Even before Jody Kozlow Gardner and Cherie Serota knew what it was, they dreaded electronic data interchange (EDI). Belly Basics, in New York City, is their maternity-clothing start-up, and the two women counted Federated Department Stores among their largest customers. When Federated mandated EDI, Belly Basics had six months to comply.

Ignoring EDI and dropping Federated wasn't an option for the $2.5-million company, which gets 25% of its orders from Federated. "Whatever it took, we had to do it," says Serota. EDI requires suppliers to receive computerized purchase orders from the retailer and return invoices in the retailer's chosen electronic form. Belly Basics' old modemless PC wasn't up to the task. Gardner and Serota started researching.

First, they realized that being small gave them an advantage. Their line was limited to about 20 items, so such tasks as computerizing inventory items wouldn't take much time. And since the company had already been putting UPC bar codes on the products, it had already met one EDI mandate.

The biggest challenge was order processing. The partners had two options: process the orders in-house with a $10,000 software/hardware package or hire a third-party service firm. Outsourcing won. "If 100% of our business were with Federated, we might bring EDI in-house," Gardner says. "But for two purchase orders a month, it's much better to go with a service." They found the service by asking Federated for recommendations.

In the end, they met the deadline, and Gardner admits, "The whole thing sounded a lot scarier than it is."