EDI: Eyeing Smaller Players

An alliance of Internet commerce players is looking to give electronic data interchange (EDI) a shot in the arm by making it easier and cheaper for smaller companies to participate. But the initiative-if successful-could also rob banks of poten-tial fee-based electronic cash management business, proving once again that coming late to the party often means missed opportunities.

It's no secret that the main obstacle to widespread adoption of EDI has been the exorbitant investment it requires, making it too costly for smaller companies.

The partners of Internet CommerceLive-Nubium Technology Group, Prospera, Microsoft, Hewlett-Packard, Logility, Net Logistics, Raptor, Remedy, and Trilogy-are targeting smaller but essential trading partners in manufacturing for demos on the benefits of doing business electronically.

Using software from Prospera (formerly EDI Able), the group intends to demonstrate how these companies can enter EDI-related information into Web-based forms and then translate that data into EDI format for transmission to partners.

This may not be good news for banks, particularly large institutions that have justified substantial investments in EDI technology with plans to sell corporate customers related services for additional revenue. "Banks have not been moving as fast as they perhaps ought to be toward that," says Mark Webster, senior manager, Coopers & Lybrand's financial services industry group. In the Internet CommerceLive scenario, banks will still be handling funds transfer and settlement, so they will, at least in the near term, maintain their traditional role. "The good news is that (the alliance members) are not poaching on the settlement piece," says Webster. The downside, however, is that the settlement piece-from which banks can generate limited revenue-may now be all that they can get, if the Nubium effort is able to separate the data (arguably the more valuable portion) from the funds transfer piece.

At press time, the alliance had no relationship with any financial institution, according to Nubium vp of marketing Marc H. Rudov, who added that the group welcomes any bank interest. "If I'm a bank-pick any one, Chase, NationsBank, Bank of America-and I tie into that consortium, I might be able to get them to steer the business my way," says Webster.

-prince tfn.com