interchange) connection for Gorham's Ltd., the retailer that has already established EDI links overseas.

Gorham's systems manager, Mr. Rod Farrington, said that it is a significant breakthrough, especially in terms of payroll for the some 60 staff.

Mr. Farrington said, "It's very less time consuming. In the past, we did a lot of the payroll using Field Link with the bank, but it was still a manual process.

"Some one had to sit down and one at a time key in the person's name, the account number and the amount. It was electronic and it was good, but now with EDI we can let the computer build the entire payroll file and automatically transfer it into the EDI software, automatically call up the bank and do the whole thing electronically.

"What we found internationally, was that EDI allowed us to redistribute our manpower into more productive areas, providing service.'' The service has been up and running for three weeks on a parallel basis to the conventional process of distributing payroll. But the bank has not yet been able to set a fee for the cost of the service to clients.

The Bank of Butterfield's assistant manager, electronic banking, Mr. Horst Finkbeiner III said that the bank had been working on the project for a year.

He said, "Although EDI is a simple concept, in practice it is very complex, especially for a bank where there is a lot of security, audit and other considerations.

"It's a little different than say Gorham's, who is dealing with us, and then we have to deal with a whole variety of different businesses.

"We've had a small team of technical and business people working on this for about a year. We had to buy a lot of software and put it on to our main frames and on our networks. It was a considerable investment and it is something that we do not expect to pay for itself overnight, but only over a long period of time.

"We got into this business though, because we knew that electronic commerce was coming to Bermuda. We knew the importance for Bermuda to have an EDI-capable bank. We looked at the top banks overseas providing that service and determined that we wanted to match their level of capability.

"We want to be able to provide all of the financial EDI services that one would expect from any major EDI bank. There are about five or six other local companies that are actively getting themselves ready for EDI.'' EDI allows companies to exchange routine business documents electronically.

But unlike electronic mail or facsimile which is unstructured, these documents are put into highly structured formats.

One company's computer can create and send the document, and the receiving company's computer can receive and process information automatically, without the need for manual data entry.

Research shows that some 70 percent of all computer output is used for computer input. EDI can reduce that manual overhead significantly, resulting in savings of both time and cost.

Mr. Farrington said, "There is another big savings. Our employees who bank at Butterfield's Bank have gone through Field Link and now straight EDI. For the employees who banked at the Bank of Bermuda, there was no Field Link service for them. And we physically had to type a list, using a word processor, of people who were to be paid electronically and carry the list every week by hand to the bank.

"But now with EDI, the Bank of Butterfield will just split off the Bank of Bermuda's portion of the payroll and send it to them electronically.'' Gorham's first EDI transaction was international. A link was established between the firm and one of its distributors last October. But it wasn't until February that everything was in place for the initial trading partners.

There are 15 such international trading partners that are linked by EDI with Gorham's. Mr. Farrington concedes that there is still much to do to establish EDI links separately with the rest of the 7,000 trading partners they have overseas.

"It still has a long way to go. You have to sit down and arrange the EDI transaction with each vendor or trading partner one at a time and then test it like we've done here with the Bank of Butterfield.

"It's only at that point that you start doing it electronically and can benefit from the savings in time.

"Also you don't have to worry about employees or customers losing their cheques. We also anticipate being able to eventually pay our local suppliers and other bills electronically, as soon as they are ready for EDI. That way you don't have to write and handle cheques.

"Yesterday, for the first time we were totally electronic all the way. We are also expecting to be able to eventually, down the road, be able to receive orders from local companies directly into our system.'' Mr. Finkbeiner said, "We too will be able to eliminate manual efforts. For payrolls, there is a processing overhead for the banks in dealing with cheques.

"But the more people use EDI for payrolls, for disbursements or even for collections such as your cable TV payment, that's less cheques that have to go through our system, less manual effort. We can then take the people we are freeing up and put them to work serving customers.'' Mr. Finkbeiner is chairman of the EDI Council of Bermuda, set up last October to guide the growth of EDI for the benefit of the Bermuda private and public sector.

Mr. Horst Finkbeiner