Corporate Profile in MONTREAL BUSINESS MAGAZINE
B Edwards on front cover, article about 10 pages long so get a pot of coffee. My cut and pasting should have got most of it but I put excepts of CEO,COO, and VP's at the end.
--couldn't get it all on one post, see next post for remainder--
FEBRUARY-MARCH 1999 MONTREAL BUSINESS MAGAZINE
E- COMMERCE RISING
Among the TOP FIVE providers on the continent, and a force in the global marketplace, this Montreal player holds trump cards in a technology that will soon involve every conceivable industry
by Michael Carin
The take-off of electronic is underway.
That is because capabilities have caught up with promises, and awareness levels have risen in tandem. Business people now trust the medium. Over the last several years they have grown familiar with data networks, and the online universe is no longer foreign to them. Of equal importance, they have begun to understand the potential of the Web interface. Speed, reliability, security: these critical issues have been either resolved or considerably improved. Last year's quite spectacular levels of new acceptance only hint at the coming numbers. We are about to witness a wholesale technological migration. A technology that was practically unknown a few years ago will shortly assume as preva-lent and as indispensable a role to business as the telephone.
E-commerce denotes the ability to do business in an electronic or "virtual" environment rather than in the physical world. Perhaps most importantly, it allows for organizations to transact with their customers and suppliers electronically, and allows for financial transactions to be conducted securely over private and public networks. The idea, of course, is to save both time and money.
Take bill presentment as an example. Depending on volume, it costs companies anywhere from one to four dollars to prepare a paper bill. If they can remove all printing, handling and postage costs, and send out that bill for half a buck, they've instituted a near-revolutionary efficiency. Moreover, upon electronic presentation of a bill, companies communicate directly with their customers. E-commerce gives them another way to convey information and promotional material about their business. It's another point of contact, a reinforcer (particularly for the small business). Again, it's efficiency.
Electronic commerce will eventually replace most or all of the manual processes that configure the communications between corporations and their suppliers and customers. The technology can be referred to as a successor to Electronic Data Interchange (EDI), yet it does not supersede EDI. The legacy connections that form EDI's infrastructure remain an integral part of today's c-commerce. EDI was focused on a point to point model. Users had to be connected directly to a company to be able to deal with it. Accordingly, EDI never reached the heights expected for it, because it was simply too complex and expensive. It was used between Eortune 1000-type companies and their big suppliers, but small suppliers could not afford the entry costs. With the arrival of the Internet, an inexpensive technology which has a standard international protocol (TCP/IP), electronic commerce enables users to connect to a network, and the network connects them to the whole community of users.
On the business to business side, with e-commerce enabling having come of age, and with the advent of the Internet having made access ubiquitous, what we are about to see is a real push to electronically connect smaller trading partners. Whole trading communities will evolve to the point where 100% of the partners will be managing their relationships electronically.
On the consumer side, as anyone who has not been oblivous to the volcanic eruption of the Internet over the last couple of years knows, very impressive adoption of e-commerce is taking place. The number of merchants going online, and the number of purchases being made, have both shot up extraordinarily.
Still, says Brian Edwards, President and CEO of BCE Emergis, a company that offers a still suite of core tech-nologies for electronic commerce: "It's a drop in the bucket compared to what we're going to see within a couple of years."
An Optimal Marriage
Ten years ago, Brian Edwards formed a company that came to be known as MPACT Immedia. MPACT was like the little engine that could. Competing against mammoth companies (like General Electric Information Systems and Sterling Commerce, for instance), it carved out impressive niches for itself in the EDI, Internet services and fledgling e-commerce domains. Still, to reach the next level would require deep pockets. At the company's annual meeting early in 1998, Edwards made a commitment to MPACT Immedia's share-holders that he would shortly create a strategic alliance or joint venture with a telco or telco-type company. Late last year he did exactly that, by virtue of a merger with the assets of Bell Canada's electronic business solutions division, Bell Emergis.
Early this year the merged entity took the name BCE Emergis. The new organization included the "BCE" name because it commands respect in the U.S., where the company is focusing its future growth. In Canada, the company's competition comes from a division of IBM Canada that does e-commerce, as well as from General Electric Information Services, but no Canadian stand-alone competes with BCE Emergis.
"In doing the merger, we became the fifth largest e-commerce company in the world," says Edwards. "Behind GElS, IBM, Harbinger, and Sterling. Now our goal is to crack the top three. We'll do it through growth and acquisitions."
And BCE Emergis will do it, says Rory Olson, the company's Executive Vice-President of Business Development, by virtue of the very chemistry that impelled its creation. "MPACT Immedia came to the table with a host of applications and expertise in putting together solutions," Olson points out, "while Bell Emergis came similarly equipped but principally armed with network infra-structure and networking know-how. Call it an optimal marriage, where the offspring is the network-centric approach and solutions built right into the network:'
Adds Christian Trudeau, the company's Executive VP and COO, and former head of Bell Emergis's Electronic Business Solutions Division: "Central control makes us unique. What we offer is a central computer room. We operate all the equipment, all the applica-tions, and our clients simply access our services. This makes us different from our competitors, who sell software. We are not a software company. We host software, and we manage it. We own and manage the IP network that our clients work on. We manage all the basic applications like e-mail, security, payment processing, order management. We have all those pieces of software on our network, and we don't enter into any exclu-sive arrangements with any particular manufacturer we use the best technology and best software that exists in the open market:
BCE Emergis markets its expertise to governments and businesses, not consumers directly. The company's offerings come in four main product lines: network services; security; payments; and e-commerce services. The technologies come packaged in a series of products that enable companies to create an account and enter the whole payment side of the electronic world. Once connected, clients can exchange information electronically, put up store fronts, and offer their products on the Net. BCE Emergis earns its keep through subscription and transaction fees.
For large organizations, customization is involved. The company develops, hosts and manages specific applications for six vertical sectors: financial; mortgage; automotive; sports and leisure; merchant-enabling; and BCE companies and telecommunications. The examples that follow indicate how electronic communities are thereby created, streamlining and cutting the cost of numerous processes throughout the industries in which they operate.
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THE CSST PROJECT
In terms of putting in place an e-commerce infra-structure based on Internet protocols to connect government and business, Quebec has been a forerunner in Canada. It leads all provinces except New Brunswick in such implementation. Starting in 1995, an extranet conceived and built for the CSST (the province's Workers' Compensation Board) on the Bell Electronic Business Network became the first realization of the vast undertaking. BCE Emergis's precursor, Bell Emergis, had taken the lead in delivering the solution.
"The CSST operates twenty regional offices, and serves some 180,000 businesses in Quebec," says Christian Trudeau, who managed the project. "That is its 'customer base.' Traditionally, all communica-tion had taken place by mail or telephone. Our mandate is to replace those manual processes between the CSST and thousands of its 'clients.' Today more than 500 employers are connected."
What will be the results once applications are fully deployed? Seventy percent of paper consump-tion will be eliminated through introduction of electronic files and forms. Information exchange will be accelerated, and the procesing time for compensation will be considerably reduced. At the same time, through use of the telecom network with value-added applications, errors have been reduced. Trudeau estimates that overall savings to the CSST could ultimately reach $25 million per year.
Trudeau is understandably proud too of the "impenetrability" of the network that serves the CSST and other clients of BCE Emergis. The government was adamant on the issue of security, given the sensitivity of the information being exchanged, and it asked for a security audit.
"Two independent security firms from the U.S. were called in," says Trudeau. "They were known as the most skilful of hackers. They tested the network from the Internet, and found that they could not enter. They came back and told us that our network was impossible to hack. It was only the third time it had ever happened to them."
With the help of BCE Emergis, users of this network can define their security requirements and establish state-of-the-art filters, encryption, and authentication devices. Just as it does for the CSST, BCE Emergis then manages and monitors the technology for its clients.
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Electronic Communities
Robert Habert, BCE Emergis's Vice-President and General Manager of Mortgage Services is located in Toronto, but 90% of his work is done in the U.S. Over the last three years Habert and his team have developed a lucra-tive niche in the mortgage business.
"We have made possible the electronic delivery of mortgage appraisals and affiliated reports, he says. "In the old days, an appraiser would go out, look at a property, take some pictures, write a report, develop the pictures, and then send the package off by overnight courier at a cost of, say, between twelve and twenty dollars.
"What happens now is that appraisers review a property and photograph it with a digital camera, come back to the office, key in the appraisal information on digital software, plug in their cameras, click a button, and deliver the whole report electronically. The delivery time is reduced to approximately ten minutes. We have partnered on this technology with the largest developer of appraisal software in the U.S., Polaroid Digital Solutions".
The role of BCE Emergis in such a process is to manage the e-commerce infra-structure, which represents a huge piece of the challenge. The company has spent millions of dollars to set up the infrastruc-ture. However great the Internet is, it is still built of, and accessed by, and fed through a vast array of different technologies, via a huge number of different ISPs. The task of the e-commerce enabler is to reconcile all the variables, and create a solution that guaran-tees immediate and legible delivery.
"We work with both the lender and the appraisal management companies)' says Habert. "We've got half of the top ten mortgage lenders in the U.S. working with our service. They're happy to have the whole process out sourced for them. We have rooms full of screens monitoring every application, every network we're connected to. We run a complete monitoring infrastructure."
Habert's group is in the midst of discussions to expand the service. "Movement of appraisals," he says, "is probably the biggest challenge and that's why we tackled it first. Many of our current clients are asking us to move into title check, flood insurance reports, and confirmation of employ-ment reports. Next, there are about ten different reports in the U.S. for each mortgage. Each involves a huge amount of paper-work and all may eventually be done electronically:
Another value added service for which BCE Emergis manages the technology is the On-Line Mortgage Explorer (OME) multi-lender Web site. OME offers the consumer the ability to shop and apply for a mortgage electronically. This is how it works:
By accessing www.multilender.com, a borrower in the U.S. may anonymously answer 14 questions which address basic information such as the home's location and loan product preference. OME then matches the borrower's response to each lender's criteria and provides the borrower with a list of suitable lenders. The borrower chooses a lender, and then completes and submits a loan application online. The lender evaluates the application, and contacts the borrower with a decision by e-mail or off-line.
BCE Emergis partners with Freddie Mac in the U.S. on OME. Currently the site features nine lenders; this number may grow to give users access to 1,350 Freddie Mac lenders. (Freddie Mac is a stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders. By supplying lenders with the money to make mortgages and packaging the mortgages into marketable securities, Freddie Mac reduces the mortgage rates paid by homebuyers. Over the years, it has opened doors for one in six homebuyers in America.
For perhaps the most telling illustration of how e-commerce is evolving, and how communities of interest are forming within it, look to the automobile industry. Having formed an action group to share expenses, General Motors, Ford, and Chrysler are participating in the Automotive Network Exchange (ANX), which is meant to provide mission critical business-to-business secure networking.
"Between them the Big Three have 12,500 suppliers," says Jim Dale, Vice-President and General Manager of BCE Emergis's Automotive Services in Michigan. "Those numbers make ANX the largest extranet initiative in the world."
ANX is 100% based on Internet technologies. It's private and dedicated, but it functions on the public network. When you use it, you feel as if you're using the Internet. The difference with ANX? Capacity is guaranteed. As well, end to end management of document flow is provided. In other words, if you send a purchase order or shipping notice, you don't have to worry about it going astray. The expertise for ANX was developed in Montreal by Bell Emergis, which also developed the network. The missing piece was the close relation to the OEMs, so the project was moved to Jim Dale's team in Livonia, Michigan, a suburb of Detroit.
All Canadian subsidiaries of the auto manufacturers are involved, and BCE Emergis believes that it will sell a connection to every supplier in Canada. When Dale is asked about the potential of the technology beyond North America, he says: There are two responses. First, there's beyond the continent, and then there's beyond auto. The auto manufacturers are global; the next step will be Europe. In terms of other industries, there's nothing about the technology that restricts it to the automotive sector. Other industries are lookig to adopt it for documents that need more security and more guarantees than the public Internet can provide."
Dale points out that the project is still nascent. As soon as it's truly up, Ml of the auto companies will move their mission critical applications onto ANX. My role is to help them get their applications ANX compatible, so that all of their trading partners can combine to them. What the community wants to do is reduce the cost of goods flowing through the supply chain, and by standardiz-ing on a network like this, the auto companies figure they can save about $72 per auto"
That adds up to a heck of a lot of money, and points to the promise ofe-commerce-once it is lodged in every sector of the economy to bring down the cost of living.
"A spine-tingling opportunity"
Last November, when BCE Emergis acquired the assets of Newstar Technologies' e-finance division, the purchase positioned the company as the foremost electronic commerce provider to Canadian banks. Newstar had been focused on the financial services market for over twenty years, geared toward providing each generation of electronic banking products. It had reached the point where it was operating billions of transactions monthly for financial institu-tions on a fully outsourced basis.
'Approximately 53% of bill payments in Canada are performed through Newstar's offerings," says Terry Ham, former President of Newstar's
e-Finance Division and now BCE Emergis's Senior Vice-President Financial Services.
The acquisition of Newstar brought to BCE Emergis an important expansion of product, as well as proprietary tools and engines. It also brought a dynamic and highly experienced senior management. Most significantly, however, it brought a widening of BCE Emergis's circle of alliances, and perfect positioning to win the biggest e-commerce mandate in Canada.
A consortium of Canadian financial institutions has formed to offer the public and merchants the capability of presenting bills on-line through seamless and integrated electronic channels. The consortium includes the Royal Bank, the CIBC, the National Bank, the TD Bank, the Desjardins-Laurentian Group, and Canada Trust. In the years ahead, the name chosen by the consortium will very lIkely rise to the level of a household phrase: "e-route."
Just last month, BCE Emergis (in conjunction with Bell Canada and Microsoft) Twas chosen by e-route to enter into exclusive negotiations for a long-term contract for the provision to e-route of an electronic bill presentment service.
What will e-route mean for the individ-ual and businesses? "Whereas now you receive your bills in the mail, and take them to an ATM or do telephone banking," says Francois C6te', BCE Emergis's Senior Vice-President of Business Development, "the new application undertaken in concert with Microsoft and Bell Canada will present the bill electronically. This will allow for complete fulfillment of the electronic deliv-ery chain. Individuals and businesses will be able to have all their bills consolidated on the Internet by their financial institution. Consumers will go to their bank's Web site to receive their bills, print their bills, and pay their bills. The savings in postage and paper will in time prove huge."
The development is so charged with ramification that Cote calls it, in the jargon of the industry, 'a killer app.'
"It will be a cornerstone of the Canadian electronic economy, and it will allow Canada to make a leap over other industrialized countries, due to the common infrastructure for all merchants. It's one of those spine-tingling opportunities. In essence, this will provide electronic bill payment capability to every Canadian, and will provide bill presentment to every merchant in Canada."
At the end of the day, no one in electronic commerce is really sure about how big the industry is likely to become, but everybody agrees that it will be enormous.
"What we're experiencing now is a growing awareness of the existing capabilities," says Brian Edwards. "The future of the industry will be a function of how much imagination we have. Look at smart cards, and the secure signature technology that we're about to come up with, and how that's going to affect us. I think that very soon we're going to see e-commerce move to personal devices. Palm pilots are going to become much more sophisticated. They're going to become wireless. You're going to be able to do your bank-ing on them. We'll have a multitude of such devices with our personal lives built in our whole medical history in our pockets, for instance. The capabilities and infrastructure are in place. Now it's just a question of vision and imagination." |
