Electronic Commerce has been moving very slowly, largely as a result of the industry’s inability to adopt universal standards that would enable low cost business to business connectivity. Development of standards has been bogged down largely because the leadership of those organizations in the forefront of e-commerce have been ineffective at unifying the various participants into a relatively cohesive industry group.

There have been numerous estimates lately regarding the extent that Electronic Commerce will replace conventional transactions in business to business activities. For the purchasing community, these estimates are often confusing and misleading. One prediction that I recently came across, offered by a widely respected information technology-consulting firm, tells us that by 2002 electronic commerce will govern $327 billion in transactions. If, as this same firm tells us, we are currently transacting $8 billion a year electronically, that means a growth of 40 fold. Frankly, that’s unbelievable!

Today, the greater percentage of business to business e-commerce is transacted through EDI. But EDI has not exactly taken the business community by storm: The process has taken nearly 20 years to get to where it is today, including the development of a universal standard…ANSI X12. To go from $8 billion in 20 years to $327 billion in four years puts Moore’s law ("technology doubles every 18 months") out to pasture. Mathematically, it means an explosion in the annual growth rate of approximately 24,500%. What? How’s that?

It also means that if EDI transactions account for 2% of U.S. business to business commerce now, it would have to grow to about 65% by 2002. Could that happen?

"Use the Internet!" "Virtual EDI!" So goes the hue and cry.

Sounds like a good idea, actually. Most of the infrastructure is already in place: Browsers and security, for example, seem quite adequate for the task. Bandwidth is growing rapidly and should support unlimited access. And it’s relatively cheap. Several standards similar to EDI’s ANSI X12 are emerging (OBI, XML, for example) that could be adopted within a year. Are we all set, then? Well, no, not exactly.

Even with current Internet technology, the cost to put a medium sized business and all of its vendors on line, using standardized vendor catalogs, common interfaces, including applications for receiving, billing, back ordering and returning goods, appears to be absolutely preposterous. Most major U.S. companies have yet to implement enterprise software, which by best estimates can run $2 to $3 million a pop. But the cost of ERP implementation pales compared to the scope of EC. One EC vendor estimates it will cost about $6 million, when the last "t" is crossed. The resources, despite impressive ROIs, just do not appear to be practical…at least to those several dozen firms I’ve spoken with recently.

The point I’m trying to make is this: To achieve growth rates even approximating those quoted appear to be, unquestionably, impossible until we adopt and implement a set of workable standards. Until then, EC remains science fiction. Unless we’re dreaming, all the technology that exists today will not enable Electronic Commerce to reach practical reality without a process that unifies these efforts into a low cost, easy to implement solution. An integrated system must be developed that is as easy to use, as intuitive, as rapidly implemented as the telephone. Electronic Commerce, in any of its current forms, does not answer that ring.

For those of you who haven’t been keeping track, Electronic Commerce on the Internet comes in three generic flavors: Vanilla is your basic web site operated by a vendor, such as Boise Cascade www.bcop.com or W.W. Grainger www.grainger.com ; chocolate is the typical catalog consolidation such as sites operated by Thomas Registerwww.thomasregister.com or Wiznet www.wiznet.com; strawberry is the extranet site installed by a third party integrator or VAN such as Ariba or Commerce-One. Occasionally, some "Neapolitans, " side by side inclusion of all three flavors in the same package, show up but seem to offer very little real homogenization.

And that’s the problem. The work of a few standards organization notwithstanding, there has been little progress over the past few years toward integration of the various elements into a process. While a group calling itself XML/EDI is working toward a process standard based on XML (Extensible Markup Language, a work-in-progress similar in ilk to HTML) and the OBI Consortium is developing an EDI-like standard that could guide still others, their progress seems far too slow to assist the industry in generating substantial growth numbers in the very near future.

CommerceNet, an organization originally established with Federal grants, professes to lead and support an industry-wide system but to date has provided very little leadership toward that end, and that primarily on the retail marketing side of business. However, a recent $5 million grant from the U.S. Department of Commerce’s Advanced Technology Program to develop an open component-based architecture for Internet commerce may very well provide the resources needed to change that. CommerceNet certainly recognizes the need for standards. In a press release, Jay M. Tenenbaum, CommerceNet’s founder and Chairman, tells us:

"Digital anarchy is threatening the explosive growth of Internet commerce. Markets will be closed if they are built on proprietary ecommerce software and applications that cannot communicate or interoperate. Websites are difficult to locate and incomprehensible to software agents because the Web lacks standards for describing catalogs and content." Recognizing the problem, I believe, means the real battle has begun. Let’s hope we can walk the walk.

To summarize the state of e-commerce, then: Consultants are proposing wildly insane growth numbers, the existing system is fragmented, costly and cumbersome, there are no standards and effective leadership has just appeared. Stay tuned for further developments.