Tortoise or Hare? The Race for e-Business Readiness

According to analysts and the Government, widespread adoption of e-business pro-cesses and applications by New Zealand businesses should be just around the corner. The thinking is that it is in our economic interests to be part of “down under” e-business community which delivers online business opportunities not only at home, but throughout the wider Asia Pacific region and the rest of the world.

And that thinking is right. Although careful planning and budgeting is needed, New Zealand businesses are gradually realising the oft-touted benefits of e-business – extended global sales and trade, cost reductions, improved internal and external business processes and better customer relationships – are potentially substantial.

Glenn Teal, manager citizen and customer services for the Manukau City Council, describes why e-business is important.

“We want consistent information that’s freely available to the citizens we serve. We want to move into the e-government area and coordinate online with other service providers like the police and fire service. Processes are everything.” Needs like these keep e-business interest alive and well in New Zealand – despite the “tech wreck” and rumblings of global economic recession.

In fact, New Zealanders are rather immune to global recession rumours. December 2001 ACNielsen survey of 8000 business professionals across New Zealand, Australia, Singapore and Japan, found only 45 percent of New Zealanders felt world recession would occur compared with 63 percent of Australians and 80 percent of Asians. The survey also revealed New Zealand consumers to be the least likely to defer from making major purchases or from changing travel plans following September 11. We’re nothing if not optimistic.

However, optimism doesn’t equate to an open wallet and the uptake of e-business technologies and processes by New Zealand business has been slower than information technology vendors, the Government and service providers would like.

Steady as “e” goes

Cautious progression (a bit reminiscent of the Royal Enquiry into GE) seems to be the order of the day. While e-business has become competitive necessity for some businesses, many are waiting for e-business processes and models to “prove themselves”.

Why so slow? One of the key reasons is New Zealand’s predominantly small business population – roughly 95 percent of all businesses employ less than 15 people. As e-business tools tend to be internationally developed, they are frequently designed with larger organisations in mind. Apart from the occasional small business “hare” which races off with strong e-business vision, e-business case studies in New Zealand are typically limited to larger organisations. This breeds doubt among smaller businesses as to whether smaller e-business solutions are out there, and are affordable. The result is frustrating “chicken and egg” situation for vendors, consultants and government ministers – all of whom can see the “big picture” and can’t wait for New Zealand businesses to see it too.

Wanted: e-business legislation and infrastructure

The Government can take some of the blame for the reluctance of New Zealand businesses to commit en masse to e-business initiatives. At the time this article went to press New Zealand was one of the few developed countries in the world without legislation protecting companies against e-business crimes or with legislation to aid in the development of e-commerce in general.

There is in fact proposed Electronic Transactions Bill which, according to recent reports, will finally become law in early November after long delay. The Bill is designed to encourage and support the use of electronic technology in New Zealand by (among other things) putting electronic signatures, documents and contracts on par with paper counterparts, reducing electronic compliance and transaction costs, removing legislative impediments to dealing with Government electronically, and promoting consistency between New Zealand law and that of our major trading partners.

While that Bill seems set to finally see the light of day, there’s less hope for the Crimes Amendment (no 6) Bill which would make hacking in New Zealand il-legal. There has been no notable progress made on this Bill since midway through last year when controversy arose over clause which would allow some government departments to intercept private electronic communications. So hackers can hack to their heart’s content in New Zealand.

More tortoise fodder

Despite the Government dragging its legislative heels, it does understand the economic importance of e-readiness. In May, the Ministry of Economic Development (MED) commissioned an “e-readiness” survey of 726 New Zealand businesses employing more than six people. This revealed around 33 percent are engaged in e-business activities with other firms (B2B.) Another third said they had e-business systems linked to internal systems. Yet 90 percent said there were barriers to taking their e-business initiatives further. Their concerns, in order of importance, were cost, lack of proven business benefit, concerns over loss of direct customer contact, security issues and lack of skilled staff.

Peter Benson, security specialist with e-business services company EMS Global, is surprised security ranked fourth on the MED survey. “In other countries security ranks right at the top – cost concerns probably reflect our smaller business population,” he says.

Benson says identity and intellectual property theft is very common in Business to Business (B2B) and Business to Consumer (B2C) e-business models and hackers are after proprietary trade secrets, research and formulas; intellectual property, secret manufacturing pro-cesses, and genetic research, and customer database and credit card details.

He says good e-business security is about first ensuring the integrity of people. He gives the example of New Zealand company with network administrator who had sole authority to raise both purchase orders and online payments. “That person set up dummy company and then paid themselves. These duties should have been segregated in an internal e-business policy.”

Such policy fits Benson’s second e-security principle, namely to implement security laws, policies, and regulations which are adhered to. The third step is to deploy security technology (including authentication software, usernames and passwords, token type devices, one time passwords, and digital certificates) and engage security testing services or software.

Of course, this can all be highly expensive. “There’s always trade off between what’s acceptable to users and what good security costs,” says Benson.

And it may be trade off not many New Zealand businesses are making. The MED survey reveals that while 37 percent of businesses with website can accept orders online, only 11 percent take payments.

Benson says e-business insurance products are available to combat the risk of security breach, but the insurer and the business need to know the value of the company’s information assets first.

“Last year large company lost $150 million in intellectual property it didn’t know was valuable until it was stolen. New Zealand is not insular and isolated in the electronic world. Businesses need to embrace security commitments and the Government needs to take an active international role to establish controls and defence mechanisms.”

A wireless world

Security is also an issue in fixed wireless networks, which have begun to be used as e-business platforms. wireless network uses radio waves rather than cable as its data transport mechanism. It may cost less than wired network to install and use and be more convenient for the business which is hampered by an inadequate wired internet connection.

For example, 27 percent of businesses surveyed by the MED said no alternative internet connection other than dial-up was avai

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