It's easy to see the benefits of B2B e-commerce: accelerated time to market, lower production costs, better inventory manaement. And that's just to start. What's hard, though, is achieving supplier and market integration. Here's where XML standards might help.
Over the last year, you’ve probably heard about the advantages of B2B trading over the Internet. Its many benefits include accelerated time to market, lower production costs, and better inventory management — and that’s just to start.
However, if you talk to people at companies that have tried to conduct B2B e-commerce, you’ll probably hear that establishing a truly connected relationship with suppliers or net markets has been very challenging.
Where the Problems Lie
Perhaps the greatest source of frustration for companies attempting to establish B2B relationships has been the disparity of technical sophistication, processes, budget, and capabilities between a company and its set of trading partners.
The problem is exacerbated by the fact that many companies are only recently becoming familiar with how to operate their newly minted enterprise resource planning (ERP) or e-commerce systems. In addition, resource constraints and lack of training place greater limits on companies attempting to integrate with their partners.
Creating a direct link with suppliers is probably the most straightforward way to integrate business process. But, not surprisingly, this procedure does not scale very well. Can you imagine repeating this process if you had 50 suppliers?
Another alternative is to purchase preconfigured transaction adapters that allow an enterprise to connect with a variety of well-established business applications. For example, you can buy a New Era of Networks Inc. (NEON) adapter that links applications to Commerce One’s MarketSite. However, keeping up with the integration requirements of one vendor can lead to headaches, especially as more and more diverse procurement products hit the market.
The frustration with managing proprietary interfaces and shifting integration requirements has fueled the adoption of industry-accepted data formats for XML.
How Can XML Standards Help?
In a B2B e-commerce context, XML has become the means by which data is formatted for a particular industry. For example, trading partners in the electronic components and IT industry use RosettaNet, a collection of exchange protocols that define products, partners, and business transactions for the industry. Investment banks and brokerages use Financial Information eXchange (FIX) published by a nonprofit organization designed to standardize the electronic transmission of financial instruments.
The Open Applications Group Inc. (OAGIS) publishes 122 XML document type definitions (DTDs) for various business transactions. OAGIS members agree to support these specifications on their web sites.
By agreeing on common data-exchange protocols, the theory goes, companies will be able to lower the overall cost of B2B integration among multiple trading partners. With the alternative of constructing individual point-to-point integration links, it seems hard to argue with this logic.
However, it’s really not that simple. One of the challenges related to B2B collaboration protocols is getting total agreement across technology platforms as well as among participants. One example of such a conflict exists between two standards being promoted by rival marketplace platform vendors Ariba and Commerce One. Ariba has developed its protocol, cXML, to work specifically with its platform. And Commerce One has developed an alternative protocol, xCBL, to work with its product.
At this stage in the adoption cycle, this challenge does not have a pronounced effect on B2B integration; however, it will be interesting to see how the standards game will play out.
Nevertheless, expect the adoption of XML-based B2B collaboration protocols to increase rapidly over the next few years, as companies search for lower costs of automating business processes and integrating activities with partners.
Are You Prepared?
B2B integration is as much an organizational challenge as a technical one. For many companies, working collaboratively with suppliers is a very foreign concept, one that goes against the competitive instincts of the enterprise. The challenge requires parties on both sides of the relationship to be flexible and diplomatic.
For companies to succeed in the B2B world, they should remind themselves of the good old-fashioned principle of give and take.
