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Issue Date: December 2002

Digital signatures resolve electronic catch-22

December 2002

President Mbeki's recent electronic signature on the ECT (Electronic Communications and Transactions) Act has removed the final obstacle standing in the path of 'real' electronic business. While ERP (enterprise resource planning) systems have been heavily utilised by corporate players for the last decade, only now that the ECT act has become law (making digital signatures legally binding) can businesses take full advantage of the real benefits offered by electronic workflow systems.
"Most companies have been running ERP systems for years," says Rob Cells, business development manager at Engineering Informatics, specialists in the installation and management of electronic workflow and Document Management Systems (DMS).
"One of the major business issues has been that ERP systems only manage 20% of business information," says Cells.
"The other 80% of information actually resides in documents outside of the ERP system. Although it seems logical to implement a DMS that deals effectively with the 80% of business information residing outside of the ERP system, many companies have delayed a conclusive move to electronic workflow - due to the lack of a legally binding IT framework.
"Until the ECT act was signed in, a major catch 22 situation existed, in that legally binding documentation always had to be concluded in paper format. This meant that a lot of companies have not implemented a controlled and effective DMS, because ultimately paper would have to be resorted to for any process requiring signatures. The ECT act and the subsequent legal status of digital signatures have finally removed this considerable obstacle to electronic workflow within the business environment."
Digital signatures are implemented via digital signature software, and are now legally equivalent to a physical signature. The digital signature can be attached to any electronic document, thereby verifying that the document has been signed by the relevant party. Certain digital signature software such as ApproveIt has been approved by the South African Government, and complies with all the legal requirements set out by the ECT act.
Now that digital signatures are legally binding, an exponential method of signature authentication has been set in place in order to facilitate a rapid spread of the technology. Any two people possessing a verified digital signature are able to authenticate a new applicant. But this authentication has to be conducted 'face to face', in the real world. Applicants have to present their credentials to two existing signature holders, who will then verify the digital signature as belonging to the relevant party.
Once attached, the digital signature essentially 'wraps' the document with security. If any changes are made to the document after the signature has been attached, the signature invalidates itself and states very clearly that it is no longer valid. The signature also records whatever changes have been made to the document - allowing relevant parties to re-sign the document once changes have been approved.
Hans de Villiers, MD of Trustmarque, a distributor of ApproveIt in South Africa, believes that legally binding digital signatures are now driving the final integration of the digital business environment. "Legally binding Electronic Approval has been possible for a while already, and in fact ATD (a division of Anglo American), has implemented Approvelt software for approving their technical drawings, some time before signing the Act," says de Villiers.
"But the ECT act has now removed uncertainty that existed in terms of electronic approval of documents, and thereby the big business obstacle. Companies are finally able to embrace electronic approval of documents totally - and it is a hot topic at the moment. At Trustmarque we have seen a significant increase in enquiries and sales since President Mbeki signed the act." According to de Villiers, the much-touted 'paperless' work environment has finally become a reality.
For more information contact Engineering Informatics, 011 791 1028.

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