Service Providers of the Information Industry - E-Commerce has Accelerating and Cost-cutting Effect on Business Processes

In the second quarter of 2004, companies using the Internet as a sales channel for serving end customers (business-to-consumer e-commerce, B2C) accounted for almost 40 per cent of the total revenues in the economic sector of IT-related service providers.

The average proportion of company turnover generated through e-commerce in this sector amounts to about 5 per cent. Hence, the economic impact of e-commerce on service providers of the information industry is still rather low. According to the companies that have gained some experiences in this area, B2C e-commerce is mainly used to accelerate business processes and lower their costs. What is surprising is that less importance was attached to the reasons "extending business hours" and "geographical expansion of the sales market", even though these motives play a key role in the theoretical discussion on e-commerce.

This is the result of a business survey among German IT-related service providers that the Centre for European Economic Research (ZEW), Mannheim, and the credit reference agency Creditreform, Neuss, conducted in June and July 2004. About 1,100 companies participated in the survey. The sector of the IT-related service providers comprises Information and Communication Technology (ICT) service providers (firms providing computer service and leasing, ICT-specialised trade as well as telecommunication services) and knowledge-intensive service providers (firms active in tax consultancy and accounting, management consultancy, architecture, technical consultancy and planning, research and development as well as advertising).

The individual sub-sectors of this industry make very different use of B2C. The telecommunications sector plays a pioneering role. ICT companies offering some of their services online were responsible for more than 77 per cent of the sub-sector's turnover in the second quarter of 2004. They were followed by business consultants, software providers and lenders as well as by companies involved in research and development. In these sub-sectors, firms that used the Internet as a sales channel generated about 50 per cent of the corresponding sectoral turnover.

Companies use the Internet even more frequently to purchase goods and services from business partners than for B2C purposes. In the information industry, companies involved in this business-to-business e-commerce (B2B) have an almost 55 per cent share in revenues. Compared with other sub-sectors of the industry, telecommunications service providers are, again, at the very forefront in this context. A far above-average B2B use could also be observed among software providers and lenders as well as among technical consultants and planners. West German IT-related service providers make use of B2C and B2B much more frequently than their Eastern German competitors.

Contact

Dr Margit Vanberg, E-mail: vanberg@zew.de