But adoption of EDI through the 1970s and 1980s was limited to big companies that could afford the hundreds of thousands of dollars each year to license the software, operate the linkages, support multiple protocols, connections and data formats, and to pay the VANs. So, although large companies did benefit from EDI, the gains did not extend to their transactions with smaller suppliers, which couldn’t afford to implement it. When the Web made its big splash in the late 1990s, CIOs seized on it as the solution to interacting electronically with their smaller trading partners. According to Mark Settle, CIO of Arrow Electronics, they also viewed the Web as the solution that would help them achieve their dream of managing their inventories in real-time (EDI transactions were traditionally conducted in batches). Thus, companies established Web-based portals that these small suppliers could use in lieu of their phones and fax machines to place and confirm orders.

Around the same time that the Web was growing in popularity as an e-business platform, 40 companies in the high-tech industry, including IBM, Motorola and Sony, formed a nonprofit consortium called RosettaNet to develop open standards based on XML for real-time B2B trading. Herman Stiphout, president of RosettaNet, says B2B trading had become so complicated in the high-tech industry that each company in a supply chain had its own way to quote prices, disseminate shipping information and reconcile invoices, including different varieties of EDI. RosettaNet’s founders wanted to create standard, automated ways of executing business processes like product design, inventory management and distributing product information. In practice, observes Arrow’s Settle, RosettaNet has become a supplement to EDI for companies in the electronics and automotive industries that can afford to deploy the new technology and that use it for complicated processes that are not yet automated. For everyone else who wants to do Web-based e-commerce, portals are the easiest option.

The Problem with Portals

Yet the cost and complexity associated with supporting multiple B2B e-commerce platforms is precisely why some companies, like the mid-market paper distributor Central Lewmar, are trying to standardize on one platform. "We don’t want to have two, three or four e-commerce connections and operations running with different vendors. It complicates our business and adds to the cost of doing business every day," says Kevin Whitfield, vice president of IT for the $750 million company. Most of Central Lewmar’s business is done over the phone or by fax, although two of its customers use EDI. Recently, Central Lewmar chose a portal hosted by Liaison Technologies as its standard. Not only that, but the company is trying to push its portal as the de facto B2B trading platform for the paper industry.