Take specialty steel maker Howco Group. The Glasgow, Scotland-based company is a worldwide supplier of metal for the oil and gas industry. Customers order steel based on their specifications, which include the alloy used, the strength of the metal and its ability to withstand heat and stress. The metal is typically sent to machine shops to be shaped into a part for an oil derrick or refinery. Howco orders can be less than a $1,000 and as small as a four- to five-foot bar of steel about 18 inches in diameter.

Howco receives about half of its purchase orders via EDI and about 40 percent through fax and telephone calls. Less than 10 percent arrive through the company's web site, built using a sales cart application from ComCity Corp. and customized Active Server Pages. The latter let customers get order status and other data from Howco's Stelplan ERP system, licensed from Invera Inc. The system runs on a Microsoft SQL Server database.

Purchase orders move between Howco's and it's largest customers' ERP systems via EDI. While individual orders may be small, many customers order regularly, with some requiring delivery within 24 hours. Even though EDI has been around for at least two decades, an eternity in technology years, Howco is content to stay the course. "If it works, you stick with it," Malcolm Howat, web development manager for Howco in Houston.

Howco would like to have more customers ordering through its web site (since taking orders there is more automated and cheaper) but its customers prefer doing business either through EDI, telephone or fax. "We're trying to grow the web site but, in our industry, doing business over the Internet is catching on slowly," Howat said. "We're quite happy to use it as a backup for our sales team."

Howco is not the only company reluctant to change what works. Enterprises are no longer rushing to the Internet, preferring to take their time to make sure any new implementations align with business goals. Besides the weak economy, studies show that immature technologies, high implementation costs and workplace culture are dampening enthusiasm for new supply chain applications.

A survey of IT managers conducted last summer by Information Week, a sister publication of InternetWeek.com, found the use of Internet-based supply-chain networks declining to 51 percent from 61 percent in late 2000. That trend is unlikely to improve much over the next several years. A survey of executives by high-tech researcher Forrester Research Inc. found that only 8 percent planned a significant increase in spending on supply chain management applications in the next three years. Fifty percent planned a moderate increase, and 27 percent expected no change in spending.

When Howco is ready to look to the Internet, chances are good it won't need to wander too far from EDI. Experts say companies heavily dependent on EDI today are likely to move to EDIINT AS2, or Electronic Data Interchange-Internet Integration Applicability Statement 2. The new standard for EDI-over-the-Internet essentially creates a wrapper around an EDI flat file so it can be sent over the Internet, instead of a VAN, or value-added network. VANs are what make EDI systems so expensive and out of reach for all but the largest companies, because they carry per-transaction costs. In addition, AS2 provides security and encryption for the HTTP packets.

Retail giant Wal-Mart Stores Inc. tapped IBM and Sterling Commerce, a subsidiary of SBC Communications Inc., to help move its 8,000 suppliers to Internet-based EDI. Wal-Mart uses EDI for exchanging purchase orders, invoices, shipping notices and other business documents.

By switching to AS2, Wal-Mart can reach smaller suppliers, thereby extending its network. "AS2 reduces the cost for mid-size companies to participate," Jason Bloomberg, analyst for research firm ZapThink, said. "AS2 is a way to make EDI more economical." For companies like Wal-Mart, new business-to-business technology, such as XML (extensible markup language), offers little that can't be immediately gained by Internet-enabled EDI, he added.

Nevertheless, Howco is not ignoring new Web-based applications. Besides taking orders, the company's web site gives its largest customers a view of the inventory Howco holds for them. In addition, customers can see current purchase orders and where the orders are in the manufacturing process.

But before Howco drives further out in the Internet, its customers will have to agree to sit in the passenger seat. "We are currently looking at all possible options for EDI and Internet technology, but we are driven by what the customer chooses to use," Howat said.

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