Sign at the Digital X: E-Sign Law Takes Effect

Lack of Standards Remains E-Sign's Obstacle

Digital certificates can provide corporate customers with major paper-related savings, says Ben Gould, senior vice president at ILumin. "In a traditional system, you're paying for real estate, filing cabinets, and clerical work," Gould says. "There are huge costs in reentry of data."

Yet PKI technology by itself isn't enough, says Gould. You need to keep documents and signatures secure while still being able to get at the data within them.

"As soon as you move data into a document format and put a signature on it, you lose its attributes," Gould says. "When you separate the data from the document, the validity of the signature is no longer enforceable."

With ILumin's XML-based document management features, data can be viewed and extracted in database format. For example, it could be used to run a credit check without infringing upon the validity of the document.

Wanted: Interoperability

Just as formal signing ceremonies and overnight deliveries of contracts didn't disappear when fax signatures became legal, e-signatures won't replace paper anytime soon. The most pressing obstacle is the lack of standards, something E-Sign failed to address.

"There's not enough interoperability among PKI products," says Jeff Hodge, vice president of DataCert. "The government needs to take a role in setting standards around PKI."

Beyond PKI incompatibilities, advocates of electronic signatures face a variety of certificate-validation approaches and XML flavors, and a total lack of international standards. Only a handful of countries, including Finland and Singapore, accept electronic signatures.

Then there's the simple matter of customer trust. In a world of hackers and viruses, vendors must reassure customers that their online John Hancock will be at once more difficult to copy and easier to use than their handwritten signature.

Biometrics May Play a Role

To some, this obstacle can be overcome only by the added security of biometric devices.

"Biometrics will be tremendously important," says James Van Dyke, an analyst with Jupiter Communications. "Once you get a few major cases of fraud, with night janitors copying down passwords at 2 a.m., you'll see greater interest."

While biometrics may fly in corporate America, individual consumers may see these devices as more of a privacy intrusion than a protection of identity. Ease of use is a greater issue in the consumer realm, and it's harder to authenticate identities.

"The retail consumer sector won't go to digital signatures anytime soon, but there should be more acceptance in B2B," says Anne Marie Earley, an analyst with Gartner Group. Even in B2B, old habits die hard, says Earley.

"I'm not sure if companies will accept not having paper copies available," she adds. She expects business use will get a jump start by business-to-government transactions, since the government has been mandated to start making government applications available over the Internet.

Meanwhile, technical details still need to be improved, such as support for the multiple signings required in large enterprises. And costs need to drop before all those heralded savings appear.

"You won't be able to get rid of a paper system until you fully implement the technology, so you have to get enough trading partners to join in," says Van Dyke. "People will pay more before they pay less."