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SPEECH/02/112

Mr Erkki Liikanen

Member of the European Commission, responsible for Enterprise and the Information Society

"Helping Small and Medium Sized Businesses to Go Digital - European initiatives and future perspectives"

CeBIT

Hannover, 18 March 2002

Ladies and gentlemen,

It is a great pleasure to be here with you in Hanover today at the NORD/LB forum. I particularly want to congratulate you for using this occasion, where you are giving recognition to companies successful in the mobile communications field, to spread the message that small and medium sized businesses or SMEs - can benefit from going digital.

Your Go Digital initiative "e-Niedersachsen" is an excellent practical example of how EU initiatives can be translated into regional initiatives. I welcome the support from the government of Lower Saxony. The transition towards the "e-Economy" clearly is the main responsibility of enterprises themselves but public authorities can help them to grasp the new opportunities that the internet represents.

In Lisbon, two years ago, the European Union set itself the ambitious target of becoming the world's most competitive and dynamic knowledge-based economy within ten years.

Our point of departure is challenging: Economic growth in the US in the second half of the 1990s left the EU further behind in terms of overall economic indicators, such as employment and labour productivity. GDP per head in the EU is less than two thirds of that in the US. This is due to the employment rate but even more to the differences in productivity growth rates.

The efficient use of ICT, the re-engineering of the businesses and investments in skills are critical to enhance productivity and to create new job opportunities.

The hype of the dot com boom is now over. We are now moving into a period of a more balanced and realistic appreciation of how e-Business can transform businesses by being integrated into their mainstream operations in the same way that ICT has been integrated into business during the past decade.

That is why I welcome the Barcelona Summit decision to ask a new Europe 2005 action plan to be presented before Summer.

We need in particular to do three things.

Firstly, to invest more in Information Society Technologies (ICT).

And we need to invest in research and development in general, which is one of the pillars upon which the technological advances in the digital economy are based.

Secondly, to alert business and public administrations to the need to re-engineer their processes in such a way as to maximise the benefits to be drawn from entering the digital economy.

Thirdly, to promote the improvement in the quantity and quality of ICT skills, in order to close the ICT skills gap in Europe, a gap which has persisted in spite of the current economic slow down.

Europe will become a hub of e-Business markets and solutions only if its SMEs are determined and able to use the Internet as a leading-edge business tool.

Generally, SMEs are more flexible in their internal organisation than larger companies and often able to adapt to changing market conditions more quickly and efficiently.

However, within the EU, it is generally true that the smaller the enterprise, the less it uses information and communication technologies

(ICT). As a result, the dominant share of SMEs in Europe's economy is not matched by their take-up of e-Business.

A recent survey showed that the share of SMEs using e-Business for purchases in EU countries ranged from 5% in Greece to 35% in Germany and 36% in Denmark. Even more strikingly, only in Germany (29%) and Denmark (27%) do more than one quarter of all SMEs use e-Business to manage sales.

However, in spite of the fact that Germany shows a more favourable picture than the European average, there is still a need to maintain the impetus to persuade SMEs of the benefits of going digital.

To frame policies to achieve this objective, we need to understand the reasons why SMEs may not wish to Go Digital.

Of course, first of all, SMEs need to have a commercial interest in e-Business transactions. They must believe that they can exploit e-Business profitably. In this respect, the level of SME participation in e-business might not reach 100 %.

But those SMEs who do potentially have a commercial interest in e-Business transactions have to overcome their perception of the risks involved in trading on-line.

Our survey shows a range of technical barriers faced by SMEs. Of these, lack of sense of security on the Internet, and the slow speed and instability of telecommunications networks, rank the highest. Of importance is also the cost of establishing and maintaining Internet access, and the lack of appropriate e-Business skills.

Here, German SMEs are very much in line with the European pattern.

48% of SMEs in Germany say that concerns about security are a very important barrier to their use of the Internet. Speed and reliability of communications are their second most important concern, with more than 23% of SMEs saying that this is a very important barrier.

The "Go Digital" initiative, aimed at helping SMEs to make better use of the Internet and e-Business, was launched in March 2001. We are currently in the process of assessing how far the actions envisaged by it have been implemented. We will be publishing a progress report, with a view to full discussion at a summit to be held in May.

Our first indications are that good progress has been made in the main areas, namely:

  • Raising awareness about the potential opportunities in e-Business for SMEs

  • Benchmarking national and regional policies in support of e-Business

  • Launching pilot projects to test new technologies and business models

  • Promoting the development of ICT skills

The "Go Digital" campaign has been instrumental in raising the awareness about the potential opportunities in e-Business for SMEs. Many events have been organised, under the Go Digital logo, by professional organisations, Chambers of Commerce and the EuroInfoCenters all around Europe.

The main objective of this awareness campaign has been to share best business practice, as presented by SMEs to SMEs, not by IT experts.

More than 70 events are already planned across Europe in 2002 as part of regional and national campaigns, so, in organising this event, you are contributing to a rich vein of activity across the EU.

But there are still many uncertainties to the take up of e-Business by SMEs. And policy makers need to be ever vigilant, because we have already seen that the concerns of SMEs are changing over time. As SMEs adopt e-Business they become more aware of practical concerns, such as speed of access, in which broadband is such a crucial component. I will come back to broadband later.

Raising awareness is, of course, one thing, but building a climate of trust and confidence amongst SMEs is another. SMEs were in the vanguard of the dot.com cycle of boom and bust. Many enterprises are suffering from what might be termed "e-fatigue".

They will now be convinced only by robust business cases for investment, based on realistic expectations of profitability and underpinned by sound technological solutions. They will no longer respond to messages that convey only fear like the one stating that they face a choice between "in e-Business or out of business".

Many national, regional and local initiatives already exist to help SMEs to "Go Digital". The Commission and Member States launched a benchmarking initiative in June 2001 to describe and benchmark national, regional and local policies for the promotion of e-Business for SMEs, with a view to identifying examples of good practice in specific policy areas.

As a result of the first phase of this initiative it is apparent that more than 150 policy initiatives specifically addressed to SMEs have been identified, mainly in the areas of raising awareness and ICT skills, promoting SME support networks and helping SMEs to participate in e-market places.

The Commission does not claim to have a monopoly of wisdom in this area. So, before proceeding further with this initiative, we have launched an open consultation on the scope and content of the project and the potential benchmark criteria. In particular, the SME community is invited to help us to identify those policy initiatives which work best.

The web site for the consultation is shown on screen and, again, I would really urge you to help us with your comments the consultation on this initiative is open until 31 March.

Over 60 projects are currently in progress under the Information Society Technologies («IST ») programme. And seven new take-up projects are due to be launched shortly.

The Commission is shortly to publish a report on the projects currently in progress, assessing their impact on regions and sectors, the technologies used, and the quality of the work and identifying possible test and showcases. The results will be used for finding the best ways of technology transfer in take-up projects and will be used also for the preparation of the Sixth Framework Programme for Research.

The ICT skills gap in Europe is still a major issue, not only for the ICT sector but also for the economy at large. Overall, the knowledge-intensive sectors were the main drivers of employment in the EU, with 60 % of all jobs created between 1995 and 2000.

For ICT to be developed and used by all enterprises and people the right skills and competencies must be in place. Some countries use foreign labour to fill in shortage of qualified personnel. In the US, for example, foreign workers filled more than a quarter of qualified ICT jobs during the late 90s. This may provide short-term solutions but cannot replace a more sustainable strategy.

Europe's long-term demand for skilled ICT people remains high. The skills gap is not just about the quantity of skilled people needed, but more importantly it is about the quality of their skills.

In this context, I would like to stress the need for "inclusiveness". In particular SMEs can often not afford to compete for specialised and highly paid computer experts. What is still missing is that people all people have the ability to use the Internet, and also the opportunity to do so. Social and demographic characteristics continue to have considerable impact on Internet take-up by individuals. The main causes of digital exclusion are gender, old age, a low education level and living in a rural area.

Less than a third of the EU labour force has ever received any ICT training. Only a small share receives continuous up-dates. Furthermore, there is still too much focus on technical applications training in contextual skills, necessary for the effective application of ICT in the workplace, is limited.

For ICT professionals, more emphasis should be placed on vocational training: re-skilling workers and the unemployed to take up vacancies in high quality ICT and e-business jobs. Targeting women for these jobs is particularly important: their share of ICT jobs is less than a quarter, and still lower at higher levels. Low female take up in ICT related education is a bad sign for the future and one which we should try to address.

As part of the GoDigital initiative, the Commission has established an ICT Skills Monitoring Group with representatives of all Member States in September 2001. Its main objective is to analyse and monitor the demand for ICT and e-business skills.

The group will issue its final report in September 2002 and a major event eSkills Summit will be organised in close co-operation with the ICT industry in the October 2002 in Copenhagen.

If we wish Europe to be more competitive, the use of ICT and the Internet, e- Business needs to be further promoted, particularly through:

  • First, promoting the adoption of new information and communication technologies by SMEs;

  • Second, by promoting digital inclusion, by helping SMEs to "Go Digital" and improving ICT skills for all European citizens; and

  • Finally, by promoting faster access to the Internet through broadband.

Why is broadband so important?

Between October 2000 and November 2001, the amount of Internet homes that have broadband access has doubled.

  • First, because once people are connected, they want higher speed.

  • Second, because this will allow the provision of new and better services both by the private and public sectors. Broadband is the key to greater productivity gains and social benefits.

About 6% of EU homes now have broadband Internet access, out of an Internet penetration level of 38%. Germany has been one of the leading European countries here.

Today, high-speed Internet access is mostly via ADSL and cable modem. But faster access technologies will rapidly be needed, both for new services and to achieve full territorial coverage. Therefore, satellites, third-generation mobiles, fibre optic and fixed wireless access will quickly have to become part of the equation.

Upgrading legacy infrastructures and rolling-out new networks is primarily a task for the market. But there is an important role for public authorities.

At EU level, we have to maintain a business-friendly legal environment. Unbundling has started to kick in, though not without delays. The Commission keeps pushing for this to happen faster.

And we have a new telecoms framework that is technology neutral. This will stimulate competition between platforms and thus accelerate investment in broadband.

Overall, what we need is a European strategy for broadband, which harnesses activities at all levels of government.

The role of public authorities should be to facilitate the development of a safe, trusted and inter-operable infrastructure. They should also commit themselves to e-Learning, e-Health and e-Government, including the use of mobile broadband and digital television for public services.

But, though a necessary component of a "Go Digital" strategy, broadband is not in itself sufficient to further promote the Internet and e-business in Europe. We need to generally intensify our efforts to promote the adoption of new information and communication technologies by SMEs.

SMEs are vital to our aim of creating a Europe which is both competitive and socially inclusive.

Once again, may I thank you for using this event to promote the aim of helping SMEs to "Go Digital" and spreading the message that SMEs will benefit from doing so.

I am also happy to assist at the UMTS application award 2002 of Niedersachsen. Applications are key for the success of the introduction of the UMTS in Germany and elsewhere.

Thank you for your attention and I look forward to a lively panel discussion.


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