Challenges of e-business development in Bulgaria

1. Challenges of e-business development in Bulgaria Elissaveta Gourova Albena Antonova Sofia University - CIST Project REGEB Labwithin SCOPES 2005–2008 Swiss National Science Foundation Sofia, 8-10 July 2006

2. Main topics • Framework for e-business development • E-readiness assessment • ICT penetration and use • Trends of e-business in Bulgarian SMEs • Corporate online presence • Internet Transactions and e-commerce • E-Business applications • Challenges to face

3. McConnell International in August2000 considered Central and Southern Europe as “a most e-ready region” . However, “low average incomes across the region,inadequate infrastructure andconservative government policies andbusiness practices will limit the speedin growth of ICTs”.

4. Framework for e-business Rank: 44, 42, 42, 40

5. Assessment of e-Business, 2004

6. ICT market

7. ICT penetration in companies • Internet usage by employees: • communication: e-mails—32.6%, • interaction with institutions—18.5%, • searching for information and analyses- 34.7%, • online marketing - 6.2%, • e-commerce 4.7%

8. Trends of e-business in Bulgarian SMEs • Corporate presence online • E-commerce and statistic data, concerning Internet transactions, buying and selling via Internet and transfers • E-business applications, including front and back- office applications, and a special overview of the ERP systems being a “core of e-business”

9. Corporate online presence • Availability of company web sites:2002 – 8.7% - ½ of the companies using Internet 2004 – 29.6% - ¾ of the companies with Internet access • Dominance of content in Bulgarian • Focus on company presentations and information • A few sites support active solutions for e-commerce

10. Internet Transactions and e-commerce • 6.6% of the Bulgarian companies have used e-commerce • 5%made purchases online- one of the lowest in Europe • 14% of the SMEs have e-cards for online payment • 6% of SMEshave an electronic signature • 52% of the firms using the Internet for e-commerce - do it for both selling and buying;16% report only buying and 4% only selling online • Online purchases- mainly printed materials and books (50%), food, flowers, and gifts (16.7%), software (16.7%), hardware, electronic devices, bank and cash transfers, tourist services, utilities bill payment • 9% paid online, and only 3% have received online payments • 5%use on daily bases the system of online payment with clients and suppliers, and 4% of the companies use it occasionally • 2% of the SMEs (in Sofia) have systems for orders processing

11. On-line selling

12. Main problems of e-commerce • Customers and other companies are not ready for e-commerce intensive use (32%) • Products and services cannot be traded online (32%) • Suppliers still do not propose online sales (29%) • Payment safety (29%) • Legal framework (25%) • Logistics problems (12%)

13. E-Business applications • 1,33% of the companies have IT systems for order processing management • 4,5% of all companies with PCs possess an ERPsystem (Enterprise Resource Planning) • 6.4% have Groupware applications • 47% of the companies with PCs use data bases and applications

14. ICT usage by EU and BG companies

15. Main barriers for e-business • At macro level • inadequate computer education and e-culture • considerable share of informal economic activity • lack of trust in the reliability of e-payments • At micro level • SMEs are mainly concentrated on the business survival and achievement of short-term goals • SMEs do not pay attention to the strategic planning for expansion of the business • SMEs do not know the possibilities that ICT and Internet provide

16. Challenges to face • Management and strategy issues • long-term strategic planning • consider ICTs not as a separate business, but as a tool that facilitates and enablesthe business • managers of SMEs non-related to the IT sector consider new technologies as “useless expenses” • lack of information, relevant qualification and training of the SMEs’ managers or owners

17. Challenges to face • Businesses will face the challenges of the global e-economy : • increased competition, resulting from lower barriers and the creation of new channels for delivery of products and services • new business models, with costs savings, better quality and customer-driven innovation • new ways of buying and selling, with further customization of products and services • new skills requirements • Moving to a knowledge-based economy?

18. Quantitative Qualitative • Cost savings • Greater customer acquisition rate • Improved bottom line • Improved profit margins • Increased corporate valuation • Increased customer loyalty behavior • Increased customer retention • Increased market share • Increased repeat purchases • Increased stock valuation • Reduced cost of sales • Better management of ideas • Decreased likelihood employee defection • Greater customer loyalty • Increased collaboration with customers • Increased customer satisfaction • Increased innovation • Increased knowledge worker empowerment • Increased knowledge worker productivity • Increased knowledge worker satisfaction • Increased market leadership • Increased organizational stability • Increased shareholder satisfaction • Increased understanding of customer needs • Positive cultural change Benefits Knowledge Management benefits

19. Thank you for your attention! for contacts: elis@fmi.uni-sofia.bg a_antonova@fmi.uni-sofia.bg