By the end of 1996, Hewlett-Packard Co.'s actions had brought some credibility to the brash words coming out of its financial services business unit.

A venerable computer industry name with new ambitions to be a force in Internet banking and electronic commerce, HP set out to topple International Business Machines Corp. from its financial industry primacy. (See the Oct. 21 FutureBanking.)

Hewlett-Packard still has a lot of convincing and converting to do to reach that lofty goal. But with a flurry of announcements over the last couple of months - many from the financial services unit, some timed for the Bank Administration Institute's Retail Delivery '96 conference in Dallas in December - HP began filling in the details of what had sounded like a merely hopeful mission statement. These included:

An Internet Marketing Framework for selling and fulfilling orders over the World Wide Web.

An agreement to integrate BroadVision Inc.'s One-to-One software in HP's Electronic Business Framework for enterprise computing and secure electronic commerce.

A strategic alliance with Verifone Inc. for payment systems based on the MasterCard-Visa Secure Electronic Transactions protocol.

And then there was ICF - the International Cryptography Framework - an alliance spearheaded by Hewlett-Packard that resulted in the first U.S. government approval for the export of "strong encryption." It could help promote global electronic commerce and, not coincidentally, many of HP's own initiatives.

Ruann F. Ernst, general manager of the financial services unit in Cupertino, Calif., took all that news in stride. The 10-year HP veteran knew it was coming and is well on her way to the next big things, such as a technology release due for April that she hints will fill important needs for retail banks.

"The acceleration you have seen is in the public announcements," she said. "You are seeing the beginning of a wave."

Ms. Ernst personifies the HP financial industry strategy: an in- your-face combativeness coupled with that unique brand of Silicon Valley humility that turns conversations toward the need for partnerships.

She bashes IBM, accusing it of being set in its old ways, closed- minded, and dictatorial - in other words, everything HP is not. She said Integrion, the home banking consortium that IBM helped put together, "says its network will take care of everything, sort of the SNA of that world." (SNA - IBM's Systems Network Architecture - is a relic of the mainframe era, when IBM indisputably held sway.)

Annette Kolendra, Ms. Ernst's recently appointed opposite number at Big Blue, disputes the charge. She views IBM's involvement with Integrion as emblematic of the computer giant's transformation into more of a systems integrator. "I don't think a consortium of banks of that stature" would let IBM technology prevail unless it were truly "best of breed," Ms. Kolendra said.

Be that as it may, IBM serves as a convenient target for Ms. Ernst. HP's approach to on-line banking, she said in a recent interview, "is as far from (IBM-Integrion) as black and white. It is more open, more distributed, and with partners.

"Our solutions will always be with partners. We don't do applications. We do not have a packaged solution. These are fundamentally different philosophies."

This is where the humility comes in.

"We have only so much research and development power within the Hewlett-Packard Co.," Ms. Ernst said. "We pick the best partners and work with them."

Few have plunged into high-tech partnering with more abandon. HP will enter into any arrangement with the requisite logic and business sense, thus creating interlocking webs of strategic alliances that Ms. Ernst called "constellations of partnerships."

"No relationship is exclusive," Ms. Ernst said. "It's not good business to force any decision on banks or customers. So we will work with both Edify and Security First Technologies" in Internet banking. "Keep in mind that they have single-currency, English-language products, and we have to work around the world.

"We work with all three data base vendors - Oracle, Sybase, and Informix. The Wall Street Journal has referred to us as a 'neutral Switzerland' between Oracle, Microsoft, Netscape, and Verifone."

(Debates will rage about whether Microsoft's Windows NT operating system will prevail over Unix. Ms. Ernst says she thinks it will, but she can keep a professional distance, because HP will support anything.)

"In fact, we will broker relationships," Ms. Ernst said. "We were talking to Verifone and found out they needed a data base system, and that led them to Oracle."

HP and Verifone, itself something of a partnership fanatic, have been forging a special relationship. They signed an agreement last May to integrate Verifone's Omnihost client/server payment processing software with HP 9000 enterprise servers. Then HP was part of Verifone's September announcement of Verismart and the Personal ATM - a system architecture and low-cost hardware device designed to spur smart-card-based banking and commerce.

HP was one of several technology supporters of Verismart. But on Dec. 4, HP and Verifone took the spotlight as a duo. They said they would together participate in MasterCard and Visa SET trials and jointly develop and deliver products combining Verifone's vWallet, vPos, and vGate offerings with the HP-UX 9000 line that is widely deployed in on-line banking applications worldwide.

"With the Verifone and HP alliance, we will have the capability to offer financial institutions and merchants worldwide more secure and complete Internet payment solutions, including hardware, software, and integration and support services," said Roger Bertman, vice president and general manager of Verifone's Internet commerce division. "We believe this can greatly accelerate Internet commerce applications."

"We had done a lot of work with Verifone in hardware devices," Ms. Ernst said. "Now we are ratcheting that up in cyberspace. We can contribute infrastructure, security, other R&D, and smart card capability at the consumer end. Verifone has the knowledge of the business environment and the players."

They are building on a foundation of "payment systems and merchant- acquirer relationships already in use by 20 million merchants" worldwide, Ms. Ernst said.

Hewlett-Packard's name turns up in other high-profile alliances. With hated IBM and archrival Sun Microsystems, HP joined the "key recovery alliance," active in an area related to the International Cryptography Framework. And it is a member of the PC/SC Work group that developed specifications for smart card readers on personal computers.

Also in the smart card area, HP has been working with Gemplus and Informix on a secure business-data infrastructure that draws on many of the aforementioned capabilities.

"You can have a virtual wallet on a smart card that can now function across country borders," said Ray Rahamin, marketing director for consumer credit payment systems in Ms. Ernst's unit. "That wouldn't be possible without ICF" - or without the cooperation that went into it.

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