26 May 1999
Source:
http://www.usia.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=99052501.clt&t=/products/washfile/newsitem.shtml
USIS Washington
File
_________________________________
25 May 1999
(Government looks for indicators for e-commerce) (2120) Washington -- U.S. Commerce Secretary William Daley has opened a conference devoted to finding methods to measure the impact of the Internet, which he says will dominate the future economy. "More and more people in the private sector are making what amounts to billions of dollars in decisions about e-commerce. And they are doing it without a reliable base of information," Daley said at the opening of the Digital Economy Conference May 25. The secretary said that many of the current economic indicators are useless to help Internet-based businesses make informed decisions. "The old pigeon holes don't work anymore," Daley said. For example, the Commerce Department is starting to collect more information about how retail sales are made. In the past, no one wanted to know whether sales were made by knocking on a door, sending a letter or advertising on a World Wide Web site, Daley said. During the two-day conference, Daley said, panels will address a number of topics crucial to spurring electronic commerce: -- implications for small businesses. The Internet offers the opportunity for small businesses to become huge international operations, such as Amazon.com, AOL, and Yahoo. Daley said medical establishments, also small businesses, are stunted by insufficient use of the Internet. -- access. The secretary said everyone must have access to the Internet, not just the wealthier and more educated segments of society. At present, white households are more than twice as likely to own a computer than African-American or Hispanic households. "We can not be the society we hope to be if whole segments are systematically excluded," Daley said. -- work force. At present, high-technology companies have trouble attracting and keeping skilled workers. "Jobs go begging because not enough people have the high-tech skills to fill them," Daley said. -- organizational change. Daley says businesses must adapt their organizations to Internet methods of sales, services and manufacturing or cease to exist. "There won't be Internet companies and non-Internet companies. A company will either be an Internet company or it will not be a company at all," Daley said. Following are terms used in the text: -- billion: 1,000 million. -- e-commerce: electronic commerce, conducted by means of the Internet and computers. Following is the text of Daley's speech, as prepared for delivery: (begin text) REMARKS BY COMMERCE SECRETARY WILLIAM M. DALEY DIGITAL ECONOMY CONFERENCE WASHINGTON, D.C. May 25, 1999 (Text as Prepared for Delivery) They warned me the turnout for this conference kept growing like an Internet stock. We maxed out on registration ... there's an overflow room for people to watch on TV ... and we are broadcasting live on the Internet. So let me welcome all of you to the U.S. Department of E-Commerce. Obviously the turnout is a reflection of the importance of the Internet. I absolutely believe in the history of commerce there has never been anything like it. I also believe we need to have a far better grasp on how it is affecting the economy as a whole. President Clinton and Vice President Gore wanted us to hold this meeting. They know, as you know, more and more people in the private sector are making what amounts to billions of dollars in decisions about e-commerce. And they are doing it without a reliable base of information. E-commerce is everywhere, and we want to do a better job of tracking it, in government statistics. We want to better measure what e-commerce means and doesn't mean to the economy -- so decisions are not made in a vacuum. To be frank with you, I don't expect this conference to end with a nice neat set of conclusions. The questions we raise are too tough. But we hope to achieve a better understanding of how to proceed from here. Let me begin by saying later this spring, Vice President Gore and I will release an up-dated report on the Emerging Digital Economy -- showing its size and growing importance. I released the first one last year, and we will make this an annual activity. The numbers showed our country's incredible economy is very much tied to information technologies. About a third of our growth has come from information technologies. And the declining price of IT products have lowered overall inflation by one percentage point or more. Without getting into details, let me preview the forthcoming report by saying this. I know nothing surprises all of the optimists on how important information technologies are. But even you will be pleased with the new numbers. But the fact is, e-commerce is still relatively small, compared to the rest of the economy. Last year, even though retail sales on the Internet tripled, they still accounted for much less than one percent of all retail trade. Business to business transactions are larger -- four to five times larger, with equally large rates of growth. But even they are less than a percent of our $9 trillion economy. Still, e-commerce's potential to change the way we work we shop ... we get our news ... we conduct business -- is enormous. It is creating businesses that would not exist without it. It is creating whole new forms of businesses. We are seeing firms like Dell using e-commerce to bond itself to business and individual customers and to link its entire supply chain up electronically. For the last decade, we have watched companies manage their inventories better -- and no doubt, e-commerce will take this to new levels. Because of all of this, the way government collects key economic performance indicators has to change. The old pigeon holes don't work anymore. And to be frank with you, we have to run to catch up. SIC codes began when Franklin Roosevelt was President and not only were there no computers then, the adding machines had cranks on them. Even up until last year, computers were classified in a category called non-electrical machinery. We have changed that. This year, we introduced the North American Industry Classification System. It thoroughly modernizes the industry groupings in our statistics. But in order for it to take hold across all agencies and businesses -- it will take time -- years -- far longer than it takes to develop Internet technology. Let me point something out. For as long as the government has collected information, people have not been very interested in how somebody makes a sale. Whether it's knocking on a door ... or sending letters ... or having a sale at the mall -- people didn't pay much attention. So, we have collected very little information on how sales are made. But now, with e-commerce, people are interested. So, at Commerce, we are changing. We are starting to collect information on retail sales -- but we have a lot of questions about how to categorize businesses. In the e-world, what is a retail site, anyway? Obviously, there is great interest in monitoring e-commerce in manufacturing and service industries. But let me just point out, there is a trade-off here. We can gather the information -- but is the cost worth it for business and government? If the business community wants us to collect a certain kind of data, and is willing to supply it, we stand ready to do it. And obviously, we want to get the job done by using the Internet -- both for collection and distribution. In short, we want to webify government. I am the last Commerce Secretary of this century -- assuming I can keep my job. But what is more important is to be the first E-Commerce Secretary of the next century. So I hope you provide us with insights today. The data we collect is meant to help you. We need your input. Beyond economics, there are other areas that are key, if e-commerce is to meet its promise. We are working in many of these areas at Commerce. Today, there will be panels about each of them. I want to highlight some of them. First, what does all of this mean for small businesses? For me, one of the most interesting aspects of the Internet is now a mom-and-pop store in rural America, can sell to the world, just like a Fortune 100, with a massive distribution system. Remember -- names like Amazon.com ... AOL ... and Yahoo were all small businesses, if they were businesses at all, five years ago. Working with the Small Business Administration, we have begun to mobilize resources to help small companies be a part of Internet growth. In the future, I hope we reach out to medical establishments that are also small businesses, and do not use the Internet and information technologies as much as they should. What we learn over the next several days will help shape our strategies. Second, the issue of access is very important to me. For some years now, Commerce has looked at whether all parts of our society are participating in the digital economy -- or whether we are creating a digital divide. The numbers show there is not equal participation. White households are more than twice as likely to own a computer than African-American or Hispanic households. There is a widening gap in computer ownership between those at upper and lower income levels -- and in between urban and rural areas. We cannot be the society we hope to be, if whole segments are systematically excluded. Recognizing this, President Clinton and Vice President Gore want every school and library connected to the Internet by next year. We are well on the way -- about 90 percent there. On Thursday, the Federal Communications Commission is expected to vote on full funding for the e-rate. This, as you know, allows schools to connect to the Internet at a discount. Yesterday, Secretaries Glickman, Riley, and I sent the FCC Commissioners a letter expressing our support for fully funding the e-rate. I cannot overestimate how crucial it is. It is important to ensuring our economy continues to grow strong and that all people have access. When you think about this -- the Internet is color blind. No one knows the owner of the dot.com store is an African American or an Hispanic or an Asian or a Native American. Some barriers that have existed in business in the 20th century should not exist on the Internet in the next century. That is very, very positive for our society. Let me make one other point about access -- this time access to bandwidth. We closely follow issues of market structure and competition in telecommunications. In the months to come, many decisions will need to be made on to how to continue to stimulate competition, and how to broaden access to bandwidth. Without more bandwidth, the Internet will never reach its full potential. Third, we need to look closely at the workforce. It is no secret our high-tech companies have faced terrible obstacles attracting and keeping workers. Jobs go begging because not enough people have the high-tech skills to fill them. This past year, President Clinton asked me to lead a national dialogue to better understand the situation. We have learned a lot about the importance of information technology workers. Today's discussion will add more knowledge, I hope. I will issue our findings and recommendations next month at the National Press Club. Fourth, and finally, is the issue of organizational change -- what happens internally with all these new technologies? This year, Commerce, the Small Business Administration, and the Agriculture Department are working hard to help firms, large and small, to deal with Y2K issues. We are working to help the health care industry, move from manila folders to electronic records. Our Manufacturing Extension Partnerships, all around the country, are working with small manufacturers. E-commerce is much more than a service sector tool. It is becoming a basic element for most manufacturing operations -- from design, to development, to product, and to distribution. To paraphrase Andy Grove, there won't be Internet companies and non-Internet companies. A company will either be an Internet company or it won't be a company at all. So, today we also are looking for your thoughts on organizational changes and what role government can play. Usually as Secretary of Commerce, I am asked to give answers to questions. But today, let me end by saying I don't have the answers. I am just interested in getting your help to frame the right questions about the digital economy. For I really believe we need to ask the right questions, if we are to get the right answers on how to grow the digital economy to its fullest potential. Thank you very much. (end text)