HispanicBusiness

By Jennifer Riley

In his 21 years as president of RGMA, a Chicago-based management consulting firm that advises minority businesses on technological and strategic issues, Ralph G. Moore has seen three technological revolutions. First, the PC came along and made business more efficient. Then e-mail and the Internet made communications easier for businesses. And most recently, e-commerce has broken down geographical and time barriers to conducting business. As is the case with most revolutions, failure to change with the times could be deadly.

When it comes to procuring new business, today's companies have to move faster, be better informed, and be willing to consider their domain as extending beyond their local vicinity. Consequently, many people feel that technology has created a burden for smaller, minority-owned businesses that might not have the resources or know-how to keep up with such rapid changes. But Mr. Moore is not one of them.

"It's a tremendous opportunity for minority businesses to participate in procurement if they can master technology," he says. "The good news is, this technological race is still new. If in fact we pounce on the technology, there's an opportunity for us to replace a whole generation of aging smokestack businesses. Minority businesses have been in the back of the line and can't move any further back. Technology will dictate who moves up."

So what technology must small, minority-owned businesses have? According to Mr. Moore, whose firm also helps large firms implement supplier diversity programs, a business must be able to consummate a transaction over the Internet, must have a Web site with an e-catalog and software that enables it to interface with the customer, and must be EDI-capable.

EDI (electronic data interchange) is the modern-day equivalent of the telephone when it comes to procurement. Without this technology, which enables businesses to electronically exchange purchase orders, invoices, shipping orders, confirmations, and other business documents in a standardized format, a firm is not eligible to compete for most government contracts and is likely unable to compete for corporate ones. In order to be fully EDI-capable, a company must have a computer, a modem, EDI translation software or access to an EDI translation service, EDI implementation conventions, and subscription to a Value Added Network (VAN), which facilitates data transmission through EDI networks. There are about 7,500 EDI-capable small businesses registered on the Small Business Administration's (SBA) Pro-Net.

The advent of the Internet – an open system of electronic communication – challenges some elements of EDI, which operates on a closed system. For example, companies must incur the cost of software and a VAN subscription in EDI, but the Internet is free. The fact that EDI's closed system is more secure than the Internet, however, helps explain why it is still an essential element of the procurement process.

The 1994 Federal Acquisition Streamlining Act sealed the fate of businesses seeking government contracts: go electronic or go without. As a result of this legislation, most federal agencies developed electronic procurement systems through which they could post Requests for Proposals (RFPs) and receive bids from contractors. But with separate systems for each agency, the procurement process was only slightly less complicated than it had been in its paper-based form.