By tradition, the tools for recording business deals have been blue-ink pen and sheet of paper. Paper documents -- contracts, invoices, letters of understanding -- are the prime legal proof that an agreement exists.
With the proliferation of cyberspace commerce, reliance on paper is weakening. Passwords and digital authentication technology are allowing companies to move parts of their business into cyberspace, as they take orders electronically.
Now, a Baltimore company wants to go one step further and do away with the paper originals.
Its product is called the Electronic Original. And the brain behind it, Steven Bisbee, has no background in computers or information technology. He was simply a commercial attorney who was tired of tackling the piles of mortgage and leasing paperwork that overwhelmed his desk, and at times his office.
So together with his friend Douglas Trotter, now the company's chief executive officer, Bisbee searched for a way to reduce his paperwork. In 1996, the two partners came up with an idea that eventually gave birth to the 20-person company that is housed in the Camden Yards Warehouse, a few stone throws from the Orioles' stadium.
EOriginal is in its second round of raising venture capital. With just one client for the moment, GE Capital Corp., it's working to persuade the money people that it has a viable idea. The company has tentative plans to go public early next year, said eOriginal's recently appointed chairman, Michael H. Jordan.
Both Bisbee and Trotter say they didn't think things would be so complicated. "We were very naive as to what it would take to accomplish" a paperless world, Bisbee said.
A paper original of a business transaction has the innate property of being the only one that exists -- proof positive of what was agreed on at a certain date. EOriginal, Trotter says, addresses that precise aspect of paper that people prize.
The selling point of eOriginal, the executives said, is time and cost efficiency. Company executives estimate the process would save companies from 7 percent to 16 percent of their administrative costs.
Online business-to-business sales are expected to reach $1.3 trillion by 2003, according to Forrester Research Inc., a technology industry research firm, up from $43 billion in 1998. Many of these transactions, in theory, could be based on contracts that exist only in the electronic realm.
The Electronic Original is part of the company's DocuGuard software package, released in 1998. Through the DocuGuard package, the Electronic Original uses special keying technology and cryptography codes to create an authentic electronic original that is stored securely with multiple backups.
EOriginal just wrapped up a pilot test with GE Capital, which has agreed to continue to test the software with limited implementation.
Michelle Landis, who oversees e-commerce in GE Capital's Commercial Equipment Financing Division, said its test has just begun, making it hard to estimate the time and cost-savings the software might create.
As used at GE Capital, the system allows certain employees to draw up contracts electronically.
Each person gets a "token," in the form of either a thin pocket-size card or a square key on a key chain, which holds the user's "digital signature" information. Holders insert their tokens into special slots on their personal computers and enter their passwords. The system then lets them create documents.
If a manager draws up a mortgage contract using his token, the document is sent to a server called the Trusted Custodial Utility, a sort of bank vault, which validates the signature, adds a date-and-time stamp and digitally signs the document.
That process seals the original document, which can't be further altered without the originator's authorization.
The manager may then allow banks or other GE Capital executives to browse the contract by assigning them a password. With the click of a mouse, these people can then view the contract on the Web.
When a change is made, the system creates a new original that supersedes the old one and keeps a record showing that the change was made. The utility server traces the entire process and documents any changes, including the date and time they took place, establishing a trail of evidence similar to a security guard's log of everyone who enters a bank vault.
None of the technology eOriginal employs is new. Digital signature technology, for example, has been around for at least five years in the e-commerce world and has gradually gained legal approval and cultural acceptance among some businesses. And the TCU verification process resembles a certificate authentication process that some state courts have begun to accept for lawsuit filings.
Legal and cultural obstacles still remain for eOriginal and other companies. Currently, for instance, there is no section of the Uniform Commercial Code across the nation regarding the legal value of digital signatures. That's a problem, said Thomas Crocker, a partner at the Alston & Bird law firm who specializes in e-commerce law. "The Internet knows no geographic boundary," he said.
Since 1995, more than 40 states have adopted different digital signature legislation. Currently, several bills are being reviewed in Congress, all of them attempting to provide a uniform way for handling electronic commerce across state lines.
Bisbee and Trotter say they're not concerned about these legal obstacles; their business philosophy is to take "one step at a time." First, they need to break down the cultural barrier against paperless commerce.
CAPTION: EOriginal CEO Douglas Trotter, left, and Executive Vice President Steven Bisbee are in their second round of raising capital.