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EDS initiative

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While others talk about the possibilities of reaching customers through corporate intranets, Electronic Data Systems is putting a system in place.

Dallas-based EDS builds and manages computer networks for many of the largest companies in the U.S. Many EDS clients want intranet capabilities, with browsers and files pushed to users' desktops.

EDS has found a way to make this pay. With its new Renascence Channel the company is offering suppliers the opportunity to reach the desktops of EDS managers and, eventually, EDS clients.

Bob Englert, director of sales and marketing for the Renascence Channel, says the 70 companies now on the channel pay from $25,000 to $150,000 to be on those desktops, depending on how much data they want to deliver. That, in turn, is paying for development of EDS's private Linq network, which offers a PointCast-like interface.

The rollout is slow, so the profit potential is still in the future, Mr. Englert says.

EDS's own account teams were the first to get the software, which was then rolled out to 75,000 employees. Clients' purchasing managers will get the capability next. Over time, it could be accessed by more than 1 million desktops.

Only for EDS suppliers

Why would a supplier pay to be on the Renascence Channel? Because, Mr. Englert says, this is no ordinary point-and-click Web ad network.

For starters, to join you have to already be supplying EDS clients through EDS. Currently, it's open to just computer hardware, software and services companies, but Mr. Englert plans to add travel and office supply companies soon.

Second, these suppliers aren't just buying ads. The ads link to EDS's own procurement databases so users click only the products their companies have previously agreed to consider buying, at the prices their volume entitles them to.

Third, not everyone gets all ads.

"The whole thing can be customized," Mr. Englert says. "Clients can have as many ads as they want, or as few."

Because the recipients determine whose ads they'll see, there's no waste.

Finally, EDS is handling the procurement details when a client -- or an EDS employee designing a client network -- clicks through and orders.

"You can come across the channel, purchase hardware and have it drop shipped from one of our locations or those of partners," Mr. Englert says.

If you're buying software it's even easier because EDS can deliver over 2,000 different software titles to the desktop, Mr. Englert says.

Potential is huge

What suppliers are actually paying for is EDS's storage of procurement details, for delivery to desktops and for regular changes to creative, which can be identical to public ads loaded on the Web.

The potential for EDS is huge just based on its current list of clients and suppliers.

"Currently we have over 55,000 computer SKUs in the system," Mr. Englert says, before travel -- through EDS Travel Services -- and office supplies are added.

Growth also comes from EDS's continuing rollout of the technology. It's on fewer than 10% of its potential users' desktops now, Mr. Englert estimates.

Barbara Ells, industry analyst for Zona Research, a Redwood City, Calif., market researcher, calls the result a "creative enterprise resource," not a Web ad network.

"Most enterprise resource management systems put the onus on the client to support the development charges, then the retailers just have to pay for accessing the Internet technologies," Ms. Ells says.

By paying for advertising, however, the retailers can increase their business through EDS, using promotion and promotion-based pricing.

"And EDS has a reputation," she says. "We think they'll be successful with it."

Over time, Ms. Ells thinks this will become a better value for the suppliers. "The price will come down," she predicts.

EDS's rivals in the system integration business are watching the company's progress.

Systems integrator Perot Systems signed a deal June 30 with PointCast and InteliHealth to create a system that is similar to Renascence.

Healthcare channel in works

Under the agreement, InteliHealth, a joint venture between Aetna U.S. Healthcare and Johns Hopkins University & Health System, will build a PointCast channel focused specifically on the healthcare industry.

Perot Systems will roll this out as part of its Healthcare Solutions Model, an intranet-based system it's selling to hospitals, health maintenance organizations and other networks of medical professionals, a Perot spokeswoman says.

All this means that middlemen who add value by handling clients' procurement and back-office computing operations may be among the big winners from the electronic commerce revolution, says Ms. Ells.

The Web "is just putting an advertising gloss, a sizzle, into the information" these integrators must deliver anyway, she says.

And the system can also help EDS do an upsell, Mr. Englert adds.

"You can buy software, we deliver it and bill you, then you'll get a smart advertisement offering training. We can start streaming the training on that software immediately" through the same network.

Despite the profit potential, this isn't advertising but service, Mr. Englert insists.

"The viewers only get ads from suppliers they've designated. The reaction from seats is fantastic. They love it."

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