214
The Evolving Web Presence of SMEs
dimensions: process of change, content of change,
and drivers of change.
7KHEHQH¿WVRIWKHIUDPHZRUNDUH¿UVWLQWKH
context of research, it provides a range of different
perspectives or lenses with which to study SMEs
adoption and progression of e-business, rather
than single dimensional approaches, for example
the stages model. This should lead to better un-
derstanding of why and how SMEs evolve their
Web sites and Internet strategies for supporting
their Web and e-business strategies. In addition, it
facilitates comparisons of commercial Web sites
over time and in different regions of the world.
6HFRQGLWVKRXOGEHRIEHQH¿WWRPDQDJHUV
knowing the Web site features that other compa-
nies in their sector, that is, potential competitors,
are implementing would be useful in relation to
new Internet investment decisions. In addition,
they should know what features need to be pro-
vided in order to implement the most suitable
Internet strategy. Customers may have different
YLHZVRIWKH¿UPGHSHQGLQJRQWKH:HEIHDWXUHV
available. Presence or absence of various features
or content may determine whether a customer
visits the site again or engages in transactions
(Teo & Pian, 2004). In all, being aware of the
e vo lu t i o n o f SM E s We b s i t e s , i n t e r m s o f t h e t y p e s
of drivers of change, the features that have been
incorporated and how implemented should be a

valuable addition to what is known about e-busi-
ness in SMEs and will help to clarify the drivers
DQGEDUULHUVWKDWLQÀXHQFHWKHLUDGRSWLRQRIPRUH
sophisticated Internet technologies.
A pilot study was undertaken of 192 Web
sites which were collected and monitored over a
10-month period to identify the types and char-
acteristics of changes on these sites. This pilot
VWXG\ KDV SURYLGHG VRPH LQWHUHVWLQJ ¿QGLQJV
about evolution and change of these Web sites.
It has also helped to validate the framework in
WKDWWKHFDWHJRULHVLGHQWL¿HGLQWKHGLPHQVLRQV
have been found to be relevant, comprehensive
and applicable.
Future research it is planned to see the increas-
ing of the sample of Web sites monitored to two
thousand companies in order to obtain a more
VLJQL¿FDQWQXPEHURIUHGHVLJQVVRWKDWFOXVWHU
analysis and association rules analysis can be
undertaken. It is hoped that further research,
based on the framework, will produce a predic-
tive model, so that the evolution process of any
given Web site, in its particular context, can be
categorized and its management better supported.
Such a model is currently lacking and should be
especially useful since continuous maintenance
DQG LQQRYDWLRQ LQYHVWPHQWV IRUP D VLJQL¿FDQW
SDUWRIWKHOLPLWHG¿QDQFLDOUHVRXUFHVWHFKQLFDO
skills, and knowledge of SMEs (Chau, 2003;
.R Z W K D  & K R R Q   /D U JH ¿ U P VH QMR\ D FF H V V 

to capital, skills and capabilities to support their
Web strategies, whereas SMEs often lack these
resources and capabilities which makes it even
more important that they maximize the potential
and minimize the risk of e-business and carefully
formulate their strategy for current and future
e-business (Barnes & Vidgen, 2001).
ACKNOWLEDGMENTS
The authors would like to thank Enrique Frias-
Martinez, Yogesh Desphande, Michael Lang, and
Sandra Bavarosso for their helpful and construc-
tive comments and advice.
REFERENCES
Adam, S., Mulye, R., Deans, K., & Palihawadana,
D. (2002). E-marketing in perspective: A three
country comparison of business use of the Inter-
net. Marketing Intelligence & Planning, 20(4),
243-251.
Alonso Mendo, F., & Fitzgerald, G. (2005a).
Theoretical approaches to study SMEs e-business
215
The Evolving Web Presence of SMEs
progression. Journal of Computing and Informa-
tion Technology (forthcoming).
Alonso Mendo, F., & Fitzgerald, G. (2005b). A
multidimensional framework to study SMEs
e-business progression. Journal of Enterprise
Information Management, 13(2), 123-136.
Alonso Mendo, F., & Fitzgerald, G. (2005c). Ex-
ploring drivers of Web site redesign. Proceedings

of the International Association for Computer
,QIRUPDWLRQ6\VWHPV3DFL¿F&RQIHUHQFH, Taipei,
Taiwan.
Azzone, G., Bianchi, R., Noci, G., & Giovanni,
A. (2001). Corporate Web sites: The drivers of
WKHLUGLIIHUHQWFRQ¿JXUDWLRQVElectronic Markets,
11(2), 126-140.
Barnes, S. J., & Vidgen, R. T. (2001). Assessing the
effect of a Web site redesign initiative: An SME
case study. International Journal of Management
Literature, 1(1), 113-126.
Benbunan-Fich, R., & Altschuller, S. (2005).
Web presence transformations in the 1990s: An
analysis of press releases. IEEE Transactions on
Professional Communication, forthcoming.
Boisvert, H. (2002, November 18-22). Smart
Web development: How Canadian companies
are building online presence. CMA Management
(Canada).
Boisvert, H., & Begin, L. (2002, April 26-29). De-
ployment of e-commerce: Meeting the needs of the
cyberconsumer. CMA Management (Canada).
Boldyreff, C., Gaskell, C., Marshall, A. & Warren,
P. (2001). Establishing a measurement programme
for the World Wide Web. Proceedings of the IEEE
Symposium on Applications and the Internet-
Workshops (SAINT), San Diego, California.
Boudreau, M. C., & Robey, D. (1999). Organiza-
tional transition to enterprise resource planning
systems: Theoretical choices for process research.

Proceedings of the 20
th
International Conference
on Information Systems, Charlotte, NC.
Brown, D. H., & Lockett, N. (2004). Potential
of critical e-applications for engaging SMEs in
e-business: A provider perspective. European
Journal of Information Systems, 13(1), 21-34.
CBI and KPMG Consulting (2002). Reality
bites—The second annual report on e-business
in the UK. London, UK.
Chan, C., & Swatman, P. M. C. (1998). EDI imple-
mentation: A broader perspective. Proceedings of
the 11
th
International Bled Electronic Commerce
Conference, Bled, Slovenia.
Chau, S. (2003). The use of e-commerce amongst
34 Australian SMEs: An experiment or a strategic
business tool? Journal of Systems and Information
Technology, 7(1), 49-66.
Daniel, E., Wilson, H., & Myers, A. (2002).
Adoption of e-commerce by SMEs in the UK:
Towards a stage model. International Small Busi-
ness Journal, 20(3), 253-270.
DiMaggio, P. J., & Powell, W. W. (1991). The
iron cage revisited: Institutional isomorphism
and collective rationality. In W. W. Powell & P.
J. DiMaggio (Ed.), The new institutionalism in
organizational analysis (pp. 63-83). Chicago:

University of Chicago Press.
DTI (Department of Trade and Industry) (2002).
Business in the Information Age—International
Benchmarking Study. London.
DTI (Department of Trade and Industry) (2003).
Business in the Information Age—International
Benchmarking Study. London.
EU (2003). Adapting e-business policies in a
changing environment: The lessons of the Go
Digital initiative and the challenges ahead.
&20¿QDORI0DUFK
216
The Evolving Web Presence of SMEs
Gribbins M. L., & King, R. C. (2004). Electronic
retailing strategies: A case study of small busi-
nesses in the gifts and collectibles industry.
Electronic Markets, 14(2), 138-152.
Hudson, L. (2000). Radical usability (or, why you
need to stop redesigning your Web site). Library
Computing, 19(1-2), 86-92.
Industry Canada (1999). Beyond the Web site, An
HFRPPHUFHVXUYLYDOJXLGHIRU&DQDGLDQ¿UPV
Retrieved from />Ivory, M., & Hearst, M. (2002). Improving Web
site design. IEEE Internet Computing, Usability
and the Web Issue, 6(2), 56-63.
Koehler, W. C. (1999). An analysis of Web pages
and Web site constancy and permanence. Journal
of the American Society of Information Science,
50(2), 162-180.
Kowtha, N. R., & Choon, T. W. I. (2001). De-

terminants of Web site development: A study of
electronic commerce in Singapore. Information
and Management, 39(3), 227–242.
Kurnia, S., & Johnston, R. B. (2002). A review of
approaches to EC-enabled IOS adoption studies.
Proceedings of the 35
th
Annual Hawaii Interna-
tional Conference on System Sciences, Hawaii.
Lamb, R., & Davidson, E. (2004). Understanding
Intranets in the context of end-user computing.
Data Base, 35(4), (forthcoming).
Langley, A. (1999). Strategies for theorizing from
process data. Academy of Management Review,
24(4), 691-710.
Levy, A., & Merry, U. (1986). Organizational
transformation: Approaches, strategies, theories.
New York: Praeger.
Levy, M., & Powell, P. (2003). Exploring SME
Internet Adoption: towards a contingent model.
Electronic Markets, 13(2), 173-181.
Loiacono, E., & McCoy, S. (2004). Web site ac-
cessibility: An online sector analysis. Information
Technology and People, 17(1), 87-101.
L u c a s , H . C . (19 9 4) . Information systems concepts
for management. New York: McGraw-Hill.
Markus, M. L., & Robey, D. (1988). Information
technology and organizational change: Causal
structure in theory and research. Management
Science, 34(5), 583-598.

0DUWLQ/00DWOD\+³%ODQNHW´DS-
SURDFKHVWRSURPRWLQJ,&7LQVPDOO¿UPV6RPH
lessons from the DTI ladder adoption model in
the UK. Internet Research: Electronic Networking
Applications and Policy, 11(5), 399-410.
0F0LOODQ6-6XUYLYDORIWKH¿WWHVWRQ-
line: A longitudinal study of health-related Web
sites. Journal of Computer Mediated Communi-
cation, 6(3). Retrieved from iana.
edu/vol6/issue3/mcmillan.html
McNaughton, R. B. (2001). A typology of Web
Site objectives in high technology business mar-
kets. Marketing Intelligence & Planning, 19(2),
82-87.
Mehrtens, J., Cragg, P. B., & Mills, A. M. (2001).
A model of Internet adoption by SMEs. Informa-
tion and Management, 39(3), 165-176.
Mohr, M. (1982). Explaining organizational be-
havior. San Francisco, CA: Jossey-Bass.
Newman, N., & Robey, D. (1992). A social process
model of user-analyst relationship. MIS Quarterly,
16(2), 249–266.
12(,1DWLRQDO2I¿FHRIWKH,QIRUPDWLRQ(FRQ-
omy) (2000). Taking the plunge 2000—Sink or
swim? Commonwealth of Australia.
Nolan, R. (1973). Managing the computer re-
source: A stage hypothesis. Communications of
the ACM, 16(7), 399-405.
217
The Evolving Web Presence of SMEs

Oliver, J., & Damaskopoulos, P. (2002). SME
HEXVLQHVV UHDGLQHVV LQ ¿YH (DVWHUQ (XURSHDQ
countries: Results of a survey. Proceedings of
the 15
th
Bled Electronic Commerce Conference
eReality: Constructing the eEconomy, Bled,
Slovenia.
Pfeffer, J. (1982). Organizations and organiza-
tional theory. Boston: Pitman.
Piccoli, G., Brohman, M.K., Watson, R. T., &
Parasuraman, A. (2004). Net-based customer
service systems: Evolution and revolution in Web
site functionalities. Decisions Sciences, 35(3),
423-455.
Rao, S. S., Metts, G., & Mora Monge, C. A. (2003).
Electronic commerce development in small and
medium sized enterprises; A stage model and
its implications. Business Process Management,
9(1), 11-32.
Robey, D., & Newman, M. (1996). Sequential
patterns in information systems development: An
application of a social process model. ACM Trans-
actions on Information Systems, 14(1), 30-63.
Ryan, T., Field, R. H. G., & Olfman, L. (2003).
Why do Universities make discontinuous changes
to their Web sites? Examining the relative impor-
tance of four reasons for change. Proceedings
of the 9
th

Americas Conference on Information
Systems, Tampa, Florida.
Sabherwal, R., & Robey, D. (1995). Reconcil-
ing variance and process strategies for studying
information systems development. Information
Systems Research, 6(4), 303-327.
Scott, W. R. (2001). Institutions and organizations.
Thousand Oaks, CA: Sage Publications.
SIBIS and European Communities (2003).
Benchmarking e-commerce in the information
society in Europe and the US. Milan: Databank
Consulting.
6RXWKHUQ $  7LOOH\ )  6PDOO ¿UPV
and information and communication technolo-
gies (ICTs): Toward a typology of ICTs usage.
New Technology, Work, and Employment, 15(2),
138-154.
6WRFNGDOH56WDQGLQJ&%HQH¿WV
and barriers of electronic marketplace participa-
tion: An SME perspective. Journal of Enterprise
Information Management, 17(4), 301-311.
Storey, D. (1994). Understanding the small busi-
ness sector. London: Routledge.
Tagliavini, M., Ravarini, A., & Antonelli, A.
(2001). An evaluation model for electronic com-
merce activities within SMEs. Information Tech-
nology and Management, 2(2), 211-230.
Teo, T. S. H., & Pian, Y. (2004). A model for Web
adoption. Information & Management, 41(4),
457-468.

Van de Ven, A. H., & Poole, M. S. (1995). Explain-
ing development and change in organizations.
The Academy of Management Review, 20(3),
510-540.
Walsham, G. (1993). Interpreting information
systems in organizations. Chichester: John Wiley
& Sons.
Weick, K. E., & Quinn, R. E. (1999). Organiza-
tional change and development. Annual Review
of Psychology, 50, 361-388.
Wilkins, L., Swatman, P., & Castleman, T. (2000).
Electronic commerce as innovation: A framework
for interpretive analysis. Proceedings of the 13
th
Bled Electronic Commerce Conference, Bled,
Slovenia.
Winter, S. J., Saunders, C., & Hart, P. (2003). Elec-
tronic window dressing: Impression management
with Web sites. European Journal of Information
Systems, 12(4), 309-322.
218
The Evolving Web Presence of SMEs
Wolfe, R. A. (1994). Organizational innovation:
Review, critique and suggested research direc-
tions. Journal of Management Studies, 31(3),
405-431.
This work was previously published in Global Electronic Business Research; Opportunities and Directions, edited by N. Al
Qirim, pp. 15-41, copyright 2006 by IGI Publishing (an imprint of IGI Global).
219
Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 1.15
Challenges for Deploying
Web Services-Based E-Business
Systems in SMEs
Ranjit Bose
University of New Mexico, USA
Vijayan Sugumaran
Oakland University, USA
ABSTRACT
E-business initiative in many companies had
started in the 1990s. These companies have re-
cently begun to explore the use of Web Services
(WS) technologies within their e-business context,
since they provide an attractive, language-neutral,
environment-neutral programming model that ac-
celerates application development and integration
inside and outside the enterprise. Despite these
advantages, companies are slow to deploy WS
because it requires a considerable shift in their
application development process. While a few
studies have reported on some of the reasons for
this wait-and-see approach, a thorough and sys-
tematic investigation of the challenges from the
stakeholders’ — providers, consumers, and stan-
dards organizations — perspective is needed. This
study addresses that and provides a framework for
studying the factors that impact the deployment
and use of WS. The framework is used to analyze
small and medium-sized enterprises (SMEs), as
they play a vital role in generating employment

opportunity and turnover within many major
economies globally.
INTRODUCTION
The e-business initiative in many companies had
VWDUWHGLQWKHV7KH¿UVWJHQHUDWLRQHEXVL-
ness application, with a business-to-consumer
(B2C) focus, had simple Web sites with databases
and forms for buying and selling online products.
Subsequently, the second generation e-business
application, with a business-to-business (B2B)
focus, had Web sites that were fully integrated
with backend systems — consisting of the major
220
Challenges for Deploying Web Services-Based E-Business Systems in SMEs
legacy applications — internally, as well as with
business partners’ information systems exter-
nally to provide a wide range of online services
(Gonsalves, 2002).
7KHHPHUJLQJ¿HOGRI:HE6HUYLFHV:6HQ-
ables different software components to be integrat-
ed without having to develop these components
from scratch and without the hassle of custom
FRGLQJ6WDO,WLVUHVXOWLQJLQVLJQL¿FDQW
changes in the way applications and supporting
infrastructures are integrated (Schmidt, 2003).
These changes have led to the design and devel-
opment of service-oriented architecture (SOA)
of application systems (Fowler, 2003). WS are
becoming the basic building blocks out of which
new applications are being created, and service

composition is becoming the main focus of the
application development process (Peltz, 2003).
Service composition combines two or more WS
following a certain composition pattern to achieve
a business process goal. Thus, service composition
provides a mechanism for seamless integration of
cross-enterprise and intra-enterprise applications
(Chung, Lin, & Mathieu, 2003).
The SOA is built on a foundation of standards,
ZKLFKGH¿QHWKHUROHVDQGDFWLYLWLHVRIWKHDUFKL-
tectural elements, and thus support the interoper-
ability of incompatible systems across the Web.
The SOA is distributed, permitting elements of
an application to be deployed on multiple systems
and executed across connected networks (Geng,
Gopal, Ramesh, & Whinston, 2003; Kleijen &
Raju, 2003). Because the transport mechanism
is built on HTTP (Hyper Text Transfer Protocol),
it is possible for application elements to interact
within and across enterprises. The elements of an
DSSOLFDWLRQDUHGHVLJQHGWRVXSSRUWVSHFL¿FWDVNV
ZLWKLQDEURDGHUZRUNÀRZRUEXVLQHVVSURFHVV
Each of these service elements of an application
LVUHVSRQVLEOHIRUGH¿QLQJLWVLQSXWVDQGRXWSXWV
using the standards for WS, so that other elements
are able to determine how this element operates,
how to make use of its functionality, and what
result to expect from its execution (Papazoglou,
2003).
A Web service is thus a self-contained and self-

described modular element of an application that
can be published, located, and invoked across the
Web. Based on existing and emerging standards
such as HTTP, XML (Extensible Markup Lan-
guage), SOAP (Simple Object Access Protocol),
WSDL (Web Services Description Language),
and UDDI (Universal Description, Discovery
DQG,QWHJUDWLRQ6HUYLFH:6SURYLGHVLJQL¿FDQW
opportunities for technical and business innova-
tion (Arsanjani, Hailpern, Martin, & Tarr, 2003;
Maruyama, 2002). Since the WS technologies
provide a language-neutral, environment-neutral
programming model that accelerates application
development and integration inside and outside
the enterprise, they encourage an approach to
application development that is evolutionary,
building on investments previously made within
an IT organization, and developing new capabili-
ties incrementally (Khalaf, 2002; Rust & Kannan,
2003).
Because of this potential to enable a new para-
digm for enterprise application development and
deployment, companies have recently begun to
explore the use of WS technologies within their
e-business context (Hagel, 2002). The integration
of WS into e-business provides several business
EHQH¿WV WKDW LQFOXGH ORZHULQJ FRVWV LPSURY-
LQJ DSSOLFDWLRQ VKDULQJ LQFUHDVLQJ ÀH[LELOLW\
streamlining business processes, and opportunity
to create innovative business models among oth-

ers. However, there are a few obstacles that need
to be overcome before widespread adoption of
WS into e-business is realized (Tilley, Gerdes,
Hamilton, Huang, Miller, Smith, & Wong, 2004).
They include security, availability, reliability, and
performance of WS-based e-business systems.
WS-based e-business systems are currently
in the early phase of adoption, primarily within
large organizations that have well-established
IT infrastructures and technically savvy staff
221
Challenges for Deploying Web Services-Based E-Business Systems in SMEs
(Chen, Chen, & Shao, 2003). Most of these or-
ganizations are experimenting with WS for ap-
plication integration and developing innovative
implementations within their e-business context.
The deployment of WS is currently focused in two
areas: (1) enterprise application integration, for
integrating disparate components, mainly legacy
applications, of an enterprise wide system; and (2)
business partner integration and secure exchange
of data with dedicated partners without using a
proprietary approach (Manes, 2003).
Despite the advantages of WS and their in-
creasingly vital role in integration initiatives,
¿UVW ZLWKLQ DQ RUJDQL]DWLRQ DQG WKHQ EHWZHHQ
enterprises, several challenges exist with devel-
oping and using them (Tilley et al., 2004). A
thorough and systematic investigation of these
challenges is needed to help improve the rate

of deployment of WS across organizations.
:6FRPSXWLQJSRVHVVLJQL¿FDQWFKDOOHQJHVDV
developers determine how to leverage emerging
technologies to automate individual applications
based on cross-organizational, heterogeneous
software components. WS standards permit ap-
plication-to-application interoperability, but the
coordination of a set of WS working toward a
common end is currently an open issue (Orchard,
2002). The service providers need to learn how to
develop WS interfaces that perform well, identify
performance problems when they occur, and how
WR¿[WKHP
In order to develop e-business applications
using leased components through WS, the chal-
lenges from the perspective of the three stakehold-
ers of WS, namely the service providers, service
consumers, and the WS Standards Organizations,
need to be understood. The service providers
offer WS. These are organizations that procure
the service implementations, supply their service
descriptions, and provide related technical and
business support. The service consumers are the
end users of the services as well as application
assemblers who assemble several WS to build
an application for the organization. A service
agreement, which is a contract between a service
provider and a service consumer, is used regard-
ing the attributes of a Web Service and its usage.
The Standards Organizations are bodies that are

involved in developing standards for both the
providers and consumers.
This study investigates the challenges that
exist for each of the stakeholders, and presents a
framework that organizes and interrelates these
challenges in an easily understandable manner to
help study the factors that impact the deployment
and use of WS. The framework is used to analyze
the challenges in small and medium-sized enter-
prises (SMEs), as they play a vital role in generat-
ing employment opportunity and turnover within
many major economies globally. Particularly, as
large companies downsize and outsource more
functions, the importance and role of SMEs in
the economy are increasing worldwide.
SMEs AND E-BUSINESS
7KHUHLVQRXQLYHUVDOGH¿QLWLRQRI60(VHDFK
country has its own. However in general, SMEs
DUHGH¿QHGDVQRQVXEVLGLDU\LQGHSHQGHQW¿UPV
which employ fewer than a stated number of em-
ployees. This number varies across nations. The
8QLWHG6WDWHVGH¿QHV60(VDV¿UPVZLWKWKHVL]H
of the employees fewer than 500, the European
Union sets the limit to 250 employees, while some
RWKHUFRXQWULHVDWHPSOR\HHV6PDOO¿UPVDUH
generally those with fewer than 50 employees,
while micro-enterprises have at most ten, or in
VRPHFDVHV¿YHHPSOR\HHV)LQDQFLDODVVHWVDUH
DOVRXVHGWRGH¿QH60(V7KH8QLWHG6WDWHVLQ
LWV GH¿QLWLRQ DOVR DVVXPHV WKDW WKH 60(V DUH

independently owned and operated, and they are
QRWGRPLQDQWLQWKHLU¿HOGRIRSHUDWLRQZLWKLQWKH
overall marketplace.
222
Challenges for Deploying Web Services-Based E-Business Systems in SMEs
Characteristics of SMEs
There have been many studies in the literature
WKDW KDYH DWWHPSWHG WR GH¿QH VHYHUDO XQLTXH
characteristics of SMEs compared with large
enterprises. Central to all of these studies is
the realization that many of the processes and
techniques that have been successfully applied
in large enterprises do not necessarily provide
similar outcomes when applied to SMEs. In other
ZRUGV60(VDUHQRW³VPDOOODUJHHQWHUSULVHV´EXW
are a separate and distinct group of organizations
compared to large enterprises. Therefore, it is
appropriate to know some of their characteristics
reported in the literature.
Some of these characteristics include lack of
technical expertise as well as adequate human
resources in SMEs to develop complex techno-
logical solutions and to undertake technical en-
hancements (Barry & Milner, 2002). Most SMEs
avoid sophisticated software and applications and
often suffer from inadequate organizational plan-
ning (Tetteh & Burn, 2001). They tend to have a
VPDOOPDQDJHPHQWWHDPDQGDUHVWURQJO\LQÀX-
enced by the owner’s background and personal
WUDLWV$XJHUDQG*DOODXJKHULGHQWL¿HGD

variety of business characteristics that affect the
adoption and use of IT in SMEs. These business
characteristics include business size, business
age, business sector, market focus, and level of
IT expertise among others.
IT Adoption in SMEs
SMEs in the United States, Canada, Australia,
and leading European economies are realizing
significant financial benefits from adoption
and implementation of Internet-based business
solutions. These Internet-based solutions fall
XQGHUWZREURDGFDWHJRULHVWKH¿UVWFDWHJRU\LV
customer-focused such as customer development
and e-marketing, whereas the second category is
internally-focused such as accounting and supply
chain management solutions. A recent study re-
ported that 25 million SMEs in the United States
generate 53% employment and 51% turnover and
18 million in the European Union generate 66%
employment and 55% turnover.
In spite of these impressive statistics, the state
of adoption, and implementation of Internet-based
business solutions in SMEs worldwide can be
divided into four evolutionary categories rang-
ing from limited use of information technology
through to full integration of business automated
SURFHVVHVDVVHHQLQWKHGLJLWL]HG¿UP.QRO
Stroken, 2001; Mehrtens, Cragg, & Mills, 2001).
These categories are (1) no adoption — there is
no information and communication technologies

usage or limited usage, (2) basic adoption — e-mail
and static Web pages are implemented within the
business, (3) intermediate adoption — e-business
platforms are being used including B2C online
payment systems, and (4) advanced adoption
— e-business platforms are used including B2B
processes/exchange.
)DFWRUV,QÀXHQFLQJWKH$GRSWLRQ
and Non-Adoption of E-Business in
SMEs
The advent of e-business in the 1990s offered
considerable opportunities to SMEs to expand
customer base, enter new product markets, and
rationalize their businesses (EMPG, 2002). Many
VPDOOHU ¿UPV KDYH VWDUWHG XVLQJ HEXVLQHVV WR
customize products and services, manage sup-
ply processes and inventories, and reduce the
WLPHEHWZHHQRUGHUDQGGHOLYHU\7KHVLJQL¿FDQW
EHQH¿WV DFKLHYHG E\ WKRVH 60(V WKDW DGRSWHG
e-business include cost reduction, sales increase,
and the ability to reach a global market.
The literature reports several factors that in-
ÀXHQFHWKHGHFLVLRQWRDGRSWDQGXVHHEXVLQHVV
in SMEs (Fariselli, Oughton, Picory, & Sugden,
1999; Mirchandani & Motwani, 2001). They
include the size of the business in terms of the
number of employees; the age of the business; the
business sector, for example, service, manufac-
223
Challenges for Deploying Web Services-Based E-Business Systems in SMEs

turing, or retail; the market focus, for example,
local, regional, national, or international; level
of IT expertise available amongst staff; and the
annual turnover of the business.
$¿UP¶VSDVWH[SHULHQFHZLWKLQIRUPDWLRQWHFK-
nologies in terms of exposure and organizational
learning ultimately affects its future choices in
adopting advanced information and communi-
cation technologies. At the business sector or
industry level the factors include the availability
of external know-how (for example, technology
suppliers), the degree of innovativeness of the
industry, the requirements imposed by major
customers and external markets, and overall levels
of competition and technological sophistication
in the industry. The greater the computer literacy
and computing skill of the owner, the more likely
WKH¿UPZLOODGRSWHEXVLQHVVWKURXJKDZDUHQHVV
RILWVEHQH¿WVHVSHFLDOO\IRUWKHVWUDWHJLFPDQDJH-
ment of the business.
The literature also reports several factors that
LQÀXHQFHWKHGHFLVLRQWRQRWDGRSWDQGQRWXVHH
business in SMEs (Scupola, 2002). They include
lack of awareness and knowledge of e-business;
limited understanding of the complexity of elec-
tronic operations; inadequate skills and high initial
investment required to develop a viable e-business
strategy; infrastructure access and costs; lack of
suitable software standards; lack of easily acces-
sible, independent and inexpensive advice and

assistance in e-business development to SMEs;
and concerns with security and privacy.
State of E-Business Adoption in
SMEs
More and more SMEs are adopting e-business
by implementing Web sites with portals while
focusing on the quality of these Web sites and
the choice of functionalities that they offer to
users (Jeffcoate, Chappell, & Feindt, 2002). The
60(VDUHGH¿QLQJWKHVFRSHRIWKHLUHEXVLQHVV
operations by identifying (1) the functionalities
and services they will provide, (2) the clienteles
they will target, and (3) the geographic scope of
their operations. The technological solutions that
the SMEs have adopted for e-business fall within
a range of options to complement their traditional
operations (Cote, Sabourin, & Vezina, 2004).
These technological solution options are as
follows: e-shop — information or information
requests, sale and distribution of the business’s
products and services; e-procurement — is a site
on which vendors sell to big buyers; e-auction
— is an electronic auction site; e-mall — sev-
eral vendors operate on the same site; 3rd party
marketplace — provides transactional support
for vendors; and virtual communities — are
designed to foster communication between the
members of a given community.
WEB SERVICES CHALLENGES
FRAMEWORK

Web services-based applications are being de-
veloped to increasingly support sophisticated e-
business processes. The application development
trend can be categorized into three categories.
Category 1: Enterprise Application Integration
²WKH¿UVWVWHSLVWRLQWHJUDWHLQWHUQDODSSOLFDWLRQV
WS allow enterprises to expose legacy applica-
tions to business applications in heterogeneous
HQYLURQPHQWVZLWKRXWKDYLQJWRUHZULWHVLJQL¿FDQW
amounts of code. Category 2: Interoperability with
Key Business Partners — the next developmental
step for most enterprises is to integrate one or
two key partners outside the enterprise. Enter-
prises use WS because they allow for interoper-
ability between applications across the public
Internet. Currently, due to the lack of broadly
DGRSWHG VSHFL¿FDWLRQV HQWHUSULVHV PXVW DJUHH
upon the technologies they will use to develop
these interoperating WS applications. Category
3: Interoperability Across Multiple Enterprises
— the subsequent developmental step for most
enterprises is to extend their computing out to
more business partners and customers. Currently,