Magazine article American Banker

Internet Systems Imperil EDI for Corporate Buying

Magazine article American Banker

Internet Systems Imperil EDI for Corporate Buying

Article excerpt

Internet-based corporate procurement systems are threatening electronic data interchange, International Data Corp. says.

For years EDI has been used by large manufacturing companies to buy essential materials.

"As an electronic means of ordering and paying, EDI was the only method before the Internet," said Joan-Carol Brigham, research manager of International Data's Internet and electronic commerce strategies program and author of a recent report.

For now, the investments that top-tier companies have made in expensive proprietary hardware, software, training, and maintenance for EDI are keeping Internet procurement systems at bay.

But the rigidities of EDI are being challenged by business-to-business electronic commerce.

"Compared with EDI, Web-enabled procurement systems are cheaper, easier to use, scalable, and more flexible," she said.

Web-based procurement systems are built on the open protocols of the Internet. They allow for the tracking of supplies and give access to new suppliers-both domestic and global.

The Internet systems "are easy to configure, and there is nothing to say you can't bolt on another module to do tracking or sales and marketing," Ms. Brigham said. "You can't do that with EDI."

Despite the advantages of Internet procurement, any defection by big companies from EDI will not be rapid, the researcher said.

"Many companies have a large investment in EDI, and that investment is not easily thrown away," Ms. Brigham said. Other challenges in deploying Web-based procurement systems revolve around getting product catalogs online in a usable format and being able to integrate with a variety of existing business systems. …

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