1www.it.murdoch.edu.au/~cec

E-Transaction Media in the Mining Industry: A Western

Australian Study

Dr. Simpson Poon, Director

Murdoch University, Perth, Australia

CeCISCentre for eCommerce & Internet Studies

www.it.murdoch.edu.au/~cec 2

The Mining Industry in Australia

• A key sector in the economic landscape.

• In 1996, it generates $18,668 million.

• 4% of national GDP

• Western Australia is the most important Mining State

• 68% metallic mineral production and 45% of total mineral production (ABS, 1999)

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History of E-Commerce in the Mining Industry

• Originally was only part of the IT infrastructure - usually proprietary inter-organisational systems.

• In the 1980’s, EDI started to mature and large companies began to increase uptake of EDI (e.g. Broken Hill Petroleum)

• Large companies started to get their smaller business partners to do so too.

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History of E-Commerce in the Mining Industry (cont’d)

• By early 1990’s the ‘coerced’ method of EDI adoption was common, small businesses were often hinted:“ Do business with us using EDI or we find someone who will!”

• Adoption often occurred as the ‘Hub-and-Spokes’ configuration with the large firm dictating what to use and how to use it.

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Since then…

• EDI systems can be found in all large (and many medium-sized) mining firms.

• Although a key technology for inter-firm exchange, adoption rate overall remains low.

• Fairly expensive and unaffordable for small firms because of adoption costs and VAN subscription fees.

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Then came the Internet

• The era of E-Commerce and Web-based applications.

• Much cheaper and useable than EDI

• Multi-purpose applications, not just transaction.

• Affordable by the smallest firms and no longer in the hands of proprietary providers.

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Have this had an impact on the Mining Industry?

• What happened since EDI?

• Has the industry opened up to the Web?

• If yes, how much? With whom?

• What are the barriers?

• What are their attitudes towards E-Commerce after the EDI experience?

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The Project

• Conducted a survey study on:– the technology used for E-Commerce;– current enablers/barriers to adoption;– whether there is shift from VAN-based EDI to

the Internet– As a preliminary study for further studies such

as:• strategic alignment of business and IT strategy• quantification of E-Commerce investment

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Results - Demographics

• 250 companies with HQ in Australia from a Mining Directory selected.

• 71 responded (28.4% response rate).

• Average firm size: 123 employees (small size firms in Mining terms).

• Many have interstate operations, some have offshore interests.

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EDI vs. the InternetTable 1 Usage comparison of the Web and EDI amongMining companies (average firm size = 123 employees)

ProprietaryEDI (%)

InternetEDI (%)

Other webapplications

(%)Customers(major/minor)*

1.4/1.4 15.5/16.9 33.8/31.0

Suppliers(major/minor)

7.0/5.6 15.5/15.5 21.1/22.5

Government 7.0 19.7 26.8Internally 7.0 21.1 31.1

*major – use this technology with major customers; minor– use this technology with minor customers

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Enablers of E-Commerce

• Low cost business solution

• Easy to set up and access

• Provide better services to customers

• Can use for many purposes (unlike EDI)

• Easy integration with existing technologies

• The future way of doing business

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The results (Enablers)

Low cost solution to business

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.02

Mean = 3.6

N = 55.00

Better service to customer

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.22

Mean = 3.5

N = 55.00

Internet is easy to setup

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = .92

Mean = 3.6

N = 55.00

Internet is general purpose, unlike EDI

5.04.03.02.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = .91

Mean = 4.1

N = 55.00

Easier to integrate with business processes

5.04.03.02.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = .83

Mean = 3.6

N = 55.00

Future way of doing business

5.04.03.02.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = .82

Mean = 4.0

N = 55.00

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Barriers of E-Commerce

• Internet is insecure• Unreliable data transmission (data losses)• New technology and therefore high risk• Already using other technologies so no need

for Internet• No need for adopting E-Commerce• Our industry doesn’t use much E-Commerce

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The results (Barriers)

Internet is insecure

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.08

Mean = 3.0

N = 65.00

Internet data transmission is unreliable

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.18

Mean = 2.7

N = 65.00

Internet business is high risk due to new tech

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.00

Mean = 2.5

N = 65.00

Already using other techs hence no need for Net

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.19

Mean = 2.2

N = 65.00

Don't feed the need to adopt Net

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.09

Mean = 2.0

N = 65.00

Our industry don't use Internet much

5.04.03.02.01.0

Histogram

Fre

qu

en

cy

30

20

10

0

Std. Dev = 1.26

Mean = 2.1

N = 65.00

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Conclusions

• There is a shift from traditional EDI to both Internet EDI and Web applications and it is happening among SMEs.

• There is a very positive view on the enablers and less pessimism on the barriers (see the skewness of the histograms).

• It is likely that Internet-based E-Commerce will have a better penetration compared to EDI given time.

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CeCISCentre for eCommerce & Internet Studies