IMPACT OF ICT IN BUSINESS AND SOCIETY

Chapter 4: ICT Adoption: Role of Governments and Policy Directions

4.1 Introduction
The adoption and usage of Information and Communication Technology (ICT) is changing business
processes, and the way people live and work. ICT has introduced what is known as the ‘Networked
economy’, where successful businesses are linked with their suppliers, internal manufacturing processes,
shippers and customers in real-time. Businesses are now able to move data and communicate with each
other in real time. This has transformed the way businesses are being done. ICT has the capacity to cut
costs of coordination, communication and information processing and many businesses have taken
advantage of this.

4.2. What is the Government Role in ICT adoption?

The government has a role in encouraging adoption of ICT through provision of the following;
1) Government on-line; E-government and E-governance
2) Business environment
3) Network infrastructure
4) Public Finance
5) Providing the supporting trusted infrastructure
6) Encouraging investments by providing tax incentives
7) Facilitating training
8) Communicating to its citizens on availability of new technologies
9) Digital information and Service
10) Intangible investments and assets
11) Developing the regal framework

4.3. Government on-line

On-line provision of government information and services can increase the efficiency and coverage of
public service delivery to small firms, and act as a model user and standard-setter for ICT adoption by
small firms. Education, general government information and services, and provision of government
services to businesses and citizens can all potentially benefit from the use of new high-speed
infrastructure and services, and should be given priority in government strategies.

4.3.1. E-Government
Definitions
 E-government involves using information technology, and especially the Internet, to improve the
delivery of government services to citizens, businesses, and other government agencies. It
involves provision of an electronic environment for engaging and interacting with the citizens
and businesses and government agencies. The interaction may be in the form of obtaining
information, filings, or making payments and a host of other activities via the World Wide Web

Benefits of E-government
 E-government enables citizens to interact and receive services from the federal, state or local
governments twenty four hours a day, seven days a week.

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  Better delivery of government services to citizens,
 Improved interactions with business and industry,
 Citizen empowerment through access to information, or more efficient government management.
 Less corruption,
 increased transparency,
 greater convenience,
 revenue growth, and/or cost reductions.”

Types of E-government
 Government to Citizen (G2C); these are those activities in which the government provides one-stop,
on-line access to information and services to citizens. G2C applications enable citizens to ask
questions of government agencies and receive answers; file income taxes (federal, state, and local);
pay taxes (income, real estate); renew driver’s licenses; pay traffic tickets; change their address; and
make appointments for vehicle emission inspections
 Government to Business (G2B); In G2B, the government deals with businesses such as suppliers
using the internet and other ICTs. G2B includes two two-way interactions and transactions:
government-to-business and business-to-government (B2G). B2G refers to businesses selling
products and services to government. Two key G2B areas are e-procurement and auctioning of
government surpluses.
 Government to Government (G2G); G2G deals with those activities that take place between different
government organizations/agencies. Many of these activities are aimed at improving the efficiency
and effectiveness of overall government operations
 Government to Constituents (E-Democracy) E-democracy refers to online activities of governments,
elected representatives, political parties and citizens for democratic processes. This includes political
or current affairs discussion and online consultation between representatives and their constituents.

Barriers to the implementation of e-Government

a) Legislative and regulatory barriers - In order for e-services to gain widespread acceptance, they must
have the same standing as the equivalent paper processes. Finally, privacy and security need to be
ensured before online services can advance.
b) Budgetary frameworks - Existing budgetary arrangements act against efficient e-government by
funding through traditional government silos, and by not recognising ICT expenditure as an
investment. Organisations need incentives for cross-organisational projects and tools for measuring
returns on investment. This can be achieved through a government-wide approach to the assessment
of e-government benefits and the sharing of savings.
c) The adoption of e-government solutions can lag behind technological change - Governments face the
challenge of fostering the development of e-government while there is still great uncertainty
regarding technological change and negative impacts (e.g. system vulnerability and illegal activities).
d) The digital divide - Generally the most disadvantaged have the lowest levels of access, yet they also
often have high levels of interaction with government. If these individuals cannot access e-
government services, they will miss out on the benefits of e-government.
e) Hyper-surveillance - Increased contact between government and its citizens goes both ways. Once e-
government begins to develop and become more sophisticated, citizens will be forced to interact

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 electronically with the government on a larger scale. This could potentially lead to a lack of privacy
for civilians as their government obtains more and more information on them. In a worse case
scenario, with so much information being passed electronically between government and civilians, a
totalitarian-like system could develop. When the government has easy access to countless information
on its citizens, personal privacy is lost

E-Governance
Definitions
 E-governance, meaning ‘electronic governance’ is using information and communication
technologies (ICTs) at various levels of the government and the public sector and beyond, for the
purpose of enhancing governance.
 “E-governance is the public sector’s use of information and communication technologies with the
aim of improving information and service delivery, encouraging citizen participation in the
decision-making process and making government more accountable, transparent and effective.

E-governance involves new styles of leadership, new ways of debating and deciding policy and
investment, new ways of accessing education, new ways of listening to citizens and new ways of
organizing and delivering information and services. E-governance is generally considered as a wider
concept than e-government, since it can bring about a change in the way citizens relate to governments
and to each other. E-governance can bring forth new concepts of citizenship, both in terms of citizen
needs and responsibilities. Its objective is to engage, enable and empower the citizen.” E-governance has
lead to the new concept of E-democracy

4.4. Business environment

A healthy business environment is fundamental for firms to thrive and benefit from ICTs. This includes a
transparent, open and competitive business framework, clear independent rule of law for all firms, easy
set up and dissolution of businesses, transparent, simple and accessible corporate regulation, and equal
and stable legal treatment for national and cross-border transactions.

4.5 Network infrastructure

Encourage rollout and use of quality infrastructure at affordable prices. Broadband connectivity is a key
component in ICT development, adoption and use. It accelerates the contribution of ICTs to economic
growth, facilitates innovation, and promotes efficiency, network effects and positive externalities. The
development of broadband markets, efficient and innovative supply arrangements, and effective use of
broadband services require policies that:
 promote effective competition and continued to stress liberalisation in infrastructure,
 network services and applications across different technological platforms;
 encourage investment in new technological infrastructure, content and applications; and
 ensures technology neutrality among competing and developing technologies to encourage
interoperability, innovation and expand choice.

4.6. Public Finance

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Public financial assistance to expand coverage for under-served groups and remote areas could
complement private investment where appropriate, provided it does not pre-empt private sector initiative
or inhibit competition.

4.7. Trust infrastructure

Get the regulatory infrastructure right for trust, security, privacy and consumer protection. Essential are a
culture of security to enhance trust in the use of ICT, effective enforcement of privacy and consumer
protection, and combating cyber-crime and spam. Strengthened cross-border co-operation between all
stakeholders is necessary to reach these goals. Of particular relevance for small firms are low cost on-line
dispute resolution mechanisms among firms and between firms and consumers

4.8. Skill upgrading

Lack of ICT skills and business skills are widespread impediments to effective uptake once adoption
decisions are made. Governments have major roles in providing basic ICT skills in compulsory schooling,
and an important role in conjunction with education institutions, business, and individuals in providing
the framework to encourage ICT skill formation at higher levels, in vocational training and in ongoing
lifelong learning.

4.9. Provide Information – Communicate with citizens on Technology

Small firms may lack objective information regarding the benefits and costs of adoption of ICT. The
private sector (e.g. business associations) and government have a role, and can provide information about
service available and when necessary improve coordination of government information on the benefits of
adoption and use of ICT, for example case studies and good-practice demonstrations to tackle market
failures in information supply.

4.10. Digital products and information services

These are an increasingly significant part of economic activity and they offer important opportunities to
small firms. Government and the private sector have key roles in facilitating content availability across all
platforms and encouraging local development of new content, including content from public sources.

4.11. Intangible investments and assets

Firms increasingly rely on intangible investments and assets (skills, organisation, software, networks) for
competitiveness and growth. However common frameworks to identify, measure and report intangible
investments and assets still need to be developed and be widely accepted. There is a significant role for
governments in conjunction with business associations and accounting bodies to encourage business to
develop and use systems which recognise and report intangibles in ways that can be reliably used by
investors, valued by capital markets and guide better management practices.

4.12. ICT Policy for SMEs

ICT policy framework is a set of principles and goals intended to govern the development,
implementation, adoption, monitoring, evaluation and application of ICTs in organizations, institutions,
societies or nations. It provides the rationale and philosophy to guide the planning and development and
utilization of ICTs in a particular setting. The governments should develop policies that ensures the
provision of the following ICT adoption enablers in the Business and society

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Many governments have not explicitly focused on ICT adoption by SMEs in the non-ICT sector. They
have either focused on growing the ICT sector or supporting the growth of SMEs, but they have not
focused on integrating the two areas to implement broad-based policies. Since most SMEs who can
benefit from the use of ICT are not in the ICT sector, they have not been able to receive the benefits.

Key Policy Recommendations for SME’s Adoption of ICT

a) Move beyond policies for basic connectivity and ICT readiness to facilitate more widespread
uptake and use of complex ICT applications and e-business uptake by small firms. Target
programmes where there are demonstrated market failures (e.g. R&D incentives, frameworks for
standards, skill formation, information and demonstrations on best practice and benefits from
adoption and use of ICT), taking into account that commercial considerations and returns drive
business adoption of new technologies.
b) Target entire industries that are most likely to benefit immediately from ICT. Targeting entire
supply chains will allow the efforts to be more focused, specific and concrete. Targeting supply
chains and specific industries quickly increases the rate of adoption, which increases the total number
of SMEs that use ICT. This will increase overall awareness of the benefits of ICT and encourage
adoption by other industries.
c) Encourage rollout of affordable quality broadband networks to underpin the competitiveness
and growth of SMEs. Continue to liberalise network infrastructure and promote broadband
competition and liberalisation in network services and applications. Where the needs exist, and
without pre-empting private initiative or inhibiting competition, complement private investment with
public financial assistance to expand coverage for under-served groups and remote areas.
d) Strengthen the infrastructure for trust, security (including spam and viruses), privacy and
consumer protection. Intellectual property protection of ICT innovations and digital products is
necessary to build the confidence among SMEs that is essential if such firms are to take full
advantage of the potential of domestic and cross-border on-line activities.
e) Expand, in conjunction with business and consumer groups, SMEs’ use of low-cost on-line
dispute resolution mechanisms. Strengthen cross-border co-operation between stakeholders and the
development of rules with cross-border application.
f) Develop and distribute digital content, including by expanding the commercial use of
information about the public sector, education and health care. E-government services to
enterprises should be used as a tool to improve efficiency of government interactions and operations
with SMEs.
g) Reduce ICT skill impediments to the growth of SMEs. Strengthen government and private roles
to improve basic ICT skills and developing frameworks to encourage higher level ICT and e-
business skill formation (including marketing, organisational, security, trust and management skills
in addition to ICT skills) in conjunction with education institutions, business and individuals.
 Governments could assist by organizing capacity building workshops targeted to SMEs and
focusing on the following:
 Ensuring that ICT investments focus on the real needs of the business;
 Enabling more effective communication between business and ICT functions at a strategic level
 Ensuring that the ICT function plays an appropriate role in creating value within the business
 Establishing an Internet-based advisory or e-coaching service on advanced ICT solutions,
ICT/business integration practices, establishment of virtual offices, and virtual business units

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h) Create enabling environments for the adoption and growth of ICT firms
ICT firms would be able to develop and design customized software and services that respond to the
localized needs, and downstream requirements of SMEs. As the marketplace is a highly competitive
area, possible actions to reduce market-entry barriers for start-up ICT firms could include:
 Establishing and supporting business incubators that specialize in growing ICT firms
 Establishing business parks for ICT firms
 Providing financial and non-financial incentives to start-up ICT firms
 Providing tax incentives to SMEs that buy ICT products and services from local firms.
i) Raise awareness of the benefits of ICT
One of the key problem is the fact that many SMEs are not aware of the benefits and the direct
financial gains to be attained by adopting ICT. Governments could assist in creating awareness and
reducing the psychological barriers to ICT acquisition by showcasing SME success stories, best
practices, and benefits gained through ICT adoption. By clearly demonstrating the modern systems
approaches to ICT/business integration, the failure rate of ICT adoption by SMEs can be reduced.
Specific actions that governments could consider exploring are:
 Providing financial or non-financial support to business organizations that promote best practices
in the field of ICT/business integration
 Organizing annual Business-Technology Alignment Award programmes
 Generating and promoting SME success stories, emphasizing benefits gained from ICT adoption
and integration
 Providing financial and non-financial support to Software as a Service (SaaS) firms that give
SMEs access to latest software without incurring high up-front capital costs.
g) Partner with other organizations. Governments should partner with international organizations,
industry associations, chambers of commerce, and local NGO/SME support agencies in order to
obtain technical expertise, financial support, and local knowledge.
International organizations - International organizations can offer regional knowledge-sharing and
training workshops, provide funding support, help build local capacity, and organize technical
cooperation arrangements between countries within the region.
 Local industry associations - can leverage their existing membership base to diffuse information
and create programmes. Their specific know-how of the industry can help create workshops that
are more relevant to the needs of SMEs and can highlight industry-specific benefits. They are a
key local partner in encouraging ICT adoption by industry.
 Chambers of commerce - Similar to industry associations, governments can use their network
and membership base to diffuse information and implement programmes.
 Local NGOs and other SME - support agencies can also help implement various programmes.

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