The Information Society Initiative is a DTI-led initiative
to promote the use of information and communications technology
within specific segments of UK society; in particular small and
medium-sized enterprises. This presentation will describe the
experiences of this programme since its inception in 1996. It
will include barriers to uptake of e-commerce; the challenges
of communicating with and delivering service to such a diverse
market sector; ways of partnering with the commercial sector;
and progress towards the target of getting one million UK small
firms trading online by 2002.
The Information Society Initiative was established by the
UK government in 1996 with a broad remit to promote the uptake
of information and communications technologies across the UK.
With the publication, in December 1998 of the Competitiveness
White Paper, this work was given renewed focus.
The Competitiveness White Paper recognised that as we move
into a knowledge-driven economy, the competitiveness of companies
and of nations will increasingly depend on how well they harness
the new digital technologies. It set a goal 'to triple the number
of UK small businesses which are wired up to the digital marketplace,
from around 350,000 at the end of 1997 to one million by 2002'.
This paper describes how, over the last four years, the Information
Society Initiative has addressed this challenge; the progress
that UK small firms have made in meeting and exceeding this goal;
the lessons we have learnt in the process; and our plans for
2. The Barriers to Information and Communications Technology
The Competitiveness White Paper recognised two principal factors
that have held back uptake of digital technologies in the UK:
- A lack of understanding: the International Benchmarking Study
1998 found that approximately 30 per cent of smaller businesses
are indifferent or uncertain about digital technologies compared
to just 16 per cent of larger businesses. IT is generally not
a strategic function represented at board level: eight per cent
of UK businesses had an IT Director compared with 67 per cent
in the US.
- Insufficient skills: A survey of 75 multinationals operating
in the UK, US, France, Germany, Japan and Singapore found that
businesses rated the UK well on the IT skills of people leaving
the education system, but rated the IT skills of the workforce
as the weakest.
Since 1998, awareness of the importance of harnessing information
and communications technologies in business has increased dramatically.
The number of smaller businesses in the UK that are connected
to the Internet has grown significantly, to more than 600,000
in 1999. However evidence, from the annual benchmarking study
suggests that penetration of digital technologies into business
functions within UK firms is far lower and very small firms,
those with less than 100 employees, are falling behind compared
with similar companies in the US and Canada.
In response to these findings, the Information Society Initiative
has put more focus on the applications of digital technology
rather than merely increasing awareness of what technologies
are available and how to use them. A broader raft of UK government
activities aimed at making the UK an excellent place to trade
electronically (e-commerce) has reinforced this approach. In
September 1999, the Performance and Innovation Unit published
its report. This identified four main barriers to achieving an
excellent environment to trade electronically:
- The lack of a clear, internationally agreed, regulatory framework
and of clarity in some area of tax policy.
- Low understanding of the potential benefits and challenges
to adopting e-commerce.
- Problems with access not just to communications and computing
technology but access at an affordable price and together with
the relevant skills to enable effective use.
- Lack of trust that the electronic trading environment can
be used without fear of fraud and with the same levels of confidence
associated with physical transactions. There are also barriers
related to the privacy of personal and business data and the
maintenance of intellectual property rights. Finally, there are
concerns about the inability to avoid exposure to unpleasant
or offensive content and to limit the potentially expensive nuisance
of unsolicited commercial e-mail.
3. A National Strategy for E-commerce
In order to address these barriers and to galvanise action
from both business and government, the UK has put in place a
national strategy for e-commerce. Elements of this strategy are
being implemented through the Information Society Initiative.
A starting point for the strategy is the development of a
common understanding of what e-commerce is and how organisations
and individuals can benefit from using the approaches it offers.
The following is the definition of e-commerce that the UK government
E-commerce is the exchange of information (value) across
electronic networks, at any stage in the supply chain, whether
paid or unpaid. It can take place:
- within an organisation,
- between businesses,
- between businesses and consumers; or
- between the public and private sectors.
The key aspects of this very broad definition are the exchange
of value electronically between many different types of organisation
and individual and that payment need not be involved.
The strategy is based upon the foundation of a market-led
approach which provides a light-touch regulatory framework within
which competitive forces can enable the overall goals to be achieved.
- to move the business world into the digital age;
- to ensure everyone can access the benefits of these technologies;
- to deliver all government services electronically so that
government too is playing its part;
are intended to focus resources and efforts across the public,
private and voluntary sectors to a common end.
4. Progress Towards the Targets
Since the 1997 international benchmarking study there has
been rapid uptake of digital technologies across the business
The figures the 1999 benchmarking survey show that the UK
is up with the leaders in its business use of digital technologies.
In addition, early results from the 2000 study indicate that
we have already exceeded the target for the number of small and
medium sized firms connected to the Internet by 2002.
However, other countries like Germany and France are showing
rapid growth too and these figures mask the fact that our small
firms are lagging behind.
That is why the original target to get one million smaller
firms online by 2002 was adjusted to 1.5 million; and why we
have set an additional target that, by 2002, one million smaller
firms will be trading online with the smallest companies up with
their peers in the G7 nations in their use of these technologies.
5. Delivering Help to Small Firms
There are four main strands to the Information Society Initiative;
aimed at helping smaller firms achieve these targets. These are:
- Raising awareness;
- Channels of advice;
- Implementation support; and
5.1 Raising Awareness
The first strand is an awareness raising programme aimed not
just at small and medium sized companies but also at large organisations
who trade and partner with smaller organisations; and at individuals
and organisations who influence the decisions which
smaller companies make: such as trade associations, banks and
accountancy firms. This
programme aims to raise awareness of the importance of digital
technologies, as well as how small firms are gaining business
benefits from harnessing these technologies and where independent,
cost-effective advice is available and tailored to the needs
of smaller firms. During the past year we have been able to raise
awareness of the programme from 6% to 19% and to generate over
50 case studies of small firms.
5.2 Channels of Advice
The second strand is the development of channels of independent
advice to help smaller companies make the right decisions about
the use of information and communications technologies within
their own businesses. At the heart of this part of the programme
is the establishment of 100 local advise centres across the UK
where smaller companies can go for help. This network of centres
is currently advising 120,000 small firms each year to various
More recently, this programme has been enhanced with the launch
of a private sector-led initiative to train and accredit ICT
advisors to small firms. Almost 100 advisors have achieved accreditation
during the pilot phase that is now being rolled out across the
The Supply Chain programme recognises that the majority of
small firms operate within one or more supply chains. It should
be possible to harness these supply chains and the larger organisations
within them to help smaller firms gain benefit from digital technologies.
This part of the programme is in an early phase and research
and pilot projects are underway.
5.3 Implementation Support
Support during the implementation of information systems forms
the third strand of activity. A range of best practice guides,
again informed by the use of case studies, is a well-established
part of this programme. At the beginning of this year these guides
were augmented by an online resource, the E-commerce Resource
Centre, which seeks to become a single, web-based point of contact
for independent advice relating to e-commerce. The E-commerce
Resource Centre will continue to be developed with the addition
of new information over the coming months. The final element
of this programme is a local partnership fund which provides
a modest amount of funding to support locally-based partnerships
which exist to support small firms during their implementation
Finally, the fourth strand - benchmarking is carried out on
an annual basis to regularly checkpoint and inform the rest of
the ISI; so that we continually adjust to the changing dynamics
of this volatile marketplace and focus our scarce resources to
best effect. The 1999 benchmarking caused us to revisit the overall
targets of the initiative and to focus far more on e-commerce
and the smaller firms. The 2000 study will, I am sure, have equally
significant impacts on our focus.
6. How are Small Firms Taking this Forward?
The three companies that follow were all winners in the ISI/InterForum
E-Commerce Awards during its first year in 1999. They illustrate
quite graphically the different ways in which small firms are
taking this agenda forward.
6.1 Civil Defence Supply
The overall national winner: Civil Defence Supply designs
and produces specialised security, military and police products.
Its products reflect the company's philosophy of promoting officer
safety without causing permanent harm. In the late 1980's a dramatic
decrease in home revenues forced the company to restructure its
business and as recently as 1996 they did not have a computer.
Now they have a substantial business built using email and
web technology and profitability has been enhanced through the
computerisation of accounting, stock control and sales order
Eran Bauer, Director of Civil Defence Supply, said, "Do
not have preconceived ideas and keep an open mind about what
e-commerce solution will be right for you."
6.2 The Teddington Cheese
The Teddington Cheese is a small specialist food and drink
retailer established in London in 1995. It sells cheeses, pickles,
biscuits, wine, cider and port and hampers.
The company has used e-commerce to reach new customers and
enhance the levels of service provided to existing, local customers.
Turnover has increased by about 10% per annum as a result of
e-mail orders within the UK.
Doug Thring, Director of The Teddington Cheese, said, "We
were surprised how much existing customers such as local restaurants
and retail customers used the site once it was set up. Our website
helps them order their selection in advance so that it is ready
for collection when they pop by. Overall it is noticeable how
our website has generated more local business through the number
of people walking through our shop door."
Plade, a Glasgow-based engineering company, designs and manufactures
specialist equipment from plastics for use in heavy engineering
and hi-tech processing equipment in the microelectronics and
healthcare industries. The company have used digital technologies
to expand exports to new international customers from £230,000
in 1997/98 to £906,000 in the following year and they continue
to provide excellent customer service remotely, once a contract
had been won.
Gregor Egan, MD of Plade, said, "E-mail gives us a great
competitive advantage in speed. We can send complex information,
often in colour, to agents and customers overseas at the touch
of a button. Any small company with interests overseas can benefit
in the same way."
7. Lessons Learnt
The primary lesson we have learnt is that while small firms
may be attempting to use common technologies, such as email and
the web, they apply these facilities to achieve very different
business objectives. Also, the order in which these new technologies
are applied is very specific to each organisation.
The most precious asset that small firms have is their time,
therefore, they are unwilling to spend a long time away from
their business activities. So, our advice has to be made available
locally and tailored to the specific needs of each company. Because
of this, and because we do not wish to duplicate services provided
by the private sector, each ISI centre determines its own operating
model and the services available.
The smaller firms we advise are interested in how they can
gain business benefits from technology rather than the technology
itself. Case studies and showcasing real examples of similar
small firms who are gaining benefits is the most effective way
of getting the message across.
To be credible advocates of information and communications
technology, we have to demonstrate that we harness these technologies
ourselves. So, increasingly our focus is on delivering services
through the digital media.
Even when a small firm understands how they can embed digital
technologies within their business strategy, they have problems
accessing the resources required to implement that strategy.
This applies to financial resources, expertise and management
time. However, we are starting to see private sector offerings
which address these issues and make it much simpler to, for example,
create a website. Consequently, our focus will be even more on
helping these companies get their strategy right.
We have been able to demonstrate the effectiveness of government
intervention in helping smaller companies improve their competitiveness
through the use of digital technologies. But this is a fast changing
situation and, we have not yet reached sufficient numbers of
companies to ensure that the UK can keep up with the leading
Therefore, over the coming year, we will be putting increasing
emphasis into engaging with other, locally-based organisations
so that, together we can make our messages even more relevant
and reach even greater numbers of small firms.
Also, new technologies are always being introduced: Digital
TV and mobile Internet access are already penetrating the UK
market. Our advice must be constantly updated to reflect these
Finally, the market dynamics and perceptions are also changing
continually. It is essential that we continue with the benchmarking
activities and adapt the programme to respond to the changes
that this reveals.