Barriers Of E-commerce And E-government In Saudi Arabia

Fahad Alharby

Abstract

MSc in CMT with software systems for e-business and WWW 2005/2006 Barriers of E-commerce and E-government in Saudi Arabia By F. M. Al-Harby Project Supervisors: Dr. Rami Qahwaji, Dr Mark Goodall

The ways for undertaking business are quickly shifting. The Internet and associated advances in Information Technology (IT) considerably affect countries in general and customers and financial services in particular. The increasing value of Ecommerce represents a watershed event for the global markets. The principle of this dissertation has been to produce a study to look at the barriers of E-commerce implementation in Saudi Arabia.

E-commerce can enhance the velocity of money in an economy. In a developing economy with an elementary information infrastructure, implementation of E-commerce needs adjustment and development. E-commerce in the Kingdom of Saudi Arabia is facing many barriers. Within Saudi Arabia; there is a segment of the population with no access to the Internet. Access to the Internet is hindered by the poor infrastructure and high costs associated with Internet service.

In order to accomplish the point of this study, a vast literature review was done, with a questionnaire which was used as the data collection tool. To achieve this, a questionnaire from a middle class Saudi family, acting as a sample, has been carried out. I have focused on the perception of E-commerce. This dissertation has been organized into six chapters. An introduction to this study, problem statements and research question were presented in chapter one. The second chapter was devoted to a literature review. The research methodology was discussed in the third chapter. Data presentation and analysis were done in chapter four and five, respectively, finally, recommendations and conclusions in the last chapter.

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

Abstract

With respect to the findings, I conclude that the Saudi citizens looked at Ecommerce positively. Their attitude and views toward E-commerce were positive so that they found that E-commerce would be an opportunity rather than a challenge or even a threat for Saudi society. They believed that E-commerce would affect their society and, thus, their country should embrace E-commerce. Lack of national telecommunications and Internet costs and lack of government legislation and regulation were infrastructure requirements which they found that the Saudi society required. They were well equipped with hardware and software but lagging in other supportive sectors such as logistics. Traditional attitudes and views about the companies and scarcity of skilled staff were cited as other major obstacles which would hinder Saudi Arabia to embrace E-commerce.

The synthesis of these study findings can be extracted into recommendations. One is that both investments in infrastructure and citizen knowledge are required if a government desires to support the implementation of E-commerce, and improvement of standards, policies, and enforcement mechanisms to assure the dependable operations of E-commerce.

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

Acknowledgements

By the grace and mercy of God, first, I would like to express my great appreciation to my supervisors Dr. Rami Qahwaji and Mr. Mark Goodall. They have always been supportive and kind to me. Their inspiration, understanding, tolerant advice and encouragement have made my studying a great learning experience and they will never be forgotten.

Second, I dedicate this dissertation to my wife, my parents, and my children: Mohammed and Dema. They gave me encouragement, and support. They provided me with strength, dreams, courage, and determination to move through the final stages of this dissertation. I also dedicate this dissertation to my boss, the General Manager of the national centre for financial and economic information, Mr. Mohammed Alnfaie, for his generous, encouragement, and support.

Finally, I would like to thank all who have contributed to my graduate studies during the last two years.

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

List of Acronyms

List of Acronyms ADSL

Asymmetric Digital Subscriber Line

AOL

America Online

ARAMEX

Arab Logistics Company

ATM

Asynchronous Transfer Mode

AT&T

American Telephone & Telegraph

B2B

Business-to-Business

B2C

Business-to-Consumers

B2G

Business-to-Government

BT

British Telecom

C2B

Consumer-to-Business

C2C

Consumer-to-Consumers

DDN

Digital Data Network

DHL

A company provides international shipping of documents and freight

EDI

Electronic Data Interchange

EFT

Electronic Funds Transfer

GCC

Gulf Cooperation Council

GDP

Gross Domestic Product

HP

Hewlett-Packard Company

ISOC

Internet Society

IPPS

Internet Petroleum Product Sale

ISP

Internet Service Providers

IT

Information Technology

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

List of Acronyms

KACST

King Abdul-Aziz City for Science & Technology

LPG

Liquefied Petroleum Gas

MCI

Microwave Communications Inc.

NAP‟s

Network Access Points

NCDC

The National Centre for Digital Certification

NSF

National Science Foundation

OECD

Organization for Economic Co-operation and Development

PKI

Public Key Infrastructure

PSTN

Public Switched Telephone Network

SAMA

Saudi Arabian Monetary

SADAD

Saudi Electronic Payments Systems Project

SaudiEDI

Saudi Electronic Data Interchange

SDH

Synchronous Digital Hierarchy Network

STC

Saudi Telecom Company

TADAWUL

Saudi Stock Market

UAE

United Arab Emirates

UPS

United Parcel Service, Inc.

URL

Uniform Resource Locator

WWW

World Wide Web

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

Table of contents

TABLE OF CONTENTS

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

Table of contents

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

List Of Figures

Barriers of E-commerce and E-government in Saudi Arabia

Fahad Alharby

List of Tables

Barriers of E-commerce and E-government in Saudi Arabia

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Chapter 1

Introduction and background

INTRODUCTION AND BACKGROUND 1.1 Introduction This first chapter is intended to give background information about the area of research. First a brief background discussion regarding E-commerce and Egovernment toward costumers and citizens, then an overview of the Internet in Saudi Arabia. This is followed by a statement of the problem, leading to the research objectives, research question, delimitations for this dissertation and finally, the structure of the dissertation and the project management plan.

1.2

Background

1.2.1 Introduction to E-commerce The definition of E-commerce is very wide and can be interpreted in different ways by different people. E-commerce has many definitions which include business process, communications and online services. It can be defined as “buying and selling over digital media” while buying can be left out if the business procedures are electronic, in addition, the selling process is electronic (Mariga, 2003). E-commerce can be more clearly explained as electronic production via public or private networks as well as E- banking, E- publishing, and E-service. During the use of E-commerce technology, businesses can split information by electronic means and manage services online in order for customers to obtain services from the businesses (Kotzab & Madlberger, 2001). E-marketing is the extension and adjustment of marketing policies in the World Wide Web (WWW) environment as a division of E-Commerce and contains all aspects that have an effect on a web site‟s proficiency, like the idea, the structure, the content, the implementation, the interface, the maintenance, the promotion and the advertising (Krishnamurthy, 2004). While extra businesses and supplementary businesses are using the web to carry out their business, there is concern about some issues such as efficiency, usability, easy navigation and a high-quality of supporting services becoming crucial and influencing their achievement (Ancarani, 2002). A particular significant problem that arises is that web users are faced with too many options. Barriers of E-commerce and E-government in Saudi Arabia

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Chapter 1

Introduction and background

1.2.2 Introduction to E-government E-government is often defined as “e-business of the state”. This is reasonable because both E-business and E-government use similar infrastructure, hardware and software as well. Nevertheless, there are obvious differences between the business models of the public and private sector, which give good reason for dealing with Egovernment as a research area of its own (Gisler M., Gunter M. & Spahni D., 2001).

E-government is sometimes defined as citizen‟s services and re-engineering with technology. Another point of view shows E-government as a fundamental transformation of government and governance at a scale not witnessed since the establishment of the industrial age (Aichholzer G. & Schmutzer R., 2000). From a technological point of view, e-government is the use of technology to increase the access to, and delivery of, government service to benefit citizens, business partners and employees (Deloitte Research, 2000). Even though there are many definitions of E-government, the real government‟s objectives are certain: maintaining collective security, administering justice, providing the institutional infrastructure of the economy, certifying that vital social capital is improved during developments in education and health and through strong families and communities (Dawes S.S., Bloniarz P.A., & Kelly K.L., 1999).

1.2.3 The Internet in Saudi Arabia The Internet, E-commerce and the use of E-government are new not only to the Middle East countries but to the world. The new technology of the World Wide Web (WWW) in 1993 enabled the use of the internet backbone by a large range of users with little or no technical skills. The Internet was officially made available in Saudi Arabia in 1997, the Saudi Arabian government spent two years building a centralized control system before contribution it for public service in February 1999. Services such as online banking have only been available in Saudi Arabia since 2001(Alfuraih, 2002; Lee, 2001). Establishing this service was late contrasted to other countries in the Middle East such as Kuwait, Egypt, United Arab Emirates, Bahrain and Lebanon. However, Internet technologies have required new laws and regulations,

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Chapter 1

Introduction and background

some of which have bring new burdens to governments and financial institutions and. Table 1.1 illustrates the enhance of Internet users in Saudi Arabia. Survey

Saudi Arabian growth in Internet users

Dabbagh 1999 (Pastore, 1999d)

112,500 Internet users were estimated in 1999

TELC2000 (TELC, 2000)

115,00 Internet users were estimated in 1999 2.2 million Internet users were predicted in 2004

Wmrc2001 (Dutta & Coury, 2001)

577,800 Internet users in 2001 (3% of the population)

Madar2002 (Madar Research, 1.6 million Internet users were estimated in 2002) 2002 (6.81% of the population) 4.48 million Internet users were predicted in 2005 Table 1.1: Growth of Internet Users in Saudi Arabia (Almogbil, 2005;Madar Research, 2002; TELC, 2000; Dutta & Coury, 2001; Pastore, 1999d)

The laws relating to E-commerce and E-government in Saudi Arabia are all quite new. Customer preferences, needs for protections, and user-friendliness are mostly unknown. Government departments and companies that offer online services in Saudi Arabia face cultural challenges. Infrastructure support for online services is also new (Almogbil, 2005).

Online services consumers depend on Internet technologies for immediate access to their requirements and financial and information resources. The security of these resources is presently the issue of important centre of attention. To have competitive, proficient, and protected online access, government, companies and institutions must implement laws, principles, and procedures that permit the business to function well and protect information assets. The online services in Saudi Arabia is still in its early steps, Saudi government, companies and banks require to run at or above the services level of successful domestic and international players (Reuters, 2000). Interpretations, response, feedback and survey items should be taken in the background of the Saudi culture. It is expected that several of the problems considered will reveal thoughts and ways which difference strongly with Western views. The Middle East countries are unique because they consist of a group of nations that have common ideologies of Islam and language (Almogbil, 2005). They can contrast,

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Chapter 1

Introduction and background

nevertheless, in their strategies and government due to loyalty to separate Islamic traditions and sects (Lieb, 1999). The enthusiasm for this study mostly approaches from the required to identify how the unique country of Saudi Arabia has adapted to Internet technology and E-commerce.

In Saudi Arabia, young people are exposed to modernity during media and travelling overseas and have various identities across different occupational, regional, national, tribal and geographic groups (Yamani, 2000). Hermida referenced a Harvard Law School report in 2002, which stated there were more than 2,000 web sites blocked by the Saudi government. The Saudi Arabian government control Internet traffic by using a central proxy servers conducted by King Abdul-Aziz City for Science and Technology (KACST). Most of these blocked web sites was sexually explicit or had religious content, as the rest were about women, drugs, and Western culture. In most countries the main Internet business happened via pornographic sites, but these sites were forbidden in Saudi Arabia along with other web sites that have sensitive political or religious views against the Saudi Arabian government or Islamic law (Almogbil, 2005; LEE, 2001). However, it is unique for a country to block sites in sequence to preserve Islamic principles and prevent people‟s beliefs from being influenced (Hermida, 2000).

1.3

Statement of the problem

E-commerce and the use of E-government in the Saudi government and industries are in the very initial stages. The Internet usage is dramatically growing in the country and many government departments and companies have an Internet presence on the net. A few companies provide elementary Internet services. For the traditional Saudi government and companies, the require to adapt to the new E-commerce opportunities not only involves direct cost, in the form of extensive investments in the new information technologies, but as well the indirect costs of having to adjust their active business models. Saudi companies should to revamp their business procedures, which direct several different internal conflicts. An internet business threatens other traditional paths and so be likely to meet with strong battle within the company. Many Saudi companies can avoid this problem immediately by

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Chapter 1

Introduction and background

not passing on to the consumer during electronic distribution. Some companies may pursue a dual strategy and attempt to make balance the traditional distribution channels and online services (Porter, 2001). The procedures, technologies, and ways of E-commerce and E-government have been constructed up overpoweringly in a Western cultural background. Saudi Arabia has been implementing vigorous information infrastructures. Nevertheless, the cultural infrastructure in Saudi Arabia is fairly different from that of the Western world. Roth predicted in 2001, based on a report from Pyramid Research, that Internet users in the Middle East region, will flow over the next five years, but foreign entrants would have to go through major cultural obstacles. Therefore, there are additional aspects in particular the cultural differences, which must be considered in order to adopt E-commerce and E-government in Saudi Arabia. (Almogbil, 2005). The effects of E-commerce and E-government are the subjects of deep debate in Saudi Arabia, and a prospective study to explore and investigate the barriers of E-commerce and the use of E-government in Saudi Arabia is underway.

1.4

Research Objectives

The main goal of this research is to identify the barriers and challenges in adopting E-commerce and E-government in Saudi Arabia. This identification of barriers will occur through examining the Saudi Arabia cultural infrastructure, as analyzed through customer‟s experiences, legal requirements, and the information technology infrastructures, in addition to studying the current situation and the benefits of E-commerce.

1.5

Research Question

In Saudi Arabia, a range of major factors impact on the usage and implementation of E-commerce and E-government. These factors include consumers, government, companies, technical personnel, managing and legal law. This study is intended to address the main question which is “What are the barriers and challenges facing Ecommerce and E-government in Saudi Arabia”. This question will be discussed in chapters four and five which will include the data collection and analysis.

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1.6

Chapter 1

Introduction and background

Delimitations Due to limitations in time as well as finances, it would be impossible to cover

all aspects of E-commerce and E-government. I will not cover the design and the execution of E-commerce, nor will I put E-commerce applications to the test.

1.7

Structure of the Dissertation As can be seen in Figure 1.1 below, this dissertation consists of six chapters. By

now, the reader is already familiar with the content of chapter one which consisted of an introduction and background discussion followed by the statement of the problem, the research objectives with research question and their limitations. Chapter two will consist of a literature review. Chapter three will illustrate how the research was conducted and which methodological choices were made, in addition to motivations for these choices. This is followed by chapter four where the collected empirical data will be presented. This data is then compared with the concepts outlined through an analysis in chapter five. In the final chapter the conclusions and recommendations will be proposed as well as suggestions for further research. INTRODUCTION AND BACKGROUND

LITERATURE REVIEW

RESEARCH METHODOLOGY

DATA PRESENTATION

DATA ANALYSIS

CONCLUSIONS AND RECOMMENDATIONS Figure 1.1 Structure of the Dissertation

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1.8

Chapter 1

Introduction and background

Project Management Plan

Project Management Plan is strongly recommended from a best practices point of view, in sequence to successfully and professionally manage the time, schedule, and quality of the project. The Project Management Plan can be viewed as a "roadmap", which will facilitate the project team to deliver the project without any delay with the quality which they expected. Table 1.2 shows the project management plan: Week 1

June

2

August

1-First formal meeting on Thu 6th. 2-Submit the completed and signed 1st Review Form to Dr Ugail 3-Fix the title and the main objectives. 4-Web based research 1-Literature review 2-Review of the methodology(looking at the questioner design)

1-Begin writing introduction 2- Questioner response

1-Literature review 2- Begin questioner design

3

4

July

1-First meeting with the supervisor. 2-Discuss the main objectives of the project and how the project will conduct 3-Begin web science search

1-Complete questioner design 2-Select sample for questioner distribution 3-Literature review(if still to complete) 4-Finish web search (if still to complete)

September 1-Time available to make amendments, correct errors, tidy up presentation 2-Aim to submit final dissertation by Sep 8th

1-Second formal meeting/submit the completed and Second Review Form to Dr Ugail 2- Begin writing Literature review 3- Questioner response 1-Analysis of questioner response 2-Evalute results 3- Begin writing methodology section of dissertation 1-Write up results and findings 2- Write up conclusion/Appendix 3-Proofreading and check references

Table 1.2 Project management plan

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Chapter 1

Introduction and background

Chapter 1: References Aarabi N., Bromideh A., (2006). The impact of e-commerce on the Iranian insurance companies. Master thesis. Lulea University of Technology. Aichholzer G., Schmutzer R., (2000). „Organizational Challenges to the Development of Electronic Government‟, DEXA 2000, IEEE Press, pp. 379-383. Almogbil. A., (2005). Security. Perceptions and Practices: challenges facing adoption of online banking in Saudi Arabia. Ph.D. Dissertation. The George Washington University, May 2005. Cabello D. B., Ravula U. K. (2006). Public E-services toward citizens. Master thesis. Lulea University of Technology. Dawes S.S., Bloniarz P.A., Kelly K.L., (1999). „Some Assembly Required: Building a Digital Government for the 21st Century‟, Retrieved June 11, 2006 from: http://www.ctg.albany.edu/publications/reports/some_assembly/some_assembly.pdf. Deloitte Research, (2000). „At the Dawn of e-Government: The Citizen as Customer‟ from:http://www.deloitte.com/dtt/cda/doc/content/at_the_dawn_of_egovernment%28 1%291.pdf. Retrieved June 21, 2006. Gisler M., Gunter M., Spahni D., (2001). „Minitrack E-government‟, Proc. of the 34th Hawaii International Conference on System Sciences, IEEE Press. Kotzab, H. & Madlberger, M. (2001). “European retailing in e-transition? An empirical evaluation of web-based retailing – indications from Austria”, International Journal of Physical Distribution and Logistics Management, Vol. 31, No. 6, pp.440462. Krishnamurthy, S. (2003). “E-Commerce Management: Text and Cases, Louiseville: Transcontinental Printing, Inc.”, ISBN 0324152523. Mariga, J. (2003). Managing E-commerce and mobile computing technologies. Hershey, PA, USA Idea Group Inc., p. 3. Pastore, M. (I999d). Saudi Arabia Gets Wired. July 21, 1999. Retrieved June 20, 2006, from http://www.clickz.com/showPage.html?page=151061 Reuters. (2000). Saudi banks embark on Internet race. Arabia.com Dubai. August 23. 2000. Retrieved June 23. 2006 from http://www.arabialink.com/Archive/GWDigests/GWD2000/GWD_2000_08_28.htm Roth, A. (2001). Middle East Web Could Draw U.S. Bankers. Credit Collections World-May 30, 2001. Retrieved June 21, 2006 from http://www.creditcollectionsworld.com/news/053001_4.htm

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Chapter 1

Introduction and background

TELC. (2000). TELC. Telecommunication: Mutually Exclusive. Retrieved June 23, 2006, from http://www.insight-publications.com/saudi/saudi/saudi-sl2.html Yarnani, M. (2000). Changed Identities: The Challenge of the New Generation in Saudi Arabia. Brookings Institute Press. September 1, 2000.

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Chapter 2

Literature Review

LITERATURE REVIEW

2.1 Introduction The literature review has been divided into ten sections starting with a brief introduction. The second section focuses on Internet and E-commerce. The third section focuses on the impact of globalization on E-commerce. The fourth section deals with Socio-cultural changes as well as text and language. The fifth section produces an overview of the history of Saudi Arabian Financial Systems, followed by the sixth section which considers telecommunication access and connectivity. In the seventh section I focus on the Education systems role as well as address the human resources plans. Regulation and Deregulation and Logistics are in sequence in sections eight and nine. Next, the successful E-commerce experiment in Saudi Arabia which is provided by Saudi Aramco, Finally, experience of E-commerce and Egovernment in the Middle East countries, using the example of the United Arab Emirates.

2.2 Internet and E-commerce Internet and E-commerce are gradually becoming one of the most significant drivers of strategic change for governments and business. Similarly, it is likely to have a considerable impact on our lives. Shops, companies and banks are looking for approaches to influence the Internet and the technique of E-commerce for improved revenues, enhanced productivity and a larger customer base with loyalty for their products. The expansion of E-commerce is a complicated and methodical engineering of society, not only concerned with the creation of the arrangement of information but furthermore depending on financial systems such as commercial credit, payment gateways in the Internet, identification, forwarding system infrastructure, standards, tax system, perform and adjusting of relative laws and the framework of the system. In other words, it depends on two important aspects, one is the construction of the market environment and policies and the other is the broad application of technology. The centre of attention in the early stages of the Internet was on selling goods to customers (business-to-consumers or B2C). Now, the focus is changing toward commercial clients (business-to-business or B2B). The B2B division is expected to be the most significant focus of Internet sharing in the future (SwissRe, 2004). Internet

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Chapter 2

Literature Review

technologies have consequences not only for distribution, but for the control of a company‟s whole business processes too. The more the production process relies on the processing of information, the greater the potential for alteration. Thus, Ecommerce is currently understood to mean the utilizing of communication and information technologies, and particularly the Internet, to incessantly enhance an organization‟s business processes. It indicates the seamless application of communication and information technology from its point of origin to its end point beside the whole value chain of business processes conducted electronically and designed to enable the achievement of a business objective. These processes possibly will be partial or complete and may include B2B, in addition to B2C, C2B transactions and even (consumer-to-consumer C2C) (Wigand, 1997).

2.2.1 E-commerce technologies It is thought that the most hopeful area of E-commerce is not dealing with customers but the computerization of purchase and sale transactions from B2B. During the last decade, most companies have used proprietary electronic data interchange (EDI) systems for this reason; nowadays they are turning to the Web and extranets. There are many commerce and merchant Web server systems that are accessible. They usually offer a Web storefront, generally among some sort of on-line catalogue support, and a means for taking orders. Several of these systems connect to financial networks to complete payment processing. Companies such as BT, AOL, MCI, and AT&T offer web hosting services that process E-commerce transactions for companies that are not ready to operate their own E-commerce web sites (Tokuro, 2003). Putting all of the processes related with E-commerce together needs further software and tools. For instance, software presenting interfaces among Web servers and the company‟s databases and E-payment systems. E-payment systems use technologies such as electronic funds transfer, credit cards and smart cards, also new Internet-based payment systems to pay for services and goods electronically. It‟s desirable to use software to monitor and track web site usage for marketing analysis (Werner, 2003).

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Chapter 2

Literature Review

2.2.1.1 Electronic data interchange EDI is the electronic transmission of commerce information among the computers of trading collaborators, for example companies, financial institutes, government agencies and customers. EDI is a proficient technique for trading collaborators to exchange the information required to manage business. In order to process information proficiently, the computer systems of trading partners are required to be capable of communicating. Business partners should have a common format for their data. Trading partner‟s computer systems also have to be physically linked, via a public or private network, a dedicated telecommunications line, or standard telephone lines and modems. EDI can produce considerable savings in money and time compared with exchanging information by other means such as printing, handling, and mailing documents.

2.2.1.2 Imaging Imaging includes many technologies for electronically managing and storing documents as well as making the information accessible, in spite of whether that information originated in electronic form or paper. Also, when storing documents, imaging systems can organize documents with easy access. There are many benefits of imaging such as enhanced workflow, further timely responses to information requests, along with reduced costs for filing, retrieving paper documents, and storing. Imaging can make documents available twenty-four hours a day, seven days a week, to multiple users, even users in remote sites. Moreover, unlike paper files, documents saved electronically are rarely missing or lost.

2.2.1.3 Electronic Mail An E-mail system allows individuals or computer systems to send messages or documents by computer. E-mail is a simple method to exchange unstructured information, such as descriptions of extraordinary conditions at risk or suggestions for underwriting improvements. Such exchanges are possible within an E-mail system or between separate E-mail systems.

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Chapter 2

Literature Review

2.2.1.4 Electronic Funds Transfer Electronic funds transfer (EFT) is a low-cost technique for automatically transferring money by computer systems. Businesses and customers can use EFT to make a deposit in their bank account or payment to transfer money to the account of a creditor. Many companies have for years used EFT to collect premium payments.

2.2.2 Major types of E-commerce E-commerce can be generally classified into four categories: business-tobusiness (B2B), business-to-consumer (B2C), customer-to-business (C2B) and consumer-to-consumer (C2C). A brief discussion on these main types of E-commerce is given in table 2.1 below (Cornall et al. 2000): E-commerce type

Example

B2B: has been in use for a few years and is more commonly known as EDI. B2B generally involves big companies transferring all their business purchasing and sales to the Web. B2C: allows sellers to contact more customers and can collect comprehensive, focused information about them, enabling sellers to target them more efficiently. This is where the customer accesses the system of the supplier. It remains a two-way function however and is usually done solely via the Web. C2B: enables consumers to move towards businesses. Consumer to Business is a growing field where the consumer requests a particular service from the business.

A typical example is Cisco (www.cisco.com), the supplier of Internet hardware, where both buyers and suppliers can deal online. A well known B2C example is the virtual bookshop Amazon.com.

For example travellers can bid for airline tickets on www.priceline.com

C2C: allows customers to interact with other A famous example is eBay where individuals customers. These web sites are typically can bid for goods from other individuals. some form of auction web site. The customer lists items for sale with a commercial auction web site. Other consumers access the web site and place bids on the preferred items. The web site then offers a link between the seller and buyer to complete the deal. The web site supplier usually charges a transaction cost.

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Chapter 2

Literature Review

In table 2.2 broad types of E-commerce are given, this is a general form of the essential areas of E-commerce activity mentioned above. Government

Business

Consumer

Table 2.2: E-commerce and broader Internet applications, Source: OECD

Most Governments around the world, such as Saudi Arabia are starting to reorganize the running of public procurement systems equivalent to 10 per cent of their Gross Domestic Product (GDP) through the net, opening the view of sizeable business-to-government (B2G) transactions. The technology is also being utilized by governments for the transmission or disturbed of information (G2B) (G2C) to lower the cost of payment systems (C2G) and enhance convenience, and by businesses to manage after sales service and to increase direct consumer marketing (OECD, 2000).

2.2.3 Benefits of E-commerce E-commerce is broadly believed to offer extensive growth and cost saving opportunities. It attracts massive interest worldwide from different areas of the economy including government, legal and law, colleges and universities, and industry institutes. The potential of E-commerce has been recognized by governments throughout the world many of which have developed strategies to smooth the progress of the adoption of E-commerce. The potential benefits of E-commerce for sellers and buyers are summarized in table 2.3.

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Chapter 2 Benefits to Sellers

Literature Review Benefits to Buyers

Expanded access to trading partners and market reach

Expanded access to trading partners and support services

Increased marketing and sales profile

Improved sourcing and procurement process

Enhanced customer contact and service

Enhanced supplier relationships (contact and service)

Reduced cost of sales, technical documentation, and customer service costs

Lower purchasing prices through improved price transparency and comparison

Reduced transaction handling/processing costs Reduced working capital and inventory requirements

Reduced procurement costs Reduced operating costs and maverick spending

Competitive advantages through Improved efficiencies and improved efficiencies and process transaction flow, visibility and planning control Table 2.3: Potential benefits of E-commerce, Source :(Aarabi N., Bromideh A.( 2006) Moodley (2003).

2.2.4 Limitations to E-commerce E-commerce has been built on the power of the private sector rather than on government or institutional initiatives, and the E-commerce companies will continue to drive the development. Nevertheless, there is considerable scope for collaboration at all stages to eliminate barriers to the development of E-commerce. The limitations of E-commerce are both technical and non-technical, as pointed out by Turban et al. (2002) in table 2.4: Technical limitations

Non-technical limitations

These include problems pertaining to 1-security 2-reliability 3-telecommunications 4- software 5-integration of E-commerce applications with existing databases 6-conflict between E-commerce applications and certain operating systems

The most important problem is the cost of developing E-commerce; moreover, privacy and security are an important concern when it comes to customer-business relationships. In reality the E-commerce industry has had an extremely hard period trying to convince customers that electronic business is as secure as any other commerce. One more issue lies in persuading customers to do business with machines, while some consumers prefer to touch goods, such as clothes and to be in no doubt of the dependability of the item they are buying.

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Literature Review

The greatest difference between technical and non-technical limitations is that technical limitations most of the time can be solved with spending sufficient money, while non-technical limitations are more complicated to modify while they involve things that cannot be altered without difficulty such as people‟s attitude, resistance to change, faceless transactions and lack of trust. In this research, I‟ll focus on E-commerce application in Saudi Arabia which is facing several difficulties including the lack of coordination among the public and the private sectors in order to structure and progress the E-commerce environment. Other barriers include an absence of payment solutions as well the small international credit cards. On the other hand, awareness is still obstructing the consideration of the E-commerce idea; moreover there is a lack of trust about on-line payment and privacy, and a lack of legal protection against fraud. Furthermore, there is inadequate infrastructure such as Internet literacy, lack of Internet connection outside big cities and the high cost of Internet rates whether dial-up or broadband access. Another barrier is the lack of legislation concerning electronic indication besides the inadequate authorized conduct of E-commerce application in Saudi Arabia. However, logistics facilities in Saudi Arabia are still resisting E-commerce development.

2.2.5 E-commerce Risks At whatever time customers use online services such as online shopping or online banking, transactions should be encrypted, thus no one, other than the customer and the company or the bank, can notice or recognize the transactions. To assess the security of E-commerce web sites, MsMoney.com Inc. (2002) anticipated the following three steps in table 2.5: (1) When connecting to the logon page at the bank's or E-commerce web site, the start of the URL should indicate "https" and not "http." This indicates that data is being encrypted. (2) In the status bar of the browser, located at the underneath of the page, a symbol should show. This, as well, indicates that data is being encrypted.

(3) You may as well locate an image on the site that states, “Click to Verify." VeriSign is a leading provider of Internet trust services, and its insignia is confirmation that your bank is certified as a secure domain. There are other trusted services besides VeriSign, such as Thawte and GTE Cyber Trust.

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2.2.6 Internet in the Middle East and GCC countries The number of Internet users are estimated to raise more rapidly in Gulf Cooperation Council (GCC) countries than other Middle East countries as Kamali (2002) forecasted as shown in Figures 2.1 Within a period of three years, the increase in the GCC countries has roughly doubled. GCC countries are considered to be the largest Internet community in the Middle East region. (Madar Research Group, 2003). Internet Penetration Aug 2002 - End of 2005 25% 20% 15% 10% 5% 0%

World Average

Middle East

10%

2.54%

9.23%

15.70%

8%

19.76%

Aug-02 End of 2005

Aug-02

GCC

End of 2005

Figure 2.1 Internet Penetration: Middle East and GCC vs. World

2.2.7 Building trust in online transactions in Saudi Arabia In the research published in 2001, Wakefield recognized that consumers be required to trust the web site of the electronic market in order to complete their electronic payment. However, if they do not feel secure, then they will not complete any kind of electronic payment. As well he mention, "Trust in a Web vendor is an important variable for the completion of an online transaction, and consumers who trust are more likely to exhibit positive online purchase intention". In truth, when online customers had a high confidence in the web site's security, they shopped via the net which improved the usage of credit cards. He also recognized a direct link among banks and online shopping: if the trust in any of them is missing, then they would together be affected.

A study presented by Alyabis (2000) discussed the use of the Internet and Ecommerce in Saudi Arabia. The participant results were as follows, in table 2.6. Barriers of E-commerce and E-government in Saudi Arabia

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The purpose of using the Internet

93.3%

used the Internet for e-mail

68.9%

used the Internet for personal research

64.4%

used the Internet for searching for information about products

20%

used the Internet for shopping

48.9%

used the Internet for online chatting

33.3%

use the Internet to buy magazines and books

28.9%

use the Internet to buy computers and software

4.4%

use the Internet to buy clothes

22.2%

use the Internet for travel

Table 2.6: the use of the Internet and E-commerce in Saudi Arabia (Alyabis 2000)

In the same study, security and E-commerce continued to be unified. Most of the respondents (75.5%) think that security is very significant for business institutes in order to make certain of secure transmission via the Internet. Approximately four respondents out of five (79.6%) thought that the IT infrastructure in Saudi Arabia was weak, which was one of the most important barriers preventing companies from developing E-commerce. E-commerce remains critical for businesses because it provides another channel through which to sell their products and provide services.

A study conducted by Wang (2001) focused on the personality characteristics affecting a possible online consumer‟s attitude toward E-commerce and their plan to buy over the Internet. In addition, Wang determined that there was an optimistic connection between the individual characteristics and attitudes of the respondents towards using E-commerce web sites. Also, he noted that the respondent's demographic group greatly influenced this attitude.

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2.3 Globalization and their impact on E-commerce The movement of globalization is obvious as people are gradually more related to each other around the world. The flow of money and information across geographic and cultural divides occurs more rapidly than ever. Within a limited timeframe goods and services can be bought and sold in all parts of the world. Globalization is a source of optimism and apprehension, where the mainly open nations are the leaders of its advance. The growth of communications technology and Internet usage indicates further globalization in the near future, while the embrace of globalization varies widely from country to country (Yusuf, 2001). Globalization demonstrates the economic, political, and cultural environment of the present age.

According to the World Bank report (The World Bank, 2000), the Middle East countries have to go ahead to be more integrated with the global economy. The integration progress has fluctuated among these countries, in trade and international finance and information technology

In fact, the financial and retail services industry has been controlled more or less as a domestic industry with very little international focus. Barriers such as tax, government regulation, and cultural issues have barred the expansion of E-commerce. On the other hand, global cost efficiencies, driven by economies of scale and comparative advantage, are driving globalization.

2.3.1 New Entrants Over the last three decades, the majority of the industries, in almost every country, have seen many new entrants such as foreign companies, banks and building societies. In Saudi Arabia, seven foreign banks and four foreign retailer firms have ventured into the Saudi market. Other new potential competitors have the opportunity to enter new companies into this competition. For example, other retail companies in Europe and the USA, such as Gean, Carefoure and Safeway, are entering the retailer market. In many cases retailers have formed alliances with traditional retailer companies and asset management companies similar to that formed between WallMart and ASDA.

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2.4 Socio-cultural changes in the Middle East Nowadays, a cultural shift from the traditional generation to modern is creating a new demand for growth in this business and structural changes in employment patterns. For example, more flexible working and periods of unemployment are creating a new type of consumer with different customer behaviours and requirements.

Ghashghai and Lewis (2002) have expected that the Internet can produce a lot of modernization within developing countries, especially in the Middle East. It could

present

"enhanced

business

opportunities

including

cross-border

opportunities; better information in crucial areas such as health, agriculture, and commerce; improved education; and increased news and entertainment." They found that it is simple to identify the Middle Eastern leaders and government's beliefs by reading available literature; however it is hard to decide the beliefs the people have internalized. On the other hand, the Internet can generate problems, such as disbursing Western political ideas, distributing pornography, or making it easier for dissident individuals and organizations to communicate within a region known for its political unrest. In most conservative and Arab countries, including Saudi Arabia, governments are aggressively using firewalls to potentially block the spread of pornography and offensive content from being seen or downloaded by Internet users.

There are issues of tailoring E-commerce web sites to suit a particular audience. Websites need to be designed for the particular audience it wishes to target. Across the globe there are many different languages, customs and cultures. There are more developing countries coming online. Some may be illiterate, have a language barrier, and have no experience of modern technology, and therefore technology should not be complicated. It must be made more users friendly. It should be as simple to use as a mobile phone.

Capurro (2000) has illustrated some of the core ethical issues of the information society in this century which combines the technical and socio-cultural issues of the information society through using the categories of the observatory on the information society as orientation:

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-“Globalization: The digital divide inside a community and/or country as well as between countries, regions, and whole continents is the major issue in this field. - Privacy and Confidentiality: These are big issues, particularly with regard to a world market that, as eBay and Amazon show, has basically different coordinates from political to geographical ones. There is a basic dynamic interaction between a culture of information-sharing and one of information protection. This creates an ethical tension between confidence and control or between methods of information distribution and information encryption. - Content Regulation: This is one of the trickiest issues because of the specific qualities of information, such as its volatility, its easy worldwide distribution and its non-consumption after its use. - Universal Access: This issue concerns the question of growth and coordination of a decentralized and interactive system that is being monitored and influenced by various actors and global players such as the hardware and software industry, the National Science Foundation (NSF), the Internet Society (ISOC), the W3-Constorium, various United Nation Agencies and non-governmental organizations, private groups of all kinds, etc” (Capurro 2000).

Having analyzed the legal, social and economic impact of E-commerce it is apparent that E-commerce is here to stay. E-commerce has become an integral part of the modern day business. Even mature businesses have had to make the switch over to the modern electronic world or risk being left behind. E-commerce can start off as simple as having a web site for selling products but it can also stretch far beyond that through to complex electronic supply-chains and inventory management systems. Many companies have become over-night successes through the efficient use of Ecommerce. However, as was demonstrated when the dot com bubble burst back in 2000, having an internet business is not sufficient. The key is still to follow the basic rules of business. The seller must have a good product and a target consumer base that are willing to buy it. Without consumers, E-commerce is nothing more than a collection of computer software and hardware.

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2.4.1 Text, Language and Culture Most Saudi business web sites use dual language Arabic and English. In my view, the most remarkable feature of the Saudi web site text is its exclusivity. Utilizing Arabic at the start makes contact with reader and directly sets it apart from the vast majority of the non-Arabic audience: the signs and symbols are unfamiliar to the point of being meaningless. Thus, it is also conceivable that not just the language, but the alphabet and script, are also meaningless to most non-Arabic audiences. In most Saudi web sites whether government or business, the English translation is available which is competent and understandable: obviously, the purpose is to express meanings which are „permissible‟ to the non-Arabic reader in a way which is unambiguous and without any difficulty in understanding.

The extensive increase in the use of E-commerce applications has led software companies to identify that an important part of their revenues are coming from nonEnglish countries. This detection, jointly with the saturation of the Western market, triggered efforts to adapt the companies‟ products to the requirements of non-English markets. Software localization techniques were built to adjust software written in one language for members of one culture to another language and for members of another culture (Keniston, 1999). The obligation that software be required to fit the cultural context of the user has been generally accepted. Nevertheless, this context has been defined solely in terms of the requirements concerning the user interface. Taylor (1992) answered the question "What then needs to be encapsulated in this concept of cultural context?” by listing the following locales, i.e., the collections of all the conventions that characterize a particular culture or user community: transliteration, hyphenation, spelling, collation, national conventions (numbers, currency, time and date), and colour (op. cit.). Hall adds such elements as messages, terminology, and positioning of windows, tables and graphs (Hall, 1999). To summarize this section, governments and organizations make considerable efforts to defend their languages. Nevertheless, the issue is, whether or not they in fact address the deeper issue of the impact of E-commerce applications or in general web sites, on the society and its values. Accepting the need for software localization, or Barriers of E-commerce and E-government in Saudi Arabia

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even the fit to a particular culture, the interface is an aspect that is clearly important but possibly not the most significant. So, there is more to culture than language just as there is more to software than interface.

2.5

The History of Saudi Arabian Financial Systems Currently, the Saudi Arabian financial system consists of various sorts of

banks, the Saudi government controlled Saudi Arabian Monetary Agency (SAMA), the private commercial banks, the specialized credit institutions, and the stock market (Tadawul).

2.5.1 The Central Bank: Saudi Arabian Monetary Agency (SAMA) Before 1952, Saudi Arabia had no official monetary system; the people used silver coins or foreign currencies as an exchange medium of circulation for their trades. In fact, there was a big resistance from religious people against the establishment of a banking system for the reason that banking interest is against Islamic laws (the Shari'ah). On the other hand, while the need for a banking system became obvious when pilgrims visiting holy places in Saudi Arabia needed to exchange money, the first foreign bank was started in 1927. The 1950's brought an increased need to form foreign and domestic banks, particularly with the revolution of the oil industry which continued to develop considerably on an annual basis (Almogbil, 2005; Money and Banking, 1992).

The Saudi Arabian Monetary Agency (SAMA) was established in 1952, it was intended to serve as a regulatory agency and act as the government's bank. In the 1960's, SAMA produced banking regulations to advance increase the banking industry. Riyal, the Saudi currency, was initially dispersed in 1972. SAMA and commercial banks play important parts in upgrading and developing the Saudi's banking technology such as ATMs, stock trading, and electronic clearing (Money and Banking, 1992).

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2.5.2 Saudi Arabian Commercial Banks Saudi Arabia has twelve private commercial banks. These commercial banks offered complete banking services to individuals, as well as to private and public enterprises. Eight of these banks were originally owned by Saudis, while the others were joint ventures with foreign banks. All of these banks offer a high quality of online banking services for their clients (Almogbil, 2005; Money and Banking, 1992.

2.5.3 The Saudi Arabian Stock Market (Tadawul) The Saudi Arabian stock market, created in 1983, was essentially designed for domestic long-term investors. Nowadays, most investors use online services which are provided by their banks to buy and sell stocks, the Tadawul system presents a successful E-business portal in Saudi Arabia.

Figure 2.2 Screenshot of the Saudi stock market home page

2.5.4 The National Centre for Digital Certification (NCDC) The National Centre for Digital Certification presents an integrated method for running the public key infrastructure (PKI). It is a protection integrated system for controlling the security keys used for attaining information privacy, verification of users' identities, certifying data reliability against tampering and alteration, and using digital signatures. Leading these functions rest electronic services such as Egovernment and E-commerce. By this security structure all sorts of web users would be able to execute electronic transactions in full protection, reliability and creditability.

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2.5.5 Electronic Transactions Act Currently, the electronic transactions process is under review and will presently be available. It plans to systematize electronic transactions and provide an organized structure for accomplishing the next objectives in table 2.7 (NCDC, 2005).

(1) Drawing up rules for using technology in the electronic transactions and signatures to reinforce confidence in these transactions and signatures and to facilitate their use in both the public and private sector, by reliable electronic records. (2) Confirmation of electronic transaction usage on both local and international levels to be utilized in all fields such as trade, medicine, education, E-government, Epayment and other applications. (3) Elimination of any obstacles facing the electronic transactions and signatures. (4) Curtailing cases of misuse and fraudulent opportunities, such as forgery of electronic transactions and signatures. Source: The National Centre for Digital Certification (2005)

2.5.6 Electronic Data Interchange, International Trade Sector Currently, the Ministry of Finance performs the Saudi Electronic Data Interchange Project (SaudiEDI), the goal of this project is to provide swiftness and transparency to the dealing out of B2B and B2C transactions, by focusing on the international trade areas such as import, export and electronic trade services.

2.5.7 Electronic Payments Systems Project (SADAD) The E-Payments Project is identified by SAMA as “SADAD”. This project spotlights G2B and B2B transactions and is expected to be completed by the end of 2006. This project is one of the main requirements for the performance of EGovernment and E-commerce.

2.6 The telecommunications Access The telecommunications companies in any country hold the physical infrastructure such as wires, fibre optics, and switching equipment. Internet Service

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Providers (ISP's) lease access to the Internet from these telecommunications companies. The ISP‟s are connected through the Network Access Points (NAP's). Utilization of the Internet requires some skills and technology. These include having electricity, a communications line such as a telephone, a modem, TV cable, satellite, and a certain level of fluency in English since more than 80% of the WWW resources are written in English (Ghashghai & Lewis, 2002). Nevertheless, to meet the requirements of those users whose interpretations or understanding of English is minimal, there is often a demand on web page designers to incorporate non-verbal cues, such as pictures or arrows. Internet service departments in King Abdul-Aziz City for Science and Technology identified the following three main issues in table 2.8 to increase penetration in Saudi Arabia (Almogbil, 2005; Al-Furaih 2002). “Raising Internet awareness: government and non-government organizations should be aware of the benefits that Internet technology can bring to them and to their clients. Most of the organizations now have informative web sites in which they put information about the organization and other information of importance to their clients. Some are more advanced than others, but they are already saving time and effort for themselves and their clients. The next step is to start moving to E-government and digital signatures and other advanced technologies. Parents should be made aware of the benefits that the Internet could bring to their kids and their education. Some parents still look at the Internet as a waste of time! Internet access prices are very high in Saudi Arabia; these are currently the highest by a wide margin in the region. This discourages users from staying online for longer periods At the same time; it encourages other means of illegal access, mainly satellites. Prices should go down if Internet applications, local content, and more penetration are to be achieved. Local Regulations should be adopted to promote E-commerce and the use of the Internet. Currently there are several initiatives for new laws for E-commerce, PKI implementation and E-government.” A number of social and infrastructure constraints against adopting online services in the Arab world countries were cited by Jordan Times (2001). Although many companies and banks may have the technical capability of offering online services, they must overcome these constraints:

- Telecommunications infrastructure in some countries remains deficient. - Internet penetration in the region is still relatively low.

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2.6.1 Connectivity The communication infrastructure in Saudi Arabia is controlled and operated by the Saudi Telecom Company (STC) that is based on four main networks (Alfuraih, 2002):

- ATM network: provides connectivity to the Internet backbone in Saudi Arabia, which covers most of the country and is used to connect the ISP's with KACST and with their dialup and ADSL clients.

- DDN (Digital Data Network): is used for connecting ISP's with their leased-lines customers; it is also used by some organization to connect branches.

- PSTN (Public Switched Telephone Network): is used for dialup and ADSL customers.

- SDH (Synchronous Digital Hierarchy) network: provides telecommunication services and international connectivity.

2.7 Education systems role Nowadays, The Ministry of Education in Saudi Arabia is starting its plan to install a million computers in schools over the next five years, establish computer learning all over the country, and link young learners to the Web. Lending at preferential terms will also be provided to teachers and staff at all the education systems in Saudi Arabia for the purchase of around sixty thousand additional computers for their personal use.

However, information technology skills and English language are a high priority and they are being taught from an early grade in all private schools and most public schools. Furthermore, currently every one of the high school and college

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students are required to attend computer training class, and there is a national exam that includes a computer literacy component. Furthermore, all college students are required to learn at least one computer language, JAVA is one of most popular computer languages in Saudi Arabia. In addition, The Ministry of Labour has also embarked on its plan to create a new information technology job and to qualify a thousand employees.

2.7.1 Human resources A skilled employee is important for the development of E-commerce applications, and that in turn requires an educational infrastructure organized in the direction of creating skilled and qualified employees in order to suit the enterprise of E-commerce.

The literacy rate in Saudi Arabia is about 79%, and is considered too high in comparison to neighbouring countries. Furthermore, about 22% of employees in Saudi Arabia have higher education certificates and about 19 thousand are holders of post-graduate degrees. The well-educated and trained employees gave Saudi Arabia an advantage of being ready to establish an E-commerce environment.

Nowadays, there are 27 public and private universities in Saudi Arabia offering degrees in different areas related to information technology, and that assist in producing well qualified employees in the computer field. However, there are many intermediate colleges and vocational institutions also graduating students with degrees related to information technology. In my view, it is worth mentioning that the high salaries and the small supply of information technology graduates could be considered as a disadvantage to E-commerce implementation in Saudi Arabia.

2.8 Regulation and Deregulation Customer protection and the global influence of regulatory systems indicate that there is rising anxiety to present more regulation and particularly professional guidance. Adam et al. (1999) confirmed that "Intellectual property, taxation, law

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enforcement, ubiquitous cryptography, and contractual issues are all unsettled in the growing E-commerce industry." These involve governments regulating E-commerce. There are three issues which ought to be considered from a legal point of view: data protection, computer crime, and copyright protection (Caelli, Longley, & Shain, 1989). Data protection deals with an organization's legal responsibilities regarding the storing and processing of personal data. Computer crime concentrates on illegal computer use, implying the direct participation of computers in a crime. Copyright protection focuses on ownership of intellectual assets, payment for use, and restricting copying these materials (Caelli, Longley, & Shain, 1989).

The capability of law to keep up with the developments in technology is not always adequate. The cultural differences between technological and humanistic cultures normally produce a lack of education, especially when it comes to understanding the law from different professions. Also, it is not easy to categorize under which law a new technical product should fall (Saarenpaa, 1999).

2.8.1 Smart Card Project Currently, recent technology has been demonstrated such as the smart card which is rapidly growing around the world, because people appreciate their multiple applications. They have a high storage capacity and a processor that allows each card to execute some complex functions. Moreover, their virtual lifespan is reasonably long. The Ministry of the Interior has taken a great concern in this technology in the first years of its coming into being. The ministry executed the smart card project which led to changing the traditional civil affairs ID with a smart card ID. Afterwards, the project aims to integrate into one card, some of the other government cards such as the driving license and family card. There is also the electronic passport application which is considered a state-of-the-art technology solution worldwide.

2.9 Logistics Saudi Post, UPS, Aramex, and DHL are the four authorised important logistics in Saudi Arabia. Saudi Post handles and delivers goods and letters to any point in the World. Recently, they established a new service with a new management to provide a good service. UPS is a provider of express package delivery, freight forwarding,

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logistics and other transportation services. Another authorized company is Aramex which has a global network and spans more than 250 countries and is managed by high technology and tracking systems. One of the most popular mail companies in Saudi Arabia is DHL which is the global market leader of the international air express industry. It offers express deliveries, as well E-commerce logistics solutions. Furthermore, its network links over 120,000 destinations in 228 countries.

Mail systems in Saudi Arabia are understood to be slow and undependable. Using this service with E-commerce would negatively impact the latter. In addition, the address location system in Saudi Arabia is still not formed in an efficient and useful way. Such adaptation or even a new system of marking the address location is immediately required in order to facilitate E-commerce applications. Recently, Saudi post established a new service which it called “Wasel” to deliver goods and letters to their customer‟s home instead of collecting it from the local post office. This service will cover the entire nation over the next five years.

Figure 2.2 Screenshot of the new Saudi Post home page

Although Saudi Arabia is a big country and covering a large area of the Arabian Peninsula, I believe that E-commerce will be helpful to decentralization and removing any geographical distances between companies and their consumers.

2.10 Successful E-commerce web sites in Saudi Arabia Beside the successful online services which most Saudi Banks offer for their clients, many large and leading Saudi companies in the oil, petroleum gas, and Barriers of E-commerce and E-government in Saudi Arabia

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petrochemical sectors have already introduced advances in E-commerce systems. For instance, Sabic and Saudi Arabian Aramco which has established Internet Petroleum Products Sales (IPPS) for Liquefied Petroleum Gas (LPG). This E-commerce application automates the current manual LPG tender sales process, and the company can thereby maximize productivity from the sale of propane and butane. IPPS allows the companies marketing and sales department to electronically publish LPG sales tenders to particular consumers and permits the customers to review published tenders and submit offers and permits the company to inform consumers whether their offers were received and accepted. As a result of the opportunities obtainable by E-commerce, most major companies in the oil, petroleum, and gas sector today consider E-commerce as a very important business process; sharing information and knowledge tools for increasing efficiency and productivity.

Online services link

Figure2.3 Screenshot of Saudi Aramco home page

Another successful electronic service is the E-omrah Project which is presented by the Ministry of Hajj. This project aims to organize the procedure of issuing Omrah visas electronically. Electronic visa applications are to be submitted through the Internet to Omrah agents overseas. These applications will be electronically processed by the Ministries of Hajj, Interior and Foreign Affairs. Visas

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are thus issued within 24 hours. This service is presently used worldwide.

2.11 Experience of E-commerce and E-government in the Middle East countries: the example of the United Arab Emirates 2.11.1 Background United Arab Emirates (UAE) has the greatest telecommunication services between neighbouring countries. It applies the newest technologies in telephone and Internet services. The utilizing of credit cards and the Internet is increased; payment gateways and on-line security solutions are accessible. Moreover, human resources are having reasonable abilities in order to run E-commerce.

Oblivious of the fact that the E-commerce in UAE is suitable, minimal Ecommerce operations are occurring. Some companies and institutions have web sites, but real on-line transactions are not happening to a large extent, either locally or worldwide. In addition, some on-line stores are mostly for advertising and marketing, it is one more approach to undertaking business.

The implementation of E-commerce in UAE is affected by many issues. One of them is cultural resistance, which delays consumers in using the Internet for business with the virtual market. Furthermore, language is considered another issue of obstruction as local inhabitants relate more to Arabic web sites and that in turn requires changing the language of foreign sites into Arabic. One more influencing issue is trust, as many customers have lack of trust, and they are worried about using credit cards and the leakage of their private information. In addition, there is the absence of legal mechanisms to protect transactions and customers from on-line fraudsters.

Dubai demonstrates enthusiasm towards E-commerce and E-government. The Dubai government has launched three important initiatives (E-govUAE 2006):

(1) Dubai Internet City

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Dubai Internet City is the first whole information technology and telecommunications centre in the world that has been established within a free trade zone. Dubai Internet City offers the latest, ready-to-operate, completely serviced office space catering to the exact requirements of today‟s new economy companies.

Nevertheless, sales and incomes are exempt from any type of taxation. Companies can also get land on rent of up to fifty years and build their own offices. Sun Microsystems supplied the server platforms, cabling, and other related active components. Furthermore, Siemens was the project integrator. Dubai Internet City is the biggest information building in the Middle East region, and has the largest generation Internet protocol telephony system in the world. Oracle, Microsoft and HP have already identified their long-term objectives.

(2) E-government invitation The E-government project aims to link all government agencies with each other, as well as with citizens, via the Internet, in order to facilitate government services. Some government institutes have already moved their transactions to the net; they are offering E-services to their people such as traffic fines which can be paid via the Internet by logging in to the Dubai Police Web Site.

(3) Tejari.com On-line shopping mall

Tejari.com is an E-business community that permits companies to do business deals using all purchasing ways through the Internet. It allows companies to obtain savings by increasing strategic initiation for most business requirements, and permits companies to expand their market reach, enter a worldwide supply base and immediately divide information.

2.11.2 Infrastructure 2.11.2.1 Telecommunications Access The telecommunications infrastructure in UAE is known as the best along with neighbouring countries. “Etisalat” is the only provider of telecommunications

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access which is mainly managed by the Dubai government. This company is capable of building an E-commerce environment. However, telephone services are high quality and are accessible by realistic cost. It offers data services such as Electronic Mail Network, Integrated Services Digital Network (ISDN); and the Asymmetric Digital Subscriber Line (ADSL), as well as Asynchronous Transfer Mode (ATM). Etisalat is the only Internet service provider (ISP) which provides a number of services such as leased lines and web hosting services (E-govUAE 2006). Recently, Etisalat has launched the “Comtrust” unit to offer an E-commerce solution. It supplies technology that supports building trust and confidence between the residents in E-commerce. Comtrust presented the proficient and cost-effective technique of performing B2G and B2C. Comtrust offers secure E-commerce services using digital signature and Public Key Infrastructure (PKI).

2.11.2.2 Financial Systems Most UAE banks provide E-banking services for their clients. The Emirates Bank International (EBI), which is 80% government owned, is the first bank in UAE that provides full E-banking services and provides a payment gateway. However, most banks still don‟t offer an Internet payment gateway.

2.11.2.3 Government legislation Despite the complete infrastructure presented to provide E-commerce, there are no new laws and legislations that are in force to govern E-commerce. New laws and regulations are required in order to employ E-commerce. In addition, the Central Bank is having a plan to present a law to manage payment and regulate E-commerce.

2.11.2.4 Logistics Logistics services in UAE might be ranked at a high level. The delivery of mail and goods are attained by advanced cargo and custom services where customs and cargo procedures are carried out electrically. This consecutively meets the needs

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of E-commerce delivery of goods and services. On the other hand, the Department of Post and Customs in Dubai has moved from a paper-based institution to computer based. “E-Mirsal” is a web-based application that has been introduced at the Department of Post and Customs. “E-Mirsal” contacts with the Department of Post and Customs by air, sea and land cargo agents.

2.11.2.5 Human Resources The government of Dubai has launched Internet University that offers courses in E-commerce and some other related courses in order to build up good skills in the computer world. This will make IT qualified people available at any level. Furthermore, some colleges and vocational schools offer E-commerce courses in their programme of study. Nevertheless, the IT technicians in UAE are mostly from India.

2.12 Summary of the Literature Review

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Literature Review

In this section, a brief summary of the “Literature Review Chapter” is presented. The literature review is mainly focused on Internet and E-commerce, and the main barriers facing adoption of E-commerce in Saudi Arabia. Thus, the literature review chapter is arranged as follows. An introduction to this chapter is presented in the first section and the second section considers the Internet and E-commerce, an introduction to E-commerce, technologies of E-commerce, major types of Ecommerce, benefits of E-commerce, limitations and barriers to E-commerce and the risk of adopting E-commerce. This section has been finished by underlining the trust of online transactions. In the second section, there is the impact of globalisation on Ecommerce, followed by the Socio-cultural changes, covering the history of the Saudi Arabian financial systems, and the role that they instituted, take a signification part in this chapter. The telecommunications access and connectivity is discussed in the sixth section which is followed by an overview of the Education systems plan. In the next two sections are Regulation and Deregulation and Logistics. Next, the successful experiment of E-commerce in Saudi Arabia which was provided by Saudi Aramco, the leading company in the oil sector, finally, the experience of E-commerce and Egovernment in the Middle East countries, using the example of the United Arab Emirates.

Chapter 2: References Aarabi N., Bromideh A., (2006). The impact of e-commerce on the Iranian insurance companies. Master thesis. Lulea University of Technology. Adam. N. R., Dogramaci, O., Gangopdhyay, A., & Yesha, Y. (1999). Electronic Commerce, Technical, Business, and Legal Issues. New Jersey: Prentice Hall PTR. Al-Furaih, I. (2002). Internet regulations; the Saudi Arabian experience. Retrieved July 8, 2006, from http://inet2002.org/CD-ROM/lu65rw2n. Almogbil, A. (2005). Security. Perceptions and Practices: challenges facing adoption of online banking in Saudi Arabia. Ph.D. Dissertation. The George Washington University, May 2005. Alyabis, F. (2000). Examining the impact of Internet electronic commerce on commercial organizations in Saudi Arabia. Ph.D. Dissertation. University of Northern IOWA, December 2000 Cabello D. B., Ravula U. K. (2006). Public E-services toward citizens. Master thesis.

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Lulea University of Technology. Caelli, W., Longley, D., & Shain, M. (1989). Information Security for Managers. New York: Macmillan. Capurro, R. (2000). Ethical challenges of the information society in the 21st century. International Information and Library Review. Retrieved July 10, 2006, from http://www.capurro.de/EEI21.htm Cornall, Monica J; Jolif, Nicolas; Anirnashahun. Ade H; Athwal, Gurpreet S., (2000). “E-Actuaries,” Presented To the Staple Inn Actuarial Society. Retrieved from http://www.sias.org.uk/papers/e-actuaries.pdf E-govUAE (2006). E-government in UAE Retrieved Aug 16, 2006, from http://www.government.ae/gov/en/index.jsp Ghashghai, E. & Lewis R. (2002). Issues Affecting Internet Use in Afghanistan and Developing Countries in the Middle East. RAND. Retrieved July 11, 2006, from http://www.rand.org/publications/IP/IP231/ Hall, P. (1999). Software Internationalization Architectures. Decision Support Systems for Sustainable Development in Developing Countries. G. E. Kersten, Z. Mikolajuk and A. Yeh, Eds., Boston, Kluwer: 291-304. ISO 7498-2. (1989). Information Processing systems -Open Systems InterconnectionBasic Reference Model - Part 2: Security Architecture, International Standards Organization Jordan Times. (2001). Arab banks facing the challenge of online banking. 10 June. Retrieved July 14, 2006, from http://www.jordanembassyus.org/06112001003.htm Keniston, K. (1999). "Language, Power, and Software." MIT Program in Science, Technology, and Society, Retrieved July 12, 2006, from http://stuff.mit.edu/people/kken/papers1/Language%20Power%20Software.htm. Money and Banking. (1992). Country Study & Country Guide for Saudi Arabia. (December). Moodley, Sagren, (2003)."The Status of B2B E-Commerce in the South African Manufacturing Sector: Evolutionary or Revolutionary?" The Southern African Journal Of Information And Communication, Issue No 3. MsMoney.com. (2002). What is Internet Banking? Retrieved July 8, 2006, from http://www.msmoney.com/mm/banking/onlinebk/what_is.htm OECD, (2000). "E-Commerce: Impacts and Policy Challenges," Organization for Economic Co-operation and Development, OECD Economic On-look. Saarenpaa, A. (1999). Law, Technology and Data Technology. Judicial Academy of Northern Finland. Retrieved July 7, 2006, from http://www.urova.fi/home/oiffi/julkaisut/lawtech.htm

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SwissRe, (2004). "World Insurance in 2003: Insurance Industry on the Road to Recovery," (New: Statistical Appendix, Updated February 2005), Sigma No. 3. Zurich. Taylor, D. (1992). Global Software. Developing Applications for the International Market. New York, Springer Verlag. The World Bank. (2000). Poverty in Age of Globalization. Retrieved July 16, 2006, from http://www1.worldbank.org/econmipolicy/globalization/docuuments/povertyglobaliza tion.pdf Tokuro. Matsuo, (2003). ''A Study on Electronic Commerce Support Systems Based On Users' Preferences", Msc. Dissertation, the Japan Advanced Institute Of Science and Technology Turban. E. And King, D., (2003). "Introduction to E-commerce," Prentice Hall USA. 61- Turban. E., King; D., Warkentin, M. And Chung, H. M., (2002), "Electronic Commerce: A Managerial Perspective" International Edition, Prentice Hall, USA. U.S.-Saudi Arabian Business Council. (2002). the Saudi Arabian Economy. Retrieved July 8, 2006, from http://www.us-saudi-business.org/015-052_Chapter%202.pdf Wakefield, R. L. (2001).A Determination of the Antecedents of Online Trust and Evaluation of Current Web Assurance Seals. Ph.D. Dissertation. The University of Mississippi. May 2001.

Wang, S. (2001).Individual/ Organization Characteristics and Intension to Adopt E-Commerce: A Study Based on Innovation Adoption Theory. Ph.D. Dissertation, the Chinese University of Hong Kong. July 2001. Werner, Ulrich, (2003). ''Business Information and Communication Systems." Outward Oriented Information Systems. Retrieved July 10. 2006. from http:// www.ulrichwerner.com/ba303/documents/71.html. Wigand. R. T. (1997). "Electronic Commerce: Definition, Theory and Context" The Information Society, 13 (1), 1-16. Yang, Z. (2001). Measuring e-service quality and its linkage to customer loyalty. Ph.D. Dissertation. New Mexico State University, December 2001. Yusuf, S. (2001). Globalization and the Challenge for Developing Countries, World Bank, DECRG, June 2001. Retrieved July 7, 2006, from http://econ.worldbank.org/files/221/0_wps2618.pdf.

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Chapter 3

Research Methodology

RESEARCH METHODOLGY 3.1 Introduction This chapter deals with the methodology planned for the existing study. Through this chapter, I summarize the methodology to be used in this research and the hypothetical basis behind the approaches and their definitions for the understanding of the readers. It begins with the intention of applying research methodology in this study, followed by the associated methods and techniques used for the gathering data. The methodology chapter includes discussion research design and approach, research strategy, research design, and finally reliability and validity.

3.2 Research Approach While the most important purpose in this research is to obtain a general view of the major barriers facing E-commerce implementation in Saudi Arabia and in particular, to what extent the Saudi society will be affected by adoption E-commerce technology and their readiness. I am concerned in knowing further about what different aspects associated to E-commerce. These ambitions may indicate that I should use questioner and address a small population in order to express and evaluate different factors controlling this embracement of E-commerce in Saudi Arabia. Thus of these explanations, a questioner is satisfying this research requirements, while I carry out study on figures not on behaviours. So, the research purpose and research question reveal that the research in this study is principally descriptive and rather clarifying, as it is my objective to explain the area of research and draw some conclusion and recommendation from the collected data. It is descriptive as I would attempt to give explanation the findings by answering the research question.

3.3 Research Strategy Research question are considered the most central condition for differentiating with different strategies. “What”, “where”, and “who” questions are probable to favour survey, histories and conduct experiment as the favourite research strategies. Nevertheless, the intention of this research is to answer this question: What are the barriers and challenges facing E-commerce and E-government in Saudi Arabia? Due to this fact a survey is anticipated as the research strategy. Furthermore, while the goal

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of this research was to gather the answers from small sample of middle class family in Saudi Arabia, I have essentially chosen questioner as a research strategy.

3.4 Research Design Developing the research design is the next step. A research design is the logic that links the data to be collected and conclusion to be drawn to the preliminary question of the research (Yin 2003). It is a preparation by which the approach is to be conducted.

3.4.1 Type of Data In general, there are two types of data used in researches. At first, primary data which is known as data that is collected for a particular study, mainly in response to an exacting problem, for the first time. While secondary data is the data that already exists, like literature review, which has been earlier assembled for some studies (Aarabi N., Bromideh A., 2006). In my point of view, the most common method of collecting primary data is during both methods surveys and literature review. However, this research used both methods to gather primary data.

3.4.2 The Questionnaire There are two essential requirements for the questionnaire. These are relevancy and accuracy. Designed for a questionnaire to be relevant, just required data is gathered. Accuracy is acquired by having as high validity and dependability as probable (Zikmund 2003). Once designing the questionnaire, lots of attempt was set into the use of language, hence that technological terminology used would not be transferred into the questionnaire. The respondents, who were a sample middle class Saudi family, could become confused if the terminology used were to lie outside their knowledge.

3.4.3 Sample Selection The people selected to respond to a questioner are a critical component of any research. They are typically called a sample, which is a smaller group selected from a larger population. The target sample of this research is a middle class Saudi family. This population consists of twelve members. Barriers of E-commerce and E-government in Saudi Arabia

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3.5 Reliability Reliability means whether the research tools which are the questionnaire are unbiased in their outcome, and be able to evaluate the similar result when used on the occasions and applied on the similar issue of object. Moreover, a good quality level of reliability means that the research tools present the same data time after time on each occasion that it is used. As we know, this dissertation started with an extensive literature review. The literature review came across several relevant articles was from several authors doing a research in E-commerce issues, which meant that I covered the area of E-commerce surroundings. This would recommend that bias, by looking only one writer and reading only about one subject, be held at a minimum level.

4.6 Validity The validity feature revolves around how good the questionnaire is capable to calculate what it is intended to calculate. It is significant that the validity is good quality, because if the study does not measure what it is supposed to measure, the results are useless. Focusing on the content of the questions was done to improve the validity. Each question and its relevant items were subject to examination in sequence to observe if it was necessary to ask it. As the length of the questioner was important, I had to prioritize the questions. In sequence to present the respondent with an easy start, I put questions of general nature at first. These questions explain the respondents' position, such as background information, which they simply could answer. Following to this beginning I asked about their views about E-commerce implementation in their country.

Finally, I have presented the questionnaire on experience researchers, such as my supervisor who had quiet a long experience in research, to make this questioner more reliability and validity. As well I tried to avoid any sort of biasness and to be very objective.

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Chapter 3: References rd

Yin, Robert, K., (2003). “Case Study Research: Design and Methods,” 3 edition, Thousands Oaks California: Sage Publications. Zikmund, William, (2003). “Essentials of Marketing Research,” USA: Thompson South-Western.

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Chapter 4

Data Presentation

DATA PRESENTATION 4.1 Introduction The main spotlight of this chapter is on data presentation, data analysis and results of the questionnaire about the major obstacles of adoption of E-commerce in Saudi Arabia. The structure of the current chapter will be based on the sequential order of the questionnaire in order to present the data at hand and provide the results of the questionnaire. This chapter includes the answers to all questions cited in the questionnaire. I will follow the structure of the questionnaire and I will present each part separately in different sections. Tables and figures will be used to make data easy to understand and better to compare.

4.2 Part one: personal profile In this part, I have asked the respondents to give us their socio-demographic information. Three items were included in this part and the main idea of this section was to describe the personal profile of the sample. These included: gender, age, and education level. In the subsequent section I will explain them further.

4.2.1 Gender and age In this part, there were two items which are the gender and the age of respondents. The distribution over the samples is shown in Figure 4.1 which shows the total distribution of the respondent‟s ages.

30% 25%

Under 18 18-25

20%

26-35 15%

36-50

10%

Over 50

5% 0%

Figure 4.1: Total age distribution of respondents

The average age of respondents of this questionnaire is about 28 years. And I got responded from six men and six women. The distribution of males and females in this questionnaire reflects the distribution of the inhabitants of Saudi Arabia. According to the last census which was published on the ministry of planning Web site (www.planning.gov.sa/statistic), the percentage of men and women respectively is 52% and 48%, and more than half of the population is under 25 years old.

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4.2.2 Education level An educational level of the respondents is the other item, which is incorporated in the first part of the personal profile. In general, the level of education varies from pre secondary to postgraduate. In this questionnaire, about 50% of the respondents are University students, in both male and female groups. Moreover, more than 17% of the respondents are post-graduate. Figure 4.2 visualizes the level of education in the sample.

Postgraduate 17%

University 50%

Pre secondary 25% Secondary 8%

Pre secondary Secondary University Postgraduate

Figure 4.2: Distribution of the educational level of respondents

4.3 Part two: attitudes and views Four questions were integrated in this part. I have asked the respondents to give us information about their attitudes and views toward E-commerce and their familiarity with it. Essentially, this part focused on the attitude of the respondents to the effects of E-commerce on their society, their awareness of E-commerce, the importance of E-commerce to their society and to what extent they are acquainted with the perception of E-commerce. In the following section I will discuss each of these further.

4.3.1 Familiarity with the concept of E-commerce In general, all participants of this survey are familiar with the Internet by spending at least 13 hours per week on the Internet, whether using a broadband or dial-up connection. The second item in this part was the assessment of the familiarity of the respondents and their acquaintance with E-commerce in general. In other words, to what extent the respondents are familiar with the concept of E-commerce. Figure 4.3 visualizes answers to this question.

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Very Much Much So-so Low Very Low 0%

20%

40%

60%

80%

100%

Figure 4.3: Respondents' familiarity with E-commerce

By looking to Figure 4.3, about 75% of respondents are somewhat familiar with the concept of E-commerce. While approximately 25% of the respondents declared that the extent of their familiarity with E-commerce is low or very low.

4.3.2 Effects of E-commerce on Saudi society The third item in this part concerns the effects of E-commerce on their society from the respondents‟ point of view. The main idea behind this question was to know what they believed about the general effects of E-commerce on Saudi Arabia. In other words, to what extent will E-commerce affect our society? The respondents‟ answers to this question are shown in Figure 4.4.

Very Much Much So-so Low Very Low 0%

20%

40%

60%

80%

100%

Figure 4.4: effects of E-commerce on Saudi society

According to Figure 4.4, about 70% of respondents believe that E-commerce will strictly affect their society, and none of them rated this effect as low. In general, the majority have perceived similar effects of E-commerce on their society.

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4.3.3 Perception of E-commerce in Saudi Arabia Clearly, E-commerce can be considered as an opportunity, a challenge or even a threat to any society. It is strongly based on many aspects, for example, people‟s competitiveness and their capability and compatibility with this new business tool. In this research I have asked respondents to answer this question for their society. In other words, is E-commerce an opportunity, a challenge or a threat? According to Figure 4.5, about 33% of the respondents look at E-commerce as an opportunity for their society, about 25% of respondents found it a threat, whereas 17% of respondents perceived it as a challenge to their society.

Threat 25%

Opportunity

Ambiguous 8%

Challenge I don't know 17%

Threat

Challenge 17%

Ambiguous Opportunity 33%

I don't know

Figure 4.5: the perception of E-commerce to the Saudi society

4.4 Part three: infrastructure requirements In this part, the level of the necessary infrastructure and equipment which are essentially required in the running of E-commerce will be evaluated in the respondents' questionnaire. In fact, the respondents are asked to answer this question: to what extent are you equipped to implement E-commerce for each item listed, i.e. hardware and software, Internet access and Information technology skills? The responses of respondents to these three important infrastructures are shown in Table 4.1: Very much

Much

So-so

Low

Very low

Total

17%

42%

33%

8%

0%

100%

Internet Access

8%

42%

8%

42%

0%

100%

Information Technology skills

8%

58%

25%

8%

0%

100%

Infrastructures Requirement Hardware and Software

Table 4.1: Infrastructure requirements for E-commerce deployment

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According to Table 4.1, the respondents' are generally well equipped with hardware and software. Internet access seems to be a threat for 42 % of respondents to be equipped for E-commerce. Respondents are remarkably well equipped with information technology skills.

4.5 Part four : major obstacles In this part, major obstacles and barriers for the adoption of E-commerce in Saudi Arabia were questioned. In this question, I listed 12 major obstacles and asked the respondents to evaluate these items according to their point of view. The question was: to what degree will each of these items delay deployment of E-commerce in Saudi Arabia? Table 4.2 shows the respondents‟ answers to this question. Overall, lack of appropriate legislation and regulation such as digital signature the lagging of telecommunication technology, Internet access cost, security and privacy reservations, and logistics, are the five top obstacles for Saudi society to embrace E-commerce. Furthermore, this table gives more details on theses barriers. It also makes it easier to evaluate the effects of these items. Major obstacles Lack of appropriate legislation and regulation Lagging of telecommunications technology Security and privacy reservations Internet access cost Logistics Low intention to buy online and inflexible resistance to change Non-conformity of current products and services to online offers Traditional attitudes and views about the companies and the movement of Globalization Scarcity of IT staff English Language problem Lack of IT skills Complicated to evaluate products and services online

Very much 33%

Much 50%

So-so 13%

Low 0%

Very low 0%

50%

50%

0%

0%

0%

67%

33%

0%

0%

0%

8% 33% 42%

67% 42% 8%

25% 25% 25%

0% 0% 8%

0% 0% 17%

33%

33%

17%

8%

8%

8%

17%

25%

42%

8%

17% 33% 8% 27%

50% 25% 0% 27%

8% 17% 8% 36%

17% 0% 50% 9%

8% 25% 33% 0%

Table 4.2: Major Obstacles hindering Saudi Arabia to embrace E-commerce

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On the other hand, by answering questions seven and eight, about 52% of participates believe that Western vendors such as Tesco, Pc-World and Amazon are more trustworthy, while 30% have no special preference for any particular vendors. Just 25% preferred using an English language web site.

4.6 Perceived benefits In the final part, the perceived benefits and advantages of adoption of Ecommerce in Saudi Arabia were the main questions to be asked from the respondents. In this question, five significant benefits were given to the respondents. In fact, the question was stated as: in the case of implementation of E-commerce, how many benefits will you and your society obtain? Respondents' perceived benefits from Ecommerce deployment are shown in Figure 4.6.

Job enhancement and high efficiency

Very much

service available 24 hours a day / 7 days a week

Much

More transparency and speed of claims management

So-so

Increase of sale volume

Very Low

Promotion enhancement with lower cost 0%

Low 20%

40%

60%

80%

100%

Figure 4.6: Total perceived benefits of E-commerce implementation in Saudi Arabia

Service availability twenty fours hours a day / seven days a week and promotion enhancement with lower costs are the most important benefits from Ecommerce implementation in Saudi Arabia from the respondents' point of view. Nevertheless, all of the respondents' answers for the benefits of E-commerce implementation in Saudi Arabia are given in Table 4.3, which makes the comparison of attitudes toward these benefits between the questionnaire respondents' easier. Perceived Benefits

Very much

Much

So-so

Low

Promotion enhancement with 25% 67% 8% 0% lower cost Increase of sales volume 8% 50% 42% 0% More transparency and speed of 17% 42% 33% 8% claims management Service available 24 hours a day / 58% 42% 0% 0% 7 days a week Job enhancement and high 17% 42% 42% 0% efficiency Table 4.3: perceived benefits of E-commerce implementation in Saudi Arabia

Barriers of E-commerce and E-government in Saudi Arabia

Very low 0% 0% 0% 0% 0%

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4.5.1 Readiness for E-commerce implementation At the end of this questionnaire, the last question was intended to summarize the respondents‟ overall attitudes toward the implementation of E-commerce in their society. In other words, with respect to all questions cited in this questionnaire, to what degree their society is ready to implement E-commerce. The question was stated as: overall, to what extent is your society ready to embrace E-commerce? The respondent‟s responses to this question are shown in Figure 4.7.

Very Much Much So-so Low Very Low 0%

20%

40%

60%

80%

100%

Figure 4.7: Readiness for E-commerce implementation

The graph shows that about 59% of the respondents believed that their society is “very much” and “much” ready to embrace E-commerce with no participant‟s feeling that their society is not ready to embrace E-commerce.

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Chapter 5

Data Analysis

DATA ANALYSIS

5.1 Introduction In the previous chapter, the data collected in this research was presented. Thus, in order to complete the data analysis, this chapter is devoted to analysis and interpretation of the quantitative data collected by the questioner in this study. In order to solve the research problem and answer the research question, in this chapter analyses are structured on the basis of the research question that guide us to explain the study problem. Therefore, I have structured this chapter in six sections. This chapter begins with a review of the research question and research problem. The second section is devoted to the analysis of the second questionnaire part labelled "attitudes and views to E-commerce in general”. The analysis and answers to the third questioner question about infrastructure requirements will be presented in the third section. Major obstacles and barriers ahead in implementation of E-commerce in Saudi Arabia, which is the fourth part, will be additionally analyzed in the fourth section. Finally, the last section concerns the analysis of the fifth part concerned with the supposed benefits required from implementation of E-commerce in Saudi Arabia.

5.2 A review of the research question The barriers and obstacles of implementation of E-commerce in Saudi Arabia are the subjects of intense debate in the information technology society. The extent of Ecommerce adoption in Saudi Arabia remains unclear, which is the main focus of this research. In addition, as discussed in the previous chapters, this research is planned to address the main question which is “What are the barriers and challenges facing adoption of E-commerce and E-government in Saudi Arabia”.

In consequence, to accomplish this point, I have made an effort to illuminate: attitudes and views towards adoption of E-commerce, infrastructure requirements, major obstacles, and benefits of implementation of E-commerce from the respondents' point of view. Thus, depending on this background and the main purpose of this research, the questionnaire has its basis in five parts. With respect to the intention of this research and the research question, in the following sections I aim to analyze and interpret the data presented in chapter four to answer the research question. Analysing and interpreting the data and discussing the literature review enable me to draw conclusions. Barriers of E-commerce and E-government in Saudi Arabia

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5.3 Attitude and views to E-commerce To know the respondents' attitude towards E-commerce, I have to clarify peoples' awareness concerning E-commerce. In order to attain this point, I include and simplify these questions from the respondents' opinions: To begin with, it is significant to identify to what extent they are acquainted with the concept of E-commerce. In other words, are the participants familiar with Ecommerce? Clearly, they are able to obtain the linked information during a variety of materials such as training programmes, courses, workshops and self-study. By reviewing the information presented in section 4.3.1 in chapter 4 it can be shown that about half of the participants have measured their expertise with the concept of E-commerce as "much" and "very much,". In contrast, the "so-so" answer has been made 25 percent overall. As well, less than 25 percent of the participants are not acquainted with the concept of E-commerce and they have considered themselves as "low" and "very low" in response to this question. Therefore, the majority of respondents are acquainted with the concept of E-commerce. The following item connected to this question is the effects of E-commerce on Saudi society in general. In other words; to what extent will E-commerce affect our society? An outline of the information provided in section 4.3.2 of chapter 4 is given as approximately 60 percent of the participants have found that E-commerce will have an effect on Saudi society. Around 17 percent of the respondents consider that Ecommerce will affect their society "very much" and roughly 42 percent of the respondents expected that the effect of E-commerce on their society would be "much." In contrast, just about 17 percent of the respondents declared that the effect of E-commerce in Saudi society would low. At the end of this part is the role of E-commerce in general. In reality, what they believe regarding the position of E-commerce in the respondents' point of view. Is it an opportunity, a challenge, a threat or are respondents ambiguous? Figure 4.5 in chapter 4 affords the summing up of the participants‟ views. About 33 percent of the participants think that E-commerce is an opportunity for their society, 25 percent of them look at E-commerce as a threat for their society, and 17 percent find it a

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challenge. Just about 8 percent of the respondents believe that E-commerce is an ambiguous issue for their society. Therefore, analyzing the related data for the second part, I can conclude that Saudi society have optimistic attitudes and views towards the concept of E-commerce. Moreover, they are well up to date and acquainted with E-commerce. Beside that, they find that E-commerce will affect their society. While over one-third believed it is an opportunity for their society if they embrace E-commerce implementation.

5.4 Infrastructure requirements The following part is to assess the participant‟s ability regarding E-commerce implementation which has been asked about in the third part of the questionnaire. In fact, to answer the question: to what extend are you equipped to implement Ecommerce for each of the items listed below? I have categorized the essential elements of infrastructure requirements in three groups as: 

hardware and software



internet access



Information technology skills

To attain the purpose of this part, I have tried to illuminate the items cited above from the respondents' opinion and what they accurately think about them. By looking at the information which was provided in section 4.4 in chapter 4, it indicates that the participants are well equipped with hardware and software. Overall, just about 8 percent of the respondents feel that they are low and very low in hardware and software infrastructures.

Internet Access is the second item in the infrastructure requirement assessment. Table 3.1 in chapter 4 shows that roughly half of the participants have assessed their Internet access as "low" and "very low," whereas the same percentages evaluate themselves as " much" and even " very much."

The information technology skills are the third infrastructure required in Ecommerce implementation. Looking back to table 3.1 in chapter 4, approximately 66

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percent of the respondents show that they are well skilled in information technology, in general. Almost 33 percent of the respondents are concerned about the lack of information technology skills.

5.5 Major obstacles The fourth part in this study looks at the major obstacles and barriers which may delay the Saudi society in embracing E-commerce. In particular to answer this question: to what degree will each item delay deployment of E-commerce in your society? I needed to recognize the barriers and so, requested the respondents to decide to what degree these barriers will delay deployment of E-commerce in their society? Based on the literature review and introductory study to investigate a full list of possible obstacles and barriers to E-commerce implementation, a list of twelve major obstacles were decided: 

Lagging of telecommunications technology



Lack of appropriate legislation and regulation



Security and privacy reservations



Internet access cost



Logistics



Low intention to buy online and inflexible resistance to change



Non-conformity of current products and services to online offers



Traditional attitudes and views about the companies and the movement of Globalization



Scarcity of IT staff



English Language problems



Lack of IT skills



Too complicated to evaluate products and services online

A review of the information provided in part 4.5 in chapter four indicates that lagging of telecommunications technology to facilitate E-commerce is the most important issue which will delay Saudi society to embrace E-commerce. Nearly all of the respondents believe that lagging of telecommunications technology is hindering E-commerce deployment in Saudi Arabia. The second highest mean value is "lack of

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appropriate legislation and regulation". Approximately 33 percent of the respondents graded it as "very much" and 50 percent as "much" for E-commerce deployment. In total, 83 percent of the respondents agree that this barrier will hinder E-commerce development. In general, the main and basic elements in the implementation of E-commerce in every society or business are online banking, telecommunication infrastructure and appropriate regulation. Theoretically, without any telecommunication support to provide and develop high quality Internet services, online banking to make accessible electronic payments and, in the end, appropriate legislation and regulation to protect copyright and digital signature, no business can initialize and deploy any electronic business. Incompetence in each of them will certainly stop E-commerce applications. Furthermore, security and privacy reservations, logistics, Internet access cost, non-conformity of current products and services to online offers, low intention to buy online and inflexible resistance to change are the next most important obstacles which may obstruct E-commerce deployment. Almost all of the respondents are concerned about security and privacy reservations. In addition, over three-quarters of respondents are suffering from problems with logistics services and thus, this is the fourth major obstacle in the respondents' opinion. Non-conformity of current products and services to online offers are the next major obstacles which are highly expressed by about 66 percent of the respondents. In contrast, about half of the respondents have found that low intention to buy online and inflexible resistance to change and adapt with the culture needed for E-commerce implementation are other major impediments which can disadvantage E-commerce deployment.

Even though most of the new generation in Saudi Arabia know the English language they still prefer Arabic web sites. Almost two-thirds of the respondents chose an Arabic web site interface and about 8 percent of the respondents do not have any problem using dual language web sites. Western vendors such as Tesco, Wall Mart, PC-World and Amazon are becoming more trusted than Arabic vendors by 58 percent of the respondents.

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To sum up, the majority of the respondents consider that these twelve major barriers will delay E-commerce implementation. They have the same opinion on most of them although the intensity of agreement is somewhat different.

5.6 Perceived benefits The fifth part of this research concerns perceived benefits wanted from implementation of E-commerce. This question was asked: in the case of implementation of E-commerce, how many benefits will you and your society obtain? To obtain an answer to this question, I have selected the top five benefits of Ecommerce. These are listed below: 

Promotion enhancement with lower costs



Increase in sale volume



More transparency and speed of claims management



Service available 24 hours a day / 7 days a week



Job enhancement and higher efficiency Therefore, I asked the respondents to evaluate these five major benefits of E-

commerce. In other words, to what extent they believe that their society will accomplish these benefits if their society goes through to E-commerce. Overall, almost all respondents think that in the case of E-commerce use, they will enjoy the availability of services 24 hours a day / seven days a week. Thus it is regarded as the most significant benefit sought from E-commerce, and is among the top benefits. The next most significant benefit according to the respondents‟ point of view is promotion enhancement with lower costs. Almost 92 percent of the respondents state that it is a very essential benefit for them in the case of E-commerce implementation. Conversely, as few as 8 percent of the respondents believe it is less important to them and should be considered as the second most important benefit.

Almost 59 percent of the respondents declare that job enhancement and high efficiency would be another benefit for their society if they embrace E-commerce by choosing “very much” and “much”. On the other hand, just 42 percent of the respondents are in doubt that E-commerce would cause optimistic results for job

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enhancement and higher efficiency. Nearly 59 percent of the respondents judge that implementation of Ecommerce will bring more transparency and speed of claims management which will build a high-quality service and a good relationship between customers and business owners. Increase in sale volumes is another benefit of E-commerce implementation. Roughly 58 percent of the respondents agree with this benefit, and they believe that E-commerce can raise sales volume. In brief, the majority of respondents have the same strong opinion on these five top benefits. Indeed, in the case E-commerce implementation, Saudi society will acquire the advantage of all the benefits. As a result, these five top benefits can be sorted below according to the respondents' highest agreement from the highest perceived benefits to the lowest benefits: 

Service available 24 hours a day / 7 days a week



Promotion enhancement with lower costs



Job enhancement and higher efficiency



More transparency and speed of claims management



Increase in sale volume

5.7 Readiness for E-commerce implementation In general, the readiness for E-commerce implementation contrasts and is firmly based on several issues bounded by the society. With all respect to these issues, I asked the respondents to answer the final question concerning their readiness for Ecommerce implementation. Hence, in this research, the final question in the questionnaire is: overall, to what extent is your society ready to embrace Ecommerce? Overall, more than half of the respondents believe that their society is ready to embrace E-commerce. By contrast, over one-third of the respondents do not believe that their society is capable of embracing E-commerce, and thus, they believe that their society is not prepared to implement E-commerce applications well.

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Chapter 6

Conclusions and Recommendations

CONCLUSIONS AND RECOMMENDATIONS

In the previous chapter I analyzed the data collected by questionnaire in this study. In this chapter, I will present the conclusions drawn from the analysis achieved in this research. Findings will initially be presented in a general discussion, dealing with the areas of the most barriers to implement E-commerce. However, in this final chapter, general conclusions will be drawn. Finally, at the end of this chapter I will also give some further recommendations for future research. Studying the barriers of E-commerce and the use of E-government in Saudi Arabia, it can be easily conclude that the main bottleneck of developing E-commerce is none of the technical difficulties other than the regulations and logistics. While in traditional commerce, the private sector should present control for the expansion and improvement of E-commerce, as well as the establishment of dependable and trustworthy business practices for performing business activities in the new era of technology. Government should build a positive environment for open and reasonable contribution in E-commerce. In addition, the Government should support technical services and infrastructure improvements that will lead to the establishment and implementation of E-commerce. The regulations and legal system and international agreements between countries, should be familiar to accommodate E-commerce. Laws must be established and be compulsory to avoid cyber crime, for instance money laundering, violation of intellectual property rights, respect of copyright regulations, certifying customer protection, and education and training should be initiated to enhance digital literacy among all citizens is crucial, in addition to research and development in the field of information technology. The Saudi Government can take a significant responsibility in ensuring that main stakeholders are completely involved in conducting Ecommerce. In spite of the important role of government in the implementation of Ecommerce, much of the required investment requests must be approached from the private sector. Experiences confirm that the private sector has been the most

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Conclusions and Recommendations

innovative player and the most important driving force towards building E-commerce. Overall, the modalities of technical application to business activities are more powerfully determined by the market than by government. Nevertheless, an Ecommerce strategy that combines public intervention with private sector enterprise in a commonly encouraging way is the simple practical one. The following recommendations should cover the most important factors of E-commerce implementation: 1. Government regulation Regulation should intend to present legal security and technological and commercial neutrality in addition to removing obstacles to using E-commerce and Egovernment services. Some regulations which must be valid include: 

Certifying that online transactions are legally valid.



Performing legislation to make sure that electronic signatures can be used with legal effect.



Enacting legislation relating to computer crime.



For high-quality preparation of E-commerce, making guidelines and codes of conduct is very important.



Making compulsory, intellectual property rights, copyright policy and patented ideas.



Enacting regulations in the field of information protection and privacy.

2. Telecommunication and Internet access A high priority for Saudi Arabia is to ensure that their citizens have access to the Internet at a reasonable cost. That means that the Saudi Government, in collaboration with other stakeholders must: 

Ensure that telecommunication services and Internet access is accessible in all the country.



Improve the quality and service of telecommunication companies.



Control Internet and telecommunication services tariff prices.



Create E-payment gateways and platforms in association with the financial system.



Ensure secure hosting facilities. Barriers of E-commerce and E-government in Saudi Arabia

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3. Education and training Unless businesses and customers are educated about the opportunities and benefits offered by E-commerce and E-government services, E-commerce will not be launched. It is necessary to create a demand for E-commerce by: 

Education and training in efficient use of new technologies.



Educating teachers and increasing Internet access and computers in schools.



Ensuring professional information technology training programmes at universities and technical colleges.



Government should encourage demand for digital information exchange by providing information and services online.



Supporting the private sector, in particular small and medium enterprise, in using E-commerce, such as: financial aids and loans to use E-commerce applications, development of web sites, etc.

The E-commerce implementation and development process in Saudi Arabia should have two main factors present in order to accomplish a satisfactory usage level: free and fast Internet access and more security regarding the confidentiality of transactions and web sites. No doubt, some factors either advance or delay Internet access development. Logistics, education, culture or language should be analyzed in order to realize the diversities in using the Internet around the world especially in the developing countries of the Middle East.

While the technology to implement E-commerce is developing quickly, with advances in wireless technologies and high-speed Internet, it is the social and legal issues, which will possibly cause the most barriers. Working on a worldwide basis via the Internet creates major legal ambiguities, which are a challenge for government to regulate. Provided that these challenges are recognized then I believe the future will be bright for E-commerce. From the social aspect, E-commerce can have many advantages, such as working from home avoiding the bother of car parking, long queues, and more choices available. Though with this, social interaction becomes less and less. To sum up, E-commerce is here to stay and provided its place in business is recognized and implemented correctly then it can prove a valuable asset to any business.

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Chapter 6

Conclusions and Recommendations

6.1 Recommendations for Further Research The limitation of this research and its findings should be noted with a view to extending the present study. This section includes some recommendations for prospect study related to research method and hypothesis in addition to empirical concerns. I hope that these suggestions will persuade others to carry out researches in order to precede knowledge of the barriers facing E-commerce implementation in Saudi Arabia. As well as probably confirm, improve the dispute made in this study.

As stated in the pervious chapters, a few of the Saudi companies have actually implemented E-commerce, thus far. Some companies have been established semionline by offering their consumer to fill in their information and even order their services and products and then they have to pay to their bank account or possibly they will pay in cash when they obtain the offers. Nevertheless, most of the Saudi‟ banks are preparation to start their E-business which means that they might be facilitate other sectors in money payment and transactions. Hence, it is strongly suggested to do research in the case of online banking, to evaluate this forthcoming study with a real one following E-commerce implementation.

The next suggestion is to extend of this dissertation. In this study I have focus on E-commerce in general and I did not consider in particular issues such as B2B and B2C and the challenges facing them, as well as their impact in Saudi culture and market. Prospect studies could make several extensions of the existing study and also study the roles and effects of E-commerce in Saudi Arabia. It is highly recommended to conduct another study with qualitatively research rather than focusing on a quantitative research to investigate extremely on each item mentioned in this study, and explore the unknown sides of this research.

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References

REFERENCES

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Appendix: Questioner

Appendix A

A Questioner in the major obstacles of adoption E-commerce in Saudi Arabia

Dear Sir/Madam I am a postgraduate student, conducting a questioner on the adoption of E-commerce technology in Saudi Arabia. I would very much appreciate if you could help me by completing this short questionnaire. Please note that this research is purely for academic purposes. Your responses are also confidential as no information that identifies you is asked in this questionnaire. This questionnaire takes less than 10 minutes to complete!

Kind Regards!

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Appendix: Questioner

Part 1: Personal Profile A) Gender Male

Female

B) Age Under 18,

18 to 25,

26 to 35

36 to 50,

Over 50

C) Education Level Pre secondary

Secondary

University

Postgraduate

Others, please specify it ………………………..

Part 2: Attitudes and views 1) Do you ever connect to the Internet? Yes

Sometimes

No

If No go to question 2, In average, how many hours you spend on the Internet every week?

0-5hr

6-10hr

11-20hr

21-30hr

31+hr

What are your connections types? Dial-Up

DSL/128

DSL/256

DSL/512 or higher

Satellite 2) To what extent are you familiar with the concept of E-commerce? Very much

Much

So-so

Low

Very low

3) To what extent will E-commerce affect our society? Very much

Much

So-so

Low

Very low

4) In your point of view, E-commerce is a/an: Opportunity

Challenge

Threat

Ambiguous

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Appendix: Questioner

Part 3: Infrastructure Recruitment 5) To what extend you are equipped to implement E-commerce for each items listed below? Infrastructures

Very much

Much

So-so

Low

Very low

Hardware and Software Internet Access Information Technology skills

Part 4: Major Obstacles 6) To what degree each of these items will delay deployment of E-commerce in your society? Major obstacles

Very much

Much

So-so

Low

Very low

Lack of appropriate legislation and regulation Lagging of Telecommunications Security and privacy reservations Internet access cost Logistics Low intention to buy online and inflexible resistance to change Non-conformity of current products and services to online offers Traditionally attitudes and views over the companies and the movement of Globalization Scarcity of IT staff English Language problem Lack of IT skills Complicated to evaluate products and services online

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Appendix: Questioner

7) Which most vendors you trust? Saudi vendors such as Panda, Extra and Jarier bookshop Western vendors such as Tesco, Pc-World and Amazon

No special preference

8) Depending on the language used, what are the most preferred web sites? Arabic web sites English web sites

Dual language websites

Part 5: Perceived Benefits 9) In the case of implementation of E-commerce, how many benefits will you and your society obtain? Benefits

Very much

Much

So-so

Low

Very low

Promotion enhancement with lower cost Increase of sale volume More transparency and speed of claims management service available 24 hours a day / 7 days a week Job enhancement and high efficiency

10) Totally, to what extent your society is ready to embrace E-commerce? Very much

Much

So-so

Low

Very low

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