Canadian small and medium-sized businesses are falling behind in doing business on the Internet, according to a couple of recent studies.

A private sector-led initiative wants government and business to remedy the situation.

The Canadian e-Business Initiative (CeBI) provides its annual report on the state of e-business in Canada with two recent studies, Net Impact Study Canada (4): Strategies for Increasing SME Engagement in the e-Economy, and Fast Forward (5): Making Connectivity Work for Canada.

CeBI said in a news release that a key finding shows many SMEs (small and medium enterprises) are still not using all the Internet business solutions they could. More e-business could reduce costs through better management of many business functions, from procurement and customer relationships to product development.

Companies in leading sectors such as financial services and information and communications technologies are adopting e-business aggressively. Many similar firms in retail, wholesale and manufacturing are not moving beyond technologies such as e-mail and Internet use.

Despite a solid Internet infrastructure, high level of connectivity and consumer acceptance of Internet commerce, the CeBI data also cite a variety of recent international studies showing Canada’s slipping position in the world economy.

“Canada must work to address these weaknesses, which are holding us back from creating a more dynamic and productive digital economy,” said Terry Walsh, president of Cisco Systems Canada and co-chair of CeBI.

“SMEs are the drivers of our economy. The CeBI reports undeniably demonstrate that our national productivity is linked to e-business strength,” Walsh added. “We cannot afford to allow the e-business sector to languish and it is our strong recommendation that the government heed this call to action.”

Canada has a higher concentration of SMEs than any other G7 nation, representing 99 per cent of all businesses nationally. They are responsible for 60 per cent of our economic output, 80 per cent of our employment and 85 per cent of new jobs.

The CeBI recommendations include:

* The government of Canada should pursue a strategic plan to stimulate e-business adoption among SMEs, which could include annual sectoral benchmarks, industry roadmaps, and co-ordinated and consistent leadership to build awareness.

* The government should recognize the role and importance of information and communications technologies as a cornerstone of the 21st- century Canadian economy.

* Large private sector business must do more to drive widespread e-business use among their SME partners.

* All stakeholders should work to address security concerns in the online environment.