Barriers of e-commerce and e-government in Saudi Arabia

Fahad Alharby Abstract

Barriers of E-commerce and E-government in Saudi Arabia

MSc in CMT with software systems for e-business and WWW 2005/2006


By F. M. Al-Harby

Project Supervisors: Dr. Rami Qahwaji, Dr Mark Goodall

The ways for undertaking business are quickly shifting. The Internet and

associated advances in Information Technology (IT) considerably affect countries in

general and customers and financial services in particular. The increasing value of E-

commerce represents a watershed event for the global markets. The principle of this

dissertation has been to produce a study to look at the barriers of E-commerce

implementation in Saudi Arabia.

E-commerce can enhance the velocity of money in an economy. In a developing

economy with an elementary information infrastructure, implementation of E-commerce

needs adjustment and development. E-commerce in the Kingdom of Saudi Arabia is facing

many barriers. Within Saudi Arabia; there is a segment of the population with no access to

the Internet. Access to the Internet is hindered by the poor infrastructure and high costs

associated with Internet service.

In order to accomplish the point of this study, a vast literature review was

done, with a questionnaire which was used as the data collection tool. To achieve this,

a questionnaire from a middle class Saudi family, acting as a sample, has been carried

out. I have focused on the perception of E-commerce. This dissertation has been

organized into six chapters. An introduction to this study, problem statements and

research question were presented in chapter one. The second chapter was devoted to a

literature review. The research methodology was discussed in the third chapter. Data

presentation and analysis were done in chapter four and five, respectively, finally,

recommendations and conclusions in the last chapter.

Fahad Alharby Abstract


With respect to the findings, I conclude that the Saudi citizens looked at E-

commerce positively. Their attitude and views toward E-commerce were positive so

that they found that E-commerce would be an opportunity rather than a challenge or

even a threat for Saudi society. They believed that E-commerce would affect their

society and, thus, their country should embrace E-commerce. Lack of national

telecommunications and Internet costs and lack of government legislation and

regulation were infrastructure requirements which they found that the Saudi society

required. They were well equipped with hardware and software but lagging in other

supportive sectors such as logistics. Traditional attitudes and views about the

companies and scarcity of skilled staff were cited as other major obstacles which

would hinder Saudi Arabia to embrace E-commerce.

The synthesis of these study findings can be extracted into recommendations. One is

that both investments in infrastructure and citizen knowledge are required if a government

desires to support the implementation of E-commerce, and improvement of standards,

policies, and enforcement mechanisms to assure the dependable operations of E-commerce.

Fahad Alharby Acknowledgements


By the grace and mercy of God, first, I would like to express my great appreciation to

my supervisors Dr. Rami Qahwaji and Mr. Mark Goodall. They have always been supportive

and kind to me. Their inspiration, understanding, tolerant advice and encouragement have

made my studying a great learning experience and they will never be forgotten.

Second, I dedicate this dissertation to my wife, my parents, and my children:

Mohammed and Dema. They gave me encouragement, and support. They provided me with

strength, dreams, courage, and determination to move through the final stages of this

dissertation. I also dedicate this dissertation to my boss, the General Manager of the national

centre for financial and economic information, Mr. Mohammed Alnfaie, for his generous,

encouragement, and support.

Finally, I would like to thank all who have contributed to my graduate studies during

the last two years.

Fahad Alharby List of Acronyms


List of Acronyms

ADSL Asymmetric Digital Subscriber Line

AOL America Online

ARAMEX Arab Logistics Company

ATM Asynchronous Transfer Mode

AT&T American Telephone & Telegraph

B2B Business-to-Business

B2C Business-to-Consumers

B2G Business-to-Government

BT British Telecom

C2B Consumer-to-Business

C2C Consumer-to-Consumers

DDN Digital Data Network

DHL A company provides international shipping of documents and

freight

EDI Electronic Data Interchange

EFT Electronic Funds Transfer

GCC Gulf Cooperation Council

GDP Gross Domestic Product

HP Hewlett-Packard Company

ISOC Internet Society

IPPS Internet Petroleum Product Sale

ISP Internet Service Providers

IT Information Technology

Fahad Alharby List of Acronyms


KACST King Abdul-Aziz City for Science & Technology

LPG Liquefied Petroleum Gas

MCI Microwave Communications Inc.

NAP‟s Network Access Points

NCDC The National Centre for Digital Certification

NSF National Science Foundation

OECD Organization for Economic Co-operation and Development

PKI Public Key Infrastructure

PSTN Public Switched Telephone Network

SAMA Saudi Arabian Monetary

SADAD Saudi Electronic Payments Systems Project

SaudiEDI Saudi Electronic Data Interchange

SDH Synchronous Digital Hierarchy Network

STC Saudi Telecom Company

TADAWUL Saudi Stock Market

UAE United Arab Emirates

UPS United Parcel Service, Inc.

URL Uniform Resource Locator

WWW World Wide Web

Fahad Alharby Table of contents


TABLE OF CONTENTS

Fahad Alharby Table of contents


Fahad Alharby List Of Figures


Fahad Alharby List of Tables


Fahad Alharby Chapter 1 Introduction and background

Barriers of E-commerce and E-government in Saudi Arabia - 1 -

INTRODUCTION AND BACKGROUND

1.1 Introduction

This first chapter is intended to give background information about the area of

research. First a brief background discussion regarding E-commerce and E-

government toward costumers and citizens, then an overview of the Internet in Saudi

Arabia. This is followed by a statement of the problem, leading to the research

objectives, research question, delimitations for this dissertation and finally, the

structure of the dissertation and the project management plan.

1.2 Background

1.2.1 Introduction to E-commerce

The definition of E-commerce is very wide and can be interpreted in different

ways by different people. E-commerce has many definitions which include business

process, communications and online services. It can be defined as “buying and selling

over digital media” while buying can be left out if the business procedures are

electronic, in addition, the selling process is electronic (Mariga, 2003). E-commerce

can be more clearly explained as electronic production via public or private networks

as well as E- banking, E- publishing, and E-service. During the use of E-commerce

technology, businesses can split information by electronic means and manage services

online in order for customers to obtain services from the businesses (Kotzab &

Madlberger, 2001).

E-marketing is the extension and adjustment of marketing policies in the

World Wide Web (WWW) environment as a division of E-Commerce and contains all

aspects that have an effect on a web site‟s proficiency, like the idea, the structure, the

content, the implementation, the interface, the maintenance, the promotion and the

advertising (Krishnamurthy, 2004). While extra businesses and supplementary

businesses are using the web to carry out their business, there is concern about some

issues such as efficiency, usability, easy navigation and a high-quality of supporting

services becoming crucial and influencing their achievement (Ancarani, 2002). A

particular significant problem that arises is that web users are faced with too many

options.



1.2.2 Introduction to E-government

E-government is often defined as “e-business of the state”. This is reasonable

because both E-business and E-government use similar infrastructure, hardware and

software as well. Nevertheless, there are obvious differences between the business

models of the public and private sector, which give good reason for dealing with E-

government as a research area of its own (Gisler M., Gunter M. & Spahni D., 2001).

E-government is sometimes defined as citizen‟s services and re-engineering

with technology. Another point of view shows E-government as a fundamental

transformation of government and governance at a scale not witnessed since the

establishment of the industrial age (Aichholzer G. & Schmutzer R., 2000). From a

technological point of view, e-government is the use of technology to increase the

access to, and delivery of, government service to benefit citizens, business partners

and employees (Deloitte Research, 2000).

Even though there are many definitions of E-government, the real

government‟s objectives are certain: maintaining collective security, administering

justice, providing the institutional infrastructure of the economy, certifying that vital

social capital is improved during developments in education and health and through

strong families and communities (Dawes S.S., Bloniarz P.A., & Kelly K.L., 1999).

1.2.3 The Internet in Saudi Arabia

The Internet, E-commerce and the use of E-government are new not only to

the Middle East countries but to the world. The new technology of the World Wide

Web (WWW) in 1993 enabled the use of the internet backbone by a large range of

users with little or no technical skills. The Internet was officially made available in

Saudi Arabia in 1997, the Saudi Arabian government spent two years building a

centralized control system before contribution it for public service in February 1999.

Services such as online banking have only been available in Saudi Arabia since

2001(Alfuraih, 2002; Lee, 2001). Establishing this service was late contrasted to other

countries in the Middle East such as Kuwait, Egypt, United Arab Emirates, Bahrain

and Lebanon. However, Internet technologies have required new laws and regulations,



some of which have bring new burdens to governments and financial institutions and.

Table 1.1 illustrates the enhance of Internet users in Saudi Arabia.

Survey Saudi Arabian growth in Internet users

Dabbagh 1999 (Pastore, 1999d) 112,500 Internet users were estimated in 1999

TELC2000 (TELC, 2000) 115,00 Internet users were estimated in 1999

2.2 million Internet users were predicted in

2004

Wmrc2001 (Dutta & Coury,

2001)

577,800 Internet users in 2001 (3% of the

population)

Madar2002 (Madar Research,

2002)

1.6 million Internet users were estimated in

2002 (6.81% of the population)

4.48 million Internet users were predicted in

2005

Table 1.1: Growth of Internet Users in Saudi Arabia

(Almogbil, 2005;Madar Research, 2002; TELC, 2000; Dutta & Coury, 2001; Pastore, 1999d)

The laws relating to E-commerce and E-government in Saudi Arabia are all quite

new. Customer preferences, needs for protections, and user-friendliness are mostly

unknown. Government departments and companies that offer online services in Saudi

Arabia face cultural challenges. Infrastructure support for online services is also new

(Almogbil, 2005).

Online services consumers depend on Internet technologies for immediate

access to their requirements and financial and information resources. The security of

these resources is presently the issue of important centre of attention. To have

competitive, proficient, and protected online access, government, companies and

institutions must implement laws, principles, and procedures that permit the business

to function well and protect information assets. The online services in Saudi Arabia is

still in its early steps, Saudi government, companies and banks require to run at or

above the services level of successful domestic and international players (Reuters,

2000).

Interpretations, response, feedback and survey items should be taken in the

background of the Saudi culture. It is expected that several of the problems considered

will reveal thoughts and ways which difference strongly with Western views. The

Middle East countries are unique because they consist of a group of nations that have

common ideologies of Islam and language (Almogbil, 2005). They can contrast,



nevertheless, in their strategies and government due to loyalty to separate Islamic

traditions and sects (Lieb, 1999). The enthusiasm for this study mostly approaches

from the required to identify how the unique country of Saudi Arabia has adapted to

Internet technology and E-commerce.

In Saudi Arabia, young people are exposed to modernity during media and

travelling overseas and have various identities across different occupational, regional,

national, tribal and geographic groups (Yamani, 2000). Hermida referenced a Harvard

Law School report in 2002, which stated there were more than 2,000 web sites

blocked by the Saudi government. The Saudi Arabian government control Internet

traffic by using a central proxy servers conducted by King Abdul-Aziz City for

Science and Technology (KACST). Most of these blocked web sites was sexually

explicit or had religious content, as the rest were about women, drugs, and Western

culture. In most countries the main Internet business happened via pornographic sites,

but these sites were forbidden in Saudi Arabia along with other web sites that have

sensitive political or religious views against the Saudi Arabian government or Islamic

law (Almogbil, 2005; LEE, 2001). However, it is unique for a country to block sites

in sequence to preserve Islamic principles and prevent people‟s beliefs from being

influenced (Hermida, 2000).

1.3 Statement of the problem

E-commerce and the use of E-government in the Saudi government and industries

are in the very initial stages. The Internet usage is dramatically growing in the country

and many government departments and companies have an Internet presence on the

net. A few companies provide elementary Internet services.

For the traditional Saudi government and companies, the require to adapt to the

new E-commerce opportunities not only involves direct cost, in the form of extensive

investments in the new information technologies, but as well the indirect costs of

having to adjust their active business models. Saudi companies should to revamp their

business procedures, which direct several different internal conflicts. An internet

business threatens other traditional paths and so be likely to meet with strong battle

within the company. Many Saudi companies can avoid this problem immediately by



not passing on to the consumer during electronic distribution. Some companies may

pursue a dual strategy and attempt to make balance the traditional distribution

channels and online services (Porter, 2001).

The procedures, technologies, and ways of E-commerce and E-government have

been constructed up overpoweringly in a Western cultural background. Saudi Arabia

has been implementing vigorous information infrastructures. Nevertheless, the

cultural infrastructure in Saudi Arabia is fairly different from that of the Western

world. Roth predicted in 2001, based on a report from Pyramid Research, that Internet

users in the Middle East region, will flow over the next five years, but foreign entrants

would have to go through major cultural obstacles. Therefore, there are additional

aspects in particular the cultural differences, which must be considered in order to

adopt E-commerce and E-government in Saudi Arabia. (Almogbil, 2005). The effects

of E-commerce and E-government are the subjects of deep debate in Saudi Arabia,

and a prospective study to explore and investigate the barriers of E-commerce and the

use of E-government in Saudi Arabia is underway.

1.4 Research Objectives

The main goal of this research is to identify the barriers and challenges in

adopting E-commerce and E-government in Saudi Arabia. This identification of

barriers will occur through examining the Saudi Arabia cultural infrastructure, as

analyzed through customer‟s experiences, legal requirements, and the information

technology infrastructures, in addition to studying the current situation and the

benefits of E-commerce.

1.5 Research Question

In Saudi Arabia, a range of major factors impact on the usage and implementation

of E-commerce and E-government. These factors include consumers, government,

companies, technical personnel, managing and legal law. This study is intended to

address the main question which is “What are the barriers and challenges facing E-

commerce and E-government in Saudi Arabia”. This question will be discussed in

chapters four and five which will include the data collection and analysis.



1.6 Delimitations

Due to limitations in time as well as finances, it would be impossible to cover

all aspects of E-commerce and E-government. I will not cover the design and the

execution of E-commerce, nor will I put E-commerce applications to the test.

1.7 Structure of the Dissertation

As can be seen in Figure 1.1 below, this dissertation consists of six chapters. By

now, the reader is already familiar with the content of chapter one which consisted of

an introduction and background discussion followed by the statement of the problem,

the research objectives with research question and their limitations. Chapter two will

consist of a literature review. Chapter three will illustrate how the research was

conducted and which methodological choices were made, in addition to motivations

for these choices. This is followed by chapter four where the collected empirical data

will be presented. This data is then compared with the concepts outlined through an

analysis in chapter five. In the final chapter the conclusions and recommendations

will be proposed as well as suggestions for further research.

INTRODUCTION AND BACKGROUND

LITERATURE REVIEW

RESEARCH METHODOLOGY

DATA PRESENTATION

DATA ANALYSIS

CONCLUSIONS AND

RECOMMENDATIONS

Figure 1.1 Structure of the Dissertation



1.8 Project Management Plan

Project Management Plan is strongly recommended from a best practices point of

view, in sequence to successfully and professionally manage the time, schedule, and

quality of the project. The Project Management Plan can be viewed as a "roadmap",

which will facilitate the project team to deliver the project without any delay with the

quality which they expected. Table 1.2 shows the project management plan:

Week June July August September

1 1-First formal meeting on

Thu 6th

.

2-Submit the completed and

signed 1st Review Form to

Dr Ugail

3-Fix the title and the main

objectives.

4-Web based research

1-Begin writing

introduction

2- Questioner response

1-Time available to

make amendments,

correct errors, tidy up

presentation

2-Aim to submit final

dissertation by Sep 8th

2 1-Literature review

2-Review of the

methodology(looking at the

questioner design)

1-Second formal

meeting/submit the

completed and Second

Review Form to Dr

Ugail

2- Begin writing

Literature review

3- Questioner response

3 1-Literature review

2- Begin questioner design

1-Analysis of

questioner response

2-Evalute results

3- Begin writing

methodology section of

dissertation

4 1-First meeting with the

supervisor.

2-Discuss the main

objectives of the project and

how the project will conduct

3-Begin web science search

1-Complete questioner

design

2-Select sample for

questioner distribution

3-Literature review(if still to

complete)

4-Finish web search (if still

to complete)

1-Write up results and

findings

2- Write up

conclusion/Appendix

3-Proofreading and

check references

Table 1.2 Project management plan



Chapter 1: References

Aarabi N., Bromideh A., (2006). The impact of e-commerce on the Iranian insurance

companies. Master thesis. Lulea University of Technology.

Aichholzer G., Schmutzer R., (2000). „Organizational Challenges to the Development

of Electronic Government‟, DEXA 2000, IEEE Press, pp. 379-383.

Almogbil. A., (2005). Security. Perceptions and Practices: challenges facing adoption

of online banking in Saudi Arabia. Ph.D. Dissertation. The George Washington

University, May 2005.

Cabello D. B., Ravula U. K. (2006). Public E-services toward citizens. Master thesis.

Lulea University of Technology.

Dawes S.S., Bloniarz P.A., Kelly K.L., (1999). „Some Assembly Required: Building a

Digital Government for the 21st Century‟, Retrieved June 11, 2006 from:

http://www.ctg.albany.edu/publications/reports/some_assembly/some_assembly.pdf.

Deloitte Research, (2000). „At the Dawn of e-Government: The Citizen as Customer‟

from:http://www.deloitte.com/dtt/cda/doc/content/at_the_dawn_of_egovernment%28

1%291.pdf. Retrieved June 21, 2006.

Gisler M., Gunter M., Spahni D., (2001). „Minitrack E-government‟, Proc. of the 34th

Hawaii International Conference on System Sciences, IEEE Press.

Kotzab, H. & Madlberger, M. (2001). “European retailing in e-transition? An

empirical evaluation of web-based retailing – indications from Austria”, International

Journal of Physical Distribution and Logistics Management, Vol. 31, No. 6, pp.440-

462.

Krishnamurthy, S. (2003). “E-Commerce Management: Text and Cases, Louiseville:

Transcontinental Printing, Inc.”, ISBN 0324152523.

Mariga, J. (2003). Managing E-commerce and mobile computing technologies.

Hershey, PA, USA Idea Group Inc., p. 3.

Pastore, M. (I999d). Saudi Arabia Gets Wired. July 21, 1999. Retrieved June 20, 2006,

from http://www.clickz.com/showPage.html?page=151061

Reuters. (2000). Saudi banks embark on Internet race. Arabia.com Dubai. August 23.

2000. Retrieved June 23. 2006 from

http://www.arabialink.com/Archive/GWDigests/GWD2000/GWD_2000_08_28.htm

Roth, A. (2001). Middle East Web Could Draw U.S. Bankers. Credit Collections

World-May 30, 2001. Retrieved June 21, 2006 from

http://www.creditcollectionsworld.com/news/053001_4.htm



TELC. (2000). TELC. Telecommunication: Mutually Exclusive. Retrieved June 23,

2006, from http://www.insight-publications.com/saudi/saudi/saudi-sl2.html

Yarnani, M. (2000). Changed Identities: The Challenge of the New Generation in

Saudi Arabia. Brookings Institute Press. September 1, 2000.

Fahad Alharby Chapter 2 Literature Review

Barriers of E-commerce and E-government in Saudi Arabia 10

LITERATURE REVIEW

2.1 Introduction

The literature review has been divided into ten sections starting with a brief

introduction. The second section focuses on Internet and E-commerce. The third

section focuses on the impact of globalization on E-commerce. The fourth section

deals with Socio-cultural changes as well as text and language. The fifth section

produces an overview of the history of Saudi Arabian Financial Systems, followed by

the sixth section which considers telecommunication access and connectivity. In the

seventh section I focus on the Education systems role as well as address the human

resources plans. Regulation and Deregulation and Logistics are in sequence in

sections eight and nine. Next, the successful E-commerce experiment in Saudi Arabia

which is provided by Saudi Aramco, Finally, experience of E-commerce and E-

government in the Middle East countries, using the example of the United Arab

Emirates.

2.2 Internet and E-commerce

Internet and E-commerce are gradually becoming one of the most significant

drivers of strategic change for governments and business. Similarly, it is likely to

have a considerable impact on our lives. Shops, companies and banks are looking for

approaches to influence the Internet and the technique of E-commerce for improved

revenues, enhanced productivity and a larger customer base with loyalty for their

products.

The expansion of E-commerce is a complicated and methodical engineering of

society, not only concerned with the creation of the arrangement of information but

furthermore depending on financial systems such as commercial credit, payment

gateways in the Internet, identification, forwarding system infrastructure, standards,

tax system, perform and adjusting of relative laws and the framework of the system.

In other words, it depends on two important aspects, one is the construction of the

market environment and policies and the other is the broad application of technology.

The centre of attention in the early stages of the Internet was on selling goods

to customers (business-to-consumers or B2C). Now, the focus is changing toward

commercial clients (business-to-business or B2B). The B2B division is expected to be

the most significant focus of Internet sharing in the future (SwissRe, 2004). Internet



technologies have consequences not only for distribution, but for the control of a

company‟s whole business processes too. The more the production process relies on

the processing of information, the greater the potential for alteration. Thus, E-

commerce is currently understood to mean the utilizing of communication and

information technologies, and particularly the Internet, to incessantly enhance an

organization‟s business processes. It indicates the seamless application of

communication and information technology from its point of origin to its end point

beside the whole value chain of business processes conducted electronically and

designed to enable the achievement of a business objective. These processes possibly

will be partial or complete and may include B2B, in addition to B2C, C2B

transactions and even (consumer-to-consumer C2C) (Wigand, 1997).

2.2.1 E-commerce technologies

It is thought that the most hopeful area of E-commerce is not dealing with

customers but the computerization of purchase and sale transactions from B2B.

During the last decade, most companies have used proprietary electronic data

interchange (EDI) systems for this reason; nowadays they are turning to the Web and

extranets. There are many commerce and merchant Web server systems that are

accessible. They usually offer a Web storefront, generally among some sort of on-line

catalogue support, and a means for taking orders. Several of these systems connect to

financial networks to complete payment processing. Companies such as BT, AOL,

MCI, and AT&T offer web hosting services that process E-commerce transactions for

companies that are not ready to operate their own E-commerce web sites (Tokuro,

2003).

Putting all of the processes related with E-commerce together needs further

software and tools. For instance, software presenting interfaces among Web servers

and the company‟s databases and E-payment systems. E-payment systems use

technologies such as electronic funds transfer, credit cards and smart cards, also new

Internet-based payment systems to pay for services and goods electronically. It‟s

desirable to use software to monitor and track web site usage for marketing analysis

(Werner, 2003).



2.2.1.1 Electronic data interchange

EDI is the electronic transmission of commerce information among the

computers of trading collaborators, for example companies, financial institutes,

government agencies and customers. EDI is a proficient technique for trading

collaborators to exchange the information required to manage business. In order to

process information proficiently, the computer systems of trading partners are

required to be capable of communicating. Business partners should have a common

format for their data. Trading partner‟s computer systems also have to be physically

linked, via a public or private network, a dedicated telecommunications line, or

standard telephone lines and modems. EDI can produce considerable savings in

money and time compared with exchanging information by other means such as

printing, handling, and mailing documents.

2.2.1.2 Imaging

Imaging includes many technologies for electronically managing and storing

documents as well as making the information accessible, in spite of whether that

information originated in electronic form or paper. Also, when storing documents,

imaging systems can organize documents with easy access. There are many benefits

of imaging such as enhanced workflow, further timely responses to information

requests, along with reduced costs for filing, retrieving paper documents, and storing.

Imaging can make documents available twenty-four hours a day, seven days a week,

to multiple users, even users in remote sites. Moreover, unlike paper files, documents

saved electronically are rarely missing or lost.

2.2.1.3 Electronic Mail

An E-mail system allows individuals or computer systems to send messages or

documents by computer. E-mail is a simple method to exchange unstructured

information, such as descriptions of extraordinary conditions at risk or suggestions for

underwriting improvements. Such exchanges are possible within an E-mail system or

between separate E-mail systems.



2.2.1.4 Electronic Funds Transfer

Electronic funds transfer (EFT) is a low-cost technique for automatically

transferring money by computer systems. Businesses and customers can use EFT to

make a deposit in their bank account or payment to transfer money to the account of a

creditor. Many companies have for years used EFT to collect premium payments.

2.2.2 Major types of E-commerce

E-commerce can be generally classified into four categories: business-to-

business (B2B), business-to-consumer (B2C), customer-to-business (C2B) and

consumer-to-consumer (C2C). A brief discussion on these main types of E-commerce

is given in table 2.1 below (Cornall et al. 2000):

E-commerce type Example

B2B: has been in use for a few years and

is more commonly known as EDI. B2B

generally involves big companies

transferring all their business purchasing

and sales to the Web.

A typical example is Cisco

(www.cisco.com), the supplier of

Internet hardware, where both buyers and

suppliers can deal online.

B2C: allows sellers to contact more

customers and can collect

comprehensive, focused information

about them, enabling sellers to target

them more efficiently. This is where the

customer accesses the system of the

supplier. It remains a two-way function

however and is usually done solely via

the Web.

A well known B2C example is the virtual

bookshop Amazon.com.

C2B: enables consumers to move

towards businesses. Consumer to

Business is a growing field where the

consumer requests a particular service

from the business.

For example travellers can bid for airline

tickets on www.priceline.com

C2C: allows customers to interact with other

customers. These web sites are typically

some form of auction web site. The customer

lists items for sale with a commercial auction

web site. Other consumers access the web

site and place bids on the preferred items.

The web site then offers a link between the

seller and buyer to complete the deal. The

web site supplier usually charges a

transaction cost.

A famous example is eBay where individuals

can bid for goods from other individuals.



In table 2.2 broad types of E-commerce are given, this is a general form of the

essential areas of E-commerce activity mentioned above.

Government Business Consumer

Table 2.2: E-commerce and broader Internet applications, Source: OECD

Most Governments around the world, such as Saudi Arabia are starting to

reorganize the running of public procurement systems equivalent to 10 per cent of

their Gross Domestic Product (GDP) through the net, opening the view of sizeable

business-to-government (B2G) transactions. The technology is also being utilized by

governments for the transmission or disturbed of information (G2B) (G2C) to lower

the cost of payment systems (C2G) and enhance convenience, and by businesses to

manage after sales service and to increase direct consumer marketing (OECD, 2000).

2.2.3 Benefits of E-commerce

E-commerce is broadly believed to offer extensive growth and cost saving

opportunities. It attracts massive interest worldwide from different areas of the

economy including government, legal and law, colleges and universities, and industry

institutes. The potential of E-commerce has been recognized by governments

throughout the world many of which have developed strategies to smooth the progress

of the adoption of E-commerce. The potential benefits of E-commerce for sellers and

buyers are summarized in table 2.3.



Benefits to Sellers Benefits to Buyers

Expanded access to trading

partners and market reach

Expanded access to trading

partners and support services

Increased marketing and sales

profile

Improved sourcing and

procurement process

Enhanced customer contact and

service

Enhanced supplier relationships

(contact and service)

Reduced cost of sales, technical

documentation, and customer

service costs

Lower purchasing prices

through improved price

transparency and comparison

Reduced transaction

handling/processing costs

Reduced procurement costs

Reduced working capital and

inventory requirements

Reduced operating costs and

maverick spending

Competitive advantages through

improved efficiencies and process

planning

Improved efficiencies and

transaction flow, visibility and

control

Table 2.3: Potential benefits of E-commerce, Source :(Aarabi N., Bromideh A.( 2006) Moodley (2003).

2.2.4 Limitations to E-commerce

E-commerce has been built on the power of the private sector rather than on

government or institutional initiatives, and the E-commerce companies will continue

to drive the development. Nevertheless, there is considerable scope for collaboration

at all stages to eliminate barriers to the development of E-commerce. The limitations

of E-commerce are both technical and non-technical, as pointed out by Turban et al.

(2002) in table 2.4:

Technical limitations Non-technical limitations These include problems pertaining to

1-security

2-reliability

3-telecommunications

4- software

5-integration of E-commerce applications

with existing databases

6-conflict between E-commerce applications

and certain operating systems

The most important problem is the cost of

developing E-commerce; moreover, privacy

and security are an important concern when

it comes to customer-business relationships.

In reality the E-commerce industry has had

an extremely hard period trying to convince

customers that electronic business is as

secure as any other commerce. One more

issue lies in persuading customers to do

business with machines, while some

consumers prefer to touch goods, such as

clothes and to be in no doubt of the

dependability of the item they are buying.



The greatest difference between technical and non-technical limitations is that

technical limitations most of the time can be solved with spending sufficient money,

while non-technical limitations are more complicated to modify while they involve

things that cannot be altered without difficulty such as people‟s attitude, resistance to

change, faceless transactions and lack of trust.

In this research, I‟ll focus on E-commerce application in Saudi Arabia which

is facing several difficulties including the lack of coordination among the public and

the private sectors in order to structure and progress the E-commerce environment.

Other barriers include an absence of payment solutions as well the small international

credit cards. On the other hand, awareness is still obstructing the consideration of the

E-commerce idea; moreover there is a lack of trust about on-line payment and privacy,

and a lack of legal protection against fraud. Furthermore, there is inadequate

infrastructure such as Internet literacy, lack of Internet connection outside big cities

and the high cost of Internet rates whether dial-up or broadband access. Another

barrier is the lack of legislation concerning electronic indication besides the

inadequate authorized conduct of E-commerce application in Saudi Arabia. However,

logistics facilities in Saudi Arabia are still resisting E-commerce development.

2.2.5 E-commerce Risks

At whatever time customers use online services such as online shopping or

online banking, transactions should be encrypted, thus no one, other than the customer

and the company or the bank, can notice or recognize the transactions. To assess the

security of E-commerce web sites, MsMoney.com Inc. (2002) anticipated the

following three steps in table 2.5:

(1) When connecting to the logon page at the bank's or E-commerce web site, the

start of the URL should indicate "https" and not "http." This indicates that data is

being encrypted.

(2) In the status bar of the browser, located at the underneath of the page, a

symbol should show. This, as well, indicates that data is being encrypted.

(3) You may as well locate an image on the site that states, “Click to Verify."

VeriSign is a leading provider of Internet trust services, and its insignia is

confirmation that your bank is certified as a secure domain. There are other trusted

services besides VeriSign, such as Thawte and GTE Cyber Trust.



2.2.6 Internet in the Middle East and GCC countries

The number of Internet users are estimated to raise more rapidly in Gulf

Cooperation Council (GCC) countries than other Middle East countries as Kamali (2002)

forecasted as shown in Figures 2.1 Within a period of three years, the increase in the GCC

countries has roughly doubled. GCC countries are considered to be the largest Internet

community in the Middle East region. (Madar Research Group, 2003).

Internet Penetration

Aug 2002 - End of 2005

0%

5%

10%

15%

20%

25%

Aug-02 End of 2005

Aug-02 10% 2.54% 9.23%

End of 2005 15.70% 8% 19.76%

World Average Middle East GCC

Figure 2.1 Internet Penetration: Middle East and GCC vs. World

2.2.7 Building trust in online transactions in Saudi Arabia

In the research published in 2001, Wakefield recognized that consumers be

required to trust the web site of the electronic market in order to complete their

electronic payment. However, if they do not feel secure, then they will not complete

any kind of electronic payment. As well he mention, "Trust in a Web vendor is an

important variable for the completion of an online transaction, and consumers who

trust are more likely to exhibit positive online purchase intention". In truth, when

online customers had a high confidence in the web site's security, they shopped via

the net which improved the usage of credit cards. He also recognized a direct link

among banks and online shopping: if the trust in any of them is missing, then they

would together be affected.

A study presented by Alyabis (2000) discussed the use of the Internet and E-

commerce in Saudi Arabia. The participant results were as follows, in table 2.6.



The percentage of participants The purpose of using the Internet

93.3% used the Internet for e-mail

68.9% used the Internet for personal research

64.4% used the Internet for searching for

information about products

20% used the Internet for shopping

48.9% used the Internet for online chatting

33.3% use the Internet to buy magazines and

books

28.9% use the Internet to buy computers and

software

4.4% use the Internet to buy clothes

22.2% use the Internet for travel

Table 2.6: the use of the Internet and E-commerce in Saudi Arabia (Alyabis 2000)

In the same study, security and E-commerce continued to be unified. Most of

the respondents (75.5%) think that security is very significant for business institutes in

order to make certain of secure transmission via the Internet. Approximately four

respondents out of five (79.6%) thought that the IT infrastructure in Saudi Arabia was

weak, which was one of the most important barriers preventing companies from

developing E-commerce. E-commerce remains critical for businesses because it

provides another channel through which to sell their products and provide services.

A study conducted by Wang (2001) focused on the personality characteristics

affecting a possible online consumer‟s attitude toward E-commerce and their plan to

buy over the Internet. In addition, Wang determined that there was an optimistic

connection between the individual characteristics and attitudes of the respondents

towards using E-commerce web sites. Also, he noted that the respondent's

demographic group greatly influenced this attitude.



2.3 Globalization and their impact on E-commerce

The movement of globalization is obvious as people are gradually more

related to each other around the world. The flow of money and information across

geographic and cultural divides occurs more rapidly than ever. Within a limited

timeframe goods and services can be bought and sold in all parts of the world.

Globalization is a source of optimism and apprehension, where the mainly open

nations are the leaders of its advance. The growth of communications technology and

Internet usage indicates further globalization in the near future, while the embrace of

globalization varies widely from country to country (Yusuf, 2001). Globalization

demonstrates the economic, political, and cultural environment of the present age.

According to the World Bank report (The World Bank, 2000), the Middle East

countries have to go ahead to be more integrated with the global economy. The

integration progress has fluctuated among these countries, in trade and international

finance and information technology

In fact, the financial and retail services industry has been controlled more or

less as a domestic industry with very little international focus. Barriers such as tax,

government regulation, and cultural issues have barred the expansion of E-commerce.

On the other hand, global cost efficiencies, driven by economies of scale and

comparative advantage, are driving globalization.

2.3.1 New Entrants

Over the last three decades, the majority of the industries, in almost every

country, have seen many new entrants such as foreign companies, banks and building

societies. In Saudi Arabia, seven foreign banks and four foreign retailer firms have

ventured into the Saudi market. Other new potential competitors have the opportunity

to enter new companies into this competition. For example, other retail companies in

Europe and the USA, such as Gean, Carefoure and Safeway, are entering the retailer

market. In many cases retailers have formed alliances with traditional retailer

companies and asset management companies similar to that formed between Wall-

Mart and ASDA.



2.4 Socio-cultural changes in the Middle East

Nowadays, a cultural shift from the traditional generation to modern is

creating a new demand for growth in this business and structural changes in

employment patterns. For example, more flexible working and periods of

unemployment are creating a new type of consumer with different customer

behaviours and requirements.

Ghashghai and Lewis (2002) have expected that the Internet can produce a lot

of modernization within developing countries, especially in the Middle East. It

could present "enhanced business opportunities including cross-border

opportunities; better information in crucial areas such as health, agriculture, and

commerce; improved education; and increased news and entertainment." They found

that it is simple to identify the Middle Eastern leaders and government's beliefs by

reading available literature; however it is hard to decide the beliefs the people have

internalized. On the other hand, the Internet can generate problems, such as

disbursing Western political ideas, distributing pornography, or making it easier for

dissident individuals and organizations to communicate within a region known for

its political unrest. In most conservative and Arab countries, including Saudi Arabia,

governments are aggressively using firewalls to potentially block the spread of

pornography and offensive content from being seen or downloaded by Internet users.

There are issues of tailoring E-commerce web sites to suit a particular

audience. Websites need to be designed for the particular audience it wishes to target.

Across the globe there are many different languages, customs and cultures. There are

more developing countries coming online. Some may be illiterate, have a language

barrier, and have no experience of modern technology, and therefore technology

should not be complicated. It must be made more users friendly. It should be as

simple to use as a mobile phone.

Capurro (2000) has illustrated some of the core ethical issues of the

information society in this century which combines the technical and socio-cultural

issues of the information society through using the categories of the observatory on the

information society as orientation:



-“Globalization: The digital divide inside a community and/or country as well as

between countries, regions, and whole continents is the major issue in this field.

- Privacy and Confidentiality: These are big issues, particularly with

regard to a world market that, as eBay and Amazon show, has basically

different coordinates from political to geographical ones. There is a basic

dynamic interaction between a culture of information-sharing and one of

information protection. This creates an ethical tension between confidence and

control or between methods of information distribution and information

encryption.

- Content Regulation: This is one of the trickiest issues because of the specific

qualities of information, such as its volatility, its easy worldwide distribution and

its non-consumption after its use.

- Universal Access: This issue concerns the question of growth and

coordination of a decentralized and interactive system that is being

monitored and influenced by various actors and global players such as the

hardware and software industry, the National Science Foundation (NSF), the

Internet Society (ISOC), the W3-Constorium, various United Nation Agencies

and non-governmental organizations, private groups of all kinds, etc” (Capurro

2000).

Having analyzed the legal, social and economic impact of E-commerce it is

apparent that E-commerce is here to stay. E-commerce has become an integral part of

the modern day business. Even mature businesses have had to make the switch over to

the modern electronic world or risk being left behind. E-commerce can start off as

simple as having a web site for selling products but it can also stretch far beyond that

through to complex electronic supply-chains and inventory management systems.

Many companies have become over-night successes through the efficient use of E-

commerce. However, as was demonstrated when the dot com bubble burst back in

2000, having an internet business is not sufficient. The key is still to follow the basic

rules of business. The seller must have a good product and a target consumer base that

are willing to buy it. Without consumers, E-commerce is nothing more than a

collection of computer software and hardware.



2.4.1 Text, Language and Culture

Most Saudi business web sites use dual language Arabic and English. In my

view, the most remarkable feature of the Saudi web site text is its exclusivity.

Utilizing Arabic at the start makes contact with reader and directly sets it apart from

the vast majority of the non-Arabic audience: the signs and symbols are unfamiliar to

the point of being meaningless. Thus, it is also conceivable that not just the language,

but the alphabet and script, are also meaningless to most non-Arabic audiences. In

most Saudi web sites whether government or business, the English translation is

available which is competent and understandable: obviously, the purpose is to express

meanings which are „permissible‟ to the non-Arabic reader in a way which is

unambiguous and without any difficulty in understanding.

The extensive increase in the use of E-commerce applications has led software

companies to identify that an important part of their revenues are coming from non-

English countries. This detection, jointly with the saturation of the Western market,

triggered efforts to adapt the companies‟ products to the requirements of non-English

markets. Software localization techniques were built to adjust software written in one

language for members of one culture to another language and for members of another

culture (Keniston, 1999).

The obligation that software be required to fit the cultural context of the user

has been generally accepted. Nevertheless, this context has been defined solely in

terms of the requirements concerning the user interface. Taylor (1992) answered the

question "What then needs to be encapsulated in this concept of cultural context?” by

listing the following locales, i.e., the collections of all the conventions that

characterize a particular culture or user community: transliteration, hyphenation,

spelling, collation, national conventions (numbers, currency, time and date), and

colour (op. cit.). Hall adds such elements as messages, terminology, and positioning

of windows, tables and graphs (Hall, 1999).

To summarize this section, governments and organizations make considerable

efforts to defend their languages. Nevertheless, the issue is, whether or not they in fact

address the deeper issue of the impact of E-commerce applications or in general web

sites, on the society and its values. Accepting the need for software localization, or



even the fit to a particular culture, the interface is an aspect that is clearly important

but possibly not the most significant. So, there is more to culture than language just as

there is more to software than interface.

2.5 The History of Saudi Arabian Financial Systems

Currently, the Saudi Arabian financial system consists of various sorts of

banks, the Saudi government controlled Saudi Arabian Monetary Agency (SAMA),

the private commercial banks, the specialized credit institutions, and the stock market

(Tadawul).

2.5.1 The Central Bank: Saudi Arabian Monetary Agency (SAMA)

Before 1952, Saudi Arabia had no official monetary system; the people used

silver coins or foreign currencies as an exchange medium of circulation for their

trades. In fact, there was a big resistance from religious people against the

establishment of a banking system for the reason that banking interest is against

Islamic laws (the Shari'ah). On the other hand, while the need for a banking system

became obvious when pilgrims visiting holy places in Saudi Arabia needed to

exchange money, the first foreign bank was started in 1927. The 1950's brought an

increased need to form foreign and domestic banks, particularly with the revolution of

the oil industry which continued to develop considerably on an annual basis

(Almogbil, 2005; Money and Banking, 1992).

The Saudi Arabian Monetary Agency (SAMA) was established in 1952, it was

intended to serve as a regulatory agency and act as the government's bank. In the

1960's, SAMA produced banking regulations to advance increase the banking

industry. Riyal, the Saudi currency, was initially dispersed in 1972. SAMA and

commercial banks play important parts in upgrading and developing the Saudi's

banking technology such as ATMs, stock trading, and electronic clearing (Money and

Banking, 1992).



2.5.2 Saudi Arabian Commercial Banks

Saudi Arabia has twelve private commercial banks. These commercial banks

offered complete banking services to individuals, as well as to private and public

enterprises. Eight of these banks were originally owned by Saudis, while the others

were joint ventures with foreign banks. All of these banks offer a high quality of

online banking services for their clients (Almogbil, 2005; Money and Banking, 1992.

2.5.3 The Saudi Arabian Stock Market (Tadawul)

The Saudi Arabian stock market, created in 1983, was essentially designed for

domestic long-term investors. Nowadays, most investors use online services which are

provided by their banks to buy and sell stocks, the Tadawul system presents a successful

E-business portal in Saudi Arabia.

Figure 2.2 Screenshot of the Saudi stock market home page

2.5.4 The National Centre for Digital Certification (NCDC)

The National Centre for Digital Certification presents an integrated method for

running the public key infrastructure (PKI). It is a protection integrated system for

controlling the security keys used for attaining information privacy, verification of

users' identities, certifying data reliability against tampering and alteration, and using

digital signatures. Leading these functions rest electronic services such as E-

government and E-commerce. By this security structure all sorts of web users would

be able to execute electronic transactions in full protection, reliability and

creditability.



2.5.5 Electronic Transactions Act

Currently, the electronic transactions process is under review and will

presently be available. It plans to systematize electronic transactions and provide an

organized structure for accomplishing the next objectives in table 2.7 (NCDC, 2005).

(1) Drawing up rules for using technology in the electronic transactions and

signatures to reinforce confidence in these transactions and signatures and to

facilitate their use in both the public and private sector, by reliable electronic

records.

(2) Confirmation of electronic transaction usage on both local and international levels

to be utilized in all fields such as trade, medicine, education, E-government, E-

payment and other applications.

(3) Elimination of any obstacles facing the electronic transactions and signatures.

(4) Curtailing cases of misuse and fraudulent opportunities, such as forgery of

electronic transactions and signatures.

Source: The National Centre for Digital Certification (2005)

2.5.6 Electronic Data Interchange, International Trade Sector

Currently, the Ministry of Finance performs the Saudi Electronic Data

Interchange Project (SaudiEDI), the goal of this project is to provide swiftness and

transparency to the dealing out of B2B and B2C transactions, by focusing on the

international trade areas such as import, export and electronic trade services.

2.5.7 Electronic Payments Systems Project (SADAD)

The E-Payments Project is identified by SAMA as “SADAD”. This project

spotlights G2B and B2B transactions and is expected to be completed by the end of

2006. This project is one of the main requirements for the performance of E-

Government and E-commerce.

2.6 The telecommunications Access

The telecommunications companies in any country hold the physical

infrastructure such as wires, fibre optics, and switching equipment. Internet Service



Providers (ISP's) lease access to the Internet from these telecommunications

companies. The ISP‟s are connected through the Network Access Points (NAP's).

Utilization of the Internet requires some skills and technology. These include having

electricity, a communications line such as a telephone, a modem, TV cable, satellite,

and a certain level of fluency in English since more than 80% of the WWW resources

are written in English (Ghashghai & Lewis, 2002). Nevertheless, to meet the

requirements of those users whose interpretations or understanding of English is

minimal, there is often a demand on web page designers to incorporate non-verbal

cues, such as pictures or arrows.

Internet service departments in King Abdul-Aziz City for Science and

Technology identified the following three main issues in table 2.8 to increase

penetration in Saudi Arabia (Almogbil, 2005; Al-Furaih 2002).

“Raising Internet awareness: government and non-government organizations

should be aware of the benefits that Internet technology can bring to them and to

their clients. Most of the organizations now have informative web sites in which

they put information about the organization and other information of importance

to their clients. Some are more advanced than others, but they are already saving

time and effort for themselves and their clients. The next step is to start moving

to E-government and digital signatures and other advanced technologies. Parents

should be made aware of the benefits that the Internet could bring to their kids

and their education. Some parents still look at the Internet as a waste of time!

Internet access prices are very high in Saudi Arabia; these are currently the highest

by a wide margin in the region. This discourages users from staying online for longer

periods At the same time; it encourages other means of illegal access, mainly satellites.

Prices should go down if Internet applications, local content, and more penetration are

to be achieved.

Local Regulations should be adopted to promote E-commerce and the use of the

Internet. Currently there are several initiatives for new laws for E-commerce, PKI

implementation and E-government.”

A number of social and infrastructure constraints against adopting online

services in the Arab world countries were cited by Jordan Times (2001). Although

many companies and banks may have the technical capability of offering online

services, they must overcome these constraints:

- Telecommunications infrastructure in some countries remains deficient.

- Internet penetration in the region is still relatively low.



2.6.1 Connectivity

The communication infrastructure in Saudi Arabia is controlled and operated

by the Saudi Telecom Company (STC) that is based on four main networks (Alfuraih,

2002):

- ATM network: provides connectivity to the Internet backbone in Saudi

Arabia, which covers most of the country and is used to connect the

ISP's with KACST and with their dialup and ADSL clients.

- DDN (Digital Data Network): is used for connecting ISP's with

their leased-lines customers; it is also used by some organization to

connect branches.

- PSTN (Public Switched Telephone Network): is used for dialup

and ADSL customers.

- SDH (Synchronous Digital Hierarchy) network: provides

telecommunication services and international connectivity.

2.7 Education systems role

Nowadays, The Ministry of Education in Saudi Arabia is starting its plan to

install a million computers in schools over the next five years, establish computer

learning all over the country, and link young learners to the Web. Lending at

preferential terms will also be provided to teachers and staff at all the education

systems in Saudi Arabia for the purchase of around sixty thousand additional

computers for their personal use.

However, information technology skills and English language are a high

priority and they are being taught from an early grade in all private schools and most

public schools. Furthermore, currently every one of the high school and college



students are required to attend computer training class, and there is a national exam

that includes a computer literacy component. Furthermore, all college students are

required to learn at least one computer language, JAVA is one of most popular

computer languages in Saudi Arabia. In addition, The Ministry of Labour has also

embarked on its plan to create a new information technology job and to qualify a

thousand employees.

2.7.1 Human resources

A skilled employee is important for the development of E-commerce

applications, and that in turn requires an educational infrastructure organized in the

direction of creating skilled and qualified employees in order to suit the enterprise of

E-commerce.

The literacy rate in Saudi Arabia is about 79%, and is considered too high in

comparison to neighbouring countries. Furthermore, about 22% of employees in

Saudi Arabia have higher education certificates and about 19 thousand are holders of

post-graduate degrees. The well-educated and trained employees gave Saudi Arabia

an advantage of being ready to establish an E-commerce environment.

Nowadays, there are 27 public and private universities in Saudi Arabia

offering degrees in different areas related to information technology, and that assist in

producing well qualified employees in the computer field. However, there are many

intermediate colleges and vocational institutions also graduating students with degrees

related to information technology. In my view, it is worth mentioning that the high

salaries and the small supply of information technology graduates could be considered

as a disadvantage to E-commerce implementation in Saudi Arabia.

2.8 Regulation and Deregulation

Customer protection and the global influence of regulatory systems indicate

that there is rising anxiety to present more regulation and particularly professional

guidance. Adam et al. (1999) confirmed that "Intellectual property, taxation, law



enforcement, ubiquitous cryptography, and contractual issues are all unsettled in the

growing E-commerce industry." These involve governments regulating E-commerce.

There are three issues which ought to be considered from a legal point of view: data

protection, computer crime, and copyright protection (Caelli, Longley, & Shain, 1989).

Data protection deals with an organization's legal responsibilities regarding the

storing and processing of personal data. Computer crime concentrates on illegal

computer use, implying the direct participation of computers in a crime. Copyright

protection focuses on ownership of intellectual assets, payment for use, and restricting

copying these materials (Caelli, Longley, & Shain, 1989).

The capability of law to keep up with the developments in technology is not

always adequate. The cultural differences between technological and humanistic

cultures normally produce a lack of education, especially when it comes to

understanding the law from different professions. Also, it is not easy to categorize

under which law a new technical product should fall (Saarenpaa, 1999).

2.8.1 Smart Card Project

Currently, recent technology has been demonstrated such as the smart card

which is rapidly growing around the world, because people appreciate their multiple

applications. They have a high storage capacity and a processor that allows each card

to execute some complex functions. Moreover, their virtual lifespan is reasonably

long. The Ministry of the Interior has taken a great concern in this technology in the

first years of its coming into being. The ministry executed the smart card project

which led to changing the traditional civil affairs ID with a smart card ID. Afterwards,

the project aims to integrate into one card, some of the other government cards such

as the driving license and family card. There is also the electronic passport application

which is considered a state-of-the-art technology solution worldwide.

2.9 Logistics

Saudi Post, UPS, Aramex, and DHL are the four authorised important logistics

in Saudi Arabia. Saudi Post handles and delivers goods and letters to any point in the

World. Recently, they established a new service with a new management to provide a

good service. UPS is a provider of express package delivery, freight forwarding,



logistics and other transportation services. Another authorized company is Aramex

which has a global network and spans more than 250 countries and is managed by

high technology and tracking systems. One of the most popular mail companies in

Saudi Arabia is DHL which is the global market leader of the international air

express industry. It offers express deliveries, as well E-commerce logistics solutions.

Furthermore, its network links over 120,000 destinations in 228 countries.

Mail systems in Saudi Arabia are understood to be slow and undependable.

Using this service with E-commerce would negatively impact the latter. In addition,

the address location system in Saudi Arabia is still not formed in an efficient and

useful way. Such adaptation or even a new system of marking the address location is

immediately required in order to facilitate E-commerce applications. Recently, Saudi

post established a new service which it called “Wasel” to deliver goods and letters to

their customer‟s home instead of collecting it from the local post office. This service

will cover the entire nation over the next five years.

Figure 2.2 Screenshot of the new Saudi Post home page

Although Saudi Arabia is a big country and covering a large area of the

Arabian Peninsula, I believe that E-commerce will be helpful to decentralization and

removing any geographical distances between companies and their consumers.

2.10 Successful E-commerce web sites in Saudi Arabia

Beside the successful online services which most Saudi Banks offer for their

clients, many large and leading Saudi companies in the oil, petroleum gas, and



petrochemical sectors have already introduced advances in E-commerce systems. For

instance, Sabic and Saudi Arabian Aramco which has established Internet Petroleum

Products Sales (IPPS) for Liquefied Petroleum Gas (LPG). This E-commerce

application automates the current manual LPG tender sales process, and the company

can thereby maximize productivity from the sale of propane and butane. IPPS allows

the companies marketing and sales department to electronically publish LPG sales

tenders to particular consumers and permits the customers to review published tenders

and submit offers and permits the company to inform consumers whether their offers

were received and accepted.

As a result of the opportunities obtainable by E-commerce, most major

companies in the oil, petroleum, and gas sector today consider E-commerce as a very

important business process; sharing information and knowledge tools for increasing

efficiency and productivity.

Figure2.3 Screenshot of Saudi Aramco home page

Another successful electronic service is the E-omrah Project which is

presented by the Ministry of Hajj. This project aims to organize the procedure of

issuing Omrah visas electronically. Electronic visa applications are to be submitted

through the Internet to Omrah agents overseas. These applications will be

electronically processed by the Ministries of Hajj, Interior and Foreign Affairs. Visas

Online

services

link



are thus issued within 24 hours. This service is presently used worldwide.

2.11 Experience of E-commerce and E-government in the Middle

East countries: the example of the United Arab Emirates

2.11.1 Background

United Arab Emirates (UAE) has the greatest telecommunication services

between neighbouring countries. It applies the newest technologies in telephone and

Internet services. The utilizing of credit cards and the Internet is increased; payment

gateways and on-line security solutions are accessible. Moreover, human resources

are having reasonable abilities in order to run E-commerce.

Oblivious of the fact that the E-commerce in UAE is suitable, minimal E-

commerce operations are occurring. Some companies and institutions have web sites,

but real on-line transactions are not happening to a large extent, either locally or

worldwide. In addition, some on-line stores are mostly for advertising and marketing,

it is one more approach to undertaking business.

The implementation of E-commerce in UAE is affected by many issues. One

of them is cultural resistance, which delays consumers in using the Internet for

business with the virtual market. Furthermore, language is considered another issue of

obstruction as local inhabitants relate more to Arabic web sites and that in turn

requires changing the language of foreign sites into Arabic. One more influencing

issue is trust, as many customers have lack of trust, and they are worried about using

credit cards and the leakage of their private information. In addition, there is the

absence of legal mechanisms to protect transactions and customers from on-line

fraudsters.

Dubai demonstrates enthusiasm towards E-commerce and E-government. The Dubai

government has launched three important initiatives (E-govUAE 2006):

(1) Dubai Internet City



Dubai Internet City is the first whole information technology and

telecommunications centre in the world that has been established within a free trade

zone. Dubai Internet City offers the latest, ready-to-operate, completely serviced

office space catering to the exact requirements of today‟s new economy companies.

Nevertheless, sales and incomes are exempt from any type of taxation.

Companies can also get land on rent of up to fifty years and build their own offices.

Sun Microsystems supplied the server platforms, cabling, and other related active

components. Furthermore, Siemens was the project integrator. Dubai Internet City is

the biggest information building in the Middle East region, and has the largest

generation Internet protocol telephony system in the world. Oracle, Microsoft and HP

have already identified their long-term objectives.

(2) E-government invitation

The E-government project aims to link all government agencies with each

other, as well as with citizens, via the Internet, in order to facilitate government

services. Some government institutes have already moved their transactions to the net;

they are offering E-services to their people such as traffic fines which can be paid via

the Internet by logging in to the Dubai Police Web Site.

(3) Tejari.com On-line shopping mall

Tejari.com is an E-business community that permits companies to do business

deals using all purchasing ways through the Internet. It allows companies to obtain

savings by increasing strategic initiation for most business requirements, and permits

companies to expand their market reach, enter a worldwide supply base and

immediately divide information.

2.11.2 Infrastructure

2.11.2.1 Telecommunications Access

The telecommunications infrastructure in UAE is known as the best along

with neighbouring countries. “Etisalat” is the only provider of telecommunications



access which is mainly managed by the Dubai government. This company is capable

of building an E-commerce environment. However, telephone services are high

quality and are accessible by realistic cost. It offers data services such as Electronic

Mail Network, Integrated Services Digital Network (ISDN); and the Asymmetric

Digital Subscriber Line (ADSL), as well as Asynchronous Transfer Mode (ATM).

Etisalat is the only Internet service provider (ISP) which provides a number of

services such as leased lines and web hosting services (E-govUAE 2006).

Recently, Etisalat has launched the “Comtrust” unit to offer an E-commerce

solution. It supplies technology that supports building trust and confidence between

the residents in E-commerce. Comtrust presented the proficient and cost-effective

technique of performing B2G and B2C. Comtrust offers secure E-commerce services

using digital signature and Public Key Infrastructure (PKI).

2.11.2.2 Financial Systems

Most UAE banks provide E-banking services for their clients. The Emirates

Bank International (EBI), which is 80% government owned, is the first bank in UAE

that provides full E-banking services and provides a payment gateway. However,

most banks still don‟t offer an Internet payment gateway.

2.11.2.3 Government legislation

Despite the complete infrastructure presented to provide E-commerce, there

are no new laws and legislations that are in force to govern E-commerce. New laws

and regulations are required in order to employ E-commerce. In addition, the Central

Bank is having a plan to present a law to manage payment and regulate E-commerce.

2.11.2.4 Logistics

Logistics services in UAE might be ranked at a high level. The delivery of

mail and goods are attained by advanced cargo and custom services where customs

and cargo procedures are carried out electrically. This consecutively meets the needs



of E-commerce delivery of goods and services. On the other hand, the Department of

Post and Customs in Dubai has moved from a paper-based institution to computer

based. “E-Mirsal” is a web-based application that has been introduced at the

Department of Post and Customs. “E-Mirsal” contacts with the Department of Post

and Customs by air, sea and land cargo agents.

2.11.2.5 Human Resources

The government of Dubai has launched Internet University that offers courses

in E-commerce and some other related courses in order to build up good skills in the

computer world. This will make IT qualified people available at any level.

Furthermore, some colleges and vocational schools offer E-commerce courses in their

programme of study. Nevertheless, the IT technicians in UAE are mostly from India.

2.12 Summary of the Literature Review



In this section, a brief summary of the “Literature Review Chapter” is

presented. The literature review is mainly focused on Internet and E-commerce, and

the main barriers facing adoption of E-commerce in Saudi Arabia. Thus, the literature

review chapter is arranged as follows. An introduction to this chapter is presented in

the first section and the second section considers the Internet and E-commerce, an

introduction to E-commerce, technologies of E-commerce, major types of E-

commerce, benefits of E-commerce, limitations and barriers to E-commerce and the

risk of adopting E-commerce. This section has been finished by underlining the trust

of online transactions. In the second section, there is the impact of globalisation on E-

commerce, followed by the Socio-cultural changes, covering the history of the Saudi

Arabian financial systems, and the role that they instituted, take a signification part in

this chapter. The telecommunications access and connectivity is discussed in the sixth

section which is followed by an overview of the Education systems plan. In the next

two sections are Regulation and Deregulation and Logistics. Next, the successful

experiment of E-commerce in Saudi Arabia which was provided by Saudi Aramco,

the leading company in the oil sector, finally, the experience of E-commerce and E-

government in the Middle East countries, using the example of the United Arab

Emirates.


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Fahad Alharby Chapter 3 Research Methodology


RESEARCH METHODOLGY

3.1 Introduction This chapter deals with the methodology planned for the existing study. Through this

chapter, I summarize the methodology to be used in this research and the hypothetical

basis behind the approaches and their definitions for the understanding of the readers.

It begins with the intention of applying research methodology in this study, followed

by the associated methods and techniques used for the gathering data. The

methodology chapter includes discussion research design and approach, research

strategy, research design, and finally reliability and validity.

3.2 Research Approach

While the most important purpose in this research is to obtain a general view

of the major barriers facing E-commerce implementation in Saudi Arabia and in

particular, to what extent the Saudi society will be affected by adoption E-commerce

technology and their readiness. I am concerned in knowing further about what

different aspects associated to E-commerce. These ambitions may indicate that I

should use questioner and address a small population in order to express and evaluate

different factors controlling this embracement of E-commerce in Saudi Arabia. Thus

of these explanations, a questioner is satisfying this research requirements, while I

carry out study on figures not on behaviours. So, the research purpose and research

question reveal that the research in this study is principally descriptive and rather

clarifying, as it is my objective to explain the area of research and draw some

conclusion and recommendation from the collected data. It is descriptive as I would

attempt to give explanation the findings by answering the research question.

3.3 Research Strategy

Research question are considered the most central condition for differentiating

with different strategies. “What”, “where”, and “who” questions are probable to

favour survey, histories and conduct experiment as the favourite research strategies.

Nevertheless, the intention of this research is to answer this question: What are the

barriers and challenges facing E-commerce and E-government in Saudi Arabia? Due

to this fact a survey is anticipated as the research strategy. Furthermore, while the goal



of this research was to gather the answers from small sample of middle class family in

Saudi Arabia, I have essentially chosen questioner as a research strategy.

3.4 Research Design

Developing the research design is the next step. A research design is the logic

that links the data to be collected and conclusion to be drawn to the preliminary

question of the research (Yin 2003). It is a preparation by which the approach is to be

conducted.

3.4.1 Type of Data

In general, there are two types of data used in researches. At first, primary data

which is known as data that is collected for a particular study, mainly in response to

an exacting problem, for the first time. While secondary data is the data that already

exists, like literature review, which has been earlier assembled for some studies

(Aarabi N., Bromideh A., 2006). In my point of view, the most common method of

collecting primary data is during both methods surveys and literature review.

However, this research used both methods to gather primary data.

3.4.2 The Questionnaire

There are two essential requirements for the questionnaire. These are

relevancy and accuracy. Designed for a questionnaire to be relevant, just required data

is gathered. Accuracy is acquired by having as high validity and dependability as

probable (Zikmund 2003). Once designing the questionnaire, lots of attempt was set

into the use of language, hence that technological terminology used would not be

transferred into the questionnaire. The respondents, who were a sample middle class

Saudi family, could become confused if the terminology used were to lie outside their

knowledge.

3.4.3 Sample Selection

The people selected to respond to a questioner are a critical component of any

research. They are typically called a sample, which is a smaller group selected from a

larger population. The target sample of this research is a middle class Saudi family. This

population consists of twelve members.



3.5 Reliability

Reliability means whether the research tools which are the questionnaire are

unbiased in their outcome, and be able to evaluate the similar result when used on the

occasions and applied on the similar issue of object. Moreover, a good quality level of

reliability means that the research tools present the same data time after time on each

occasion that it is used. As we know, this dissertation started with an extensive

literature review. The literature review came across several relevant articles was from

several authors doing a research in E-commerce issues, which meant that I covered

the area of E-commerce surroundings. This would recommend that bias, by looking

only one writer and reading only about one subject, be held at a minimum level.

4.6 Validity

The validity feature revolves around how good the questionnaire is capable to

calculate what it is intended to calculate. It is significant that the validity is good

quality, because if the study does not measure what it is supposed to measure, the

results are useless. Focusing on the content of the questions was done to improve the

validity. Each question and its relevant items were subject to examination in sequence

to observe if it was necessary to ask it. As the length of the questioner was important,

I had to prioritize the questions. In sequence to present the respondent with an easy

start, I put questions of general nature at first. These questions explain the

respondents' position, such as background information, which they simply could

answer. Following to this beginning I asked about their views about E-commerce

implementation in their country.

Finally, I have presented the questionnaire on experience researchers, such as

my supervisor who had quiet a long experience in research, to make this questioner

more reliability and validity. As well I tried to avoid any sort of biasness and to be

very objective.




Yin, Robert, K., (2003). “Case Study Research: Design and Methods,” 3rd

edition,

Thousands Oaks California: Sage Publications.

Zikmund, William, (2003). “Essentials of Marketing Research,” USA: Thompson

South-Western.

Fahad Alharby Chapter 4 Data Presentation


DATA PRESENTATION

4.1 Introduction The main spotlight of this chapter is on data presentation, data analysis and results of

the questionnaire about the major obstacles of adoption of E-commerce in Saudi

Arabia. The structure of the current chapter will be based on the sequential order of

the questionnaire in order to present the data at hand and provide the results of the

questionnaire. This chapter includes the answers to all questions cited in the

questionnaire. I will follow the structure of the questionnaire and I will present each

part separately in different sections. Tables and figures will be used to make data

easy to understand and better to compare.

4.2 Part one: personal profile

In this part, I have asked the respondents to give us their socio-demographic

information. Three items were included in this part and the main idea of this section

was to describe the personal profile of the sample. These included: gender, age, and

education level. In the subsequent section I will explain them further.

4.2.1 Gender and age In this part, there were two items which are the gender and the age of

respondents. The distribution over the samples is shown in Figure 4.1 which shows

the total distribution of the respondent‟s ages.

0%

5%

10%

15%

20%

25%

30%

Under 18

18-25

26-35

36-50

Over 50

Figure 4.1: Total age distribution of respondents

The average age of respondents of this questionnaire is about 28 years. And I

got responded from six men and six women. The distribution of males and females in

this questionnaire reflects the distribution of the inhabitants of Saudi Arabia.

According to the last census which was published on the ministry of planning Web

site (www.planning.gov.sa/statistic), the percentage of men and women respectively

is 52% and 48%, and more than half of the population is under 25 years old.



4.2.2 Education level

An educational level of the respondents is the other item, which is

incorporated in the first part of the personal profile. In general, the level of education

varies from pre secondary to postgraduate. In this questionnaire, about 50% of the

respondents are University students, in both male and female groups. Moreover, more

than 17% of the respondents are post-graduate. Figure 4.2 visualizes the level of

education in the sample.

Pre secondary

25%

Secondary

8%University

50%

Postgraduate

17% Pre secondary

Secondary

University

Postgraduate

Figure 4.2: Distribution of the educational level of respondents

4.3 Part two: attitudes and views

Four questions were integrated in this part. I have asked the respondents to

give us information about their attitudes and views toward E-commerce and their

familiarity with it. Essentially, this part focused on the attitude of the respondents to

the effects of E-commerce on their society, their awareness of E-commerce, the

importance of E-commerce to their society and to what extent they are acquainted

with the perception of E-commerce. In the following section I will discuss each of

these further.

4.3.1 Familiarity with the concept of E-commerce

In general, all participants of this survey are familiar with the Internet by

spending at least 13 hours per week on the Internet, whether using a broadband or

dial-up connection. The second item in this part was the assessment of the familiarity

of the respondents and their acquaintance with E-commerce in general. In other words,

to what extent the respondents are familiar with the concept of E-commerce. Figure

4.3 visualizes answers to this question.



0% 20% 40% 60% 80% 100%

Very Much

Much

So-so

Low

Very Low

Figure 4.3: Respondents' familiarity with E-commerce

By looking to Figure 4.3, about 75% of respondents are somewhat familiar

with the concept of E-commerce. While approximately 25% of the respondents

declared that the extent of their familiarity with E-commerce is low or very low.

4.3.2 Effects of E-commerce on Saudi society

The third item in this part concerns the effects of E-commerce on their society

from the respondents‟ point of view. The main idea behind this question was to know

what they believed about the general effects of E-commerce on Saudi Arabia. In other

words, to what extent will E-commerce affect our society? The respondents‟ answers

to this question are shown in Figure 4.4.

0% 20% 40% 60% 80% 100%

Very Much

Much

So-so

Low

Very Low

Figure 4.4: effects of E-commerce on Saudi society

According to Figure 4.4, about 70% of respondents believe that E-commerce

will strictly affect their society, and none of them rated this effect as low. In general,

the majority have perceived similar effects of E-commerce on their society.



4.3.3 Perception of E-commerce in Saudi Arabia

Clearly, E-commerce can be considered as an opportunity, a challenge or even

a threat to any society. It is strongly based on many aspects, for example, people‟s

competitiveness and their capability and compatibility with this new business tool. In

this research I have asked respondents to answer this question for their society. In

other words, is E-commerce an opportunity, a challenge or a threat?

According to Figure 4.5, about 33% of the respondents look at E-commerce as

an opportunity for their society, about 25% of respondents found it a threat, whereas

17% of respondents perceived it as a challenge to their society.

Opportunity 33%

Challenge 17%

Threat 25%Ambiguous 8%

I don't know 17%

Opportunity

Challenge

Threat

Ambiguous

I don't know

Figure 4.5: the perception of E-commerce to the Saudi society

4.4 Part three: infrastructure requirements

In this part, the level of the necessary infrastructure and equipment which are

essentially required in the running of E-commerce will be evaluated in the

respondents' questionnaire. In fact, the respondents are asked to answer this question:

to what extent are you equipped to implement E-commerce for each item listed, i.e.

hardware and software, Internet access and Information technology skills? The

responses of respondents to these three important infrastructures are shown in Table

4.1:

Infrastructures

Requirement

Very

much Much So-so Low

Very

low Total

Hardware and

Software 17% 42% 33% 8% 0% 100%

Internet Access 8% 42% 8% 42% 0% 100%

Information

Technology skills 8% 58% 25% 8% 0% 100%

Table 4.1: Infrastructure requirements for E-commerce deployment



According to Table 4.1, the respondents' are generally well equipped with

hardware and software. Internet access seems to be a threat for 42 % of respondents to

be equipped for E-commerce. Respondents are remarkably well equipped with

information technology skills.

4.5 Part four : major obstacles

In this part, major obstacles and barriers for the adoption of E-commerce in

Saudi Arabia were questioned. In this question, I listed 12 major obstacles and asked

the respondents to evaluate these items according to their point of view. The question

was: to what degree will each of these items delay deployment of E-commerce in

Saudi Arabia?

Table 4.2 shows the respondents‟ answers to this question. Overall, lack of

appropriate legislation and regulation such as digital signature the lagging of

telecommunication technology, Internet access cost, security and privacy reservations,

and logistics, are the five top obstacles for Saudi society to embrace E-commerce.

Furthermore, this table gives more details on theses barriers. It also makes it easier to

evaluate the effects of these items.

Major obstacles Very much Much So-so Low Very low Lack of appropriate legislation

and regulation 33% 50% 13% 0% 0%

Lagging of

telecommunications

technology

50% 50% 0% 0% 0%

Security and privacy

reservations 67% 33% 0% 0% 0%

Internet access cost 8% 67% 25% 0% 0% Logistics 33% 42% 25% 0% 0% Low intention to buy online

and inflexible resistance to

change

42% 8% 25% 8% 17%

Non-conformity of current

products and services to

online offers

33% 33% 17% 8% 8%

Traditional attitudes and views

about the companies and the

movement of Globalization

8% 17% 25% 42% 8%

Scarcity of IT staff 17% 50% 8% 17% 8% English Language problem 33% 25% 17% 0% 25% Lack of IT skills 8% 0% 8% 50% 33% Complicated to evaluate

products and services online 27% 27% 36% 9% 0%

Table 4.2: Major Obstacles hindering Saudi Arabia to embrace E-commerce



On the other hand, by answering questions seven and eight, about 52% of

participates believe that Western vendors such as Tesco, Pc-World and Amazon are

more trustworthy, while 30% have no special preference for any particular vendors.

Just 25% preferred using an English language web site.

4.6 Perceived benefits

In the final part, the perceived benefits and advantages of adoption of E-

commerce in Saudi Arabia were the main questions to be asked from the respondents.

In this question, five significant benefits were given to the respondents. In fact, the

question was stated as: in the case of implementation of E-commerce, how many

benefits will you and your society obtain? Respondents' perceived benefits from E-

commerce deployment are shown in Figure 4.6.

0% 20% 40% 60% 80% 100%

Promotion enhancement with lower cost

Increase of sale volume

More transparency and speed of claims management

service available 24 hours a day / 7 days a week

Job enhancement and high efficiencyVery much

Much

So-so

Very Low

Low

Figure 4.6: Total perceived benefits of E-commerce implementation in Saudi Arabia

Service availability twenty fours hours a day / seven days a week and

promotion enhancement with lower costs are the most important benefits from E-

commerce implementation in Saudi Arabia from the respondents' point of view.

Nevertheless, all of the respondents' answers for the benefits of E-commerce

implementation in Saudi Arabia are given in Table 4.3, which makes the comparison

of attitudes toward these benefits between the questionnaire respondents' easier.

Perceived Benefits Very much Much So-so Low Very low Promotion enhancement with

lower cost 25% 67% 8% 0% 0%

Increase of sales volume 8% 50% 42% 0% 0% More transparency and speed of

claims management 17% 42% 33% 8% 0%

Service available 24 hours a day /

7 days a week 58% 42% 0% 0% 0%

Job enhancement and high

efficiency 17% 42% 42% 0% 0%

Table 4.3: perceived benefits of E-commerce implementation in Saudi Arabia



4.5.1 Readiness for E-commerce implementation

At the end of this questionnaire, the last question was intended to summarize

the respondents‟ overall attitudes toward the implementation of E-commerce in their

society. In other words, with respect to all questions cited in this questionnaire, to

what degree their society is ready to implement E-commerce. The question was stated

as: overall, to what extent is your society ready to embrace E-commerce? The

respondent‟s responses to this question are shown in Figure 4.7.

0% 20% 40% 60% 80% 100%

Very Much

Much

So-so

Low

Very Low

Figure 4.7: Readiness for E-commerce implementation

The graph shows that about 59% of the respondents believed that their society

is “very much” and “much” ready to embrace E-commerce with no participant‟s

feeling that their society is not ready to embrace E-commerce.

Fahad Alharby Chapter 5 Data Analysis


DATA ANALYSIS

5.1 Introduction

In the previous chapter, the data collected in this research was presented. Thus, in

order to complete the data analysis, this chapter is devoted to analysis and

interpretation of the quantitative data collected by the questioner in this study. In

order to solve the research problem and answer the research question, in this chapter

analyses are structured on the basis of the research question that guide us to explain

the study problem. Therefore, I have structured this chapter in six sections. This

chapter begins with a review of the research question and research problem. The

second section is devoted to the analysis of the second questionnaire part labelled

"attitudes and views to E-commerce in general”. The analysis and answers to the

third questioner question about infrastructure requirements will be presented in the

third section. Major obstacles and barriers ahead in implementation of E-commerce

in Saudi Arabia, which is the fourth part, will be additionally analyzed in the fourth

section. Finally, the last section concerns the analysis of the fifth part concerned with

the supposed benefits required from implementation of E-commerce in Saudi Arabia.

5.2 A review of the research question

The barriers and obstacles of implementation of E-commerce in Saudi Arabia are

the subjects of intense debate in the information technology society. The extent of E-

commerce adoption in Saudi Arabia remains unclear, which is the main focus of this

research. In addition, as discussed in the previous chapters, this research is planned to

address the main question which is “What are the barriers and challenges facing

adoption of E-commerce and E-government in Saudi Arabia”.

In consequence, to accomplish this point, I have made an effort to illuminate:

attitudes and views towards adoption of E-commerce, infrastructure requirements,

major obstacles, and benefits of implementation of E-commerce from the respondents'

point of view. Thus, depending on this background and the main purpose of this

research, the questionnaire has its basis in five parts.

With respect to the intention of this research and the research question, in the

following sections I aim to analyze and interpret the data presented in chapter four to

answer the research question. Analysing and interpreting the data and discussing the

literature review enable me to draw conclusions.



5.3 Attitude and views to E-commerce

To know the respondents' attitude towards E-commerce, I have to clarify

peoples' awareness concerning E-commerce. In order to attain this point, I include and

simplify these questions from the respondents' opinions:

To begin with, it is significant to identify to what extent they are acquainted

with the concept of E-commerce. In other words, are the participants familiar with E-

commerce? Clearly, they are able to obtain the linked information during a variety of

materials such as training programmes, courses, workshops and self-study.

By reviewing the information presented in section 4.3.1 in chapter 4 it can be

shown that about half of the participants have measured their expertise with the

concept of E-commerce as "much" and "very much,". In contrast, the "so-so" answer

has been made 25 percent overall. As well, less than 25 percent of the participants are

not acquainted with the concept of E-commerce and they have considered themselves

as "low" and "very low" in response to this question. Therefore, the majority of

respondents are acquainted with the concept of E-commerce.

The following item connected to this question is the effects of E-commerce on

Saudi society in general. In other words; to what extent will E-commerce affect our

society? An outline of the information provided in section 4.3.2 of chapter 4 is given

as approximately 60 percent of the participants have found that E-commerce will have

an effect on Saudi society. Around 17 percent of the respondents consider that E-

commerce will affect their society "very much" and roughly 42 percent of the

respondents expected that the effect of E-commerce on their society would be

"much." In contrast, just about 17 percent of the respondents declared that the effect

of E-commerce in Saudi society would low.

At the end of this part is the role of E-commerce in general. In reality, what

they believe regarding the position of E-commerce in the respondents' point of view.

Is it an opportunity, a challenge, a threat or are respondents ambiguous? Figure 4.5 in

chapter 4 affords the summing up of the participants‟ views. About 33 percent of the

participants think that E-commerce is an opportunity for their society, 25 percent of

them look at E-commerce as a threat for their society, and 17 percent find it a



challenge. Just about 8 percent of the respondents believe that E-commerce is an

ambiguous issue for their society.

Therefore, analyzing the related data for the second part, I can conclude that

Saudi society have optimistic attitudes and views towards the concept of E-commerce.

Moreover, they are well up to date and acquainted with E-commerce. Beside that,

they find that E-commerce will affect their society. While over one-third believed it is

an opportunity for their society if they embrace E-commerce implementation.

5.4 Infrastructure requirements

The following part is to assess the participant‟s ability regarding E-commerce

implementation which has been asked about in the third part of the questionnaire. In

fact, to answer the question: to what extend are you equipped to implement E-

commerce for each of the items listed below? I have categorized the essential

elements of infrastructure requirements in three groups as:

hardware and software

internet access

Information technology skills

To attain the purpose of this part, I have tried to illuminate the items cited

above from the respondents' opinion and what they accurately think about them. By

looking at the information which was provided in section 4.4 in chapter 4, it indicates

that the participants are well equipped with hardware and software. Overall, just about

8 percent of the respondents feel that they are low and very low in hardware and

software infrastructures.

Internet Access is the second item in the infrastructure requirement

assessment. Table 3.1 in chapter 4 shows that roughly half of the participants have

assessed their Internet access as "low" and "very low," whereas the same percentages

evaluate themselves as " much" and even " very much."

The information technology skills are the third infrastructure required in E-

commerce implementation. Looking back to table 3.1 in chapter 4, approximately 66



percent of the respondents show that they are well skilled in information technology,

in general. Almost 33 percent of the respondents are concerned about the lack of

information technology skills.

5.5 Major obstacles

The fourth part in this study looks at the major obstacles and barriers which

may delay the Saudi society in embracing E-commerce. In particular to answer this

question: to what degree will each item delay deployment of E-commerce in your

society? I needed to recognize the barriers and so, requested the respondents to decide

to what degree these barriers will delay deployment of E-commerce in their society?

Based on the literature review and introductory study to investigate a full list of

possible obstacles and barriers to E-commerce implementation, a list of twelve major

obstacles were decided:

Lagging of telecommunications technology

Lack of appropriate legislation and regulation

Security and privacy reservations

Internet access cost

Logistics

Low intention to buy online and inflexible resistance to change

Non-conformity of current products and services to online offers

Traditional attitudes and views about the companies and the movement

of Globalization

Scarcity of IT staff

English Language problems

Lack of IT skills

Too complicated to evaluate products and services online

A review of the information provided in part 4.5 in chapter four indicates that

lagging of telecommunications technology to facilitate E-commerce is the most

important issue which will delay Saudi society to embrace E-commerce. Nearly all of

the respondents believe that lagging of telecommunications technology is hindering

E-commerce deployment in Saudi Arabia. The second highest mean value is "lack of



appropriate legislation and regulation". Approximately 33 percent of the respondents

graded it as "very much" and 50 percent as "much" for E-commerce deployment. In

total, 83 percent of the respondents agree that this barrier will hinder E-commerce

development.

In general, the main and basic elements in the implementation of E-commerce

in every society or business are online banking, telecommunication infrastructure and

appropriate regulation. Theoretically, without any telecommunication support to

provide and develop high quality Internet services, online banking to make accessible

electronic payments and, in the end, appropriate legislation and regulation to protect

copyright and digital signature, no business can initialize and deploy any electronic

business. Incompetence in each of them will certainly stop E-commerce applications.

Furthermore, security and privacy reservations, logistics, Internet access cost,

non-conformity of current products and services to online offers, low intention to buy

online and inflexible resistance to change are the next most important obstacles which

may obstruct E-commerce deployment.

Almost all of the respondents are concerned about security and privacy

reservations. In addition, over three-quarters of respondents are suffering from

problems with logistics services and thus, this is the fourth major obstacle in the

respondents' opinion. Non-conformity of current products and services to online

offers are the next major obstacles which are highly expressed by about 66 percent of

the respondents. In contrast, about half of the respondents have found that low

intention to buy online and inflexible resistance to change and adapt with the culture

needed for E-commerce implementation are other major impediments which can

disadvantage E-commerce deployment.

Even though most of the new generation in Saudi Arabia know the English

language they still prefer Arabic web sites. Almost two-thirds of the respondents

chose an Arabic web site interface and about 8 percent of the respondents do not have

any problem using dual language web sites. Western vendors such as Tesco, Wall

Mart, PC-World and Amazon are becoming more trusted than Arabic vendors by 58

percent of the respondents.



To sum up, the majority of the respondents consider that these twelve major

barriers will delay E-commerce implementation. They have the same opinion on most

of them although the intensity of agreement is somewhat different.

5.6 Perceived benefits

The fifth part of this research concerns perceived benefits wanted from

implementation of E-commerce. This question was asked: in the case of

implementation of E-commerce, how many benefits will you and your society obtain?

To obtain an answer to this question, I have selected the top five benefits of E-

commerce. These are listed below:

Promotion enhancement with lower costs

Increase in sale volume


Service available 24 hours a day / 7 days a week

Job enhancement and higher efficiency

Therefore, I asked the respondents to evaluate these five major benefits of E-

commerce. In other words, to what extent they believe that their society will

accomplish these benefits if their society goes through to E-commerce.

Overall, almost all respondents think that in the case of E-commerce use, they

will enjoy the availability of services 24 hours a day / seven days a week. Thus it is

regarded as the most significant benefit sought from E-commerce, and is among the

top benefits. The next most significant benefit according to the respondents‟ point of

view is promotion enhancement with lower costs. Almost 92 percent of the

respondents state that it is a very essential benefit for them in the case of E-commerce

implementation. Conversely, as few as 8 percent of the respondents believe it is less

important to them and should be considered as the second most important benefit.

Almost 59 percent of the respondents declare that job enhancement and high

efficiency would be another benefit for their society if they embrace E-commerce by

choosing “very much” and “much”. On the other hand, just 42 percent of the

respondents are in doubt that E-commerce would cause optimistic results for job



enhancement and higher efficiency.

Nearly 59 percent of the respondents judge that implementation of E-

commerce will bring more transparency and speed of claims management which will

build a high-quality service and a good relationship between customers and business

owners. Increase in sale volumes is another benefit of E-commerce implementation.

Roughly 58 percent of the respondents agree with this benefit, and they believe that

E-commerce can raise sales volume.

In brief, the majority of respondents have the same strong opinion on these

five top benefits. Indeed, in the case E-commerce implementation, Saudi society will

acquire the advantage of all the benefits. As a result, these five top benefits can be

sorted below according to the respondents' highest agreement from the highest

perceived benefits to the lowest benefits:

Service available 24 hours a day / 7 days a week

Promotion enhancement with lower costs

Job enhancement and higher efficiency


Increase in sale volume

5.7 Readiness for E-commerce implementation

In general, the readiness for E-commerce implementation contrasts and is

firmly based on several issues bounded by the society. With all respect to these issues,

I asked the respondents to answer the final question concerning their readiness for E-

commerce implementation. Hence, in this research, the final question in the

questionnaire is: overall, to what extent is your society ready to embrace E-

commerce? Overall, more than half of the respondents believe that their society is

ready to embrace E-commerce. By contrast, over one-third of the respondents do not

believe that their society is capable of embracing E-commerce, and thus, they believe

that their society is not prepared to implement E-commerce applications well.

Fahad Alharby Chapter 6 Conclusions and Recommendations


CONCLUSIONS AND RECOMMENDATIONS

In the previous chapter I analyzed the data collected by questionnaire in this study. In

this chapter, I will present the conclusions drawn from the analysis achieved in this

research. Findings will initially be presented in a general discussion, dealing with the

areas of the most barriers to implement E-commerce. However, in this final chapter,

general conclusions will be drawn. Finally, at the end of this chapter I will also give

some further recommendations for future research.

Studying the barriers of E-commerce and the use of E-government in Saudi

Arabia, it can be easily conclude that the main bottleneck of developing E-commerce

is none of the technical difficulties other than the regulations and logistics. While in

traditional commerce, the private sector should present control for the expansion and

improvement of E-commerce, as well as the establishment of dependable and

trustworthy business practices for performing business activities in the new era of

technology. Government should build a positive environment for open and reasonable

contribution in E-commerce. In addition, the Government should support technical

services and infrastructure improvements that will lead to the establishment and

implementation of E-commerce.

The regulations and legal system and international agreements between

countries, should be familiar to accommodate E-commerce. Laws must be established

and be compulsory to avoid cyber crime, for instance money laundering, violation of

intellectual property rights, respect of copyright regulations, certifying customer

protection, and education and training should be initiated to enhance digital literacy

among all citizens is crucial, in addition to research and development in the field of

information technology. The Saudi Government can take a significant responsibility

in ensuring that main stakeholders are completely involved in conducting E-

commerce.

In spite of the important role of government in the implementation of E-

commerce, much of the required investment requests must be approached from the

private sector. Experiences confirm that the private sector has been the most



innovative player and the most important driving force towards building E-commerce.

Overall, the modalities of technical application to business activities are more

powerfully determined by the market than by government. Nevertheless, an E-

commerce strategy that combines public intervention with private sector enterprise in

a commonly encouraging way is the simple practical one. The following

recommendations should cover the most important factors of E-commerce

implementation:

1. Government regulation

Regulation should intend to present legal security and technological and

commercial neutrality in addition to removing obstacles to using E-commerce and E-

government services. Some regulations which must be valid include:

Certifying that online transactions are legally valid.

Performing legislation to make sure that electronic signatures can be used with

legal effect.

Enacting legislation relating to computer crime.

For high-quality preparation of E-commerce, making guidelines and codes of

conduct is very important.

Making compulsory, intellectual property rights, copyright policy and patented

ideas.

Enacting regulations in the field of information protection and privacy.

2. Telecommunication and Internet access

A high priority for Saudi Arabia is to ensure that their citizens have access to

the Internet at a reasonable cost. That means that the Saudi Government, in

collaboration with other stakeholders must:

Ensure that telecommunication services and Internet access is accessible in all

the country.

Improve the quality and service of telecommunication companies.

Control Internet and telecommunication services tariff prices.

Create E-payment gateways and platforms in association with the financial

system.

Ensure secure hosting facilities.



3. Education and training

Unless businesses and customers are educated about the opportunities and

benefits offered by E-commerce and E-government services, E-commerce will not be

launched. It is necessary to create a demand for E-commerce by:

Education and training in efficient use of new technologies.

Educating teachers and increasing Internet access and computers in schools.

Ensuring professional information technology training programmes at

universities and technical colleges.

Government should encourage demand for digital information exchange by

providing information and services online.

Supporting the private sector, in particular small and medium enterprise, in

using E-commerce, such as: financial aids and loans to use E-commerce

applications, development of web sites, etc.

The E-commerce implementation and development process in Saudi Arabia

should have two main factors present in order to accomplish a satisfactory usage level:

free and fast Internet access and more security regarding the confidentiality of

transactions and web sites. No doubt, some factors either advance or delay Internet

access development. Logistics, education, culture or language should be analyzed in

order to realize the diversities in using the Internet around the world especially in the

developing countries of the Middle East.

While the technology to implement E-commerce is developing quickly, with

advances in wireless technologies and high-speed Internet, it is the social and legal

issues, which will possibly cause the most barriers. Working on a worldwide basis

via the Internet creates major legal ambiguities, which are a challenge for government

to regulate. Provided that these challenges are recognized then I believe the future will

be bright for E-commerce. From the social aspect, E-commerce can have many

advantages, such as working from home avoiding the bother of car parking, long

queues, and more choices available. Though with this, social interaction becomes less

and less. To sum up, E-commerce is here to stay and provided its place in business is

recognized and implemented correctly then it can prove a valuable asset to any

business.



6.1 Recommendations for Further Research

The limitation of this research and its findings should be noted with a view to

extending the present study. This section includes some recommendations for

prospect study related to research method and hypothesis in addition to empirical

concerns. I hope that these suggestions will persuade others to carry out researches in

order to precede knowledge of the barriers facing E-commerce implementation in

Saudi Arabia. As well as probably confirm, improve the dispute made in this study.

As stated in the pervious chapters, a few of the Saudi companies have actually

implemented E-commerce, thus far. Some companies have been established semi-

online by offering their consumer to fill in their information and even order their

services and products and then they have to pay to their bank account or possibly they

will pay in cash when they obtain the offers. Nevertheless, most of the Saudi‟ banks

are preparation to start their E-business which means that they might be facilitate

other sectors in money payment and transactions. Hence, it is strongly suggested to do

research in the case of online banking, to evaluate this forthcoming study with a real

one following E-commerce implementation.

The next suggestion is to extend of this dissertation. In this study I have focus

on E-commerce in general and I did not consider in particular issues such as B2B and

B2C and the challenges facing them, as well as their impact in Saudi culture and

market. Prospect studies could make several extensions of the existing study and also

study the roles and effects of E-commerce in Saudi Arabia. It is highly recommended

to conduct another study with qualitatively research rather than focusing on a

quantitative research to investigate extremely on each item mentioned in this study,

and explore the unknown sides of this research.

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Fahad Alharby Appendix: Questioner


Appendix A

A Questioner in the major obstacles of adoption E-commerce in

Saudi Arabia

Dear Sir/Madam

I am a postgraduate student, conducting a questioner on the adoption of E-commerce

technology in Saudi Arabia.

I would very much appreciate if you could help me by completing this short

questionnaire. Please note that this research is purely for academic purposes. Your

responses are also confidential as no information that identifies you is asked in this

questionnaire.

This questionnaire takes less than 10 minutes to complete!

Kind Regards!



Part 1: Personal Profile

A) Gender

Male Female

B) Age

Under 18, 18 to 25, 26 to 35 36 to 50, Over 50

C) Education Level

Pre secondary Secondary University Postgraduate

Others, please specify it ………………………..

Part 2: Attitudes and views

1) Do you ever connect to the Internet?

Yes Sometimes No

If No go to question 2,

In average, how many hours you spend on the Internet every week?

0-5hr 6-10hr 11-20hr 21-30hr 31+hr

What are your connections types?

Dial-Up DSL/128 DSL/256 DSL/512 or higher

Satellite

2) To what extent are you familiar with the concept of E-commerce?

Very much Much So-so Low Very low

3) To what extent will E-commerce affect our society?


4) In your point of view, E-commerce is a/an:

Opportunity Challenge Threat Ambiguous I don‟t know



Part 3: Infrastructure Recruitment

5) To what extend you are equipped to implement E-commerce for each items

listed below?

Infrastructures Very much Much So-so Low Very low

Hardware and Software

Internet Access

Information Technology

skills

Part 4: Major Obstacles

6) To what degree each of these items will delay deployment of E-commerce in

your society?

Major obstacles Very much Much So-so Low Very low

Lack of appropriate

legislation and regulation

Lagging of

Telecommunications

Security and privacy

reservations

Internet access cost

Logistics

Low intention to buy online

and inflexible resistance to

change

Non-conformity of current

products and services to

online offers

Traditionally attitudes and

views over the companies

and the movement of

Globalization

Scarcity of IT staff

English Language problem

Lack of IT skills Complicated to evaluate

products and services online



7) Which most vendors you trust?

Saudi vendors such as Panda, Extra and Jarier bookshop

Western vendors such as Tesco, Pc-World and Amazon

No special preference

8) Depending on the language used, what are the most preferred web sites?

Arabic web sites

English web sites

Dual language websites

Part 5: Perceived Benefits

9) In the case of implementation of E-commerce, how many benefits will you

and your society obtain?

Benefits Very much Much So-so Low Very low

Promotion enhancement

with lower cost

Increase of sale volume

More transparency and speed

of claims management

service available 24 hours a

day / 7 days a week

Job enhancement and high

efficiency

10) Totally, to what extent your society is ready to embrace E-commerce?


Barriers of e-commerce and e-government in Saudi Arabia

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