Sign Here

The new E-SIGN Act signifies a huge stamp of approval for online contract management.

[From iSource Business, December 2000] For years you've been hearing how e-procurement technology will make your workflow quicker, better and more cost-effective. In many respects it has. With the right technology solution in place, you have a closed, secure, online environment to create, send, receive and review RFQs and award bids. Perhaps you and your suppliers use a system that allows projects to be tracked and audited. In the best-case scenario, all this information is automatically indexed and easily retrieved. The online world has provided impressive procurement efficiencies, and now thanks to the new federal E-SIGN Act signed into law this past June the digital revolution has truly arrived.

The law, which went into effect Oct. 1, gives online, digitally signed documents the same legal status as paper contracts. This is an exciting development for those of you who could do everything online except execute a contract with a signature. This legislation will fundamentally impact the way procurement professionals interact with their suppliers. At the same time, purchasing professionals must move forward with some caution.

What to Do

First, not all digital signatures are created equal. Make sure your application only uses Class 2 digital signatures. These are signatures that are issued only after a person provides proof of his or her identity to a digital certificate authority. Having the right type of Class 2 digital signature is critical to ensuring you are conducting truly legal commerce.

Second, make sure your documents are protected from prying eyes. A 1024-bit encryption technology provided by RSA Data Security, a leading encryption technology firm, is recommended. The security provided within the repository ensures that the electronic chain or custody and document integrity of your e-originals will be preserved permanently.

Third, evaluate whether it makes sense to build your own document management/digital signature technology or leverage existing technology that can be integrated into your system. Building a technology with suitable functionality could take a year or longer, several million dollars and a team of IT professionals to manage. An ASP can often provide its technology solution immediately to a corporation. The goal is to find a reasonably priced application that will fit seamlessly into your present workflow.

And finally, make sure you have a method for gaining consent from your customer. The E-SIGN Act is very specific here, and your organization must provide proof at any time that you have gained consent for them to use the system. A notary can be at your office in a couple of hours to get your real signature on an agreement stating that you consent to use our system and that those transactions are legally binding. This simple approach offers you the difference between a closed system (for internal use only) and an open system accessible to anyone with a Web browser. Whatever solution you choose, make sure you provide for a method to gain consent.

The new E-SIGN Act provides a huge stamp of approval for online contract management. Procurement companies financial service companies, and real estate professionals are predicted to be among the early adopters. It makes sense: Conducting business at "Internet speed" is already bringing profits and efficiencies to these vertical markets.