NZ firms lag in e-business nous

By ADAM GIFFORD

Deloitte Touche Tohmatsu e-business leader Alasdair MacLeod is shocked at the widespread lack of understanding about electronic business among small and medium businesses.

Deloitte this week released a survey of 279 New Zealand firms showing that while almost all had e-mail and two thirds had a website, few were doing electronic data interchange (EDI), online purchasing or online sales.

Some 21.5 per cent said they had spent nothing at all on e-business development, something Mr MacLeod said was alarming given the pace of adoption in other countries.

"The results startled me because I didn't realise New Zealand was so far behind," he said.

The survey revealed an even split, 48 per cent to 49 per cent, between those firms which have done work on e-business strategy and those which have not.

"For those organisations which have implemented an e-business strategy, 74 per cent saw it as being important. The ones which have not done anything don't think it is important," Mr MacLeod said.

"That is a worry. To a degree they are burying their heads in the sand."

The widespread perception is that e-business is business to consumer, whereas business-to-business activities are more important. This is reflected in a finding that 73.1 per cent of firms planning e-business development intend to start with their websites, while only 31.5 per cent are looking at EDI and 27.2 per cent at online purchasing.

"For the vast majority of New Zealand businesses, their strategy will have to start by looking inside rather than outside," Mr MacLeod said.

"A website is important, but it's the last thing I would get to. If you haven't got the business-to-business stuff well thought through and implemented back office integration rock solid, I wouldn't build a website at all.

"If I was a small company in New Zealand, with only a few thousand dollars to spend, I would spend it on strategy rather than a website.

"People are focused on the wrong end. How do you fulfil online orders and maintain a cost/price advantage if you have not done supply chain rationalisation?"

That leads to companies doing things like copying by hand what is written on a screen so it can be sent to the next stage of the order process.

He said businesses were also underestimating the importance of security.


"If you can't afford to do an e-security audit, you can't afford to be online, full stop. A terrifying number of businesses around the world have not thought about security and are getting hacked," Mr MacLeod said.

"A number of New Zealand companies have been hideously damaged in the past few months, with client records corrupted or stolen."

He said too many companies saw e-business as a technical issue.

"It's not, it's a fundamental business issue. You can put it off for some time but you can't put it off forever."

Mr MacLeod said larger companies who were taking a global view were pushing ahead with e-procurement and back office integration.

"The reason a lot of people are not doing anything is because they don't know what to do."

The survey found almost 70 per cent of those who identified themselves as managers said they needed strategic assistance and half needed help with technology.

Deloitte Touche Tohmatsu is holding seminars on issues raised in the survey, and it has also developed a "dotcom in a box" package for mid-market customers, including Great Plains accounting and distribution software and a customisable web front end.

SAP New Zealand has taken a similar approach, offering a "try before you buy" e-commerce starter pack.

SAP's e-business architect, Brent Ellison, said the pack would allow customers to implement business-to-business procurement, an online store and a desktop interface for employees in five days.