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 July 1, 1999

Electronic post office pilot ready

BOUDER — NetDelivery only has one client.

For most businesses, that would be a sure sign of trouble, but not when your one client is the Canadian government and not when you’re in the burgeoning electronic document delivery market.

Using NetDelivery’s Electronic Delivery Management (EDM) system, the Canadian Post Office is developing a “electronic post office” for its clients. The technology will allow customers to receive all forms of electronic documents through a secure, encrypted “electronic mailbox.”

“It’s the magic behind the Electronic Post Office,” says Ben Werbski, director of sales and marketing at Electronic Post Office (Canada), of Boulder-based NetDelivery’s EDM technology.

A pilot version of the system will be implemented this month using selected large volume senders — department stores, credit card companies. Customers will register for an electronic post office box site and receive an ID and password in the mail.

“We’ve looked at other major software suppliers, and they couldn’t provide the solution that NetDelivery did,” says Werbski.

To envision what EDM does, think of an electronic mail sorter. EDM takes a stream of data from large volume mailers and distributes the information to an electronic post office box.

Canada Post ultimately hopes to offer its clients one-stop bill presentment and payment. Right now, several institutions allow customers to view their bills online and some offer the ability to pay their bills online. Through EDM technology, Canada Post will serve as a “consolidator” — meaning several bills from different institutions will appear on one site.

This application, called electronic bill presentment and payment (EBPP), will allow customers to pay their bills immediately and have money transferred automatically from their bank account. EBPP can save companies millions of dollars annually. Billers no longer have to process, print and mail a statement each month.

NetD elivery is one of many companies feeling their way through this evolving market, along with better funded heavyweights like CheckFree and Microsoft Transpoint. In their September 1998 issue, Bank Technology News estimated there were more than 20 companies specializing in EBPP technology.

Today, Net Delivery has the look of a rapidly growing e-commerce company. The company recently moved to larger offices at 4725 Walnut St. While the product development area is up and running, the marketing department is a work in progress — a cavernous office space with rows of uninstalled cubicle walls tucked in corners and paper office nameplates taped to doors.

NetDelivery was established in 1995 in Fort Collins. The company initially focused on “personalized desktop delivery,” a system that allowed users to subscribe to content on the Web and have it automatically delivered to them.

The technology, entitled Zip Delivery, was ultimately unprofitable, says Laura Reed, the company’s vice president of marketing. “According to our business plan, advertisers would pay, but there just weren’t enough of them.”

The company moved to Boulder in January 1997. Around that time, the company began to shift its business strategy toward the EPPB market, but the transition was tenuous.

“It was a confused message for awhile,” says John Kaplan, chief architect of advanced technology. “For a while, we were so focused on doing software engineering we became weak on product development … during that time, we simply couldn’t figure out who we were or what our message was.”

Because the industry is still emerging, most companies are focusing on building infrastructures that will allow them to offer one-stop, consolidated bill payment. That infrastructure includes attracting vendor partners.

In February 1998, the company partnered with International Billing Services (IBS), a statement processing company responsible for 1.5 percent of all U.S. Postal Service first-class mail. NetDelivery’s EDS software will automatically log on to the Internet and pull together bill and statement information from biller’s signed on with IBS.

Yet NetDelivery is not a David in a battle against Goliaths.

“We don’t’ really compete with CheckFree and Transpoint,” says Kaplan. “They’re service providers … we’re not a service provider. We develop software for companies that want to compete with Check-free and Transpoint.”

At one time, NetDelivery wasn’t so sure who it was competing with. “If you asked us a year ago, we would have said we were competing with CheckFree, but we only thought we were competing with them,” explains Kaplan.

Regardless of who NetDelivery is competing with, their customer appears satisfied. “It’s a great working relationship,´ said Canada Post’s Werbski. “They’ve met all of our expectation.”

Yet while well suited to Canada — where the information required to send electronic payments is already centralized — EPPB is a more difficult proposition in the United States.

The main reason for this is that a critical mass of customers have to want to pay online in order to make the technology worthwhile for billers. Currently, fewer than 5 percent of PC users pay any of their bills online, according to a study released by Atlanta-based Synergistics Research Corp.

“The technology is available, but it takes adoption on both sides (biller and payer),” explains Laura Reed, vice president of marketing for NetDelivery. “It takes an initial outlay of capital. Companies have to take that leap, and customers aren’t demanding the technology.”

For electronic billing to become more popular, industry analysts believe different bills have to be aggregated on one site, allowing one-stop bill payment. “Telephone companies and the long-distance carriers have customer bills onsite, but there’s no integration,” says Reed.

Impeding this integration is competition among companies trying to get electronic billers online. Reed claims that the stiff competition for EBPP market share makes consolidating bills at one fixed point difficult.

A more lucrative market might exist in the area of business-to-business commerce. “Billing between business is now horrendous,” explains Reed. Large companies use customized electronic data interfaces (EDIs) that smaller vendors must network into and pay a value added fee in order to order products.”

EDM’s technology would make it cheaper and easier for smaller businesses by allowing information to be distributed safely over the Internet. This would allow smaller vendors to transact with larger ones without having to hook up to a costly value added network.

“Within 12 months, smaller companies will be able to do Web-enabled EDI,” says Reed, instead of having to rely on cumbersome EDI systems.

NetDelivery’s software can be applied to a variety of consolidation and distribution tasks in both business to commerce and business to business environments, says Kaplan, “but both markets are really immature.”

BOUDER — NetDelivery only has one client.

For most businesses, that would be a sure sign of trouble, but not when your one client is the Canadian government and not when you’re in the burgeoning electronic document delivery market.

Using NetDelivery’s Electronic Delivery Management (EDM) system, the Canadian Post Office is developing a “electronic post office” for its clients. The technology will allow customers to receive all forms of electronic documents through a secure, encrypted “electronic mailbox.”

“It’s the magic behind the Electronic Post Office,”…

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