e-business standardisation in the automotive industry - two approaches towards the integration of...

e-Business standardisation in the Automotive Industry –Two Approaches Towards the Integration of SMEs

Martina Gerst Kai JakobsUniversity of Edinburgh Aachen [email protected] [email protected]

Abstract

This paper looks at two different approaches to thedevelopment of standards in sectors with a strongpresence of SMEs. A case study explores Covisint, oneof the automotive industry’s major electronic markets,as an example of a sector-specific approach tostandards setting. This approach eventually failed, andthe reasons for this failure are identified and analysed.The committee-based approach to standardisation issubsequently discussed. Theoretical deliberations,together with the outcome of a survey, lead to a numberof recommendations how more relevant standards couldbe produced, and how the role of SMEs in standardssetting could be improved.

1. The Context

1.1. The Automotive Industry

According to a study by McKinsey [1], in the next tenyears, the automotive industry will be shattered by a third‘revolution’ following the invention of the assembly-lineproduction by Henry Ford and the lean production ofToyota. Customers expect ‘more car’ for the same money,which means continuous cost pressure and innovationmarathon for OEMs (Original Equipment Manufacturers).This fact leads to a range of transformations in thestructure of the automotive supply chain. For example, inorder to improve customer satisfaction and increaserevenue growth and shareholder value, large OEMs andtheir suppliers are forced to create networks. to replace theexisting one-to-one relations. Nevertheless, in thesecollaborative networks the added value is beginning toshift from the OEMs to suppliers and to other businesspartners such as system integrators.

Apart from shifts in the value chain, the industry isconfronted with a number of transformations thatchallenge the established relationships between industryplayers. The automotive industry is characterised byextremely complex processes and the standardisation ofprocesses and data is inevitable in order to meet

production requirements. Driven by challenges such asshorter product life cycles, increasing cost pressure instagnant markets and higher complexity of the electronicsembedded in modules and systems, OEMs graduallyincrease the outsourcing of manufacturing, which isexpected to rise from 25% up to 35% within the next 10years [1]. The supplier community that is characterised bysmall and medium sized enterprises (SMEs) shapes to alarge extent the automotive industry (in Germany, nearly63% of companies are SMEs), is also undergoing strongshifts as the result of these pressures. Increasingly,platforms and model varieties require advanced deals andproject management capabilities which means that interms of innovation management, suppliers have to beable to provide leading-edge technology and efficientsimultaneous engineering processes. This change affectsprimarily the tier-1 suppliers who are taking over systemsintegration responsibility and management of the supplychain from the OEMs.

Each OEM has an extensive network of suppliers.They, in turn, frequently supply more than one OEM. Inthis situation, bi-lateral standardisation of the complexprocesses and technology that enable the co-operationboth between OEMs and suppliers and between differentsuppliers is less than effective, as it would leave supplierswith the need to maintain one system per OEM. Still,this is the approach of choice in many cases. However,possible alternatives are available, including sector-specific harmonisation (e.g., in the form of an electronicmarket place) and, particularly, international, committee-based standardisation.

1.2. Committee-based Standardisation

Today, the standards setting process in the Informationand Communication Technologies (ICT) and e-businesssectors are very much dominated by the large companiesand other financially potent stakeholders. As aconsequence, there is the real danger that standards – andthus, ultimately, policies – are based on the needs andrequirements of a comparably small – albeit powerful –group of stakeholders. The action plan ‘Innovate for aCompetitive Europe’ – rightly – says “Voluntary

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standards, properly used, can help establish thecompatibility of innovative concepts and products withrelated products and so can be a key enabler forinnovation. … SMEs should be more involved instandardisation, to exploit their potential for innovationand to enhance the accountability, openness andconsensus-based character of the Europeanstandardisation system.”

Yet, the Working Groups (WGs) of almost allstandards setting bodies are populated by representativesof large, multi-national companies. SME users – i.e.those who ‘merely’ deploy ICT systems – are hardlyrepresented at all, and neither are their umbrellaorganisations.

Today, SMEs are under enormous pressure from their– frequently large – customers to deploy e-commercesystems (and the necessary underlying ICT infrastructure)which are compatible with the customers’ respectivesystems. Yet, as these systems typically differ, SMEswould accordingly have to set up and maintain a numberof different such systems. This is hardly a realisticoption, and the use of standards-based systems is anSME’s only chance to keep both its ICT environmentmanageable and all customers happy.

Unfortunately, few standards take into account SMEs’unique requirements. Major standards setting initiativeshave already failed because of this. Thus, it seems to beabout time to have a closer look at the currentstandardisation practice with respect to SMEs' needs.

The remainder of the paper is organised as follows.Chapter 2 provides a narrative about recentstandardisation efforts in the automotive sector to create a“de-facto industry standard”. Set up a standardisedelectronic market for the automotive sector has been partof these activities. As this attempt largely failed, it seemslegitimate to discuss other options that are available forstandards setting. One such option would be to turn tothe formal international (or possibly European) formalstandards setting process. However, with the suppliercommunity in the automotive sector largely comprisingSMEs, it is necessary to look at this group’s specificcharacteristics and resulting needs. This is done in chapter3, which also discusses the relations that exist betweenthe different groups of stakeholders in standards setting,focussing on SMEs. Finally, some recommendationshow the participation of SMEs in standards setting couldbe increased, and its value improved, are given in chapter4.

2. What Happened so Far

The pressure for collaboration has led organisations in theautomotive sector to become involved in a range ofefforts to improve co-operation between manufacturersand suppliers. Examples include electronic collaborationprojects, the integration of engineering processes, andelectronic catalogue projects to present product and

service data. Such Internet-based applications are adoptednot only to achieve operational effectiveness by reducingco-ordination costs and transaction risks [2], but also toimprove communication and information presentation.

2.1. Activities at LCM1

In 2000, LCM launched a strategic programme to ensurethe networking of the entire value chain beyond thecompany’s boundaries. In the area of B2B, theprogramme aimed at a more continuous and efficientcollaboration with suppliers supported by Internet-basedtools. During a time frame of two years, several B2B e-commerce projects in the field of engineering,procurement and supply were started and implemented indifferent business units and linked to the suppliercommunity. These projects had reduced costs andshortened throughput times to some extent, but LCMaimed at an all-out effort to press forward inter-organisational collaboration with suppliers on a globalbasis. In LCM’s vision, such collaboration shouldinclude the integration of individual projects in thebusiness units as well as the integration of LCM-specificapplications into one global supplier portal with onesingle point of entry [3].

The pressure for collaboration enforces integration andshifted the emphasis from ‘stand-alone’ initiatives to thedevelopment of standardised and integrated solutions [4].In this context, one form of IOS (Inter-OrganisationalSystems) that meets the criteria for collaboration andintegration are portals. A supplier portal allows tointegrate content, applications and processes between anOEM and its supply base in order to:• Improve communication and collaboration between

LCM and the suppliers• Provide real-time access to information held in

disparate systems,• Personalise each user interaction and provide a

unified window into LCM’s business,• Integrate and access relevant data, applications and

business processes.The automotive industry has been one of the earliest

and most enthusiastic adopters of supplier portals. Twoalternatives of strategic network design are dominatingthe current automotive portal scene: either companiesdecide to build up their own private portal (proprietaryapproach) in order to create a network with their supplybase, e.g. VW Group or Toyota or companies decide towork with electronic markets2 such as SupplyOn orCovisint to deploy portals.

In 2001, LCM was contemplating the need tointroduce an Internet based platform to enable a betterintegration with suppliers in order to meet the challenges

1‘Large Car Manufacturer’; we don’t want to disclose the company

name.2

In this paper, the terms ‘electronic markets’ and ‘Internet hubs’ areused synonymously.


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in the industry. Such a platform required complex use oftechnology and incorporated a multitude of standards.Consequently, the decision to integrate business partnerswith IOS involves a strategic decision whether (1) toimplement and customise off-the-shelf systems related toproprietary processes (which means to stick to the ‘homemade’ processes and systems) or (2) to implementstandardised technology (Industry-standards solutions thatuse XML standards to exchange data and messages) thatsupports standardised business processes. Various factors(e.g. economic, organisational, technical, social) andactors (e.g. players from internal business units, softwaresuppliers, consultants) situated in the highly dynamicautomotive industry influenced this decision. LCMconsidered two alternatives, an in-house option whichsupposed the creation of a proprietary portal for thecompany’s suppliers or the implementation of astandardised portal solution, i.e. the one offered byCovisint. In the case of LCM, the decision at this pointof time to implement alternative (2) was directed by acost-benefit analysis. The implementation of alternative(2) was expected to lead to economies-of-scale in thebusiness areas where standardised business processescould be implemented. Additionally, LCM aimed toimprove the collaboration with its supplier community.From a strategic perspective, the implementation of astandardised technology was part of LCM’s corporate ITstrategy. At the same time, LCM was also one of thestakeholders of Covisint. Due to the fact that the peopleinvolved in the project brought together a large amount ofknowledge, the expectations for the success of the projectwere very high.

2.2. Covisint

In 1999, the Internet hub Covisint3 (Connectivity,Visibility, Integration) was founded by a number of largeOEMs such as DaimlerChrysler, Ford and GeneralMotors and software companies such as Oracle andCommerce One. The aim of Covisint was to connect theautomotive industry to a global exchange marketplacewith the offer of one single point of entry. It thus aimedto represent a de-facto industry standard. First of all,Covisint offered different own e-services, for example e-auction or e-collaboration tools. Second, the e-serviceoffer aimed to improve the interconnection between, andintegration of OEMs and suppliers through standardisedportal technology. This technology provided uniformpersonalised access from any location and any devicebetween networked organisations. The functionality andinfrastructure that characterises such open architectureallowed the integration of diverse interaction channels. Toa large extent, the supplier community is the same for allOEMs. Concretely, the same suppliers were using thesame OEM-own applications which always neededdifferent log-ins and different passwords. Therefore, the

3 Since 2004, Covisint is owned by Compuware.

‘big picture” behind Covisint was the idea of one singlepoint-of-entry for suppliers of every company size tofacilitate and enable integration and collaboration.

The development process was characterised by aniterative approach. Before LCM started to develop andimplement the standardised portal technology, another ofthe OEMs founders had already started to develop a portalregistration process (based on the best practice in theindustry: the development of standards has benefited fromthe development of portals by other organisations before).As all the founders were very interested in taking themost benefit out of Covisint, they were highly motivatedto develop standard processes which later could beimplemented in their own organisations.

In a first instance, standards development was relatedto best practices in the industry and had been worked outby a limited number of specialists from the OEMs thatwere involved in Covisint. In a later stage, this smallgroup approach to standard development has beenreplaced by a consortium of the Covisint stakeholders andthe software companies which delivered pieces of softwareto complete the offer of the Internet hub. The consortiumapproach was more similar with the typical approach tostandard development, following specific procedures andhaving different working groups that met regularly.Additionally, industry experts of associations wereinvited to presentations and workshops to contribute tothe standards development. In a second phase, in order toincrease legitimacy among suppliers, they were includedin the process. However, participation in the consortiumwas closely controlled, and the working procedures wereless rather than more transparent and open. Therestrictions in participation, the lack of transparency andopenness regarding the work within the consortium couldbe explained by the desire of the OEMs to achieve theinitial goal of a standardised industry solution.

Due to the ‘fast-to-market’ strategy of Covisint, thestandards were developed in parallel with systemsdevelopment and implementation. The emphasis of thestandardisation itself was on speed and on findingcompromise solutions that fitted all parties rather than onlong-term quality solutions. The development phase ofthe standardised portal was very complex because on theone hand, the complexity of the technology itself and thedifficulty to integrate all the different technological piecesin an overall portal architecture.

There has been constant feedback between standard useand standard creation. Facilitated by an interdisciplinaryon-site project team at LCM, regularly video conferencesand document exchanges on a collaboration project toolbetween the teams involved facilitated thecommunication. An important factor which facilitatedthis communication was the good inter-personalrelationships between LCM and Covisint, for examplesome of LCM's former employees changed to Covisint atits start. Good personal relationships lead to goodcommunication and ease the feedback process, which alsomeant that the pace of implementation was quicker.


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Standardisation had followed a pragmatic approach, inthat it aimed to integrate into the solution each new userrequirement within the range of the budget restrictions.For example, within the project team tensions appearedbetween people from IT and business units related towhat happens after the adoption of a standard that doesnot include functionality which is already in place andrelates to various systems. Such discussions, as well asthe solutions, were triggered and approached based on thebudget restrictions. Therefore, transforming the standardinvolved a ‘workaround solution’ to fit the users needs atthe same time as the limitations in the budget. Such apragmatic approach called into question the vision aboutthe ‘best practice solution’, as ‘best practice” wassacrificed in order to comply with the financiallimitations. In the end, organisational and technicalfactors together with economic deliberations have led to amutual shaping of what become ‘the best practicesolution’ and the inner-organisational process.

A key challenge was the integration of the portalarchitecture and functionality in the existing corporate ITinfrastructure, for example in terms of security, the singlesign-on, which enables the access to different informationsources and applications with only one login andpassword, was difficult to implement in the overall ITinfrastructure. The integration of applications also provedto be significantly more difficult than initially predicted.First, these applications were either standard softwaresuch as SAP which have a separate login process, orlegacy systems particularly programmed to fit the needsof distinct business units, and which were notconsidering the web-based frames. As a result, the costfor additional programming to ‘web-enable’ theseapplications had to be discussed with the differentapplication owners concerned. As IT budgets at that pointof time were limited, discussions focused around whichdepartment had the responsibility to cover additionalcosts. Second, the above mentioned legacy systemsinherited functionalities that were either portalfunctionalities or functionalities that were not in thestandard portal package and therefore not available. Thedifficulty here was to convince the application owners tointegrate their application in a first phase with a reducedfunctionality.

The overall inconsistent strategy of the OEMs withrespect to the implementation of the e-collaboration toolssignificantly affected the suppliers’ negative perception ofportals in general. Whereas some of the OEMs prefer thestandardised industry solutions such as LCM, others suchas the VWGroup, vote for the in-house option.Additionally, Covisint was not able to work out clearlythe benefits for suppliers and their distribution. As oneresult, a number of large tier-1 suppliers foundedSupplyOn which became one of the major competitors inthe field.

A manager of one OEM said that “with thefoundation of Covisint, OEMs aimed to simplifysuppliers’ life tremendously. Covisint represented a huge

advantage for a supplier working with all OEMs becausehe could use one gateway to all OEM applications andcould also use the e-services offering of Covisint.Unfortunately, neither Covisint nor the participatingOEMs were capable to sell this to the suppliercommunity. The suppliers were not aware of this uniqueadvantage. If you look what happened in the last years, asupplier is forced to work with different OEMportals...in some cases, he works with different portalsfor one OEM. All have different requirements and needdifferent log-ins and passwords. This means additionalresources and investments for the supplier.”

Today, most would agree that both electronic markets,Covisint and SupplyOn, failed to set-up a de-factoindustry standard for two major reasons. First of all, thebusiness processes of the different consortium partnerswere difficult to agree upon and to harmonise.Consequently, the requirements from participatingcompanies were very difficult to develop for third parties.Second, the ‘fast to market’ approach led to incompletesolutions which were difficult to integrate in an alreadyexisting IT infrastructure and were expensive to realise.But effective collaboration requires interoperability andthe integration into back-end systems.

One conclusion that could be drawn from this wouldbe to look for committee-based standards in the future,developed under the responsibility of an recognisedStandards Developing Organisation (SDO; an accreditedorganisation such as, e.g., ISO4 or CEN5), followingconsensus and due process, and giving all stakeholdersthe chance to participate and to contribute.

In the following, we will report on a study about therole of SMEs in the standards setting process. This is ofparticular relevance to for automotive industry, where avery high percentage of suppliers are SMEs. If acommittee-based approach were eventually to be adoptedin this sector it would only make sense if theirrequirements, and their overall situation, were adequatelytaken into account in the standards-making process.

3. SMEs and Standardisation

3.1. Some Background

There seems to be general agreement that userparticipation is a sine qua non for a standardisationactivity to be successful, particularly in the field of ICT.In fact, increased user participation is often considered asthe panacea for all problems. However, today only verylimited numbers of user representatives can be observedin almost all major international standards organisations.For example, only about 3% of the members of theEuropean Telecommunications Standards Institute (ETSI)qualify as ‘users’, only one of which is a ‘true’ SME;

4The International Organization for Standardization.

5The European Committee for Standardization.


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almost all others are umbrella organisations oradministrative entities.

In fact, the importance of the involvement of allstakeholders in the standardisation process is nicelyillustrated by the case of MAP6. The failure of thispotentially very useful multi-million dollar initiative maynot least be attributed to the complete absence of SMEsin the standardisation activity. The extremely complexspecifications were done solely by very large companies,for which this complexity apparently was not such a bigproblem. Unfortunately, they failed to realise that thesituation was very different for their SME suppliers. Forthem, the specifications were way too complex to beimplemented and managed. Eventually, the wholeinitiative collapsed.

A distinction has to be made between large usercorporations and SMEs, as they differ considerably interms of requirements on ICT systems, availableresources, and relevant knowledge. Indeed, it hasfrequently been observed that SMEs do not normallyparticipate in standardisation, a fact typically attributed toa lack of resources. It follows that measures have to betaken to enable smaller companies to contribute to theprocess as well. This is all the more important sinceSMEs are a major cornerstone of employment, and ofincreasing economical importance in the future [5].

Frequently, small organisations tend to considerinvolvement in standardisation being just not worth theeffort. They either try to get by on what they have got, totalk to their service providers and/or vendors in order toget ‘customised’ solutions (with all the risks andproblems associated with this approach), or to solve theproblems internally by integrating ‘home-made’enhancements (with largely the same problems ascustomised solutions). Moreover, to actively get involvedin the standards setting process will probably be regardedas being far too expensive and time consuming forSMEs. What’s more, the eventual outcome of suchinvolvement lies too far in the future, and is far toouncertain, as to be of any perceived real benefit.

Major differences between large organisations andSMEs can also be identified regarding adoption and usageof information technology. For instance, the former tendto go for systems based on ‘official’ standards (i.e. thoseproduced by ISO) if and when available, whereas most ofthe latter opt for readily available off-the shelf systemsand services, which need to be cheap and easy to install,maintain and use. Proprietary systems are also used ifSMEs are compelled to do so by e.g. a major businesspartner. The non-use of many standards-based services bySMEs is largely due to the fact that insufficientknowledge and resources are available to employ thesesystems, which are perceived as being extremely

6Manufacturing Automation Protocol’, an initiative started by General

Motors and other large companies in the mid-eighties to provide forinter-operability of IT systems in production environments (see e.g.[11]).

complicated to deal with. This is a rather worryingindication that ‘official’ standards, and consequently theproducts implementing them, actually fail in adequatelyaddressing the needs of major market segments forsimplicity and usability. In fact, this perception, may beconsidered as a major impediment to a more successfuluptake of standards based systems. With SMEs being alarge base of potential customers, this exemplifies anurgent need for simpler standards.

The procedures adopted by the individual standardssetting bodies suggest that the degree of control over, andinfluence on, the standards setting process is aboutequally distributed between the different stakeholders(including e.g. vendors, service providers, and users).One could, therefore, be tempted to assume that in thisprocess interested parties meet, compile and review theirneeds and requirements, define the best technicalapproaches and mechanisms realistically feasible, andeventually come up with a standard that should survive inthe market and should pretty much suit all needs.

Unfortunately, this does not quite capture reality.Especially the assumption of an equal influence of allstakeholders appears to be flawed – at least according tosome earlier research [6]. In fact, it appears that so fardevelopment of IT standards has almost exclusively beentechnology driven; with standards produced solelyreflecting providers’ and implementers’ priorities like, forexample, manageability rather than usability. This canlargely be attributed to the fact that relevantstandardisation committees have typically beendominated by vendors and service providers. (see also [6]for a more elaborate discussion). Accordingly, a morerealistic model is called for.

Figure 1 depicts the actual situation morerealistically. Deliberately or not, manufacturers andservice providers act as a sort of ‘buffer’ betweencorporate users and standards committees.

................

SMEusers

Generalpublic

Consumerorganisations

Productuser groups

Professionalumbrella

organisations

Manufacturers Serviceproviders

StandardsCommittee

Endusers

Largecorporate users

Government

Businesspartners

very little influence

strong influence

dialogue, impact questionable

limited influence

The 'third estate'

SMEumbrella

org.

............... hardly any influence

Figure 1: Relations between stakeholders instandardisation


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The figure also shows that some entities seem toform what you might call the ‘third estate’ of standardssetting. It comprises of the general public, consumerorganisations and, most notably here, SME usercompanies. They are largely separate from the keyplayers, with SME umbrella organisations locatedsomewhere in between. Although they represent the vastmajority of standard users these groups have extremelylittle say in the standards setting process. This holdsdespite the fact that organisations such as NORMAPME,the ‘European Office of Crafts, Trades and SMEs forStandardisation’, are actively participating in selectedstandard working groups on behalf of their constituency.

3.2. A Study of SMEs in Standards Setting

To learn about the issues relating to SME users instandards setting we conducted a study of members ofrelevant committees of ISO and ITU7.

The study comprised desk research, several workshops,and a number of (smallish) surveys8. Here, data werecollected through different questionnaires with open-ended questions. Qualitative methods were deployed toanalyse the data.

The three workshops yielded mixed results. It seemsthat the original idea of addressing geographically closeuser ‘communities’ (to minimise consumption of timeand money) is inappropriate, presumably due to the verydiverse needs and requirements of the individual SMEusers. Rather, addressing a geographically distributedgroup of users with similar interests and needs appears tobe more successful (as exemplified by the one of theworkshops).

Also, it was specifically emphasised that standards area pre-condition for solving SMEs’ ICT-related problems.However, it also became apparent that many standards aretoo complex, that SMEs need support whenimplementing them, and that uniform implementationsare important. Another outcome was that problems ofsoftware maintenance and supplier-dependence might bebest addressed by Open Source Software.

A brief overall stock taking of the outcome of thesurveys: Both ITU and ISO indeed appear to bedominated by large companies. SME representation (ifany, that is) occurs primarily through small consultancyfirms, as opposed to actual users. Also, the influence‘real’ SMEs (i.e., excluding consultants) have on theprocess is said to be very limited in the WGs. At thedecision level it is virtually nil.

It does not really come as a big surprise that ITUWGs are said to be very much dominated byrepresentatives from regulators, vendors, and serviceproviders / network operators (historically, the respective

7The International Telecommunication Union.

8For a full account of the study, particularly including the desk

research, see [13].

national PTTs were the only organisations with a right tovote).

SME participation is extremely limited in numbers(even non-existent for some groups), and accordinglytheir overall influence is equally limited.

Respondents’ opinions were split about SMEs’influence at the technical level. A large minority basicallystated that in many cases influence is related to marketpower. The majority, however, noted that the individualcapabilities of the representatives (i.e., e.g., technicalskills, language proficiency) represent the deciding factor.

At the decision level, only administrations have theright to vote within the ITU. Thus, in a way they havethe most influence. However, large companies arefrequently heavily involved in the actual writing of thedocuments. Therefore, they are rather influential at thislevel as well. Very little, if any, influence is attributed toSMEs here.

With respect to the benefits and/or drawbacks groupmembers associate with (increased) SME participationbenefits clearly prevail. For one, the broadest possibleparticipation is beneficial to standards setting per-se.SME participation would also broaden technicalexpertise, as they are frequently closer to state-of-the-arttechnical development than big companies, and lessbound by internal rules and administrative procedures.Also, they would be welcome as a counter-weight to theinterests of the big companies. This holds particularly ifthey represented fora or some other form of umbrellaorganisations.

Cost of participation is considered the major obstacleSMEs will face if they want to become active instandards setting. Suggestions how this could beovercome include increased deployment of electronicmedia to replace meetings, lower or waive fees for SMEs,provide dedicated travel money. In addition, SMEs couldjoin forces and co-sponsor representatives.

Within ISO, academia and, particularly, consultantsseem to play a somewhat bigger role than they do in ITU.Apart from that, the make up of the working groups issimilar to that of ITU.

Also not unlike the situation within ITU, SMErepresentation seems to be very limited in most cases.However, one respondent said that SMEs account forabout 90% of her group’s membership (JTC1/SC7/WG18, ‘Quality Management’).

The importance of aspects like personality andtechnical proficiency was particularly stressed by themembers of the ISO WGs. Only a small minorityobserved that size is related to a company’s influence in aworking group.

Perceived benefits and problems of SMEparticipation are pretty much in line with those identifiedby the ITU members. However, overall the enthusiasmabout SME participation appeared to be less pronouncedhere (with one exception). In particular, it was noted thatthe typical sporadic/infrequent participation of SMErepresentatives may lead to inadequate familiarity with


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both technical aspects discussed as well as procedures,thus causing unnecessary delays to the process.

Again, the lack of funding was seen as the mostimportant impediment to SME participation.

4. Recommendations

Today, the active participation in standard-setting islargely limited to large, multi-national companies inmost relevant sectors, most notably including the ICTand e-business domains. In particular, SMEs hardly standa chance to make their voice adequately heard. Asstandardisation and policy-making are mutuallydependent, this is an extremely unsatisfactory situation.Ultimately, it means that the influence of globally actingmulti-nationals on European policy is out of proportionwith e.g. the number of jobs they provide in Europe. In away, SMEs are part of a modern-day ‘Third Estate’ withrespect to their capability to influence standardisation andthus, ultimately, policy making. This holds despite thefact that there are over 20 million SMEs in the EU.

Standardisation processes provide a platform whereopportunities of technologies, requirements of companies,consumer preferences, and other needs of the society atlarge, e.g. protection of the environment, can beefficiently mediated. Standards that are useful and usablefor all relevant stakeholders should be the outcome ofthese processes.

Moreover, “Standards are a core part of theinfrastructure that supports efficient innovation.” [7] (seealso [8] and [9] for similar accounts). With innovationbeing high on the agenda in Europe it would beextremely unhelpful if SMEs which, after all, form theemployment and growth engine of the EU, were excludedfrom shaping this infrastructure upon which they verymuch rely.

A number of specific recommendations may be madebased on the above. Most notably, these include:• Target user communities

The needs and requirements of different communities(e.g., business areas) may differ considerably. Toattract attention these sector-specific problems needto be addressed. SDOs might want to explore thisapproach. For example together with internationalindustry bodies such as ODETTE International whichis an organisation, formed by the automotiveindustry that aims to set standards for e-businesscommunications, engineering data exchange orlogistics management.

• Make standards simplerComplexity of the standards appears to be an issuefor many users (not just SMEs). This may to aconsiderable extent be attributed to ISO’s tendency todesign overarching, monolithic solutions. A more‘incremental’ approach, not unlike the one adoptedby the IETF, would be worth considering here.

These two recommendations came out of the workshops.

• Devise ways of integrating requirements fromdifferent types of users and sectorsComplex standards are not least a result ofinadequate user representation on the committees.However, the context-specific nature of requirementsmakes meaningful user representation a non-trivialtask. Dedicated ‘user groups’ might be an optionworth considering, despite all problems associatedwith this approach.

• Provide support for representation through SME-user umbrella organisationsAn umbrella organisation (e.g., EuroChambers,Normapme) should represent their constituency. Thisshould be done through dedicated and trainedstandards specialists.

Both desk research and surveys suggested theserecommendations.And, at a more general level:• Re-think the current standards setting process

Basically, user requirements can today only be fedinto the process in the very early stages. Practicalexperience does not go into the process at all. Amechanism similar to the one employed by theIETF, but possibly going further to allow for real-lifeexperience to go into the process, could be an option.

• Think of alternative/complementing ways to achieveinteroperabilityFor some problems (e.g., maintainability) othermechanisms of achieving interoperability may bemore suitable than (European) standards (e.g., opensource software; see also [10]).

• Deploy standardisation as a means for the diffusionof innovations within the EUA standards working group is both a locus ofinnovation as well as an enabler of the diffusion ofinnovations by its members. Exploiting thesepotentials to the fullest would very much contributetowards a more innovation-friendly environment.

According to a study of nexolab in 2001, standards werea major headache for SMEs. 75% of the suppliers sawstandardisation as a major obstacle for closercollaboration [11]. Therefore, it might be useful forcompanies to rethink their standardisation strategies.

5. References

[1] McKinsey (2003) Study HAWK 2015 –Wissensbasierte Veränderung der automobilenWertschöpfungskette, VDA 30 Materialien zurAutomobilindustrie.

[2] Kumar, K., van Dissel, H.G., (1996) Sustainablecollaboration: Managing conflict and cooperation ininterorganisational systems. MIS Quarterly 20 (3),pp. 279–300.


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[3] Gerst, M., Schulze, H. (2003) e-Business in derUmsetzung- das globale DaimlerChryslerLieferantenportal. In: Beschaffung Aktuell, Heft8/2003, pp. 50-51b.

[4] Koch, O., Gerst, M. (2003) E-Collaboration-Initiative bei DaimlerChrysler. In: Bogaschewsky,R. (ed): Integrated Supply Management – Einkaufund Beschaffung: Effizienz steigern, Kostensenken. pp. 207-234.

[5] Organization for Economic Co-operation andDevelopment (eds) (2000): The Role of SMEs andEntrepreneurship, Proc. of the OECD MinisterialBologna Conference.

[6] Jakobs, K.; Procter, R.; Williams, R. (2001): TheMaking of Standards. IEEE CommunicationsMagazine, vol. 39, no. 4.

[7] National Standardization Strategic Framework (eds;2003)): Standards and Innovation.http://www.nssf.info/standardsandinnovation.pdf.Accessed June 21, 2004.

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