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