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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Elmer who wrote (152688)	12/17/2001 2:19:37 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Intel Readies EDI Retirement By Mitch Wagner Monday, December 17, 2001, 1:00 PM ET. Santa Clara, Calif.--Intel last week said it will replace EDI with RosettaNet standards by 2006, making it the first company to publicly commit to retiring electronic data interchange. The chip maker also said it's reached a RosettaNet milestone: By year-end, Intel will be swapping data in RosettaNet's XML formats over the Internet with 50 trading partners. Intel sees the use of RosettaNet and the Internet as superior to EDI in cost and flexibility; hence the five-year plan to phase out the legacy technology. Although some companies have been conducting EDI transactions over the Internet, newer XML technology offers several advantages. EDI exchanges data in batch mode--meaning transactions occur at prescheduled intervals, such as daily--whereas XML supports real-time exchanges. Moreover, RosettaNet's error-checking features--absent in EDI--have made its transactions three times as accurate as those in EDI, Intel said. The 50 Intel partners that will be using RosettaNet are mostly large companies that also have EDI connections. Intel's plans for 2002 call for using RosettaNet to communicate electronically with smaller suppliers as well. Some large partners that aren't yet exchanging data with Intel using RosettaNet, including National Semiconductor, look forward to doing so. "I'm ready whenever they're ready," said Mike Glynn, IT director at National Semiconductor. "I've enabled RosettaNet with a couple of other customers, so doing it with Intel is not going to be a big deal." Intel could save as much as 2 percent of revenue, or roughly $564 million, annually by tuning its supply chain with Internet technology, estimated Vernon Keenan, founder of analyst firm Keenan Vision. That includes the move away from EDI. The savings would be realized as customers and suppliers enter their own data into Intel systems. That would eliminate the need for people to enter the data manually and for specialized networks to transfer the data. Intel would also be able to reduce sales head count as customers enter their own orders in self-service systems, and the company would save from a reduction in transactional errors. But Keenan said he doubts Intel, or any EDI user, will be able to pull the plug on the technology in its entirety, even over a five-year timetable. Transitioning to RosettaNet from EDI will be a big job. Although Intel now has 35 big trading partners on RosettaNet, the transaction volume is still very small; less than 1 percent of the company's trading volume is now done with RosettaNet standards. Intel plans to raise that percentage next year--precise goals are still being determined--and the company said it will move more than 50 percent of transactions to RosettaNet by 2003. Intel customers currently online with RosettaNet include Compaq, IBM and distributor Arrow Electronics. The RosettaNet initiative is part of a big online push for Intel. The company started selling chips and subsystems over the Web in July 1998 and almost immediately ramped up to $1 billion per month in sales. Today, Intel counts both EDI and traditional Internet sales as Internet-based. That's because key EDI-related functions are performed over the Internet, including inventory management at Intel and at the customer site, as well as exchanging price and availability data, said Sandra Morris, vice president of Intel's e-business group. When it comes to dealing with suppliers, Intel is implementing collaborative design and quality control applications over the Internet. Intel is using a mix of homegrown tools and standardized connections from enterprise and manufacturing resource planning vendors such as SAP. About 90 percent of direct suppliers connect to Intel electronically. Intel was running at a $5 billion annual rate of procurement over the Internet in midyear, when about half of indirect suppliers were connected over the Internet. Since then, Morris said, an additional 20 percent of indirect suppliers have gone online. internetwk.com