1. Background

1.1 The Global Information Economy
A report produced for World Information Technology and Services Alliance (WITSA) by International Data Corporation, "Digital Planet: the Global Information Economy", showed that global IT is valued at almost $2 trillion and is growing at a rate substantially faster than worldwide GDP. The same study shows that national GDP grows when Information and Communication Technology spending increases and that even in the face of deteriorating economic conditions, the effect on ICT spending is muted.

Data confirms that ICT is both an economic buffer and catalyst. " ... countries see ICT as critical to their long term competitive advantage and so continue to invest, even in the face of economic downturns. At the same time, ICT appears to deliver a resilient quality to the economic health of the nations, giving them the flexibility and insight needed to respond very quickly to changes in market conditions."(IDC Senior Vice President for Worldwide Research, Phillipe de Marcillac)

The report places Romania ($450 million) among the countries spending least on ICT, together with Bulgaria, Slovenia, Slovakia and Vietnam. The United States spent $643 billion in 1997, Japan $317 billion, Germany $119 billion and France $91 billion.

1.2 The Situation of Transition Economies
In June 2000, the United Nations Commission for Europe organised in Geneva a Forum on E-commerce for Transition Economies in the Digital Age, aimed to promote the development of the Internet and electronic commerce in transition economies. It also reviewed the Internet infrastructure and prospects for electronic commerce in the countries of Central and Eastern Europe and the CIS, considered the potential of electronic commerce for SMEs, and tried to identify the needs for capacity building.

The forum also revealed that E-business created a paradox. Whereas the Internet provided traders and enterprises new possibilities for finding buyers and sellers, and brought customers and producers closer than ever, in the real world, where goods have physically to be moved, the infrastructure is often years behind the times.

Transition economies, including CEE countries, will have to adapt very fast, otherwise the gap will widen, and they will remain in a state of isolation, underdevelopment and poverty. The forum emphasised the high potential SMEs have for developing new businesses based on the infrastructure provided by ICT.

1.3 The Romanian Business Environment
International statistics do not place Romania in a favourable position.
A recent report of Economist Intelligence Unit, part of The Economist Group, ranks Romania in the 43rd position out of 60 countries regarding its readiness for e-commerce. The criteria used were the business environment (a prognosis for the next five years) and the connectivity level (possibility of Internet connection, costs and knowledge about it). Several other CEE countries are placed before Romania (Hungary, Poland, the Czech Republic, the Slovak Republic, Bulgaria).

Table 1 presents some general data on Romania:

Table 1: Romania in Figures (Baltac, 2000)


In Romania, only 3% of the population have access to Internet, compared to 11% in Hungary and 10% in the Czech Republic, and to more than 60% in the EU countries. (Dabija,2000).

1.3.1. Telecommunication
The telecommunications main operator, RomTelecom, was privatised, but it still has the monopoly until 2002. Several other companies announced their intention to build competitive telecommunication networks after 2002 (Conel, S.N.CFR, United Pan Euro). There are already 4 mobile operators, managing approx. 1,350,000 lines, and the growth rate in this field is extremely high.

The charges for peak hours communications are extremely high - for 20 hours of navigation on Internet per month, a user should pay approximately 25$, a quarter of his monthly revenue (without considering the ISP charges) (Damian,2000).
The telecommunication company recently announced an offer for 'free ISP' services, providing Internet access at the same tariffs as normal voice calls. This will put downward pressure on ISP charges, but they are unable to compete with the telecommunications company, unless they find alternatives.

1.3.2. Payment Methods
Regarding the specific payment methods used for e-commerce, there are 7 Romanian banks issuing cards and around 6000 businesses accepting cards. In December 1999, the total amount of transactions paid with cards was of approx. $2 million. The card types include VISA, EUROPAY, EUROCARD/MASTERCARD, MAESTRO, AMERICAN EXPRESS, JCB, DINERS CLUB. Based on a statistics provided by VISA International, Romania ranks 5th of the 10 CEE countries in ATM and POS number, the number of issued VISA cards and the volume of services provided for card owners. Regarding the number of VISA cards for 1000 inhabitants and the volume of transactions per capita, Romania ranks 7th. Most major banks provide home-banking services, and there are two banks offering Internet-banking services. Some of the public institutions started last year delivering the salaries of their employees by cards.

1.3.3. Legal Framework
In 1995, the development of the information society in Romania was discussed at the governmental level. The government, together with the chiefs of the main political parties, has decided upon an action plan.

In 1998, the government approved the National Strategy for Informatization and Accelerated Implementation of the Information Society, and the National Strategy for Communications.

The draft of the IT law (the Code of Utilisation and Development of Information Technologies) was sent to the Parliament in 1994. It went through several versions, none as yet formally discussed by the Parliament. The last version is part of a package that includes other laws on e-commerce, Internet piracy and non-cash payments.

In order to regulate properly electronic transactions, other laws, referring to digital signature, digital document status, transaction security enforcement measures, protection of personal data will be necessary. All these laws will have to comply with the European Union law, contributing to Romania's efforts to be admitted in the EU.

1.3.5. Existing Romanian e-Commerce Sites
The Organisation for Economic Co-operation Development gave the following definition to e-commerce: "Electronic commerce refers generally to all forms of transactions relating to commercial activities, including both organisations and individuals, that are based upon the processing and transmission of digitised data, including text, sound and visual images" (OECD,1997).

According to this definition, at this moment there are operating approx. 10 business-to-business (B2B) and approx. 15 business-to-consumer (B2C) Romanian e-commerce sites on the web. Some of them are still shop windows, but there are also some real electronic stores (Table

Table 2: Some of the Romanian e-commerce pioneer sites

Most of the B2B sites receive electronic orders, accept payment instructions by home-banking and deliver the merchandise after prepayment. Some of the B2C sites (especially those targeting Romanians who live abroad) accept only credit cards, and deliver the product immediately. For digital certificates issuing authority set, all the operational sites use VeriSign (U.S.A.). The other B2C sites accept orders on-line, deliver the merchandise, and collect the money at the parcel's arrival. Shipping is usually free inside Romania.

1.3.6. Pro's and Con's for e-Commerce in Romania
The pro's are:
· the multi-lingual culture of Romanians;
· young people attitude toward Internet;
· experienced IT specialists.
Let us notice, for example, that the software used for the American automobile components e-market(150,000 users) was designed by Softwin, a Romanian software company. Each year, around 10 000 Romanian young IT specialists are leaving the country and accepting a job abroad.
The con's are:
· the underdeveloped communication infrastructure;
· the small number of PCs in homes;
· the high communication charges and the monopoly of RomTelecom;
· the low market penetration and, therefore, usage of credit cards;
· the reticence of people regarding the risks of e-transactions.

In the long run, there are plans to support wider access for the people to computers and the Internet, for extending the use of smart cards in medical care, public telephones, public transport and payments to the public sector employees, and also for exclusively on-line public procurements (Filip,2000). A small town with 40,000 inhabitants, Dej, is destined to become the first Romanian "digital town", after becoming the beneficiary of EU and in country sources of funds for local IT projects. There is a web site dedicated to the presentation of European directives and to the Romanian strategy in this field, called e-Romania, in response to the e-Europe initiative of the EU. (www.agora.ro/agora/main/e-romania.html). Web addresses became common place in most of the adds: on TV, in the newspapers, on packages and company cars, as an invitation for consumers to get better information and - why not?- to shop in a new manner.

2. Costs, Benefits and Risks of e-Commerce
Nowadays, the number of Romanian e-commerce sites is small. E-commerce is more seen as a premium service in order to gain competitive advantage than a profitable division of the company. Even so, the number of companies intending to establish a presence on the web in order to promote their products and services is growing constantly. Unfortunately, most of the managers are not aware of the real costs and potential benefits of embracing e-commerce.

It is time for private initiative and SME involvement in new fields like e-commerce, but private entrepreneurs want to know if such a business will generate a profit. Starting too soon could be dangerous, too late could result in lost opportunities. E-commerce is either a major opportunity or a significant business threat (Fisher,2000).

No doubt, there are some privileged industries that can benefit the most of e-commerce: these producing intangible products, like software, music records, videos, information. In these product lines, e-sales can produce spectacular sales volume.

The costs, benefits and risks of a company extending its business on the Net are mostly influenced by the product type, the quality of the e-commerce site and the business environment.
The main entry costs are:
· hardware (computers, routers, servers, network hardware);
· network service providers (e.g. Internet access);
· software to run that hardware and e-commerce packages;
· enabling services (e-payment, authentication/certification services, advertising);
· acquisition of a domain name.

Usually, the entry capital costs are low, but such an enterprise demands high effort.
The current costs are:
· hardware maintenance;
· software maintenance;
· Internet access;
· enabling services;
· monthly charges for the domain name;
· personnel costs.

There are several web-based services involved in operating an e-commerce site: (1)hosting, (2)e-mail, (3) transaction/payment processing, (4) distribution/order fulfilment, (5) customer service and support, (6) security (Currie,1999). Generally, companies choose outsourcing for the more technical ones, such as hosting, e-mail and security of the site, but prefer to develop their own competencies in the business-related and most sensitive ones: transaction-payment processing, distribution/order fulfilment and customer service.

Usually, in order to assess the worth of a web-site, the following key qualities are checked:
· convenience and variety of products or services offered;
· usability, security and performance of the web site.

The benefits of an e-commerce site can be both tangible and intangible, but it is obvious that intangible benefits will be pronounced.

As for tangible benefits, the reduction of transaction costs and increased sales volume can determine financially measurable profit. The added value is not necessarily reflected in the price. It could also determine growth in sales volume or simply other intangible benefits. Because of the linking function (search engines, directories, advertisement, news services, travel agencies), many different entities are involved in the selling of a product, making attribution of value rather difficult. From the consumer's point of view, the added value could mean:
· convenience of shopping from home at any time;
· the ability to access additional information about the product;
· the pleasure of being part of a community;
· the greater variety to choose from;
· the ability to tailor a product to their individual needs;
· immediacy of ownership - for the intangible products that can be delivered directly to the consumer's computer over the network.
E-commerce could become the consumers' favourite way of shopping, because in an ideal situation, it should be characterised by low cost, high reliability, order fulfilment accuracy and high speed.

The intangible benefits are effects of the system which either cannot be directly measured, cannot be valued or cannot be directly related to change (Remenyi,1993). The most important potential benefits in this category are considered to be:
· achieving or maintaining leadership;
· enhanced reputation, improved brand image, impact of company information;
· competitive advantage;
· increased customer loyalty, attraction of new customers;
· improved customer service;
· mass specialisation;
· developing new product capabilities ;
· re-engineering of the supply chains;
· outsourcing of non-core activities.

One of the primary aims of e-commerce was to reduce inventory carrying costs by shortening the stock turnover cycle. But when a company decides to start an e-commerce site, it has also an important opportunity to review its mission, its evolution, its objectives and its strategy. Its unique attributes (both good and bad) must be identified, and then the ways e-commerce can help remove the bad and enhance the good must be discovered - this means reengineering.

Finally, the risks encompassed by an e-commerce business unit in Romania are:
· the limited access of a small segment of the population to the Internet, determined by prohibitive telecommunications and Internet services charges;
· the reliability and the speed of the Internet;
· the lack of suitable, quick payment instruments ;
· consumers' resistance to change;
· piracy;
· changes in market situation;
· changes of the legal framework;
· problems with the customs occurred when shipping physical products over borders.

Is e-commerce just an element of "going with the flow" for many organisations, not wishing to be left out of a revolution that just might have the impact claimed for it? Or is it an important opportunity to get prepared for the digital economy of tomorrow? Rapid decisions are needed, because the technology is moving fast. It is important to take decisions that are both fast and right- to choose an approach that is sustainable and that fits the rest of the organisation.

3. A Possible Evaluation Technique for e-Commerce
When evaluating an IS, the starting point must be the motivation of their introduction. E-commerce implementation is most of the times decided for establishing brand presence and image, being considered a strategic investment. Classical evaluation techniques proved not to be suitable for the evaluation of e-commerce (Miller,1999). Return on investment, cost-benefit analysis, payback period and other purely financial techniques could lead to disappointing conclusions, because they do not reflect at all the contribution of intangible benefits.

Parker's information economics theory was intended to complete the image of the IT contribution to the business, by trying to value intangible benefits. Usually, intangible benefits are prevailing in strategic information systems such as e-commerce. Without taking them into account and without measuring them in any way, it comes out they had no contribution to the firm's objectives, and this is untrue. To the three dimensions of Parker and Benson's evaluation model of the Information Economics Theory (adjusted ROI, business value and IT value), we added a fourth, which is customer value. We believe that this dimension is of great importance in the evaluation of e-commerce. For other types of systems, internal measures prevail, but because e-commerce systems are created for the customers' use, their success totally relies on customer attitude, and external measures should be included. The original model required the participation of users (replaced by managers in our view) to score values and risks in the corporate domain, and of IT specialists to score the IT-related categories. In the suggested model, the customers (individuals or businesses representatives) will join them. Surveys on customers' opinions are very easy to conduct in the special client-supplier interface created by e-commerce.

This technique was mainly used for scoring alternative investment projects. We suggest the use of the technique for periodic evaluation of an operational e-commerce system. As in the original technique, value and risk categories are attributed a score between 0 and 5, and each of these categories is assigned a weight.

ADJUSTED ROI +BUSINESS VALUE +IT VALUE +CUSTOMER VALUE
Traditional ROI(+) Strategic match(+) Strategic IT architecture(+)
value linking(+) Competitive advantage(+) Usability(+)
value acceleration(+) Competitive response(+) Performance(+)
value restructuring(+) Management information(+) Aesthetic (+)
innovation(+) Product info(+)
Time cycle(+)
Customer profile management(+)
Business strategy risk(-) IT strategy risk (-)
Definitional mismatch(-)
Technical risk (-)
Business organization risk(-) IT service delivery risk(-) Customer risk(-)
= VALUE
Table 3: Information Economics Adapted to e-Commerce

We kept most of the original categories, the only difference being they are considered from an ex-post perspective. Definitional uncertainty in the IT Value section was replaced by Definitional mismatch,e.g. the degree of risk in terms of how well the functional requirements and specifications meet the real operational needs.

Customer value section:
Usability is one of the most relevant features of an e-commerce web site, and so is the system performance, that is why they were included here. The aesthetic of the shop window is considered to contribute to the customer's decision to buy. Extended information on the product or service, the length of the time cycle between placing the order and receiving the product, and a special relation with the customer, based on customer profile management, are other categories taken into consideration. A customer risk category was also included, referring to security offered by the site, but also to the possibility that the offered product or service will not meet the customer's expectations.

The categories in Table 3 have only an indicative meaning. Each company should adapt these categories to its own needs and specifications. Instead of business feasibility and technical viability, this adapted technique is addressing the match between the business, the system and customer' opinions in their evolution.

4. Romanian Perspectives
Despite several specific obstacles in developing e-commerce divisions, Romanian companies are confident in future. Especially large companies are now preparing to use this new sales channel, targeting new markets around the world for their products. Alba county is famous for its porcelain industry, there are approximately 80 porcelain factories in the area. One of the oldest of them, Global, decided few month ago to publish information about their products on a web site. The results were surprising for the company management: they received several e-mail information requests from all over the world. As a consequence, they decided to invest in e-commerce, as an alternative sales channel. Their latest offerings will soon be showed on the web site, with preferential pricing for e-commerce orders coinciding with cash or letter of credit/guaranty payment terms.

The business-to-business e-commerce will probably become an important factor in local commerce within Romania over a 2-5 years time frame. Companies can afford communication costs, they have competent personnel and they could easily adapt, if the solution of e-commerce proves to be efficient. Lower prices, as well as quick and secure transactions could be solid arguments in favour of e-commerce. B2B solutions between Romanian companies and their foreign suppliers and clients have already made their appearance, and they will continue to grow in the next years according to the global context. What is missing is confidence in the profitability of e-commerce. Certainly, the first success stories on this subject will contribute to change this attitude and to embark upon.

5. e-Evaluation - a Web-site promoting evaluation techniques
Increasing awareness of the Romanian public on e-commerce solutions was the aim for organising and publishing related information on a web site. The web site is dedicated to a large category of public: entrepreneurs, managers, potential investors, IT specialists, students. It provides lists of forecasted costs, potential tangible and intangible benefits, and possible risks, in order to help the public to get a clear picture of IT investments in general, and e-commerce in particular, from an investor's point of view. The site introduces several evaluation methods and techniques to the Romanian public, from Cost-Benefit Analysis and ROI to Information Economics and Balanced Scorecard, illustrated with case studies of IT investments in Romania's specific conditions, both success and failure stories. It also provides support for developing a business case for this field, a message board with FAQs, and links to other related web sites.

6. Conclusion
The emerging businesses, based on Internet, need realistic, responsible evaluation more than any other. More and more companies are thinking of extending their business on the Web. Retail and travel companies, insurance companies and companies offering various financial services, are expanding their activities on the Web. Most of these investments are mandatory, if these companies want to keep their customers. In this field, more than anywhere else, the evaluation process needs to be part of cycle which feeds back necessary changes on a regular and frequent basis. The evaluation of e-commerce systems poses particular problems, over and above those of more conventional systems. A holistic approach, linked to trade cycles and the supporting value chain, involving the major stakeholders becomes, more than ever, a necessity.

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