Local e-commerce needs regulatory support

Australia lacks the necessary infrastructure and regulatory authorities to cope with the $US200 billion-plus global electronic commerce marketplace, according to a management consultant.

KPMG management consulting partner Jim Walker said the key element missing in Australia was "a trust architecture" that could facilitate third party management and authentication of digital certificates necessary for electronic business transactions.

Speaking at the Australian Computer Society 1998 Electronic Commerce Symposium at Lorne in southern Victoria, Walker said Malaysia and Germany were leading the world in development of such an architecture. Both countries have established similar agencies charged with this responsibility, he said.

However, he said, Australia, the US, Britain and most of Europe and Asia were still working on it.

This stumbling block comes at the time, Walker said, when Australian companies are starting to shed their concern over security issues associated with electronic commerce.

But while the absence of a suitable framework for electronic commerce clearly has the potential to disadvantage businesses, the e-commerce solution providers themselves, particularly in the US, are in a critical condition.

Few organisations have been able to justify investment in e-commerce solutions largely due to fragile security and regulatory foundations.

Walker said that more than 80 per cent of electronic commerce companies in the US have so far failed to turn a profit.

This is despite the fact these companies account for an aggregate capital investment of more than $US30 billion.

A team of UN specialists based in Melbourne is currently working to develop an Australian certification authority, Walker said. By accessing what is to be called GTPnet, local companies will be able to trade with registered companies and access relevant information. However, certificates for global trust and security, necessary for high value dealings remain in the development stage.

And while the process of ironing out a system that's right for Australia may be further complicated by state and federal government intervention at the regulatory level, local organisations will be forced to re-engineer their own operations internally, according to Mark Hughes, electronic commerce manager, Coca-Cola Amatil.

"E-commerce accentuates the failure of business to understand applications," Hughes said.

He said that electronic business entails much more than simply adapting existing business practices for the electronic world.

"The whole sales/business model changes," he said, and companies must understand this from the perspective of their IT systems.

"The creation of application to application solutions demands an understanding of what it means to remove people from the equation," he said.

Existing data repositories for customers, their contact details and so on could be undermined by the legacy of manual record keeping.

Hughes cited a recent incident whereby Coca Cola was forced to retrain 1800 sales staff and reprogram 1000 hand held machines after it was discovered that entry fields in invoices and other documentation were riddled with inaccuracies.

"Preparing for e-commerce is paramount to business process re-engineering," Hughes said. Even if a company chooses not to pursue an e-commerce strategy, preparing to do so will increase efficiency.

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