The biggest impact on trade over the next 10 years will be the automation of the selling and ordering process carried out between customer, supplier and distributor. This is still done mostly by people using the outmoded telephone and postal systems. General Electric’s Geisco information services unit claims that 690 cities in the world are within local dialling distance of each other, representing 95% of the free world. But although the process is steadily heading along the electronic route, it is a slow one, and requires enormous investment on the part of value added network operators. But the biggest single problem, according to Geisco’s UK managing director Dr Colin Bell and ICL’s Peter Gershon, now chairman of the newly formed joint venture company International Networking Services Ltd (CI No 599) is the problem of making it happen, the problem of marketing. It needs initiative on the part of the trading clusters as the potential users of the network-based services.
Worldwide basis
Geisco and ICL finally laid down their plans for a combined thrust into the international electronic data interchange market last week with their announcement of the new company equipped with a new contract with the Corporation of Lloyd’s and the Lloyd’s Insurance Broking Committee. The new International Network Services Ltd, based in Feltham Middlesex, is 60%-owned by ICL and 40%-owned by Geisco and aims to be a UKP50m company by the early 1990s, growing at between 20% and 50% per annum. This year Geisco and ICL will complete physical interconnection of the two networks by the end of 1987 and the main focus of the year will be to integrate Geisco’s EDI Express service with ICL’s Tradanet service to form International Tradanet. Both Geisco and Mercury will be used to carry traffic within the UK and Geisco’s communications lines will be used outside the UK. The message from Geisco and ICL is that if trade associations would only talk to each other on a worldwide basis the benefits for everyone, including themselves of course, would be enormous in terms of time and money. But prejudice, ignorance, and mistrust between competitors and countries is rife. Setting up plant is easy enough for Geisco. Setting up a distribution network is more difficult. This it hopes to overcome by establishing national bridgeheads, like the company it has established with ICL in the UK. Quite apart from having a network in place, ICL still has the largest installed customer base in the UK, mostly in the public sector. So Geisco came to ICL for UK sales and marketing expertise. In return it will be using its own muscle to market ICL’s value added network services internationally. And Geisco plans to set up similar deals with other flagship companies in other countries. Electronic Data Interchange is about electronic communications between trading clusters. One example of a trading cluster using Geisco’s EDI Express service is the Society of Motor Manufacturers and Traders, SMMT. International manufacturers like Ford, British Leyland and Peugeot exchange information with their dealers and suppliers like GKN and Lucas using a service called Motornet. A manufacturer like Ford will need to exchange constant and timely information with its distributors as well as suppliers GKN and Lucas. Banks are the hidden fourth player in the cluster, which Geisco and ICL hope soon to pull into view. This makes up the primary links in a trading cluster, but the secondary links are formed with other trading clusters. Geisco’s aim is to link SMMT with other trade associations worldwide – like Gallia in France, Misa in Germany. The US motor trade association, Mema, can already talk to Motornet and calls the service it uses from Geisco Transnet with its own documentation formats. Geisco is in discussions with organisations in Scandinavia and Germany to establish bridgeheads at a national level for clusters. The other type of venture it is pursuing is to go for service providers in vertical industry segments. An example of this is Wildata in shipping. Geisco claims to be way ahead of
its competition in the value added services market. It is part of the 16 business units under the umbrella of General Electric, the latest of which is its RCA Globcom acquisition. Geisco will work closely in the future with Globcom as one of the Federal Communications Committee’s licensed US international record carriers. Dr Colin Bell envisages at the most six value added network operators in five years time and more likely just three. It sees itself there in conjunction with companies like ICL, because it is an international rather than a multi-national company, and independent of its parent in the sense that it is not a captive supplier to General Electric. International revenues are growing at 40% to 50% per annum, where national revenues are growing at 10% to 15% per annum. He also sees IBM being in there if IBM has made up its mind that it really is a market it wants to pursue, although he regards IBM as a multi-national company with a kind of federation of national baronies, with staff motivated to get results at a national level. He also expects Electronic Data Systems to be there, although up to 80% of its revenues come from General Motors.
Electronic insurance
ICL looks well enough equipped to carry its services across the UK borders. Managing director of INS, Lee Tate, from ICL, says that the INS UK network will need to be expanded to cope with anticipated growth. Its contract, with the Lloyd’s Insurance Broking Committee, LIBC, and the Corporation of Lloyd’s in the City is for an electronic insurance service; it is only a three-month pilot contract but its significance is that it was swiped from under the nose of IBM in a market which it dominates. ICL combined with Geisco, which does 50% of its business in the banking and financial sector, is a much stronger force to be reckoned with. Lloyd’s, a steadfast IBM equipment user, and the LIBC have already conducted a trial with IBM to automate the settlement data which is passed around the City each week on magnetic tape. But the trial with IBM has evidently failed to come up to Lloyd’s and LIBC’s standards and INS is hoping this is a sign of things to come in the financial market. Five of the six sites are IBM sites. INS is calling the pilot service Limenet, for London Insurance Market Electronic Network, and hopes it will become the first new service to be developed jointly by ICL and Geisco. A minimum of three out of the 260 Lloyd’s brokers will be connected to Lloyd’s in the City and to the Lloyd’s Policy Signing Office, LPSO, in Chatham, connected in turn to an agent, which manages affairs in the market for the group of syndicates. Limenet is a pilot service, but the new INS team will develop more services together in international banking, manufacturing, the automobile and aerospace industries and transportation.
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