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The Internet has provided a global medium for electronic traders but, until a secure digital signature is available, growth remains restricted. Geoff Tyler reports on recent developments
A decade ago, electronic data interchange (EDI) was hailed as a breakthrough in electronic trade between companies. Then along came the Internet and, with it, electronic commerce, and EDI was consigned to the fashion scrapheap.
The irony is that EDI and so-called e-commerce mean exactly the same thing. The only role the Internet plays is one of a transport medium. EDI came about so that closed groups of trading partners could send each other orders, confirmations, delivery details, call-offs, payment notifications and even payments. This was done by linking to the bank payment exchange systems, using ISDN, dial-up modem connections or, where the volume justified it, wide area networks for the data links.
To keep those links secure, software based on EDI standards invariably included details peculiar to the trading group, and in any case could be encrypted before transmission using a quite basic private algorithm with which all the trading partners had been supplied along with the EDI software itself. In short, the trading partners knew each other. All the Internet has done is to make a suitable EDI data communications medium available universally, so that adding or deleting trading partners is a much simpler process. It has also opened the prospect of extending the EDI principle to companies that are unfamiliar to one another - and it is here that the problems begin. In spite of all the hype about the Internet, most of the corporate presence is based on advertising and information dissemination. The number of actual business transactions conducted is minuscule. No one puts the value of UK Internet business transactions at more than 500 million a year. There is clearly a huge gap between where the market is now and where various commentators expect it to be within the next few years. So why is it that this great global opportunity to buy and supply online is not taking off? Research in Business to Business Electronic Commerce, released earlier this year by Ovum, finds that "far from opening the market, e-commerce will be driven by the renaissance of closed trading communities...