MEASURING THE ICT MATURITY OF SMES

Pham Quoc TrungGraduate School of EconomicsKyoto Universitypham.trung@kt4.ecs.kyoto-u.ac.jp

CONTENTS

1. Introduction

2. Research process

3. Literature review

4. Model for measuring ICT maturity

5. Road-map for ICT development in SMEs

6. Indicator of knowledge-oriented

7. ICT maturity index

8. Conclusion

1.INTRODUCTION Knowledge management is very important. KM depends mostly on the development of Information

Communication Technology (ICT). To be success, enterprises should prepare a suitable c

ondition for KM by improving their ICT maturity. Nowadays, small and medium enterprises (SMEs) bec

ome more and more important. Helping SMEs to know their current ICT maturity will m

ake them be more success in knowledge economy. So that, measuring the ICT maturity of SMEs is very i

mportant for the development of SMEs and economy.

2.RESEARCH PROCESS

Literature review Model for measuring ICT maturity. Development road-map of ICT use in SMEs Indicators for measuring the ICT development t

oward knowledge-oriented. Tool for measuring ICT maturity. Survey results of ICT maturity of some Vietna

mese SMEs.

3.LITERATURE REVIEW 1

SMEs (small and medium sized enterprises) are enterprises with less than 250 employees (definition of European Commission)

ICT maturity of SME: is the state of an SME, in which it reaches fully state of development in applying information communication technology (ICT) in doing its business.

5 levels of maturity in an organization toward Knowledge Management : Default, Reactive, Aware, Convinced and Sharing. (KM Maturity Model [15] of V.P. Kochikar)

3.LITERATURE REVIEW 2

From previous work [3] of Europe, a road-map for ICT development in SMEs as follow: Inactive - no current use of ICT in company Basic - including word processing and other deskt

op packages Substantial - extending into the networking of PC

s and several applications Sophisticated - involving the integration of applic

ations and exploiting ICT to achieve service differentiation

4.MEASURING ICT MATURITY1 Model for measuring ICT maturity of SMEs

4 main factors: ICT Policy, ICT Infrastructure (hardware, network), ICT Application (software, data, process), and ICT Human Resource

Enterprise Inside

Environment

Policy

Law/ regular

Consumer

Infrastructure

Human Resource

Application ICT Maturity

Supplier

Competitor

4.MEASURING ICT MATURITY2 Development trend of 4 main factors :

ICT Policy: In SMEs, the policy should be more flexible, easy for cooperation, toward outsourcing.

ICT Infrastructure: The development trend of ICT infrastructure in SMEs is shown by the increase in connectivity and mobility day by day.

ICT Application: the trend for ICT application in SMEs is the integration all of their information systems and business models to create e-business.

ICT Human Resource: The development of human resource is shown in the sophisticate level of their skills as well as the innovation capability of SMEs.

5.ICT DEVELOPMENT

ROADMAP1 2 forces that mostly effect to SMEs are: E-commerce: web become important environ

ment for doing business: advertising, marketing, trading and sharing knowledge. This force would lead to the so-called ‘web-based enterprises’.

Globalization: knowledge workers and knowledge works become the main source for innovation and development in globalization. This force would lead to the so-called ‘knowledge-oriented enterprises’.

5.ICT DEVELOPMENT

ROADMAP2 The 5-stage road-map of ICT development :

Inactive: no current use of ICT in company Basic: including office and other desktop packages Substantial: extending into the networking of PCs an

d some applications Web-based: extending to e-commerce with many we

b-based services Knowledge-oriented: integration of applications and

use ICT tools for developing intellectual capital toward innovation and creation.

With this roadmap, ‘Web-based’ is ready for Level 3 (Aware) and ‘Knowledge-oriented’ is ready for Level 4, 5 (Convinced, Sharing) of Kochikar’s KM maturity model.

Maturity level Level 1 Level 2 Level 3 Level 4 Level 5

Main factorsDevelopment Features

Inactive Basic Substantial Web basedKnowledge

oriented

InfrastructureConnectivity & Mobility

Telephone PC, laptop Network Internet Wireless

ICT HRSophisticated & Innovation

UnskilledBusiness skills

Technology skills

MIS skillsLearning skills

ApplicationIntegrated & Unification

No application

Office, E-mail

MIS apps E-commerce E-business

PolicyFlexibility & Mobility

No policy Standardize Modernize Cooperation Outsourcing

5.ICT DEVELOPMENT

ROADMAP3

6.INDICATORS OF KNOWLEDGE-ORIENTED ICT DEVELOPMENT1　

Indicators Stage 　 Indicators Stage

ICT

Infrastru

cture

Fixed telephone 2

ICT

Ap

plication

Standard application software 2

Mobile devices 5 Internet use for getting information 4

Number of computers 2 Website 4

Type of Internet access 4 Services for which Internet is used 4

Local network 3 Value of online purchases 4

Internet bandwidth 4 Value of online sales 4

Secure Internet Server/ Hosting 4 E-Marketing 5

Security & backup system 4 E-mail/ IM for communicating 2

Wide area network (WAN, GAN) 3 Social Network for cooperating 5

Wireless LAN/ wifi 5 Remote Meeting/Voice Conference 5

Wap/ i-mode access 5 Intranet/ Extranet 3

Management Information Systems 3

ERP, SCM, CRM 3

Business Intelligent/Knowledge Base 5

6.INDICATORS OF KNOWLEDGE-ORIENTED ICT DEVELOPMENT2

　Indicators Stage 　 Indicators Stage

Hu

man

resource

ICT training 3

ICT

Policy

ICT investment 3

Share of employee using a computer 2 Quality policy 2

Share of employee using the Internet 4 Privacy policy 4

Royalty payment & receipt 5 Regulatory quality 2

Patent application 5 Security policy 4

Company spending on R&D 5 Piracy policy 5

Capacity for innovation 5 IT expert recruitment/ training 5

IT specified employee 3 Upgrade ICT hardware/ software 3

IT department - CIO 4 Assessment effectiveness 5

Business specified employee 2 ICT use for KM is a priority 5

Self-learning skill 5

Other

Company name 　

Expertise Reuse 5 Company size

Company detail (field, location…) 　

7.ICT MATURITY INDEX 1

A questionnaire is designed based on above indicators and used for a survey. The ICT maturity index (ICTMI) should be calculated by the following formula:

with

(Ilk, Alk, Hlk, Plk: indicators of stage l of 4 main factors; nl, ml, pl, ql: number of respective indicators of stage l)

ICTMI is attached to the ICT development stages as follow: 0-1/5:Inactive; 1/5-2/5:Basic; 2/5-3/5: Substantial; 3/5-4/5: Web-based; 4/5-1: Knowledge-oriented.

41,1,,,,0 ICTMIPHAI

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)(4

1

1

l l

n

klk

n

I

I

l

4

)(4

1

1

l l

m

klk

m

A

A

l

4

)(4

1

1

l l

p

klk

p

H

H

l

4

)(4

1

1

l l

q

klk

q

P

P

l

PHAIICTMI

7.ICT MATURITY INDEX 2

ICT policy should be considered firstly in improving the ICT maturity of an SME. Three remain factors should be improved simultaneously.

At each ICT maturity level, SME should invest more on each different aspect of ICT use, for example: ICT infrastructure is important for Inactive to Basic, ICT Application for Basic to Substantial, ICT policy for Substantial to Web-based and Human Resource for Web-based to Knowledge-oriented.

7.ICTMI 3 -VIETNAMESE SMESID SME Field Type Infra. Apps. HR Policy ICTMI Level

1 PLC Trade Private 0.2773 0.3033 0.0768 0.0417 0.1748 Inactive

2 KQL Service Public 0.4234 0.4533 0.6042 0.2783 0.4398 Substantial

3 HFL Service Private 0.3528 0.4464 0.1083 0.3750 0.3206 Basic

4 QTC Trade Limited 0.5639 0.6580 0.7083 0.5568 0.6217 Web-based

5 AHC Industry Limited 0.4421 0.3650 0.2045 0.6250 0.4091 Substantial

6 BRT Service Public 0.3967 0.4953 0.3667 0.0699 0.3322 Basic

7 TNT Trade, Service Limited 0.7431 0.5358 0.3802 0.4722 0.5328 Substantial

8 CVC Service Limited 0.5509 0.5736 0.5903 0.6806 0.5988 Substantial

9 REF Service Limited 0.6979 0.6408 0.5833 0.8750 0.6993 Web-based

10 TMC Industry, Service Limited 0.2576 0.2208 0.3583 0.4306 0.3168 Basic

Average 0.4706 0.4692 0.3981 0.4405 0.4446 Substantial

Infrastructure

0.0000 0.2000 0.4000 0.6000 0.8000 1.0000

PLC

KQL

HFL

QTC

AHC

BRT

TNT

CVC

REF

TMC

Applications

0.0000 0.2000 0.4000 0.6000 0.8000 1.0000

PLC

KQL

HFL

QTC

AHC

BRT

TNT

CVC

REF

TMC

ICT maturity index

0.0000 0.2000 0.4000 0.6000 0.8000 1.0000

PLC

KQL

HFL

QTC

AHC

BRT

TNT

CVC

REF

TMC

Human Resource

0.0000 0.2000 0.4000 0.6000 0.8000 1.0000

PLC

KQL

HFL

QTC

AHC

BRT

TNT

CVC

REF

TMC

ICT Policy

0.0000 0.2000 0.4000 0.6000 0.8000 1.0000

PLC

KQL

HFL

QTC

AHC

BRT

TNT

CVC

REF

TMC

8.CONCLUSION Knowing about ICT maturity is very important for

SMEs to be successful nowadays. Using this tool, SMEs could know about their IC

T maturity and plan for improvement in future. Appropriate use of ICT will maximize their benefi

ts and lead them toward knowledge-oriented enterprises.

Implications for further improvement: Appropriate coefficient for ICT maturity index; Suitable actions for improving ICT maturity; Using this tool for industry, country range.

REFERENCES

1. S. Kim & H. Lee, The impact of Organizational Context & Information Technology on employee Knowledge-Sharing Capabilities, Public Administration Review, 2006

2. Australian Communications & Media Authority, Top six trends in Communications, and Media Technologies, Applications and Services – Possible implications, 2008

3. M. Chesser & W. Skok, Road-map for Successful IT Transfer for Small Businesses, ACM, 2000

4. United Nations, Measuring ICT: the Global Status of ICT Indicators, UN ICT, 20055. International Telecommunication Union, Global ICT Opportunity Index Report, 20076. World Bank Institution, Knowledge Innovation and Knowledge Economy Index, 20077. International Telecommunication Union, Digital Opportunity Index Report, 20078. World Economy Forum, Network Readiness Index Report, 20079. EIU - The Economist & IBM Institute for Business Value, E-Readiness Report, 200710. Vietnam National ICT Office, Vietnam ICT index 2006, VAIP, 200611. Dirk Krafzig et al, Enterprise SOA: Service Oriented-Architecture Best Practices, 200412. Peter Drucker, Management Challenges for the 21st century, Harper Business, 199913. Jeremy Rifkin, The Age of Access, Ken Tarcher, Putnam, 200014. Thomas Friedman, The world is flat, Farrar, Straus and Gioux, 200515. V. P. Kochikar, “The Knowledge Management Maturity Model: A staged framework for l

everaging knowledge”, KM World 2000, Santa Clara, CA, 2000

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