The Italy business and information technologies (BIT) survey

The major intent of this project is to study the impact of new information technologies on industry structure, firms' practices and strategic results. Our research team, since 2002, has worked on this research agenda. The study that we present here builds on the results of the first Business and Information Technologies (BIT) study developed in Italy in 2002-2003 (see DeMatté et al., forthcoming), which highlighted three important phenomena: first, the substantial difference in the rate of digitization of core processes, between firms of different sizes and information and communication technologies (ICT) governance complexity, which could be explained not only by different firms' capabilities, but also by the different role of technology in specific competitive contexts. Second, the different rate of digitization of different organizational processes: digital investments were much higher in the internal processes, and much lower in external relationships, with both customers and suppliers (e-commerce and e-procurement were not highly diffused). Third, the importance of cultural, social and organizational variables, not only as a precondition for the success of e-business projects, but also as a complementary "effect" of the projects themselves. Our second survey built on these results, aims to collect more detailed data on the same critical areas: (1) different and specific areas of adoption; (2) the ICT governance processes; (3) the organizational and social processes (capabilities and changes) related to ICT business impact; (4) the general business results related to ICT innovation. This report synthesizes the results we found with this 2004-2005 survey. The Italian 2004 BIT dataset includes data collected through a survey of the chief information officer managers of a sample of the larger Italian companies, carried outbetweenOctober 2004 and April 2005.The respondents could fill in the questionnaire using the phone, the mail, and the web. The usable questionnaires were 214 out of 2326 invited answers (the response rate was 9.2%). We have analyzed the results of the 2004-2005 BIT survey, focusing in particular on two areas of knowledge: (1) the processes of ICT adoption and ICT governance; (2) the relationship between firm's intangible resources and ICT processes and effects, at the organizational and business level. In this survey, we found that: • At this stage and for the type of firms considered (the larger firms), there is not any digital divide between Southern andNorthern Italy in the spending for information technology (IT), despite of the economic diversity of the two areas. • There is not any divide between Italian and foreign companies operating in Italy, since foreign groups doing business in Italy do not showhigher spending rates for IT. • The real divide, consistent with what we found in the previous BIT study, is related to the different IT investment efforts made by companies of different sizes. • The nature of the industry helps in explaining the different IT adoption processes; the level of spending is significantly higher in the information intensive businesses of the service industries (financial services, consulting, and telecommunications). With regard to the applications adopted and technology use: • Corporate intranets and corporatewebsites represent the most diffused applications, while aminority of companies have explored e-procurement, e-commerce and other innovative frontiers in collaborative supply chains, in line with what we found in the first study, that is, that Italian companies have started to digitize internal processes more than external relationships, and communication processes more than commercial activities (Dematté et al., forthcoming). This phenomenon is particularly interesting, if we consider the average size of our sample companies. • The most innovative systems, radio frequency identification and e-learning platforms, still have a very limited diffusion, also confirming that the Italian companies tend to be late in the innovation cycle. • It is also worth mentioning that the size of the company and the nature of the industry (more or less information-intensive) influence the type of activities performed online, and therefore the sophistication of the digital communication forms. Also, the organizational complexity and richness of the firm is important; our correlation analysis in fact showed that ICT adoption and ICT adoption trend are higher not only in companies distributed geographically (number of organizational units in Italy), but also in companies with a higher degree of organizational capital, marketbased social capital, and innovation orientation. With regard to the changes (strategic and organizational) induced in the organization: • In the majority of firms, the number of employees who now use these new communication and information instruments has increased, the ICT function has become more integrated in the production processes, and there are more instruments to support employees in their decisions. • New communication technologies have also started to change the way firms and people work, in the direction of what we call "digital enterprise", an enterprise connected and coordinated through digital communication (firms are now more geographically dispersed; in many of them videoconferencing has substituted business travels, and they use internet-based systems to coordinate employees). • Despite these changes, the organizational impact of ICT investments is varied. Considering the perceived effect of ICT, in only a minority of firms the organizational structure seem to have become flatter, and employees are believed to have increased their power (components of what we call new organizational capital or new organizational capabilities). • A richer explanation of how the ICT processes impact the organization can be derived by the analysis of the influence of the organizational and social capital on the ICT processes, and how the combination of these different resources with ICT can dynamically produce new capabilities and business advantages, beyond the organizational change called "digital enterprise". ICT adoption is in fact also correlated to significant changes in the organizational structure and capabilities. With regard to the impact of ICT on firms' performance: • Themajority of the managers surveyed believed that their firms have achieved important results in the organizational and operational productivity areas, while it appeared more problematic in recognizing the benefits in terms of commercial efficiency, positive impact on successful new product development, and new strategic learning. In conclusion we can say that, in general, the direction of ICT innovation in Italy has not much changed, even though the digital investments of firms seem to have increased (we cannot do a direct comparison because the two samples in the studies are different). There is still a divide related to the size of the firms and there is a tendency to invest more on internal communication and information processing than on the digitization of the external relationships and supply chain collaboration. This is particularly significant considering that we have surveyed some of the largest companies in the country.We know that this situation can draw a negative light on the Italian potential to explore the new frontiers of innovation and global competition. No country and no company can afford to consider itself protected and isolated in its local markets and capabilities. Italian firms should learn and dare to explore the newfrontiers of digital innovation in the awareness that ICT is not just a technology for doing the ame things as before, in a more convenient and efficient way. ICT can become a strategi variable in firms, if it combines with new capabilities, new organization, and new pictures of the economy and the world.