What's Holding Up EC in Australia?
Roger Clarke

Principal, Xamax Consultancy Pty Ltd, Canberra

Visiting Fellow, Department of Computer Science, Australian National University

Version of 11 August 1997

© Xamax Consultancy Pty Ltd, 1997

This paper is at http://www.anu.edu.au/people/Roger.Clarke/EC/Impeds97.html


The stimuli for the preparation of this document were a discussion with I.T. journalist extraordinaire, John Hilvert, in relation to an article for 'The Australian', and an impending guest lecture in a third-year information systems unit at the Australian National University.

During the last decade, I've undertaken many consultancy and research assignments relating to impediments militating against the adoption of electronic commerce. I'm continuing to do so, generally in conjunction with my strategic partners in this area, Electronic Trading Concepts - ETC, and the Monash University Centre for Electronic Commerce.


Electronic Commerce (EC) is the conduct of business with the assistance of telecommunications, and of telecommunications-based tools. See Clarke (1997) for definitions, and Clarke (1993) for an early explanation of what EC is, and how it is far more than just structured transactions (i.e. electronic data interchange - EDI).

EC holds a great deal of promise. But then it has done for some time now. U.S. pundits, and even some Europeans, talk in glowing terms about its application. But Australia seems to be lagging. Why is this?

Two initial observations are necessary:

In order to get to grips with the impediments, it's first necessary to segment the EC marketplace a little. It is valuable to distinguish the following classes of EC:

This document addresses each of these in turn.

Life Among the Corporates

Large organisations change slowly. They have heavily engrained structures and processes, and new developments take a great deal of time to percolate through.

Meanwhile, small organisations don't take up new technologies quickly unless they perceive immediate advantage in doing so, or immediate disadvantage in not making the move.

Technologies that have recently broken through a barrier and achieved rapid adoption are the fax-machine and the mobile telephone. Both are important tools of commerce, and, with the advantage of hindsight, will be perceived to have been early implementations of EC.

A 'critical mass' of EC-capable business partners is widely seen as a pre-requisite to break-through. Small businesses have yet to see a surge in the numbers of business partners who expect them to use other elements of EC, such as electronic directories and catalogues for discovering sources of supply and potential customers; web-forms for ordering; EDI for transmitting transaction data with suppliers and customers; email for ongoing communications with customers; and net-based payment mechanisms for settlement.

One of the reasons for this is that there are many different contexts in which commerce takes place; for example, each of the following classifications of goods and services involve rather different kinds of tools to discover partners, negotiate, enter into contract, deliver and settle:

An important class of large organisations, that are capable of generating the necessary momentum towards widespread adoption of EC, or at least of some types of EC, is government agencies. Government agencies in Australia have a healthy respect for their own independence, and generally resist co-ordinated initiatives. Moreover, those governments that have established EC initiatives have failed to pursue their strategies effectively, or failed to adapt them to the rapid changes in technology that have occurred; hence some of their projects have been still-born, and others are only now showing signs of achieving breakthrough.

A few clusters of organisations have established EDI as a primary means of communicating transactional data with their business partners, notably the Australian Customs Service, BHP Steel Division, Coles-Myer and the Australian Taxation Office. These are all so-called 'hub-and-spoke' schemes, which inevitably involve some degree of duress imposed by a major organisation on its generally smaller 'business partners'.

For EC tools to become mainstreamed, it is important that initiatives be structured on a collaborative, 'win-win-win' basis, so that all parties share in the advantages, and hence have positive incentives to participate, as well as negative disincentives not to. One instance in which significant market-segment collaboration has occurred, at least at one level of the sector, is the motor vehicle manufacturing industry, where the 3 manufacturers successfully imposed EDI on their c. 150 components-suppliers. Several, more fully collaborative projects are under way, in such areas as pharmaceuticals.

EDI, and other early EC capabilities, were built over services provided by value-added network providers (VANs), who mostly used proprietary standards. The question can be asked as to why the open standards of the Internet haven't (or at least haven't yet) stimulated the long-awaited explosion.

One reason is that it has taken some time for companies to unwind their commitments to proprietary standards. New technologies like web-forms have proven not to be simple to interface across to existing 'legacy' (or as I prefer to call them, 'heritage') systems. This is because changes to existing systems, even where they are packages licensed from a software house, are very slow, cumbersome and error-prone; and because the new technologies do not provide convenient bridges to assist the transition from old to new.

Another consideration is the time and cost involved in getting catalogue information up on the web. Corporate shop-windows were easy enough, but the next step has proven to be non-trivial. Progress is now being made in establishing environments within which product-list and price-list information can be published, protected, and maintained, all at the same time.

In addition, businesses have only modest interest in doing small parts of their purchasing on the net. If they are to adapt their practices, then they want to see a rich set of Internet-capable partners, and a considerable proportion of their work performed within a consistent and coherent environment. Only as full-scale support environments like Transigo are delivered, will this need be satisfied.

The most-often-quoted factor, inadequate security, is another partial explanation for the slowness of take-up. I see it as being merely a symptom of the real underlying factor: insufficient trust. I see secure services as being a short-term, but very necessary, phase of the Internet, which will establish the requisite trust in the reliability of Internet-based commerce, and unleash rapid take-up. Digital certificates, certification authorities, and Transigo's electronic tender-box, are important parts of this jig-saw puzzle.

Once support for secure (but somewhat tedious) transactions is in place, most organisations will then work out risk-management strategies, and conduct most of their transactions in a relatively insecure manner. In other words, once it becomes mainstreamed, Internet-based EC will be much like existing manual commerce, and primitive (telephone-and-fax) electronic commerce: people will take calculated gambles most of the time, and occasionally lose out to shysters.

In short, I see the key factors in this market segment as being mature services; positive incentives for all participants in order to achieve critical mass; trust; and patience, as large ships turn.

Consumer Marketing

A small proportion of netizens are already active users of the Internet for commerce. Most of the action at present appears to be in CDs and books (i.e. physical goods), software (both as a physical good mailed on a magnetic or optical medium, and as a digital good provided by download), and possibly gambling (a digital service, and in some cases like the Northern Territory lottery, a physical good called lottery tickets). Most of the payments appear to be being conducted using unprotected credit-card details (which is a manageable risk for Australian consumers, and not seen as a major issue at present by the transaction-processors).

A vast amount of effort (although very little thought, or expense) is being invested in promotional e-mailings. For details on that phenomenon, see my pages on spam, appropriation of mailboxes, and privacy and e-lists.

Marketers are also endeavouring to convert their shop-windows from general promotional/advertising tools into sales-closure tools, but this is hampered by the slowness of any of the net-based payment schemes to hit critical mass. Concerning scenarios for net-based payment schemes, see Clarke (1997).

Marketers also appear to be endeavouring to exploit the net's capacity as a means of gathering data about consumers; and to subvert the web's hitherto consumer-pull pattern, by migrating it into a marketer-push medium.

Even after allowing for its immaturity, current consumer marketing on the Internet is astoundingly amateurish and dysfunctional. Suggestions as to how the Internet can be used for marketing in a responsible manner are made in each of my documents on spam, cookies and e-lists, and also in my pages on cyberculture.

I may be being unduly optimistic about consumers, but I perceive even the newbies amongst us to be largely unreceptive to 'up-front', pushy American sales sleeze, and resentful of its intrusiveness. I still expect Internet consumer marketing to explode, but it will be delayed longer than I'd anticipated, until marketers' practices become more reasonable, or at least appear to do so.

Non-Purchasing Electronic Business

Electronic commerce can be used narrowly, to refer only to trade in goods and services. Some people use it much more generally, however, in a manner equivalent to, for example, 'electronic business'. This sense of the term encompasses all kinds of information-exchange activities performed by 'businesses', in both the private and the public sectors.

One example of a cluster of EC activities outside the narrow interpretation is what is broadly referred to as CALS. This acronym has many interpretations, some of them quite silly (e.g. 'Commerce At Light Speed'). 'Computer-Aided Logistics Services' is a somewhat more sensible interpretation. The focus is on the exchange of design documents among the various organisations involved in the development of a complex artefact such as an aeroplane, ship or building.

Other examples of electronic business include:

Progress is being made in each of these areas, generally involving customised application of Internet protocols. One useful reference-point is the National Library's index of the home-pages of agencies of Australian Governments.

Two current initiatives of great importance are the proposed National Business Information Service (NBIS) and the intended Single Entry Point (SEP). These are intended to provide businesses generally, and small enterprises in particular, with more convenient means for interacting with government agencies, at both Commonwealth and State levels. If the commitment is real, initial momentum can be sustained, effective analysis of stakeholder requirements is performed, and design, construction and implementation are undertaken in a quality and consistent manner, these initiatives hold great promise for improving business efficiency.

Electronic Services Delivery

The term 'electronic services delivery' (ESD) is in common use to refer to non-purchasing applications of electronic tools to deliver services to people, in their roles as consumers and citizens (and in some cases as small business-people as well).

The Victorian Government's initiative is the most mature, but most States and Territories have projects in progress, ranging from interactive voice-response (IVR) and call-centres, via public kiosks, to web-based services. At Commonwealth level, the Commonwealth Services Delivery Agency (CSDA) is likely to provide some of its social security and educational support services in this way.

Considerable amounts of government information are already available on the Internet, and some industry and professional associations, and community-based organisations, are also improving their exploitation of the net.

The degree of coordination has to date been limited, the quality mixed, the maintenance somewhat haphazard, and the business models largely limited to sponsor-finance. Evidence of maturation exists, however, and Australia may well continue to be one of the world-leaders in the area.


There has been considerable progress in some aspects of EC in Australia. Purchasing, both by organisations and by individuals, is developing fairly slowly, particularly in comparison with the speed that hyped-up, largely American prognostications, have led us to expect. But a reasonable amount of information exists about the impediments and about how to address them.

Consumer marketing is moving unnecessarily slowly, largely because of the serious immaturity of the people trying to do the selling, and to a much more limited extent because of immaturity among consumers, and in the available infrastructure.

Progress in areas other than purchasing is more brisk, and Australian government agencies are particularly active in maturing their initial web-offerings into fuller, more responsive, and better co-ordinated and maintained services.


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Created: 11 August 1997

Last Amended: 11 August 1997

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