THE INTERNET AND ELECTRONIC COMMERCE

By BILL BUGBEE
LightYear Resources

Since 1969, the Internet has served the e-mail and electronic messaging needs of the federal government, libraries, universities and most recently, commercial service providers. As a vast global collection of networks, the Internet has proven to be a great vehicle for information dissemination for both the consumer and business market sectors. And each day, new information services join the Internet in what has become something more analogous to a living organism than simply a telecommunications highway.

The confusion facing many businesses over just what to do about the Internet comes in part in the speed of innovation itself that is occurring with the Internet. This technology change is especially a problem for businesses seeking to put a stake in the ground as Internet users and providers.

But the collaborative nature of the Internet, its universal communication reach and its ease of use are so pervasive that this may turn out to be more of a solution than a problem.

According to Carolyn Chin, Manager of Electronic Services for IBM, a fixed office location corrals workers and quickly becomes expensive, ineffective and obsolete mode of operation in comparison to Internet communication opportunities.

"In the virtual world, a flexible working environment offers the maximum in productivity, and the ability to pursue opportunities in a real-time landscape of global portions," said Chin. "Considering the costs to business and society to build and maintain highway systems and public transportation projects, in a background of an ever increasing commuting workforce, the Internet offers a welcome alternative."

Chin's bold predictions also include a movement away from face-to-face business practices to a business state in which "data mining" for business opportunities over the Internet will be common, and in an emerging around-the-clock global marketplace, digitized businesses will move from away mass-marketing of products and services to eventually serving individuals.

IBM is one technology company that practices what it preaches and has taken advantage of the Internet global reach. IBM has eliminated over 22 million square feet of office space by creating a virtual workforce via the Internet. Workers using this new style of business operations can access their corporate network anytime and from almost anywhere on the planet.

Although the media and the technology business sectors are a-buzz with the all possibilities of electronic commerce, a less known, but practical application for the Internet today is Electronic Data Interchange, or EDI. This company-to-company electronic business protocol has its roots in the 1970s, and is an essential building block of electronic commerce.

EDI was initially created as a means of eliminating paper transactions between trading partners. Generally, it involves a series of specialized electronic transactions that transfer structured data between two or more trading partners computer systems by means of industry-wide message standards. For example, one of the first areas of electronic commerce, now nearly two decades old, came in the form of the electronic exchange of purchase orders among trading partners.

EDI has delivered substantial savings and benefits to organizations which have used it to reduce the delays caused by postal paper chains. It also eliminates the need to re-key data moving from one business to another, which saves time and reduces errors. An entire series of automated business process have been made possible as a result of EDI, such as Just-In-Time manufacturing.

Traditionally, EDI has been a private affair among two trading partners. But now that notion is being challenged by the open landscape and cost performance of the Internet as a competitive alternative to the traditional mode of EDI operations via value-added-networks (VAN)s and private networks: closed systems that were effective, but too limited in scope to work as an effective generic means to electronic commerce.

Thanks to the Internet, some companies have even begun to electronically publish their standards implementation of EDI. The opportunity for a new openness in EDI on the Internet is being actively pursued by the International Standards Organization (ISO) and the International Electrical Committee (IEC). Better than anything before it, the Internet addresses the dynamic nature of EDI standards for everyone's access and benefit.

Last year, the ISO and IEC formed a joint committee called Open-EDI in recognition of the expanding role that the Internet can play in EDI. Open-EDI's mission is to facilitate EDI with unknown participants, while permitting random electronic commerce interactions among newly established trading partners. The ability to contact and do business with new and previously unknown suppliers and customers through Open-EDI is sure to provide plenty of electronic commerce opportunities through the World Wide Web.

VANs (Value Added Networks) and other closed, proprietary network systems have claimed certain inherit advantages in security and control over the Internet. The idea of a global "open" public network in the form of the Internet, open to anyone, had previously been enough to scare off even the most adventurous electronic trading partners.

But, these advantages are no longer restricted to private networks. Like everything associated with the Internet, this "insecurity about security" is giving way to new technology tools and services which have been created to specifically to address such concerns. Achieving various degrees of secure Electronic Commerce over open networks is being aggressively pursued by technology vendors through the delivery of new encryption technologies and methodologies especially designed for the Internet.

These advancements in security technology are permitting the mainstream of commercial users to enter the Internet with much more confidence. Advances in firewall technologies can also ensure that unwanted inquires and unsolicited network traffic, inherent with the open Internet environment, will be effectively screened and otherwise isolated, ensuring that such traffic does not contaminate existing EC trading partner systems and relationships.

As a practical matter, the sense of security in telecommunications is never absolute, but some early explorers are demonstrating to their trading partners and competitors the merits of electronic commerce over the Internet. Venturing where no one has gone before, big name companies and government entities are already transacting EDI over the Internet. EDI purchase orders, invoices, an advance shipping notices are now routinely transacted via the Internet by Avex Electronics, Cisco Systems, Government Technology Services, NASA, National Semiconductor and Sun Microsystems.

Community, regional and industry uses of the Internet are fueling practical alternatives to expensive VAN services for transacting EDI. CommerceNet, an California-based electronic trade organization, was formed to facilitate the use of the Internet infrastructure for electronic commerce and to nurture efficient EDI trade relationships among companies and customers.

With a specific group mission of addressing issues such as; connectivity, network services, payment services, directories, and Internet EDI, the 47 sponsoring members behind CommerceNet reads like a who's who list, including: Advantis (IBM), Ameritech, Bellcore, CompuServe, GE, Pacific Bell, MCI, Sterling Software, as well as major hardware and software companies, banks and manufacturers.

Following the CommerceNet model, and residing closer to home, another community-minded electronic commerce Internet initiative, ecomm Northwest. ecomm Northwest was recently created to improve the economic development of the Pacific Northwest by rapidly advancing the ways and means of electronic commerce, and the promotion of an electronic commerce forum for the advancement of regional electronic commerce activities.

Some key challenges lay ahead of the vast promise of electronic commerce over the Internet. There is a need to simplify the way electronic commerce is performed, while supporting more complex transactions that include multiple party transactions. And other advances, such as real-time transaction processing, new search engine technologies and better security are lurking on the horizon.

The Internet's growth as a viable media for electronic commerce continues to grow, addressing security, user needs, and bandwidth issues through technology advancement and investment by the private sector. The Internet holds the promise of global opportunity for both consumers and business, and its rapid evolving state, make it force in commerce that can no longer can be denied. The integration of business transactions into a network with non-commercial roots and a technical personality that is both robust and arcane is the challenge. A challenge no doubt that will be overcome.

Bill Bugbee is President of LightYear Resources, Ltd., a Beaverton, Oregon consulting firm specializing in Electronic Data Interchange (EDI).