Burning Paper with Internet EDI

Today's VARs and systems integrators are creating new models for business-to-business electronic commerce.

David Baum

The roots of business-to-business electronic commerce (EC) lie in Electronic Data Interchange (EDI), a set of specifications for ordering, billing, and paying for parts and services over private electronic networks. Adopted in the 1980s, mostly in the retail, apparel, and transportation industries, EDI today spans most types of transaction-based business. It's a fast and dependable way to deliver electronic transactions via computer-to-computer communications.

What's the catch? It's expensive, requiring hefty setup charges and a big month-to-month outlay to the value-added network (VAN) providers that secure EDI transactions. "EC is wonderful f or those companies that can afford to implement EDI systems internally," says Bryan Beske , vice president of systems and tec hnology at Trade Point USA in Fairfax, Virginia. "Where the process breaks down is when you have smaller companies wanting to play the game that are not EDI-enabled."

Sound elitist? It is. The attitude that characterized EDI during the first decade of its existence was a bit like that of a spoiled child on his or her home turf: If you don't want to play by my rules, feel free to take your business elsewhere. "For many companies, EDI participation is a requirement for doing business," says Pat Bergamasco, executive vice president of marketing and sales at Epoch Networks in Irvine, California. "Large manufacturers and retailers often insist that their suppliers use EDI as a precondition for all purchase agreements. These large hub sites are in a position to dictate the use of EDI to their smaller trading partners, or spokes."

The big companies benefited through just-in-time manufacturing and the formation of tighter supply chains, Bergamasco adds. However, in many cases, the spokes saw few, if any, benefits--other than the privilege of trading with a behemoth. But that's changing fast, thanks to the Internet.

EDI for Everyone

"The Internet is revitalizing interest in EDI and Electronic Funds Transfer (EFT) technology," says Ed Black, an analyst at the Aberdeen Group. "Companies no longer need to invest in installing and maintaining expensive value-added networks. Most leading EDI suppliers are now introducing products that operate over the Internet. In some cases, they're not only cheaper, but they're faster than VAN-based implementations."

The Internet is also broadening EDI's scope. Due to its high cost of entry, EDI was formerly useful mainly for a company's first-tier suppliers. In the case of a large company, such as General Motors or Wal-Mart, that might amount to a few dozen players out of hundreds or even thousands that could potentially benefit from electronic connections. "Big companies are now looking to the Internet to bring even the smallest of suppliers into the EDI fold," notes Beske.

Strength in Numbers

One of the big trends in this new electronic marketplace is what Forrester Research refers to as "communities of commerce": groups of buyers and sellers that get together to form on-line trading communities. "A new market model is emerging to reshape how buyers and sellers interact," says Stan Dolberg, an analyst with Forrester Research in Framingham, Massachusetts. "Just as the Web recasts information delivery with communities of interest, vertical cooperatives will emerge to revolutionize the interchange of goods and services on the Internet. Merchants, banks, investment firms, and technology vendors are all pushing to create a secure environment for EC."

A good example of this trend is the Trade'ex system ( http://www.tradeex.com ), a virtual trade point for computer equipment and peripherals developed by Beske and his colleagues at Trade Point USA. Trade'ex maintains a Web server that does on-line bidding, purchasing, and distribution for computer gear. Buyers and sellers--companies like Apple, Compaq, and Hewlett-Packard--register themselves with the Trade'ex system to exchange goods and services on-line. The movement of goods and the money are handled electronically.

KPMG is helping its clients construct new EDI systems under the umbrella of what it's calling the Electronic Interprise. "As we move into the twenty-first century, the emphasis will change to architecting systems that support inter-entity computing," KPMG partner Robin Palmer notes. "How do you have disparate entities communicating with each other, collaborating with each other, exchanging transactions with eac h other? Contemporary EDI models will become one of the key enablers for realizing this vision of inter-entity computing."

EDI Cloning

VARs are able to turn such visions into reality by leveraging the experience gained from one project to complete others. For example, with the experience it's gained from peddling computer gear, Trade Point USA plans to parlay the Trade'ex solution to other vertical markets.

The real cloning breakthrough comes with the standard forms that can be transmitted via the Web. Novice users can fill out these forms without getting bogged down by complex EDI terminology. For example, instead of wading through header, name, and data segments, customers simply fill out the "Ship to" fields.

Traditional EDI vendors, such as GE Information Services (GEIS) and Sterling Commerce, are leading the way. Trade Point USA is working with Sterling Commerce in a venture called I-Trade ( http://www.i-trade.com ), a Web-based clearinghouse for international trade information and services. Sterling is using its new Commerce:Webforms software to add transactional capabilities to I-Trade, making it a complete solution for all phases of the international trade cycle.

"I-Trade users will be able to do business with each other through the secure electronic exchange of purchase orders, invoices, and other electronic documents," notes Dave Kishler, a spokesman at Sterling. "Commerce:Webforms supplies the delivery mechanism, a library of thousands of company-specific, Web-based electronic forms."

Premenos's WebDox products use e-mail and the Web for internal and external document exchange via the Secure Sockets Layer (SSL) protocol. WebDox Central resides on the server of a large organization; WebDox Remote resides on the PCs of smaller trading partners.

Harbinger Express is a Web-based EDI service that supplies the framework for Internet users to exchange secure documents and transactions. Harbinger sets up the translation mechanism on a case-by-case basis and certifies partners for trading. Business documents, such as invoices and purchase orders, can then be read through standard Web browsers.

The most recent entrant on the EDI/EC scene is Actra, a joint venture of GEIS and Netscape Communications. Actra leverages GEIS's extensive EDI experience and Netscape's position in the Internet space to build Internet commerce applications for the business-to-consumer and business-to-business commerce markets. Its CrossCommerce product family, introduced in May, helps VARs to construct selling and merchandising solutions that rely on Internet communications to extend existing EDI investments.

Back-End Connectivity

While the Web is recasting the front end of many EDI systems, Aberdeen's Black says that an effective Internet architecture starts with highly scalable back-end server hardware and complex, data-type-enabled relational database management systems (RDBMSes). "Links to enterprise databases improve content, simplify integration with corporate networks and systems, and provide greater links among software from multiple suppliers," he explains. Such back-end servers are the bedrock of on-line product catalogs and Internet-enabled order-entry systems.

A commercial and government systems integrator, BTG is experienced in developing and supporting Intranets and Web sites for large enterprises. The company recommends that VARs start with an HTML-enabled database, such as CA-OpenIngres, to simplify this massive update process. "OpenIngres is HTML-enabled, which makes it easy to grab data out of a relational database and dynamically generate Web pages from the data," explains Jack Littley, senior vice president and director of corporate development for BTG.

"Overall, Web commerce is getting easier," he adds. "A year or two ago, VARs had to work out issues such as credit-card ordering and transaction verification themselves. Now those functions are handled by the Internet commerce servers."

But despite the Herculean efforts that vendors are currently undergoing to automate the task of building EDI and EC systems, there's plenty of work left for systems integrators and resellers who are skilled at implementing specific vertical solutions.

"VARs will take these turnkey ordering systems and tailor them to specific industries to make the job of getting customers and their products on-line that much easier," Littley says. "No matter how advanced the Internet tools become, there is always room for an integrator to add value."

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Where to Find

Actra Corp.

Sunnyvale, CA
Phone:    408-542-3183
Internet: 
http://www.actracorp.com


BTG, Inc.

Fairfax, VA
Phone:    703-556-6518
Internet: 
http://www.btg.com


GE Information Services

Rockville, MD
Phone:    800-560-4347
Internet: 
http://www.geis.com


Harbinger Corp.

Atlanta, GA
Phone:    404-467-3000
Internet: 
http://www.harbinger.com


Premenos

Concord, CA
Phone:    800-426-3836
Internet: 
http://www.premenos.com


Sterling Commerce, Inc.

Dublin, OH
Phone:    800-299-4031 
Internet: 
http://www.sterlingcomm.com


Trade Point USA

Columbus, OH
Phone:    614-645-1700 
Internet: 
http://www2.tpusa.com


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Bryan Beske

photo_link (34 Kbytes)

"Internet technologies enable a new paradigm for EDI. Increased interoperability will make EDI easier and less expensive to implement."

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David Baum is a freelance technology writer based in Santa Barbara, California. You can contact him at dwbaum@silcom.com .