9 Hot Trends for '99

orget about electronic commerce. To the cognoscenti, it's "e-commerce," and they're all doing it. The Defense Department took a big step in this direction in March, when it signed up for a service called PowerTrack, operated by U.S. Bancorp of Minneapolis. The bank essentially maintains an online clearinghouse for shipping information, on behalf of both shippers and those receiving shipments. That information includes bills of lading, delivery receipts and -most importantly -payment information.

When participating DoD agencies need to send supplies abroad, for example, they can verify the shipment is en route, confirm delivery, make changes and corrections in the records (for instance, if three boxes were delivered but not the fourth) and get billed electronically, all via the Internet.

They pay the invoice by approving a payment authorization that appears on their desktop computer. The PowerTrack system can link to the agencies' financial systems so that transactions are automatically recorded. User agencies also get reports periodically or as needed on their spending to date, carrier performance, comparative costs and other management concerns.

The Army, Air Force, National Guard, Defense Logistics Agency and U.S. Transportation Command are beginning to use PowerTrack to pay more than 600 participating carriers. Those companies move about 95 percent of the DoD participants' shipments by motor carrier, air freight, express parcel service and intermodal container. Shipping bills for the covered agencies add up to about $1 billion a year, according to a U.S. Bancorp representative.

Pentagon officials expect the new service, which will be implemented this year, to shave $10 million from what they now spend on shipping. Most of the savings will come from eliminating
labor-intensive paperwork and delays, although the newly available management information also may contribute to efficiency.

The shipping companies benefit from faster payment and their own reduction in paperwork. Richard Brown, managing director of government sales and logistics for Emery Worldwide, says one large DoD shipper paid shipping bills, on average, 50 days faster during a pilot for the new system last year. Emery Worldwide is one of DoD's largest carriers.

Mary Lou McHugh, assistant deputy under secretary of Defense for transportation policy, calls the new arrangement a "win-win solution for DoD and our carrier partners." Similar outcomes from other agencies' e-commerce initiatives are propelling this trend, turning years of talk into real activity.

In the government, of course, "commerce" tends to mean buying from the private sector, as DoD is doing with shipping services. But a broad definition of e-commerce is applicable to agency activities such as making or guaranteeing loans, issuing permits for the use of federal lands, or disbursing crop support payments to farmers.

Doing business electronically puts new demands on communications systems. They must be more reliable, secure and capacious if they are to be the infrastructure for important transactions. What's more, users want security features to be nearly invisible, even though strengthening network security usually results in some inconvenience.

Although e-commerce technology is not fully mature, forward-looking agency officials don't believe they have a choice about embracing e-commerce strategies. Powerful economic, social and technological forces -including downsizing, workforce shortages, public expectations and Internet hype -are pushing them forward.