Drivers Of Business Internet Adoption Information Technology Essay

E-business has introduced new opportunities within recent years for small and large organization to compete successfully in the global marketplace. Many speculators have noted that among the newest changes introduced by electronic communications is the approach of transforming and transmitting information for gaining competitive advantage by organizations in the market place. The internet has provided significant space of opportunities for many small businesses to move and build closer relationships with their new or existing customers and suppliers online to achieve customer attraction and retention. With the use of online, e-business services to both customers and suppliers has significantly reduce costs while providing new convenient ways and channel for purchase of goods and services. Through providing high-quality online services to customers, business can build and create a long lasting relationship with all stakeholders involved (chaffey, 2009)

Drivers of Business internet adoption

At a relatively early point in e-business adoption, a government report (DTI, 2000) identified two main categories of drivers, which is prevalent and relevant today:

Cost/efficiency drivers

Increasing speed with which supplies can be obtained

Increasing speed with which goods can be dispatched

Reduced sales and purchasing costs.

Competitiveness drivers

Customer demand

Improving the range and quality of services offered

Avoiding losing market share to businesses already using e-commerce

(Chaffey, 2009).

Perrott (2005) identifies four key areas driving performance, which are cost-benefits, competitive pressures, market advantage and value adding, for example improving customer satisfaction while building strong and long lasting relationship.

The main business drivers for introducing e-commerce and e-business are opportunities for increased revenues and reducing costs, but many other benefits can be identified that improve customer service and corporate image (Chaffey 2009). Chaffey review the potential benefits use in identifying both tangible and intangible benefits (cost hard to calculate).

Figure Tangible and intangible benefits from e-commerce and e-business (Chaffey, 2009)

E-COMMERCE AND DIGITAL OPPORTUNITITES IN AFRICA

Internet edition of the 2004 report on “E-Commerce and Development” published by United Nations Conference on Trade and Development (UNCTAD). The Report was intended to provide practitioners and policy-makers with information and analysis to better assess and understand the impact of the growing role of ICTs in economic development.

From the report foreword by past UN Secretary General Kofi Annan:

“Information and communications technologies have considerable potential to promote development and economic growth. They can foster innovation and improve productivity. They can reduce transaction costs and make available, in mere seconds, the rich store of global knowledge. In the hands of developing countries, and especially small- and medium-sized enterprises, the use of ICTs can bring impressive gains in employment, gender equality and standards of living” (ITU)

(OVERVIEW OF THE ICT LANDSCAPE IN AFRICA)

The latest evaluations of immerse digital opportunity across the continent of Africa is shown below. The Digital Opportunity Index assesses countries on eleven different indicators, organized into three clusters of Opportunity, Infrastructure and Utilization. Measurements of digital opportunity for Africa show that, in 2005, only three countries had a DOI score in excess of 0.40 (Seychelles, Mauritius and Morocco), while in 2006, seven countries had DOI scores greater than 0.40 countries includes Egypt, Algeria, South Africa and Tunisia joined with a DOI score of above 0.40 (ITU).

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Figure Digital opportunities index (ITU, 2007)

Analysis of the DOI results shows that, in Africa, digital opportunity is without a doubt mobile. Mobile lines outnumber fixed lines by 5 to 1, the ratio is even higher in sub-Saharan Africa, where 9 out of 10 subscribers use mobile.  Mobile penetration in Africa increased from 6.5 per 100 inhabitants to 13.1 per 100 inhabitants from 2003 to 2005. Africa’s mobile market region was considered the fastest-growing market in the world, with averaging of 50% growth per year since 2000; fortunate growth rates that strategic investors like Orascom, Celtel, MTN and Vodacom are profiting from (ITU)

The digital penetration of Africa is going to encourage local business to embrace the opportunities of e-business and attract foreign investors to invest in Africa regions. The important of digital technology in Africa cannot be over exaggerated neither can it be underscored.

SUBSAHARA AFRICA

11 African countries have Internet Exchange Points (IXPs). At least around eleven African countries, including Nigeria, Ghana and South Africa, presently now have Internet Exchange Points (IXPs). These countries now benefit from effective and efficient peering arrangements among themselves and very cheaper international connectivity and bandwidth.

Nigerian Internet Exchange (NIXP) Chief Executive Officer (CEO) said that eleven sub-Saharan African countries presently have international Internet Exchange Points (IXPs), following the commissioning of Nigeria’s Internet exchange in late 2006, at about 30 million naira cost. Rudman observed, that “until now, all ISPs within Nigeria have been connected to overseas countries, Which means that Africa was paying foreign carriers to exchange ‘local’ [continental] traffic on their behalf. This was very costly and inefficient”. Rudman estimated costs of over US$100 million each year in Nigeria for use of unnecessary international transit or international bandwidth for national data. Rudman noted, peering with other ISPs at the exchange point, means all local internet traffic will remain local within the seven ISPs connection to NIXP and Starcomms was the first public telecom operator to connect to it (ITU).

African countries with Internet exchanges include:  Botswana, Angola, Congo DR, Ghana, Egypt, Kenya,  Nigeria, Mozambique, Rwanda, Tanzania, South Africa, Uganda and Zimbabwe.

Evaluation of the digital divide

In 2007 World Information Society Report, ITU included the very latest statistics monitoring the evolution of the digital divide, with the use of a variety of statistical techniques. The digital divide narrowed most rapidly in mobile telephony, with 1 in 2 people in the world projected to have access to a mobile phone by end of 2007. Low-income countries was found having important gains in mobile telephony (figure below), with mobile phones outnumbering fixed lines by 7 to 1 in LDCs and by as much as 9 to 1 in Sub-Saharan Africa.

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Figure Distribution of ICT by income group of economies (ITU, 2007)

The digital divide was also found narrowing in terms of Internet usage.  In 1997, almost three-quarters of world’s population living in low-income economies and lower-middle income economies was around 5% of world’s total Internet users. In 2005, they accounted for around 32.5% or nearly about third of all Internet users. The digital divide has evolved and gaps in access in the high-speed broadband technologies that matters most in today ‘information economy’ are more marked – low-income economies accounted for about 1% of total broadband subscribers worldwide, while lower-middle income economies accounted for around 20% or one fifth of the global total.  The digital is taking on new aspects in terms of speed, efficiency and the quality of access (ITU)

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Figure Growth in Speed WISD, 17 May 2007 (ITU, 2006)

SERVICE PROVIDERS

CELTEL AFRICA

Celtel mobile phone service provider has expanded its roaming service offer to customers in 12 African countries. Without incurring extra costs, enabling around half of all Africans mobile phone users to communicate across national borders

Celtel roaming service is available in Niger, Nigeria, Chad, Burkina Faso, Sudan and Malawi, as well as the Democratic Republic of Congo, Republic of Congo, Gabon, Tanzania, Kenya and Uganda. Celtel’s roaming service extend services to a population of over 400 million people, the populations are living in an area twice as large as Western Europe.Anna Othoro, the marketing director at Celtel said. “This is a feat that not even European firms have achieved” .Although Celtel has not yet announces upgrade to 3G services like its major competitor Safaricom (ITU)

MTN

In third quarter of 2007 results, MTN Group serves over 54.1 million customers in 21 countries, making it the largest operator in the Middle East and Africa, and with over 64,000 new customers a day.

MTN’s South African network is the keystone of its activities, with subscriber’s increase of 3% to 14 million. Nigeria is other source of income for MTN, with 14.9 million customers and each spending an average of $17 a month. This represents about 7% increase in customers, as well as a healthy more than 4% rise in their spending. MTN is improving in fractures and investing heavily in Nigeria to cope with the growing demand.

Middle East and North Africa region of MTN saw 36% growth in customers, with its new Iranian network winning more than 1.7 million more users. Irancell is serving over 3.7 million people and each is spending an average of $11 a month (ITU)

E-business Challenges (Risk and Barriers to business adoption)

E-business opportunities must be balanced against the risks of introducing e-business services, which varies from strategic risk to practical risk. An organization can make a wrong investment in e-business, which is considered strategic risk. Most business have realized the opportunity and made investment in e-business and gain a competitive advantage, but while others have invested, so much in e-business without returns (profits) either because of wrong strategic planning or wrong approach to the market. Negative attitude of the managing directors and CEOs to the business benefits of information and communication technology (Chaffey, 2009).

The perception of the risks involved has limited adoption of e-business in many organizations.

Figure Usage of different e-business services in European countries (Chaffey, 2009).

A DTI (2002) Study evaluated some of the barriers to B2B e-commerce, which remain valid today. Reason for cost was the most important factors. This suggests the importance of managers assessing e-business to develop costs and the ongoing costs that form the total cost of ownership (TCO) against the value created from the tangible and intangible benefits (Chaffey, 2009).

Figure Barriers to development of online technologies (Chaffey, 2009)

BARRIERS TO ADOPTION OF E-BUSINESS IN AFRICA

KENYA

Natural limit to the mobile market in Kenya

Celtel Kenya, CEO Mr David Murray, is suggesting the possibility natural limit to the mobile market size in Kenya. Telecommunication is the fastest growing market in the world with the highest in Mobile communications segment especially Africa,but Mr. Murray warns that, in spite of the growth, Kenya’s economy will not be able to accommodate more than three operators.

Mobile market in Kenya is divided between Safaricom and Celtel Kenya, France Telecoms and Econet Wireless recently acquired the controlling stake in Telkom Kenya and about to start operations in the country. With a population of 34 million, mobile Average Revenue Per User (ARPU) is less than $10 per month (ITU)

Mr Murray reckons that survival of the operators will be determined by creativity and efficiency on the marketing front, network reliability and product development. For example, International One Network service from Celtel, the first-ever international borderless mobile network without roaming call surcharges or additional payment to receive incoming calls.  One Network service was recently been extended to cover more twelve countries, an area equivalent twice the size of the European Union (ITU).

UGADA

High taxes threaten growth in Uganda

An excellent study by Eria Hisali, consisting of data and statistics, researcher at Makerere University, concludes that Uganda’s telecom markets high taxes threaten to choke growth. Recent study published by the Uganda Communications Commission, shows that recent mobile market in Ugandan is slow. Usage tax on mobile pre-paid services in Uganda is 30% (18% VAT and 12% excise duty), this is the second-highest level of service taxes on mobile communication use internationally, as claimed by the report. Telecoms accounted for about 4% of Uganda’s total VAT revenues in 2000-2001, and 6.5% of VAT revenues in 2005-2006.

Although, Uganda Communications Commission latest statistics released, shows that the number of mobile subscribers is in increase, the report finds that, interestingly minutes of use is reduced significantly in both fixed line and mobile use.  More people are using mobiles, but less often and for a shorter period.

Tax as a proportion of revenues for the telephone sub-sector rose from 5.7% in 2001 to 19.6 or nearly a fifth in 2005. The Report suggests that high taxes may result in a slowdown in growth of the telecommunication industry by reducing investment in the sector. It also suggests that uniform tax rates may mean that poorer households bear a higher burden than higher-income households. The Report concludes that, if market growth is to continue, there is “urgent need to change the current tax policy on telecommunications sector” (ITU).

BOWSTNA

Botswana Telecommunication Authority and Orange

High Court of Appeal in Botswana ruled recently that the Botswana Telecommunications Authority (BTA) should stop receiving tax revenues thier mobile phone operators from sale of voucher cards and free airtime operators offers their customers. Orange and Mascom, Botswana’s two private mobile operators, have paid 3% of net turnover on quarterly basis from 2002, the beginning of private cellular phone operation in Botswana. However, the company had appealed the payment of tax on freebies or free airtime Orange occasionally offers to its customers, on the basis that it was free airtime, without profit. The High Court of Appeal ruled that “Free airtime given by Orange to its customers is not an amount invoiced nor does it otherwise accrue to Orange for purposes of computation of net turnover”. BTA stand a chance of refunds and stands to lose a substantial amount of future revenue (ITU).

NIGERIA

Security

Nigeria has set up a movement (Nigeria Anti-Scam Network) composed of concern youths of Nigeria fighting cybercrime and spam. The Nigeria professional are interested in change to redeem Nigeria image from the bad reputation of online crime.

The Network realizes that; “throughout the world, cyber crime is a very serious topic and a very contentious one at that. Many countries are losing a lot of money due to the activities of cyber 419s. Nigeria has been touted as the major breeding ground for most of these online frauds. Nigeria’s ranking in the corruption index have been very discouraging for the past three years and we know that this is not only as a result of Government officials’ corruptness, but also as a result of activities of online scammers. To be better prepared to fight these menace and bring back our lost reputation, some young Nigerian professionals started the Nigerian Anti-Scam network and have been doing extensive research on the activities of these scammers and ways of salvaging the country’s image” (ITU).

E-business Strategy

Assessment of an organization’s existing e-businesses capabilities is a starting point for the future development of their e-business strategy. The future direction and action of any company approach to achieve some specific objectives most be defined. Chaffey (2009) Defined E-business as the approach by which applications of internal and external electronic communications can support and influence corporate strategy.

Google Africa

As Google has become global, and it isn’t neglecting Africa. Google is betting on the powerful impart the internet will bring to improve and transform business and society on the continent, even if the region remains one of the world least connected parts. Anyone in Ghana interested in buying a goat, computer, an iPad or Hummer 2011 model can now go to Google site  and set up a link to sellers and buyers who have internet connection and SMS messages.

Recently, Google hired Ory Okolloh, as its Policy Manager for Africa in a clear sign of its ambitions. In 2010, Google launched Baraza, an interactive online space where Africans can be able to ask questions and also post answers to others. “The goal of Baraza is to facilitate knowledge sharing within and outside Africa about locally relevant issues.” According to Aneto Okonkwo Product Manager. Questions include everything from “What is the economic impact of the tax increases in the Ghana 2011 budget?” to “Is it safe to take charcoal tablets during pregnancy?” and “Where do grasshoppers come from?” Google senior official Nelson Mattos noted that any company that most succeed in Africa would have to do a good job by providing content relevant to the local market (Reuter).

Google started earlier in Uganda before launching its trade service in Ghana.  Though internet penetration rates is very low in sub Saharan Africa, the recent launch of undersea fiber optic cables in Western Africa and East could significantly improve connectivity. The spread of mobile phones and SMS messaging motivated Google offering in Africa.

It is important in raising the Bar and bringing together governments, international organizations, business, experts and civil society in focusing on leveraging Africa’s potential e-commerce strategic role in the global arena. It should feature innovative partnerships to sustain growth and addressing the human and infrastructure capacity constraints Africa is face with, and assessing strategies with opportunities for improving Africa investment climate.

 The overviews of the ICT landscape in Africa, considers the relationship existing between ICTs and competitiveness. With reference to the latest researches, examining the changing regulatory policy in Africa landscape, providing the latest summary statistics on service providers (operators) and markets information on various planned infrastructure initiatives shows the rate at which the private sector is forging ahead with the introduction and improvements of new technologies to grow the broadband and mobile markets in Africa. African rise of strategic investors such as Celtel, Vodacom and Orascom to boast e-commerce growth is very impressive.

Africa subscribers (WiMAX)

WiMAX Counts.Com by the end of 2007 reported that WiMAX has expanded rapidly in Africa over 2006-2007. Beginning of 2006, WiMAX subscribers numbered just a few thousand. However, by the end of 2007, Africa subscribers accounted for more than 20,000. Business was mostly customers, with 10’s or 100’s of internal users, in contrast to personal use. Over the years, subscriber numbers increased at an average rate of 28% per quarter, and in 2007 of 36% growth from Q2 to Q3 alone. Several new deployments took place during the second half of 2007, about 15 commercial deployments of BWA/WiMAX to the region, with a further 10 WiMAX network operators trailing and evaluating the implementation (ITU).

Unavailability of traditional fixed line telecom infrastructure in Africa opened the door for big opportunities for WiMAX which provided broadband Internet rural and underserved areas that that is not possible with wired technologies. African operators are on the edge to spread the benefits of WiMAX. There is low penetration of broadband subscribers in Africa. From the 922 million inhabitants at 2006, only about 43.6 million were Internet users and around 1 million had a broadband connection.

The Digital Opportunity Index (DOI), is one of the two indices officially endorsed by the World Summit on the Information Society (WSIS) (Geneva 2003-Tunis 2005), can be used as a practical tool to track the changing dynamics driving the Information Society worldwide.

2005 DOI scores are sharply differentiated according to region. The region with the poorest countries in the world is Africa and it is greatly impacted by the digital divide. Americas, Europe and Asia have average DOI scores of more than 0.37 world average, while Africa has 0.20 average DOI score, mainly because of fixed line infrastructure and limited Utilization. When compared with other regions, Africa with an average regional DOI score ranked last with barely one-third that of Europe (0.55). African strong-performers regions are the Seychelles, Mauritius and North African countries (Algeria, Tunisia, Morocco and Egypt).

The DOI map of Africa indicates high scores among the North African economies regions (Algeria, Morocco, Egypt, Libya and Tunisia). Egypt was in only country in the Top 15 gainers in the DOI, having a 32% in digital opportunity from 2000-2005. In contrast, economies with low ranking are mostly inland, in Sub-Saharan including economies likes, Eritrea, Chad, Ethiopia, Sierra Leone and Niger (ITU)

Many African countries are showing impart and making progress in reducing their internal gaps. Africa as a region has the highest growth rate in mobile cellular subscribers a 66% growth rate in 2005, with Egypt, Algeria, South Africa and Nigeria accounting for about 60% of the new mobile subscribers in the region. Nigeria In 2005, alone added 9.7 million subscribers; this represents about 7% of its total population. Three-quarters of all phone connections in 19 countries in Africa are mobile phones. This shows the tendency of e-commerce and e-business development in developing countries.

From the perspective of telecommunication policy, high-ranking countries have illustrated the influence of liberalization, competition in promoting opportunity for infrastructure deployment. Most North African countries, as well as South Africa and Senegal, opened their fixed mobile markets to competition and creating rapidly increasing high-speed network deployment. Competition is reducing tariffs and introducing new service packages that responded efficiently to the needs of the people. For example, In Algeria the presences of a third wireless cellular provider successfully triggered new strategies for prepaid services that was not previously offered by the incumbent’s providers.

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Figure DOI of Africa World Information Society Report 2006 (ITU, 2005)