Doing business on the Internet provides so many cost and time-saving advantages that it won't be long until it is a necessity for companies that want to be globally competitive. With the increased availability of Web-enabling options for network servers, their powerful programming and relational database capabilities can now be used to reap the benefits that electronic data interchange (EDI) and electronic commerce (EC) offer, but few organizations are ready to expose their servers for Web usage.
Recent improvements in security, including Secure Electronic Transactions (SET), digital certification, and user-controlled encryption have been introduced. However, for Web-centric business activities to achieve their fullest potential, organizations must also have high Web site availability and consistent quality of service. Outsourcing the Web site hosting not only reduces the organization's round-the-clock operations and maintenance costs, it protects the firm's mission-critical databases from improper access or corruption--an important consideration when adding EC applications.
EC is a broad term used for activities ranging from EDI and simple electronic payment systems to information delivery and product support/service. The benefits of using electronic commerce are immediately available, especially for organizataions whose business data is commonly stored on the system. Businesses of all types and sizes are finding that EC helps them improve the quality and timeliness of information exchange, increase productivity, enhance data accuracy, reduce costs, promote trading partner loyalty and improve inventory management. It also reduces the use of paper as well as paper storage requirements.
Because EC applications have such an impact on how customers and vendors view the company, it is generally best to develop a plan and implement it in stages. Depending upon your objectives, you may need more than one EC tool.
EC Options, Alternatives
EDI
EDI, the oldest application under the EC umbrella, provides a set of computerized forms that automate common business transactions such as purchase orders, invoices, shipping notices and requests for proposals.
In order to use EDI, organizations must buy special software that translates business data to and from the EDI format and integrates it into their existing business applications. In addition to revising all of their forms, information and business processing, companies must work with value-added network (VAN) providers who charge monthly and per-transaction fees. Firms with several trading partners operating on different VANs usually need different software, network connections and processes.
Intranets
To simplify communications, many companies are turning to intranets. With them, branch offices, suppliers, and strategic partners can be added and subtracted in real-time. On the AS/400, this can be accomplished by installing products such as IBM's Net.Commerce system and the Commerce Server/400 and the Webulator/400 Internet products from I/Net, and linking the server to the Internet with a high-speed, leased-line connection.
In addition to using its T3 service and encrypted connections to enhance information exchange with many business partners, Qualcomm is using the T3 and encrypted tunnels to transfer engineering documents and e-mail with its international offices. Instead of leasing lines for the international offices, they're actually connecting them back to their San Diego headquarters through the Internet. Using the T3 line to connect their international facilities has also saved Qualcomm a considerable amount money. For the price of one international leased line connection, which would only be capable of supplying a fraction of the speed, their T3 Internet connection is supporting seven international sites. That alone pays for the service.
There are drawbacks to Intranets, however--by their very nature and structure, they limit the number of firms a single company can reach and interact with.
Internet EDI
With its global reach, Internet EDI represents a ready-made platform for reducing procurement cycles, strengthening relationships with customers
and suppliers and establishing flexible alliances with individuals and business trading partners worldwide.
One of the key benefits of Internet EDI is it allows organizations to piggyback EDI onto their existing network, rather than having to use VAN networks. The Internet not only provides businesses of all sizes with a level playing field in every corner of the world, it slashes transaction processing time by as much as a factor of ten and simplifies the trading process. With the connectivity of the Internet, even small firms with a PC and Web browser can access your Web site, fill out purchase order information, provide verification of credentials, complete secure transactions and receive confirmation from trading partners--all within minutes.
Growing List of Applications
Internet EDI provides a cost-effective means of speeding communications with distributors and resellers. Resellers can use the manufacturer's Web site to determine product availability as well as the inventory on hand at the nearest distributor's location before placing an order. If the distributor is temporarily out-of-stock, the order can be passed directly to the manufacturer, with the distributor receiving credit for the sale. When products are drop-shipped to resellers and distributors, an automatic request for their stocking requirements can be generated. Orders are encrypted for
Internet transmission and then converted to EDI format for internal processing.
Other companies use Web EDI as a cost-effective marketing tool. For example, Sun Microsystems uses the Web to provide product literature, software updates and to answer frequently asked questions. In a single month, the firm saved nearly $950,000 by not having to mail out over 5,000 literature packages and nearly 7,500 software modules. By allowing customers to access the customer support help desk themselves and download solutions, they saved an additional $250,000.
The savings that EC provides has not gone unnoticed by the federal government. Through its widely publicized GSA Advantage electronic catalog effort, the GSA Web site has the contracts linked with the vendors so government agencies are able to order commercial items covered by those contracts directly from the vendors' online, electronic catalogs. Described as a shopping mall with different types of stores, the electronic catalog makes it faster and easier for shoppers to search for and compare products. When they're ready to order merchandise, they can simply use their GSA account or their government credit card.
EC Security
Recognizing the need for trading partner EDI standards, forums of network designers, operators, vendors and researchers are moving aggressively to make Internet EDI easy-to-implement, reliable and economical. For example, the Internet Engineering Task Force (IETF), based in Reston, VA, is coordinating the development of common elements of Internet EDI. A consortium led by IBM, Sprint, MasterCard International and Visa International has published specifications for the Secure Electronic Transaction (SET) standard, a method to secure bankcard transactions on the Internet. Other cross-industry standards groups are also developing guidelines for the many interoperability issues associated with Internet document transport.
Because Web EDI requires a secure Web site to translate documents between HTML and EDI formats, the sites are usually located outside the individual company's own network at a highly-reliable Web hosting facility. The secure commerce servers used by these facilities encrypt and authenticate transactions and messages sent over the Internet to make it easy for a firm to work interactively with a large number of constantly changing vendors, distributors, channel partners and customers.
On-Line Access
Security, reliability, staffing costs and timeliness are the key reasons businesses decide to outsource their Web site. Increasingly, firms have business objectives for their Web site that demand 24-hour-per-day, seven-day-per-week uptime and high performance. People become impatient when they get a "server not responding" message that says a site is not available for business. If visitors must try several times to get information from a Web site and are denied access or kept waiting, they will not return.
According to analysts at Boston, MA-based Yankee Group, companies are better off focusing on their core business activities and relying on experts to manage the Web site. As the importance of corporate Web sites grows, technical support, quality of service and network reliability become increasingly important in the ISP selection process.
For performance and security reasons, the site should be hosted by a provider that has fully redundant Web farms that are directly connected to the Internet. Direct connection not only ensures faster access, it reduces the potential points of penetration. With a fault-tolerant infrastructure in place, tier 1 ISPs can transparently reroute Web site access requests among their geographically dispersed Web farms to balance site traffic loads and ensure that there is virtually no point of failure.
The Next Step
Web EDI has already begun to reduce trading partner costs and expand the global reach of companies of all sizes. By almost every measure available, Web EDI has gone beyond being just "acceptable" to safe and reliable. Many companies have already gone beyond simply publishing marketing and sales information on their Web site and have re-engineered their business processes so they can be tightly integrated into an on-line solution.
The next step, which is already underway, is one-to-one marketing where organizations and individuals will be able to receive customized information tailored to their specific profiles.
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INTERNET EDI--A READY-MADE PLATFORM FOR FLEXIBLE COMMUNICATIONS, ALLIANCES - To learn more about this author, visit Andy Marken's Website.
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