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The European small and medium-sized enterprise Internet and business-to-business financial services study

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This report investigates the impact of the Internet on European small and medium-sized enterprises (SME's) and evaluates the opportunities in terms of online B2B financial services. The key points covered by this report are: · External challenges for SME's; · Need for SME's to innovate and adapt their organization; · Technological capabilities and the attitude of SME's towards information technology; and · Strategic partnerships of SME's in the financial services area. SME's in four different European countries are included in this study: France, Germany, Sweden and the UK. Telephone-based interviews were conducted in early 2000 with 37 respondents from these countries with the help of a structured questionnaire. The contacts came from GE-Capital customer lists and the INSEAD database. SME's provide a major portion of employment in most European countries, with Italy and Spain having the highest rates at around 80%. More than 90% of the total number of European Union businesses are comprised of SME's, accounting for 55% of EU turnover. Thus the importance of the contribution currently made by SME's, to all European economies, cannot be ignored with a general reduction in the weight of the contribution made to employment and to GDP by larger enterprises. Overall, the authors unveiled a very diverse picture of how SME's across Europe approach the Internet. These differences are mainly due to Internet penetration in each country in addition to the overall use of IT in the business. For example, they have found businesses in Sweden currently leveraging some of the opportunities made available via the Internet, while French companies are mostly behind in this respect due to established practices or the high switching costs (mainly functional) associated with the Minitel. However, an overall majority does feel a great level of excitement about the range of possibilities afforded by the Internet. The main reason for not having adopted new practices seems to be the lack of knowledge about how to formulate an effective strategy to conduct business on the Internet. SME's in general would derive a great deal of benefit from having external providers offering them coaching and exposure to the range of opportunities offered by the Internet. Effectively managing financial information and resources is one of the most important aspects of ensuring the success of a small business. Small businesses demand easy to use services that help them manage their business better. Specifically, they need to quickly and efficiently manage activities, such as cash management, payroll, credit, and applications for working capital or lease loans. This would help them to increase productivity and to focus on their core business.

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