Online Transactions Save Time, Save Money, Save Trees

Online Transactions Save Time, Save Money, Save Trees<@VM>Four Key Elements<@VM>Adapting Existing Software<@VM>Counting on Plastic<@VM>Slow But Inevitable

by James Schultz

Speeding the transition to a paperless world has made strange bedfellows of efficiency experts and environmentalists. Do away with paper transactions, and you save not only trees, but also time and money.

In the public and private sectors alike, notable progress is being made by converting to electronically enabled supply-chain management and electronic procurement. As with the growth of e-commerce in the private sector, the maturation of the Internet and affiliated Web technologies is enabling transaction technologies to establish a firm foothold. A primary reason is economics.

The cost of paper-based transactions remains high, according to Whit Andrews, a senior analyst with the GartnerGroup Inc., a high-tech consulting firm in Stamford, Conn. Paper must be moved physically from one location to another, the approval process for purchases can be laborious, and the support staff must control and handle reams of documents.

The hidden price for an apparently straightforward purchase can balloon exponentially. Up to $250, for example, can be spent to process just one, paper-based purchase order. The electronic equivalent can run as little as $1.

"Most enterprises, including government, don't know how much it costs to run their [paper] procurements," Andrews said. "It's the services that surround transactions that can end up costing significant dollars. The automation of payments is still in its very earliest stages."

Not that the number or dollar amount of transactions, whether of the paper or electronic variety, are likely to decrease. A Forrester Research report authored by Jeremy Sharrard and John McCarthy pegs the estimated dollar value of licenses, fines and fees collected by 80,000 localities across the United States at $450 billion, with an average per-transaction cost of at least one dollar.

The transition to electronic delivery, write Sharrard and McCarthy, "promise to offer ... online services ... at little or no cost to governments. ... Governments will dip into surpluses or plead for state or federal assistance to hire integrators to connect to [existing] sites, or start from scratch and build new online sites."

The experts believe that transaction technologies are essential elements of e-government portals. Specific approaches to enable their adoption are only now emerging and evolving.

Dave Glende

Dave Glende, chief technology officer for Unify, a Sacramento, Calif., company that develops software for Internet-related e-commerce applications, credits strong public interest for driving the development of Web-based transaction technologies.

He cites the emergence of electronic portals as perhaps the most important manifestation of the push to paperless transactions. Consumer expectation of instant, easy interactions and one-stop, citizen-service government e-portals should accelerate the e-transactions trend.

"People using the Web expect to go to a site and get the exact information they care about. From the user's point of view, it's essential," Glende said. "Portals meant for government are very new and very young. The demand from the public for information transfers and transactions is definitely growing."

Glende said services firms must provide:

? A robust portal, with a compendium of avilable options and services;

? The capability for routine commercial transactions;

? Reliable, rugged Web-site components, embedded programs able to share information among and between constituent portal subsites;

? Integration of legacy systems with next-generation hardware and software systems to avoid otherwise insurmountable inter- and intrasystems communications difficulties. This is perhaps the most difficult piece.

Flexibility is the programming byword. Building effective e-products calls for software able to operate on a variety of platforms. Increasingly, that means the Java programming language.

"Whatever you build now, you build something that is vendor-neutral," Glende said. "You can't count on your client's side having anything installed that matches your software exactly. Everything has to be driven from your side and from your server. So you need a language that is component-based and doesn't tie you down. Java is pretty much everywhere."

One of Unify's primary products, eWave Commerce, allows for the construction of pre-built, transaction-enabling components, such as shopping carts, order management, payment processing and merchandise management. Based on Java, XML and Java 2 Enterprise Edition (J2EE), eWave Commerce provides a component framework that enables traditional brick-and-mortar companies to integrate business applications to create a single online enterprise.

Unify asserted that, because eWave Commerce architecture is based on distributed-object computing and uses new advances in Web technology such as XML for data encapsulation, the software can be run on most operating systems, hardware platforms and database systems, and can manage large volumes of Internet transactions.

Reuven Battat

The General Services Administration's Federal Technology Service has adapted a popular program to enable its own transition to paperless transactions. FTS provides government clients with information technology products and services, including telecommunications networks, computer hardware and software, and consulting.

In 1999, FTS generated more than $3.4 billion in revenue, with about 600 employees in 11 regions.

David Griffin, IT Solutions Shop project manager with FTS, said FTS wanted to replace the antiquated paper-driven government procurement process with an automated system that would log all transactions and provide sophisticated business intelligence and real-time reporting; create a single point of Internet entry where clients, industry partners and finance representatives could do business; and guarantee highly secure, personalized access and real-time views of order and status information.

FTS' answer was the IT Solutions Shop (ITSS), a secure, online, real-time e-commerce system that facilitates order processing. Rolled out to GSA offices nationwide in late 1998, ITSS leverages the flexibility, security and scalability of Lotus Domino 5.0 to handle approximately $2 million in new orders each day.

ITSS tracks more than 15,000 orders worldwide worth more than $3 billion, and manages 20,000 funding documents in excess of $4.5 billion.

Registered federal government clients can log onto the ITSS Web site to place an order. Because the system recognizes clients and knows where they operate, the buyer's task is reduced to filling out a few online fields on a bill of materials, which is subsequently routed with the click of a mouse button to FTS for processing.

Once bids have been gathered, ITSS lets the GSA customer service representative create a market-analysis document. This form automatically ranks competing bids by price, with links to detailed quotes for more insights on warranty, training, brand name and other value-added factors.

When a winning bid has been selected, the order is routed to the finance department to secure funding. Upon approval, the order then flows automatically to the contracting department.

"Contracting officers can create the purchase order online, electronically sign it and send an e-mail message to the winning industry partner," Griffin said. "Then the purchase order is available to the vendor and to the customer online."

Since the launch of the Lotus Domino-based IT Solutions Shop, the GSA said FTS has linked more than 7,000 federal clients and 6,000 industry partners with 600 GSA customer-service representatives in a completely paperless automated ordering system. Procurement time has been reduced from an average of 26 days to 12 days, financial transaction time decreased from 29 days to seven days, and business volume increased by nearly $1 billion with minimal increases to staff.

Reuven Battat

FedBid.com, a Germantown, Md., start-up and subsidiary of Procurement Technologies Inc. that formally launched July 19, isn't yet up to the billion-dollar level. But the company hopes to make its fortune by relying on a common piece of e-transaction technology: the credit card.

FedBid bills itself as an online marketplace offering an end-to-end federal procurement solution for open-market credit card purchases. After logging on to FedBid, purchasers can research products, specify bid parameters, review and evaluate offers from competing vendors, make purchases, monitor delivery and even track their own purchasing history.

There are no catalogs per se on FedBid.com, but comprehensive, up-to-date information allows users to research and review products and product categories. Currently, 170 different products are available on the FedBid site, with a price range from $1.10 to $117,000.

"Our business aims to aggregate multiple options into one cohesive option," said co-founder Luigi Canali, FedBid chief technology officer. "This thing was built from scratch around the government user to allow a buyer to conduct purchasing effectively."

Up to three similar items at a time can be displayed on a would-be purchaser's computer screen, with detailed specifications also iterated. FedBid also offers aggregate buying: volume discounts made possible by the joint purchasing power of the site's registered 15,000 government buyers.

FedBid.com allows each user to precisely define, or personalize, his or her own bid, putting greater emphasis on price, past performance or a series of best-value parameters. Once a government buyer defines the parameters of the bid, vendors nationwide compete for the sale.

"The price for goods or services goes down as the aggregate goes up," Canali said. "From the customer's point of view, he can either identify a pending auction or pool into an existing auction. From the vendor's point of view, he has the opportunity for business that wasn't there before. It's leveling the playing field for small vendors."

Betty Greene agrees that the convenience of credit-card purchasing is driving innovation in the transaction-technology arena. Greene is the director of GTSI.com, a portal based in Chantilly, Va., that offers access to more than 150,000 products from more than 2,100 manufacturers as well as multiple integration services.

"The credit card has really made Web technology take off. The Web is really turning into a business tool," Greene said. "We're heading in the direction of 'sub Webs': information on a subsite that is pertinent to a particular group of customers ? a group within a given agency that has discrete buying requirements."

Like multivendor purchasing on portals, sub-Web transactions are also vetted. The buyer is assured that purchases are secure and warrantied, and that a buying history can be established and monitored over time. Because buyers browse a specific product line before buying, congruency with existing product lines is also validated.

Betty Greene

Despite the clear advantages of Internet-enabled transactions, government's transition to pure paperless commerce will likely take years rather than months. Forrester analysts Sharrard and McCarthy said,
"e-government portals face a weary slog in effectively connecting governments to their citizens."

The pair point out that most government information still resides offline. Moreover, local government Web sites are difficult to navigate, often outdated and suffer from a stovepiped approach that presents individual departments as separate organizations with separate content.

"There is no ability to provide the convenience to which consumers are accustomed," they wrote, adding that, "Full integration will take time as e-government sites are forced to knock on a lot of doors to convince individual localities to sign on and help with the integration work."

Among the hurdles cited are the sheer number of jobs in government that conversion to automation threatens, lack of internal expertise to get the IT job done, and the enormous amount of information and transactions that must be automated and Web-enabled.

Nonetheless, Sharrard and McCarthy maintain that data standards will emerge, the private sector will introduce easier-to-implement transaction technologies and government-service clearinghouses will assist even the smallest of local governments to administer services online.

For businesses that cater to government, said Reuven Battat, president and CEO of ProcureNet Inc., Great River, N.Y., the promise of e-transaction technology is too powerful to ignore. Procurement automation is cutting the process of ordering from weeks to days and, in some cases, hours.

Not just traditional products will be available rapidly. Eventually, Battat said, even the purchase of battle equipment will be conducted routinely over the Internet.

"E-procurement technology is a major new shift in doing things," Battat said. "It's a matter of public acceptance. Once the confidence goes up with the availability and security of online services, the majority of the government will be online in the next five years."

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