account for 25% of GDP Contribute c. 65% of exports

Almost a third of the PC’s sold in Europe come from Ireland ICT Trade Surplus 9% of GDP

Growing proportion of software distributed digitally Development as world e-Business centre further evolution of

development process

Knowledge Economy Driving Growth iKnowledge Economy Driving Growth in n Ireland - NowIreland - Now

The Future of ICT…The Future of ICT…eCommerce Continues to GroweCommerce Continues to Grow

IT and communications sectors of the world economy are forecasted to grow at annual rates of 30-40% p.a. over the next decade, or ten times the rate of the rest of the economy.

In spite of the downturn, B2C ecommerce continues to grow at a 39% CAGR and B2B ecommerce continues to grow at a 47% CAGR.

Source: eMarketer aggregation from IDC, Forrester and Jupiter

$0.0

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

2000 2001 2002 2003P 2004P

B2B Growth ($ in Billions) B2C Growth

($ in Billions)

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

2000 2001 2002 2003P 2004P

The Future of ICT…The Future of ICT…U.S. Bandwidth Demand Growth % U.S. Bandwidth Demand Growth %

30 33 3542

50

6270

79

90

40

55

0102030405060708090

100

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06

Source: BCG McKinsey/JP Morgan

Importance of ICT LeadershipImportance of ICT LeadershipGoing ForwardGoing Forward

Potential to accelerate economic development by:

1. Developing business service activities for next generation Internet infrastructure, applications and services

2. Spawning ground for software and services companies producing media and broadband products and services

3. Enhancing attractiveness as R&D center

4. Enhancing opportunity for regional development

5. Creating an Internet literate population

6. Creating an image of Ireland as world economic and technology leader

Importance of ICT Leadership cont’dImportance of ICT Leadership cont’d

Potential to accelerate business development: Innovation: Active e-commerce users on average report twice

the proportion of new products and of improved products in sales

Market Introductions: Use of e-commerce related to doubling of sales of products new to market

Market Share & Access to New Customers: Innovators with successful new product launches twice as likely to be e-commerce users

Skills: e-Commerce users associated with 20% or more employees at degree level, compared with less than 10% for non-ecommerce users

Source: Electronic Commerce and Business Change, ONS UK, June 2002

Importance of ICT Leadership cont’dImportance of ICT Leadership cont’d

Vast Improvement in Citizen Services

Health Care Education and Training Enhanced Family Life through Workplace Flexibility Enhanced Delivery of Government Services Lifeline for those with Disabilities Better dissemination of Culture and Entertainment

Establish where you are now: Establish where you are now:

Three mutually reinforcing pillars,Three mutually reinforcing pillars,

1.1. eBusinesseBusiness

2.2. eGovernmenteGovernment

3.3. Information SocietyInformation Society

1.1. eBusinesseBusinessIreland - Existing Centre for ICT IndustryIreland - Existing Centre for ICT Industry

300+ major electronics companies

80,000+ employed: equipment/software/services

1/3 of all exports

Ireland: world’s largest exporter of software products 40% of Europe's PC packaged software market 60% of Europe's business application software

ICT Companies Based in IrelandICT Companies Based in Ireland

EMC Dell DoubleclickAndersen Microsoft Iona TechnologiesNovell Trintech SmartforceAOL Baltimore ICLHP Bid.Com VikingeTrade Enba EricssonSiebel Informix NortelIntel EDS AccentureSun IBM HP

eBusiness Enterprise CreationeBusiness Enterprise Creation

Ireland was the best represented of the European case study countries in the Deloitte & Touche Technology Fast 500 in 2001, with 10 listings per 1m population (i.e. 38) compared with 2.5 for the second-ranked UK;

Ireland was the best represented of the European case study countries in the Tornado 100 listing of European and Israeli top high-tech companies, with 1.3 listings per 1 million population compared with 1.0 listings for the second-ranked Sweden;

Ireland has more NASDAQ listings per head of population than the other case study countries (excluding the US).

Source: Forfas Research

eBusiness Foreign Direct Investment (FDI)eBusiness Foreign Direct Investment (FDI)

eBusiness Adoption by Ireland-based eBusiness Adoption by Ireland-based “Existing” Enterprise”“Existing” Enterprise”

2000 2001 2002All Respondents/ All Respondents with > 1 PC

% of Enterprise % of Enterprise % of Enterprise

Networked PCs 69% 72% 74%

Internet Access 69% 81% 84%

Own Website 34% 45% 55%

All Respondents with Internet

Access

Narrowband Connection 69% 53% 40%

ISDN Connection 21% 38% 47%

Dedicated Leased Line 8% 6% 9%

Cable 0% 1% 1%

Source: Enterprise Ireland

2. eGovernment2. eGovernmentKey Government Initiatives The Revenue Online Service (ROS) which allows for the online

filing and payment (via direct debit mandate) of taxes, and online access to personal account details and historical returns;

The launch of the integrated portal for business access to Government services (i.e., BASIS) in May 2001;

Introduction of an eTender website; Agreement on an eProcurement Strategy, and planned rollout.

3. Information Society3. Information Society

0

12

3

4

56

7

89

10

11

1213

14

S Fin DK UK NL D A B IRL F I E P EL

EIU 2002 IDC 2001 NRI 2001

e-Business development e-Business development Going ForwardGoing Forward

Environment Support Levels Enterprise Development Levels

Taxation & Finance

Legal & RegulatorySecurity &

Trust

Research &Development

NationalInfrastructure

Support Services

Skills

Education

ICT adoption& use Investment in

e-Business Growth in numbers of e-Businesses

Numbers employed

NationalStrategy

E-BusinessMarket Size

E-BusinessExport growth

E-business Development

Number of e-Commercetranscations

Electronic BusinessProcesses

E-Government

Develop Sectoral StrategiesDevelop Sectoral Strategies Existing SectorsExisting Sectors New Emerging SectorsNew Emerging Sectors

Enterprise Development LevelsEnterprise Development Levels

Existing SectorsExisting Sectors

Current StatusCurrent Status

Sector Website % of Sales Achieved

Over Internet

1. Pharmaceuticals 68% 2.3%

2. Engineering 55% 0.2%

3. Electronics 76% 0.3%

4. Consumer Food 44% 0.3%

5. Consumer Products 61% 0.2%

6. InfoComms 94% 1.5%

7. Finance/ Healthcare/ Software 95% 5.6%

8. Digital Media/ eCommerce/ Training 89% 0.4%

9. Total 67% 0.7%

Key Technology TrendsKey Technology Trendsand Strategies Going Forwardand Strategies Going Forward

eBu

sin

ess

evo

luti

on

an

d

bu

sin

ess

ben

efit

Intranet /Web-mail

Web page

Order taking, making

and tracking

eBusiness functionality implemented

Supplier Integration

Full supply chain

integration

INFORM INTERACT TRANSACT INTEGRATE

New Emerging SectorsNew Emerging Sectors

For Example – Digital Content

A Strategy for the Digital Content Strategy in Ireland – Forfas – November 2002. (www.forfas.ie)

Five Key Niches for Ireland e-Learning Games Wireless Services Digital Libraries Non-Media Applications

Promote a Positive eBusiness Promote a Positive eBusiness EnvironmentEnvironment

Key Pillars of SuccessKey Pillars of Success

Strong Enterprise Sector (Indigenous and Overseas)

National eCommerce Strategy

National Partnership

Skilled Labour Force

Competitive Regulatory Framework

High Specification R&D Programmes

Telecommunications

National eCommerce StrategyNational eCommerce Strategy

Single Published Overarching Vision and Strategy (New Connections)

Lead from the Top (eMinister) (Ms. Mary Hanafin, TD)

Dedicated Executive Agency - Information Society Department (Information Society Commission)

Commitment to Investment (Information Society Fund)

Clear and transparent Schedule for implementation (Web Based)

National and International benchmarking of progress (Forfas, eEurope)

National PartnershipNational Partnership

Five national partnership agreements between social partners since 1987 Wage restraint but also consensus on a wide range of

economic and social policy areas - National Competitiveness Council (NCC) Information Society Irish Council for Science, Technology & Innovation

(ICSTI) Expert group on Future Skills Needs (EGFSN) Advisory Committee on Telecommunications

Partnership with representative bodies and within public administration to address business needs

Labour Force: High Skills and FlexibilityLabour Force: High Skills and Flexibility

Schools IT2000 There are at least 56,000 computers in Irish schools

Third Level Creation of 5,500 additional software places in the Universities

Expert Group on Future Skills Needs (€165 in further ICT Education)

Rank highly for the “fit” between its educational system with its high output of third-level graduates in computer science and engineering – and the needs of a competitive economy. (Source: The IMD World Competitiveness Report)

Competitive Regulatory FrameworkCompetitive Regulatory Framework

eCommerce Act 2000 enabling digital signatures

Copyright and Related Rights Act, 2000

Broadcasting Act, 2001

Communications Regulation Act 2002

Pro-competitive approach adopted by regulators

High Specification R&D ProgrammesHigh Specification R&D Programmes

NDP allocation – Government has made provision for the sum of around €2.5 billion in the National Development Plan (2000-2006)

Science Foundation Ireland (SFI) – government established €635m fund over the seven-year period for investment in world-class research in niche technology deemed capable of driving economic competitiveness in the longer term ICT Biotechnology

Media Lab Europe - Digital Hub

TelecommunicationsTelecommunications1. Enhanced International Connectivity1. Enhanced International Connectivity

Forfas and others recommended a significant upgrade of international connectivity

Agreed partnership with Global Crossing in 1999

Direct landing provides 160 Stms plus additional capacity and dark fibre available

Pan-European, pan-America and Asia-pacific connectivity

Two dedicated telehouses & 16 internet data centres

360 networks completed link to Canada in 2001

Global Crossing Ireland and Pan-European Network

International Leased Line Price Basket International Leased Line Price Basket August 2002August 2002

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2. National Connectivity2. National Connectivity

€190m of co-financing funding allocated under National Development Plan 2000- 2006

Objective:

“…to facilitate the benefits of the emerging new digital economy being evenly spread across the Region and to contribute to economic and social cohesion in the Information Society”

Local access infrastructure a priority

Deliver through Regional Assemblies and multiple partnerships

Two-thirds of co-funded targeted at Objective 1 Border, Midlands and West Region (€140 million)

National Fibre Optic NetworkNational Fibre Optic Network

Shannon

Wexford

Waterford

Cork

Arklow

Limerick

Roscrea

Portlaoise

DublinGalway

Lanesboro

Sligo

Ballyshannon

Dundalk

Drogheda

Letterkenny

Buncrana

Kilmore Quay

Ballinesker

Lifford

OptionsTowns Served

Regional Broadband PlanRegional Broadband Plan

Objective – to deliver broadband of 5mBits to homes and substantially greater to Business.

19 Town in Phase I

Key Parts of the Initiative: Building of Fibre Metro Loop around each center Provision of Co-Location space Infrastructure on an open access basis

Over the next 12-18 month 50,000km of networks will be added to the National Stock as part of Phase I

Waterford

Letterkenny

BallinaCarrick-on-Shannon

Monaghan

Castlebar RoscommonCavan

Mullingar

Athlone

Galway

Tullamore

Portlaoise

Kilkenny

Limerick

Clonmel

Carlow

DungarvanCork

Wexford

Youghal, Fermoy,Charleville, Mallow

Tralee, Killarney, Listowel

Ballinasloe, Tuam,

Loughrea, Gort

Westport,

Claremorris

Buncrana, Ballyshannon,Donegal

Dundalk, Drogheda,

Ardee

Carrickmacross

Sligo

Dublin City, Dublin South, Fingal,

Dun Laoghaire/Rathdown

Naas, Newbridge,Kildare, Athy

Arklow, Wicklow

Navan

Portarlington

Longford

Birr, Edenderry

Ennis, ShannonThurles, Nenagh,

Roscrea

Carrick-on-Suir,Tipperary, Cashel

Enniscorthy,New Ross, Gorey

Gweedore

Manorhamilton

Phase One Town in bold

Conclusion: How to Build an eCommerce StrategyConclusion: How to Build an eCommerce Strategy

The Future will be Different; International competition intensifying Recognize the Importance of ICT

Build partnerships – many factors necessary for Success;

Key Learning Points in Ireland Develop policies to the Three key pillars – eBusiness,

eGovernment, and the Information Society There is no single policy solution, however most successful

policy actions are simple ones In leading countries, Government show a willingness to intervene,

e.g., Telecommunications eBusiness complacency does not exist in the leading countries.