Adoption of E-Commerce in the Construction Industry

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Adoption of E-Commerce by SMES in the Construction Industry

Introduction
The internet has been growing in recent years at an alarming rate. It has revolutionised how businesses communicate and interact and opened new opportunities which ten years ago were almost inconceivable. With the help of the internet, technologies such as e-commerce make it possible to conduct international business transactions almost instantaneously and for a fraction of the cost of using traditional methods. Many businesses have recognised the possibilities the internet has to offer and the benefits available to the construction industry are just as worthy of consideration. E-commerce makes it possible to buy and sell equipment and materials as well as bid on-line for jobs. In terms of collaboration, it has drastically changed the way industry professionals communicate. Online project collaboration allows contractors to save hundreds of thousands of pounds by slashing the wait time for responses to Requests for Information (RFI). This translates into huge time savings and shorter completion times. However the adoption of e-commerce by SMEs in the construction industry in the UK is still in its infancy, with the majority of uptake being by larger companies. The research carried out in this study is based on the premise that, in order for construction companies to adopt e-commerce tools there is a need to undertake an analysis of their business processes and working methods to ensure successfully implementing, and benefiting from these tools.

E-commerce Definition

Electronic commerce or e-commerce has been defined in several ways. The Organisation for Economic Cooperation and Development (OECD) defines e-commerce as ‘the electronic exchange of information that support and govern commercial activities including organisational management, commercial management, commercial negotiations and contracts, legal and regulatory frameworks, financial settlement arrangements and taxation’ (OECD, 1999). Some others define e-commerce as a the process of buying and selling goods and services online (Unisys, 2004; and Laudon and Laudon,2002). However, this definition of e-commerce can be limited as, e-commerce is not just about buying and selling online, but also includes all forms of business activities that are conducted over the Internet (e.g. the business-to-business flow of information between companies or within a company, communication between businesses, online advertising, etc) (Learnthat, 2004). The definition of e-commerce is not static (Kosiur, 1997) and depends on the adopted perspective. According to Kalakota and Whinston (1997), from a communications perspective, e-commerce is the delivery of information, products/services, or payments via telephone lines, computer networks, or any other electronic means. From a business process perspective, e-commerce is the application of technology toward the automation of business transactions and workflows. From a service perspective, e-commerce is a tool that addresses the desire of firms, consumers and management to cut service costs while improving the quality of goods and increasing the speed of service delivery. From an online perspective, e-commerce provides the capability of buying and selling products and information on the Internet and other online services. For the purpose of this study, the broader definition of e-commerce will be adopted. An overview of UK Construction SMEs

According to UK Small Business Service 2001 statistics (SBS, 2002a), there were more than 3.7 million active business SMEs in the UK. They contributed 55.4% (12.5 million) of employment and 51.4% (1.1 trillion) annual turnover of the entire UK industries .In the construction sector, SMEs represented 18.5% of the entire SMEs enterprises, which contributed 11% (1.4 million) employment and 9.4% (0.1 trillion) annual turnover of the entire UK). Unlike other industries (e.g. finance and manufacturing) the construction...
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