This summer I was asked to join the board of directors of the NAMC/NC. One way I offered to help was to add the perspective technology strategist.  In the last few months I have been exposed to many of the challenges credit managers are confronting in their efforts to provide cost effective credit management services to their organization.  I have learned that there is no simple recipe for credit management.  Every organization uses credit management in different ways and applies credit scoring at different stages in the prospecting to order to cash cycle.

But as a technologist there are several external factors that influence all of our members.  Many of us have heard of Moore's Law: the observation that computing capacity has been dropping in price by 50% every 18 months.  This law has also been applied to the cost of storage and the speed of networks. Many of our members that did not have connections to the Internet just a few years ago are now always "on-line" using PCs that cost less then $700.

A law that fewer people are familiar with is Metcalf's Law. Named after Bob Metcalf (the inventor of the Ethernet networking standard) the law states that the value of any network rises exponentially with the number of people that use it.  We saw this effect in a dramatic way with the World Wide Web standard.  As more web sites were created more people used web browsers.  The web took off because a critical number of users adopted a simple standard for sharing documents.  We can e-mail spreadsheets as attachments because many of us use Excel as a standard application on our desktops.  Standards are wonderful things even though many of us are not exactly happy about being forced to purchase Microsoft Office™ and constantly upgrade to the latest version just to exchange data with peers.

Now with the web becoming pervasive in business we ask ourselves - How will these laws affect the role of the credit manager?  To get you to think strategically about this you may consider three key developments that have occurred in the last 24 months.  First is the creation of XML - standard language for exchanging data over the Internet.  The second is the growth of Managed Service Providers (MSPs) that are willing to outsource a part of your accounting operations for a small monthly fee.  The third is the multi-billion dollar efforts of companies like Microsoft and IBM to transform software from something-you-buy to a service-you-rent.  Microsoft's acquisition of Great Plains earlier this year did not go unnoticed by industry observers. Bill Gates has stated Microsoft has bet the farm on their .Net™ strategy.

Although I see these three factors creating dramatic change to the way credit is managed, I don't yet have a clear picture of the decision-making process credit managers would use to choose an outsourced service.  I am interested in your feedback.  Where do you spend most of your time today doing administrative tasks? How do you exchange credit information today?  Are you using the Internet to its potential?  Would you look to your accounting software vendors to provide the integration?  What services would you be interested in?  What standards do you see emerging to exchange credit information?  What security and privacy issues are you concerned with?  Would your organization pay to outsource some of these functions?  Please let me know your thoughts.