Good lord! What is all this garbage?
A perfect example of the shortcoming of EDI - get two overzealous
sophisticates involved in your decision making process and you get bogged
down in a bunch of perfumed garbage.
The internet instead of the VAN is a no brainer! What company doesn't
already have some internet connectivity? Why pay a cost per character when
you can do it for no cost per character?
If I had used VAN instead of internet, my monthly VAN costs would have been
about $50,000. Using the existing internet connection, the van fees were 0$.
Anthony
-----Original Message-----
From: Stephen O'Shaughnessy [ mailto:[EMAIL PROTECTED]
<mailto:[EMAIL PROTECTED]> ]
Sent: Thursday, August 16, 2001 1:21 PM
To: [EMAIL PROTECTED] <mailto:[EMAIL PROTECTED]>
Subject: Re: Internet vs VAN vs capabilities and cost = Business Decision.
I'm afraid your use of hypothesis testing is flawed. It is of crucial
importance which hypothesis is used as the null. You can't just flip a
coin. The null hypothesis looks to find just that ONE instance that
disproves your hypothesis. The alternative is to find EVERY instance that
proves the hypothesis. A formidable if not impossible task.
The alternative hypothesis will never actually be tested. It is only
inferred based on the results of testing the null hypothesis. If you find
the one instance, you disprove your hypothesis. If you don't, well, it
proves nothing.
The case, as presented, is really two hypotheses: VAN's are less expensive
and Internet is less expensive.
For the current discussion we are wondering if moving to the internet is
less expensive than the status quo of using VAN's to transact business
documents. The null hypothesis always states the opposite of what you are
trying to prove. In this case internet is less expensive. Again, this is
because it's easier to find one example that disproves the hypothesis than
the many required to prove the hypothesis. In my opinion our test should
say:
(Ho: is the standard notation for a null hypothesis)
(H1: is the standard notation for the alternative hypothesis)
Ho:The use of VAN's is the least expensive method of transacting business
documents electronically.
H1: The use of VAN's is the same or more expensive than other methods of
transacting business documents electronically.
The independent (the one we can manipulate) variable is methods used to
transact business documents electronically.
The dependent variable (the one we would like to measure) is cost.
Unless you want to delve into multi-variate statistics, all other parameters
must remain the same (see below).
Now all we have to do is find one method that is less expensive than using a
VAN. If we do we can reject the null hypothesis and accept the alternative.
Note: This does not prove the alternative, just that we couldn't find
statistical significance to reject it.
This may sound like a bunch of semantics to you but it is vitally important
if you don't want to be duped by statistics. Statistics don't lie. But our
ignorance, fueled by zealous sales people, can be used against us. From
Michael's hypotheses it is very easy to prove both. Most ISP are less
expensive than VAN's. But given the right set of additional parameters and
the VAN's will come out ahead. In short the original hypotheses are useless
unless you are trying to sell something to an unsuspecting buyer.
What's key to this discussion is whether or not all the other parameters are
the same. I fear our hypotheses are too broad to be tested. At least the
cost is not a simple access fee. There are many other costs which must be
factored into the test. Michael did a good job of showing us just how many
other parameters are involved.
As Michael noted, to make an informed decision an number of things, unique
to your business, must be looked at. In general internet transactions are
less expensive. They offer a wider variety of formats and options. But,
unless you are in a position to take advantage of these other options, the
VAN will be the best deal.
-----Original Message-----
From: Michael Burbury [mailto:[EMAIL PROTECTED]]
Sent: Wednesday, August 15, 2001 11:35 PM
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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