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Everything Old Is New Again
 The practical definition of electronic commerce was EDI (electronic data interchange). But after being around for decades, EDI failed to make inroads into the mainstream. Although companies have a PBX, LAN, file server and fax machine, and probably some type of Internet connection, few have an EDI solution in place.
Before you know where you're going, you need to know where you've been. From bisync lines on mainframes to special extensions to HTML,
e-commerce has morphed continually. Fortunately, if you're only getting started, you can learn from others' experiences.
· www.foodservice.com The FoodService Purchasing Cooperative went from zero to more than 300 partners online with EDI within three years. When FoodService first decided to use EDI it selected AT&T as its VAN. Most important, it decided on a project approach. Robert Lewis, vice president of MIS at FoodService, explains: "If I were to call up a company and tell the MIS guy there that he must do EDI using my format, and he knew I was the MIS person, next thing I'll hear is a dial tone. But if our senior vice president of purchasing, who can make the decision on a yearly basis whether to buy $2 million worth of salad or coleslaw dressing, writes to his cohort or to the president, then it gets immediate attention." Industries have an entrenched way of doing business whether it's over EDI or a proprietary interface based on an SNA network. Once that trading partner network is establ
ished, it becomes impossible for one company to break out of it and declare that it wants to do things a new way. This mesh of relationships means no single company can move until the whole trading partner network moves.
· www.bcbsil.com Jonathan Handler, contract manager for Blue Cross Blue Shield of Illinois, notes, "We've had dedicated links between individual member plans and hospitals in their service area for decades. We have a network of networks, each partner (financial clearinghouse, insurance plan or pharmaceuticals card service) maintains its own network of hospitals and clinics interconnected to us on the back end." The back-end network has migrated from SNA to a private TCP/IP network but has maintained its hub-and-spoke configuration. It has transformed itself into the extranet linking health-care partners.
This extranet is the basis for BlueWeb, the BlueCross Web sites. One of the apps is a purchasing plan based on the Requisite Technology Universal Catalog. Products, prices and des
criptions are loaded into the catalog for use by the administrative purchasing staff. Handler says that this benefits the Blue Cross Blue Shield associations. "The cost of a purchase requisition is about $150, of which $90 is spent on the search," he says. "This attacks the $90--a real cost savings."
EDI forms the backbone for several industries and will not disappear anytime soon. Traditional large shops already using EDI will have little incentive to change in stantly. The future of GEIS, IBM Corp. and other VANs is secure for now. However, given a natural migration point, current users of EDI and new users will look to the Internet as the means of fulfilling their e-commerce goals. EDI VAN vendors will refocus to become Internet-based middlemen. Organizational EDI experience and knowledge-base is a valuable asset and astute managers will retain it and nurture it for next-generation e-commerce systems.
However, the future is clearly with the Internet. "The Internet will overtake EDI networks. It's a
n example of the 80/20 rule. The Internet addresses the 80 percent and will incorporate the best of EDI," says Ellen Brezniak, vice president of the business-to-business operating unit at Open Market, a leading e-commerce solution provider.
Commercial ISPs essentially provide the same level of support as traditional EDI VANs. For ISPs or carriers seeking to find emerging higher-value markets, hosting business e-commerce sites represents a significant opportunity to move up the value chain. Rich Bader, president of EasyStreet Online Services, observes: "Those ISPs not aggressive about e-commerce today will look back in two years and wonder how they missed it."
Role Definitions
Excerpted from the work of the Internet Purchasing Roundtable. For more information see www.
supplyworks.com/obi/white-paper.html.
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Requisitioner
The requisitioner represents the end user of the system, the person who actually places an order. The requis
itioner is affiliated with a buying organization. The requisitioner is assumed to have access to a desktop machine with a Web browser, as well as access to a corporate intranet and the Internet. The requisitioner also has a digital certificate.
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Buying Organization
The buying organization represents the purchasing management and information systems that support purchasing. These systems include an OBI (Open Business on the Internet) server for receiving OBI order requests and returning OBI orders, and systems for handling requisitioner profile information, trading partner information, workflow, approvals and account and tax status information necessary to complete an order. The buying organization also negotiates and maintains contractual relationships with preferred selling organizations.
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Selling Organization
The selling organization maintains a dynamic electronic catalog that presents accurate product and price informationÑinformation that can be customized, based on the
organizational affiliation of the requisitioner as specified in a digital certificate. Product and price information reflect the contract with a buying organization.
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Payment Authority
Payment authorities provide authorization for the payment vehicle presented by the requisitioner. Payment authorities must provide payments to selling organizations and an invoice or debit to the buying organization. Payment authorities may include a variety of financial institutions or, if the payment vehicle is an invoice, selling organizations that assume the responsibilities of a payment authority.
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