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The intention of EDI is to eliminate the repetitive, error-prone procedures involved in paper-based trading. However, one Australian company, Halisa Pty Ltd, claims that ANSI X.12-based EDI systems are "a steamroller to crack a nut" – and yet fail to complete the full office automation process. Halisa has developed RUBAC (Rational Universal Business Automation Codes), a 32 code universal coding, electronic communication and filing system, based on the 256 ASCII character set.

Halisa claims that, fully applied, RUBAC could reduce administration costs from a current minimum of 30% of company costs to around 5%. "A structured computerised filing system will provide savings of that magnitude once information can be sent and filed electronically", the company asserts.

This cost-saving estimate is based on Halisa’s own internal tests of its RUBAC prototypes, developed in three years’ analysis of the transaction needs of the insurance industry, including underwriters, brokers, agents and end users. RUBAC works in at least two fundamental ways:

1. Creating pro forma documents, held by both sender and receiver companies, so that only the minimum amount of variable information (e.g. products and quantities) needs to be transmitted, cutting out massive slabs of data such as names, addresses, etc., usually repeatedly included in the supply cycle (see Figure 3-3); and
2. Automating the business cycle beyond basic purchase and invoice functions into all areas of administration – e.g. sending of marketing information and brochures, plus all filing and backup requirements. A graphic representation of this is shown in Figure 3-4.

Halisa claims RUBAC will ensure EDI does not remain limited in industry to the major users, but is available to the 80% of smaller companies as well. It sees ANSI X.12-based EDI as having a role in handling more complex document requirements.

Recently, the company has been seeking investment of $1.2 million to continue development of RUBAC, ideally from a syndicate of strategically placed companies: three hardware vendors, three software developers, three investment companies and three insurance groups. It believes this combination will ensure more widespread commitment to the full automation concept, as well as financing RUBAC’s development.

Halisa has since had serious expressions of interest from three companies, two MICs and a communications company, prepared to invest the entire $1.2 million for 51% of the company. However, Halisa turned down the offers because it believes that a syndicated approach to capitalization is the only way to ensure the breadth of use required to make RUBAC successful.

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The Yankee Group concurs with this assessment which addresses a problem also faced by EDI: achieving widespread compatibility between systems often used by traditional competitors. Certainly, the Yankee Group believes the capital alone is not enough: RUBAC needs to be backed by a range of companies, from different sectors (to complement Halisa’s strong knowledge of the insurance market), with considerable clout if it is to succeed.

RUBAC has been greeted with guarded enthusiasm in some quarters, with wariness and incomprehension in others. The Yankee Group sees this as perhaps symptomatic of the considerable learning curve which business has yet to traverse concerning electronic communications and data processing. While the concept may be before its time, its basic principle is opposite to EDI development in that:

• It is widely agreed that EDI’s external communications must be incorporated with the internal applications of each company, creating inevitably major new disciplines for the company – in short, new methods of doing business; and
• The achieve maximum savings from EDI for all parties, the widest possible standardisation of message and communications formats must be achieved.

In order to achieve these goals, the Yankee Group believes an unusual degree of co-operation and co-ordination by the Australian business, regulatory and government communities must be implemented.

The role of RUBAC in EDI in Australia is clouded by the lack of resources to further develop the product. This may be remedied if Halisa’s principals can entice the investment required; a task made more difficult by the caution of potential investors as yet unsure even about investing in their own EDI systems.

Certainly RUBAC offers a level of integration that would go far beyond the current level of EDI, fulfilling the long term goals of EDI. As noted above RUBAC’s implementations also requires almost unprecedented co-operation between the ultimate beneficiaries of the system. Further, it is playing against the wind which EDI proponents are keen to see blowing at gale force.

But without the investment and co-operation, the Yankee Group fears RUBAC will be another Australian initiative lost. Even if the right things happen for RUBAC, it is still up against the established, increasingly global, standard that is ANSI X.12. For this reason, the Yankee Group is convinced that the product needs more than extra funding: it needs powerful allies to support it in the achievement of its aims.

1. Conclusions

The enthusiasm for EDI among its proponents and early adopters is understandable. What the technology offers, already in its present state, are very substantial savings and efficiencies.

In the longer term, it promises to be the nervous system for the entire industrial and commercial organism, allowing it to react with instinctive speed and judgement, born of instant communications, to business needs and opportunities.

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As in all explorations into virgin technological territory, some of the missionaries will be eaten by cannibals. The first pioneers have staked their claims, though we can expect a second generation of as yet unidentified innovators to emerge, and adapt EDI to their own needs.

Possible brakes on that development in Australia are:

• In a cautious economy, companies may be wary of committing the necessary development resources to a technology whose full fruits are still some way off;
• Too may service providers may enter the sector, preventing any from making real profits. Price-cutting (as occurred in the UK) could exacerbate this problem;
• Ignorance of EDI as a new technology may persist longer than it should; and
• Despite overseas lessons, there may be insufficient co-operation to establish fully compatible standards.

The real opportunity may lie in how rapidly the challenges are faced. In any case, the Yankee Group predicts that:

• EDI will significantly reduce the cost of doing business in Australia;
• EDI will result in new efficiencies, based on fundamentally new ways of operating and trading, particularly as ‘internal EDI’ – its integration with company applications – gets under way;
• EDI will spawn a new industry of service and software suppliers, with a strategic presence of hardware suppliers; and
• EDI will gradually be integrated into a wider range of Value Added Services in the communications and data processing areas.

That EDI offers users a substantial benefit is clear. The Yankee Group believes that the organisations which are the early adopters of EDI will have a strategic competitive advantage over organisations which drag their heels. Any business, be it public or private, must be aware of the costs involved in the paper chase. If they do not see benefits, both in winning the paper war and streamlining the logistics process, and act on them as a matter of some priority, the Yankee Group does not believe they will be competitive in the 1990s.