Report on the internet economy Q4. 2001
2002. 11. 17.
In association with Webigen Inc. and Sun Microsystems Hungary, GKI Economic Research Co. conducts quarterly surveys on internet usage and the development of the electronic economy in Hungary. The following is a summary of the most crucial results of the 2001 fourth quarter survey.
As in numerous other research projects of GKI Economic Research Co., the results of this survey are synthesized in one index, called the GKIeNET-Webigen Internet Economy Index.
This sentiment index, representing the expectations of certain segments of the economy regarding the market impact of internet use and internet applications, is comprised of responses to four questions. The questions relate to the following issues: expectations regarding internet sales and procurement, the impact of the internet on the market of the company, as well as the utilization of the internet in the present and in the future.
In the fourth quarter of 2001, the GKI-Webigen Internet Economy Index was at 11.8 (previous quarter: 10.1). Tourism-related businesses were more optimistic than in the previous survey, while financial service providers became somewhat less confident, but their expectations are still more positive than the average. With the subdued prospects of the financial sector it is now the industrial and service companies that have the highest expectations in terms of the internet’s impact on the markets and operations of their companies.
The following section outlines the key findings of the general corporate survey.
The GKI-Webigen Corporate Internet Usage Index was at 14.5, which reflects a slight rise compared with the previous quarter’s figure of 10.1. The following inferences can be drawn from the index and the subindexes: Companies are expecting more marked consequences from the market changes generated by the use of internet applications. At the same time, they believe that there will only be a slight advance in the extent to which companies take advantage of the internet’s potential in the future,
expectations regarding online procurement are significantly more favorable than those regarding online sales,
companies are even more interested in online procurement than before
There are pronounced trends in internet availability. Company size (in terms of the number of employees) is indicative of internet availability: almost every large corporation (with 300+ employees) has web access (at 97%), while on the other end of the scale micro businesses with five to nine employees show a penetration of 71%. In the category of small and medium-sized companies the percentage of internet access is in line with the number of employees (between 73% and 85%)
Expectations continue to project that micro and small businesses will make significant advancements in closing the gap in web access. 10-20% of the responding micro and small businesses indicated that they were likely to get internet connection in the coming period. Overall, company size will continue to be a determining factor in internet connection availability in the short term. The complete disappearance of the differences will not take place any time soon, but the range of variation will diminish.
Three separate groups can be distinguished in the various sectors of the economy in terms of the availability of internet connections.
1. The following sectors have the highest rate of internet access (between 80 and 90%): real estate, business services, education, as well as miscellaneous community and individual services.
2. Average internet access rate (60-75%) can be seen in the following sectors: manufacturing; electricity, gas, heating and water supply; construction; transport, storage, postal services; as well as healthcare and social services.
3. The internet penetration rate is below average (43-46%) in sectors including agriculture, hunting and forestry, mining, restaurants.
Based on the responses, the most dynamic advancements in terms of internet access can be expected in agriculture, hunting and forestry; the restaurant industry; as well as in healthcare and social services. 4% of the medium-sized and large companies have written internet strategies, and 18% plan to develop a written internet strategy in the future. This is generally managed and implemented by the IT area of a company. Only 4% of the firms with written internet strategies have a dedicated internet team or department.
The level of internet consciousness is also reflected by the fact that as low as 5% of businesses have conducted in-depth research on the opportunities of e-commerce, by means of studies, cost benefit analyses or market forecasts. At the same time, future prospects are promising: 20% of the companies plan to look into the potential of e-commerce.
To many executives, the internet is in many cases still a “black box,” which is a major obstacle in the expansion of the internet and particularly in the use of online business solutions. 47% of the responding firms said that their chief executives needed to further familiarize themselves with the internet, and the responses reveal that the ratio is extremely high in the category of large corporations (65%). At the lower levels, employees with college degrees show a more favorable picture in terms of computer skills; a smaller percentage (35%) needs to acquire internet skills.
On average, companies spent 7% of their training budgets on computer skills training in 2001, and this rate will increase to 9% in 2002. Generally, these expenses account for a larger percentage of the total training expenditures in micro and small companies (11-21%), while they represent only about 6% at large corporations. In 2002 all segments plan to spend a slightly larger amount for these purposes.
In the wake of the events of September 11, 2001, security became a central issue in information technology. 70% of the companies use virus protection, the most basic and widespread solution. As low as 52% make security backups to protect their IT systems and data. 16% of the companies use firewall software to protect their systems from intruders, which is only slightly more than one-third of companies that have their own websites. Encryption is used by 10% of the firms. Company size is again a determining factor in this case.
For 2002 companies plan a dynamic increase in their IT expenditures.
8% of the companies have written internet security protocols, and one-fourth of the rest plan to implement security measures in the near future. Company size is clearly a key factor in this respect: the larger the company, the more likely it is to be concerned with internet security issues.
The survey targeted incorporated and non-incorporated entities with five or more employees over the period of November and December 2001 (based on the database of the Hungarian Central Statistical Office). For the evaluation of the survey results, the responses to the individual categories were weighted to be representative of the total segment. The 1000+ responding companies represented the segment at 19% in terms of annual net revenues in 2000 and at 15% in terms of employment.