Small and medium-sized enterprises (SMEs) will be invited to join GE Exchange Services' (GEXS) ebusiness marketplace next year, which has until now been reserved for large companies.
Most business-to-business (B2B) initiatives are centred on so-called big-ticket deals between software vendors and large enterprises. SMEs have been left out in the cold and even initiatives such as the Business & Accounting Software Developers Association's e-BIS XML have so far only met with very limited success.
From the second quarter of 2001, GEXS plans to provide document conversion capability for popular accounting packages such as Sage or Pegasus so that smaller companies can pass and receive order and invoice information to business partners that use GEXS's Interchange services. These two documents frequently form the foundation for business transactions.
The advantage of B2B exchanges for SMEs is that they will not need to spend on expensive electronic data interchange (EDI) or value-added networks. They can exchange data with business partners without having to worry about document formats used in applications to which they are not directly integrated.
According to GEXS and its customers, less than 30 per cent of all transaction volumes are conducted electronically, yet the real cost of processing comes from the remainder.
Otto Kumbar, global vice-president of Interchange solutions, said: "It is very hard to change paper-based transactions on to computer systems. But in today's environment, being left behind is a horrible scenario."
Steve Lay, logistics manager for Homebase, confirmed that about 30 per cent of his company's suppliers participate in its use of GEXS's Interchange service. "There's still a huge number of manual transactions we need to automate," he said.
Anthony Payne, GE's global product manager, acknowledged there are problems in turning the initiative into reality. He said he has received a lukewarm reception from Sage, which is not "ruling anything in or out" but is concerned about the impact on its application code.
Payne also said GE has not decided whether GEXS will build the converters or leave it up to trusted third parties.
However, the biggest problem is figuring out how users will pay for the service. As envisaged, GEXS will act as a form of post office and it is expected that sending companies will pay on some form of transaction basis.
Brian Morgan, manager of Interchange solutions for Europe, the Middle East and Africa, said: "We know this is tricky. We have to price the service at an acceptable level and are working out how best that can be done."
If successful, GEXS will provide SMEs with a major improvement in business efficiency, largely eliminating the need to use paper-based orders and invoices. Nevertheless, bringing smaller companies on board is not a done deal.
Jiggy Patel, who manages food retailer Iceland's EDI initiative at GEXS, said: "There is a lot of work on basic things like trust before suppliers are convinced. It is a process requiring a great deal of care and attention."
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