I suggest Hypothesis 4: 1 and 2 are true, based on business needs and
circumstances. The business world is not a mathematical formula, nor
will it conform to logical standards as long as old men make decisions
on the golf course. (just my opinion)
-----Original Message-----
From: Michael Burbury [mailto:[EMAIL PROTECTED]]
Sent: Thursday, August 16, 2001 12:35 AM
To: [EMAIL PROTECTED]
Subject: Internet vs VAN vs capabilities and cost = Business Decision.
Hi there all,
Due to the number of responses I have received on my previous email, I
believe it would be worthwhile to start a new thread to discuss the NULL
versus ALTERNATE Hypothesis of Internet versus VAN service provision,
costs and capabilities, and therefore ones sound and quantified Business
Decision.
As discussed previously, I offered two Hypothesis.
The Null Hypothesis:
"Using the Internet to transact business documents is cheaper than using
a VAN."
Of which the Alternate Hypothesis is:
"Using a VAN to transact business documents is cheaper than using the
Internet."
The order of these two Hypothesis is not of importance. I could have
flipped a coin and ordered them accordingly and the outcome would not be
any different. There are only three possible outcomes:
1. The NULL Hypothesis is true
2. The Alternate Hypothesis is true
3. Neither Hypothesis is true - the costs are the same.
There can be no other outcome to the proposed Hypothesis.
The outcome of your research into the two Hypothesis will result in a
sound and quantified Business Decision.
It has already been proven that the following Hypothesis is true:
Transacting Business documents in Electronic Format can save money,
streamline business processes and reduce the number of defects on each
opportunity. The opportunity for defect can be anything from re-typing
data from a form to supply of the correct "stuff" to a customer on time
and within budget - to billing the correct amount. An opportunity for a
defect can be any piece along the process of performing the desired
business outcome. By reducing the number of possibilities of a defect,
one can be assured it will impact the business bottom line significantly
(you can tell I work for GE <grin>).
Now, working on these two Hypothesis statements above, one needs to
weigh up all the factors that impact the choice to be made.
For example:
What computing environment and capabilities do I currently have?
What computing environment and capabilities do my trading partners have?
What is the Business computing strategy?
What is my Industry computing strategy? <- Important one that is often
neglected.
Do I have sufficient in-house skills to complete the project myself?
Should I outsource the project to a provider of service whom has
specific skills I require?
How do I quantify if I should do it in-house or outsource the project?
Each business will have it's own answers to these types of
"Brainstorming" questions and there is usually many more than what I
have listed above, I'm just trying to give you a starting point. I
would recommend that you consult with your trading partners to also find
out what their computing strategy is, if they have one. This will all
aid in your calculations on how the project will proceed.
One you have defined some background as to the possibilities of your
project's scope, you may now define a "List of Requirements".
For example:
I require that 100% of my trading partners communicate electronically.
I require a minimum 99.7% uptime for the service provision.
I require data formats to be compatible with the solution proposed and
my trading partner's solutions.
I require the solution to be secure and free from possible abuse.
Now you have your list of requirements, you can then move forward and
"tender" for a quotation of service provision.
This may be in-house or may be from an external consultant or may even
be from a friend and should be from all of them.
>From the tender(s), one must break down all pieces associated with the
service provision and costing(s) associated with each piece until you
finally get to a "cost per transaction". These pieces should include:
Network and redundancy or availability guarantees and fees/penalties.
Software, upgrades, annual maintenance and consulting fees.
Internal resource utilization time and training.
Infrastructure requirements.
Again there will be many more items of consideration.
Now, going back to the Hypothesis, one will be true for YOUR business
and one will not. How you come to this decision will be based on the
questions you ask and the capabilities of your business and that of your
trading partners.
To best describe this, I will provide an example in which the resultant
answer was that the NULL Hypothesis was true and the Internet proved to
be a more cost effective medium of service provision.
A specific "closed community" wished to form an alliance to trade
business documents electronically. The meaning of "closed community" is
that these businesses did not require the trade of business documents
outside of the closed group of partners. The community itself was of
reasonable size of 500 partners. The 500 partners mostly had no
computing environment or strategy and were in areas of poor
communications infrastructure (ever been to Papua New Guinea or Fiji?).
The requirements of the trading partners were minimal and most already
had access to the Internet for Web browsing and email. Security was
important for the business transactions, but the consortium of partners
chose to use the least expensive security option (being PGP Email).
Secondly, the reliability of the solution was not paramount as if email
systems failed, a reversion to FAX was used. In house integration to
back end systems also was not paramount for the project for each partner
as most did not even have back end systems and relied heavily on manual
processes.
So as you can see, each business case will make one of the Hypothesis
true and one not or it may in fact come out as being equal in cost of
provision. If it does come out equal, how do you choose? If two cars
you like are identical in price and services, which car would you choose
to buy? Brand name? Reliability? or even a recommendation from a
Friend? If the two are equal, you will need to "drill down" into the
long term costing of provision of service, reliability and features. It
should also provide a means of "future proofing" your solution so that
new technology can be easily incorporated. It may be EDI and XML over
SMTP S/MIME or HTTP/S today, but who knows what is coming in the future?
Maybe a method of monitoring human thoughts for patterns so that
businesses know when to target specific services or products to your
"thoughts of improving your specific requirements?" Who knows?
As always, I welcome feedback and will happily assist in helping you
determine what is best for your situation.
Best Regards,
Michael Burbury
GE ecXpress
System Administration
My views are not those of the company I work for and are purely my own
views on this subject. Please do not think that because I work for a
VAN, I might be biased towards the ALTERNATE Hypothesis. I take a
passive stance that states that either Hypothesis may be applicable to a
specific requirement definition and will mostly be equal in cost of
provision.
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