Canada closing e-business gap with U.S.

Canada is making progress in closing the e-business gap with the U.S., but American companies still remain far ahead in the online world.

The Canadian e-business sector should see a compound annual growth rate of 75.5 per cent through 2004, compared to 67.9 per cent in the U.S., according to a study by IDC Canada and its U.S. parent, International Data Corp.

By 2004, those percentages will represent $100 billion US in e-business spending in Canada, and $1 trillion in the U.S., the study predicts. The findings are part of continuing research released by the Canadian e-Business Opportunities Roundtable’s e-Business Acceleration team, led by IBM Canada’s president and CEO John Wetmore.

“We’re pleased and encouraged to see the gap narrowing,” said Wetmore. However, “there’s more work to be done to close a gap that remains too large, especially in the small business sector.”

The study reveals it’s the B2C (business to consumer) sector where Canadian firms are gaining the most ground. IDC is predicting a compound annual growth rate of 67.8 per cent in the Canadian B2C sector, compared to 44.1 per cent in the U.S.

However, in the B2B (business to business) sector, Canadian growth will remain behind the U.S. through 2004 — a rate of 67.8 per cent compared to 72.9 per cent in the U.S.

The IDC study also indicates that medium and large Canadian businesses still lag behind their U.S. counterparts in the most basic components of e-business.

The number of medium-sized businesses with Web connections is almost 16 per cent lower in Canada than in the U.S., and the number of large businesses using sophisticated supply chain management tools (such as extranets) is 10 per cent lower in Canada than in the U.S.

Other findings included:

* The percentage of small companies with connections to the Web has increased faster in Canada than in the U.S. In 1998, only 15 per cent of small Canadian companies were connected, compared to 35 per cent in 1999. In the U.S., the percentage rose from 52 per cent to 57 per cent.

* The number of small Canadian companies with Web sites also increased, but not as fast as in the U.S. In 1998, six per cent of Canadian small businesses had a Web site, growing to 13 per cent in 1999. In the U.S., 18 per cent of small businesses had a site in 1998, growing to 28 per cent in 1999.

The Canadian e-Business Opportunities Roundtable is a private-sector led initiative, supported by Industry Canada and formed in 1999 to develop a strategy for accelerating Canada’s participation in the Internet economy.