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Doing business better through e-commerce

Doing business better through e-commerce

Speech to Canterbury Manufacturers Association by Hon John Tamihere regarding
e-commerce conference, Christchurch

Introduction

Congratulations to Canterbury Manufacturers Association for putting on this event. I can see from the line up of speakers that a broad range of business topics has been included.

E-commerce or E-business is a broad topic. It is about more than technology. As I have travelled the length and breadth of New Zealand since February with the Small Business Day series I have experience many conversations with people about their need to be better equipped to use the business tools available.

My colleague Hon Paul Swain addressed the conference this morning about the some of the initiatives of the government to help support the ICT industry as part of the Growth and Innovation Framework. What I would like to share with you is some of issues that I have heard from small business people, especially during the recent Small Business Day series.

Small Business Day experiences Let me tell you about some the Small Business Day experiences. Some of the small businesses my colleagues and I visited in preparation for the Small Business Days were at the leading edge of e-commerce, producing some fantastic ideas on doing things better through the application of new technology. In New Plymouth my colleague, Hon Harry Duynhoven, met with WebFarm, a New Zealand company established in 1997 that is now one of New Zealand's largest web hosts, hosting some of New Zealand's best-known websites. WebFarm is New Zealand's biggest accredited registrar of .nz domain names with a 25% market share of Domain Names (similar to the market share of Xtra) yet WebFarm has just seven employees and two directors. WebFarm has been a pioneer of eCommerce in NZ. In 1999 it launched New Zealand's first multi-currency on-line eCommerce payment service, WorldPay, allowing customers to sell in US dollars on the customer web site. It now has hundreds of merchants trading online using WorldPay and is a recognised leader in secure online payments in New Zealand. Also in New Plymouth we met a businesswoman who sells leotards and dance apparel. Her two-person operation makes 75 per cent of its sales to overseas customers via its website. She is no technology zealot, just an ordinary Kiwi businesswoman in her fifties who has overcome the tyranny of distance by using the Internet. In Napier, Hon Michael Cullen met with Neocom, a small company employing eight people that started with just $400 cash two and half years ago. Neocom produces Web applications and software development for data technologies and communications. Their applications include data logging of medical records and database developments linking GPS and PDA systems.

Management capability the key

While there were many stories of electronic mastery, there were many more business people who talked of their need to become more capable to use the available technology. They were familiar with EFTPOS and email, but needed to know how to reach more customers or to source inputs more efficiently or to complete tax, ACC or Customs documents electronically. For small business, management capability is often the limiting factor. They don't have time to research the large number of new applications that could help. Sometimes they don't understand the terminology. And each vendor has a message in a different format with more complicated data about their application solution. Government response Government could do a lot better as well. Government agencies have created websites in abundance in an effort to join the electronic communication space. Government now creates online forms to help business communicate with government. We have got so many sites now that we have to create portals to summarise and provide gateway access to all the other sites - some of these like www.biz.org.nz make sense. We need to do more to: · Simplify the government message, format and style. · Rationalise the abundance of web sites. · Enhance the relevance and reduce the duplication of forms requiring data from small business.

Access to electronic services (source Statistics NZ, Business Practices Survey, June 2001) Access to electronic business services has been readily adopted by New Zealand businesses. · In June 2001, 88 per cent of New Zealand private-sector enterprises regularly used a computer. · 44 per cent had computers connected to a local-area network, while 19 per cent had computers connected to a wide-area network. · Four out of five businesses used the Internet and the same proportion used email · More than a third operated a website; Internet was mostly used as a means of communicating with customers and suppliers. · Businesses in the services sector were the highest users of IT. · 97 per cent of businesses in the accommodation industry operated a website. · 80 per cent of businesses used IT to complete their accounts and 60 per cent used IT for business data processing. · In 2001, 47 per cent of New Zealand households had a home computer, and 37 per cent of households had access to the Internet. But there are barriers to business uptake of technology applications: · The largest single obstacle identified by New Zealand businesses to making more commercial use of the Internet was that it was not seen to be relevant to their business activity (29 per cent). · Twenty-one percent of firms stated that the risk of viruses or hackers accessing confidential information restricted their use of the Internet. · Businesses with a high adoption of IT were more likely to have recorded an increase in market share, profitability, and total sales than those businesses with a low adoption of IT. · High adopters of IT more likely to have introduced both product and process innovations.

Technology boosting business

The Small Business Days also confirmed what we all knew; that is, small business is different to large business.

Small business does not design business functions and then break them down to single tasks. Small business takes many tasks and builds them up into business activities. Small businesses are transaction or task orientated.

Government policy tends to deal with aggregate or group issues. Implementation of policy also starts with aggregate activity or outcomes and breaks them down into compliance obligations or transactions.

Food safety, OSH, and employment issues may be separate issues and legislation for government. But for a small business owner they often have an impact on the same person in the same day. So why can't the compliance tasks look and feel the same to the small business owner? Why can't the process of compliance and reporting look and feel the same?

Government legislation implementation needs to allow this view of the world to fit with the policy design. Legislation operation needs to recognise that small business is different and therefore the legislation implementation needs to different. I am working hard to achieve this.

Government supporting access to information

The government is active in delivering improved electronic access to agencies services and assisting business capability development.

As Minister of Statistics I am announcing today:

A Budget 2004 investment of nearly $70 million over four years will strengthen New Zealand's official statistics and save money through more accurate targeting of government spending.

The package includes: - $20 million to improve census data collection by boosting funding for census enumerators and use of the internet. - $22.5 million to create a stronger foundation for social policy spending and evaluation. - $14 million to strengthen official statistics by improving co-ordination, access and use of statistics. - $10.5 million to develop Linked Employer-Employee Data (linking Statistics New Zealand's business information with employer and employee administrative data). - $2.7 million additional funding to secure new office accommodation for Statistics NZ in Wellington. - $1 million to collect better information on the economic contribution of volunteering and non-profit activities.

The increased funding for Statistics NZ will save money, in the medium and long term, through more accurate targeting of government spending.

The government must make sure we spend taxpayers' money effectively and this requires a robust system of statistics to provide accurate definition of the issues, and measurement of the effect of government policy and initiatives.

While extensive data on business performance is essential, we need to ensure that its collection does not create a heavy burden on business, and this funding will go a long way to lightening the compliance load.

Other initiatives previously announced include:

NZTE Enterprise Training Programme

The NZTE Enterprise Training Programme is now available online to small business owners and operators in some regions. (Announced 14 April 2004).

The online training, developed by Christchurch business The Small Business Company is available from NZTE's Enterprise Training Programme providers in 12 regions. The Enterprise Training Programme is fully funded by NZTE and predominantly delivered via workshops and follow-up coaching, but NZTE introduced online training by helping to make online training modules available too. The online training modules are based on information provided by a range of experts and material gathered from the thousands of people who have participated in Enterprise Training workshops. Feedback from the initial trials found online training provided convenience and confidentiality. Participants also said the modules were ideally customised and they liked the fact that they could go at their own pace. Business Portal - www.biz.org.nz The business portal continues to grow in visitor numbers and features. ACNielsen undertook an independent review to assess the effectiveness of the portal and recommend improvements in line with visitor needs. ACNielsen reported that the business portal: · Meets the policy objectives. The portal spans government agencies well, reduces time and effort to find out how to meet government compliance and increases the understanding between business and government. · Good visitor response and increasing numbers. Visitors found it easy to understand, credible and provided fast access to information. The visitor numbers continue to increase each month despite the limited marketing. · The impact of the biz portal on businesses. The portal is clearly of value to businesses, saves them time finding compliance/government business information and has the potential for saving them money. · Visit purpose. The main visitors are newer small business owners who have been in business less than 6 months and those considering starting a business. The most frequently viewed pages are those providing information to help people set up or run their own business and how to run a business from home. · Compliance information. Only a small number of visitors access the portal specifically for compliance details but they confirm that they pick up compliance information as part of their visit through the information on good business practice. Employment Agreement Builder The Employment Agreement Builder available at www.biz.org.nz or the Department of Labour web site provides guidance to employers, unions and employer representatives for individual employment agreements, and can be used in establishing or renegotiating agreements. Anyone employed after 2 October 2000 must have a written employment agreement, whether it be an individual agreement or a collective agreement. The Employment Agreement Builder has been created by Employment Relations Services to provide guidance to employers and employees on content for the creation of individual employment agreements.

The Builder provides examples of clauses drawn from a range of existing employment agreements, indicates which clauses are legally required in all agreements, and also offers a range of clauses to meet the additional needs of your workplace. Once you have identified the clauses you wish to include in your employment agreement, you are able to assemble the clauses into one draft agreement for saving and printing out. Companies Office Over 98 per cent of companies are registered using the internet. It takes less than less than a couple of hours for a new company to acquire a Certificate of Incorporation. From 1 July 2004 the electronic filing of the annual return to the Companies Office will free of charge.

Conclusion

Our opportunity to convert our significant access to technology into superior business performance will depend on our ability to improve the capability of the small business users and encourage government to understand the application of technology from a small business perspective.

This conference today has raised the awareness of the importance of IT in doing business better, and that is an aim I would thoroughly endorse.

ENDS

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