Editor's Note: For this special issue, we asked our columnists to cover a variety of e-business topics. Their insightful commentary provides a well- rounded outlook as to the benefits and challenges of the e-world. Regular column format will return next month.
We are witnessing far-reaching changes to business as the world moves into the new information economy. The catalysts are the Internet and the rapid advances in technology. We are seeing the growth of regional and global trading communities of buyers, suppliers and business partners in most industries. At last count, the total number of trading networks already established or in the process of being formed exceeded 600.
Two Internet technologies are contributing to this rapid change: the extensible markup language (XML) and corporate portals (also called enterprise portals).
E-commerce the sale of products and services to customers over the Internet is now relatively easy to implement. There are many software products and solutions that enable catalogs to be incorporated into Web sites for purchase of products over the Internet by consumers. Yet e- commerce is not e-business. An e-business not only sells products online (e- commerce), but also links those sales tightly to its back-end systems for order processing and delivery fulfillment. If online sales are not seamlessly integrated with the back-end systems of an enterprise, those orders must be separately entered into the normal processing and fulfillment systems. Such enterprises are only doing e-commerce, not e-business.
Perhaps the best- known example of e-business is Amazon.com, the world's largest online bookstore with over 1 million titles. Amazon has succeeded by building a closely linked e- business value chain for acceptance of orders online and delivery to its customers wherever they are located. As an e-business, it has also added CDs, videos, toys, electronics and auctions. It leveraged its infrastructure to move easily into these new sales markets, as it handles all aspects of sales and delivery with no reentry of details. Different from established businesses, Amazon had no legacy systems that first had to be changed for this new business- to-consumer (B2C) sales environment. While Amazon still shows a loss, its infrastructure is now so well-integrated and its brand is so well-known that it is widely expected to become profitable in time.
By far the greater market, however, is the business-to-business (B2B) market. The B2B market potential exceeds the B2C potential perhaps by an order of magnitude. Forrester Research projects B2B to grow from $177 billion in 1999 to $1,823 billion in 2003. During this same period they project B2C to grow from $20 billion in 1999 to $144 billion in 2003. The GartnerGroup, in February 2000, offered more aggressive growth projections that the B2B market will grow from $145 billion in 1999 to $7,300 billion in 2004.
Most businesses are not like Amazon. They do have existing processes and systems for order entry, credit control, invoicing, inventory and delivery. Many of these systems are old but still functioning well for the sales environment for which they were designed. Even the latest systems may be considered "legacy" if they cannot easily be changed to encompass e-commerce and e-business via the Internet. This is where XML and corporate portals offer great benefit.
Many application systems and databases in an enterprise may be used to carry out different business processes. XML permits relatively easy integration of business processes and application systems both within and also across enterprises. This is called enterprise application integration (EAI).
Each legacy system was built to operate in a specific application environment, using the processes and terminology relevant to each separate application. Consider a hypothetical organization, XYZ Corporation. The order entry system was built for its order entry department to support its processes and terminology and accept orders from customers. The credit control system was built for the credit control department for its processes and terminology. But distinct from the order entry group, credit control assesses credit-worthiness of its clients; they are not called customers. The credit control system, finance department and the invoicing and accounts receivable systems all use different terminology. Similar terminology problems arise in the shipping department with the shipping and distribution systems and (to a lesser extent) with the warehouse inventory systems. This is one reason why it has been so difficult to change legacy systems so that they can be integrated for use in e- business: each was built with different terminology.
Enter XML, which provides a solution to this dilemma. Released as a recommended standard in February 1998 by the W3C (one of the standards bodies of the Internet), XML is a language that takes the meta data used by different applications and systems and uses it to describe the relevant data.
In our example, XYZ must manage all sales orders, credit control, invoicing, inventory and receivables activity by each of its customers (clients, debtors, etc.). Now consider the case of two (fictitious) enterprises that buy products and services from XYZ. These are ABC, Inc. and DEF Enterprises.
XYZ manages its business with ABC and DEF by allocating unique account numbers. But for reference to ABC in XYZ Corporation, for example, XML shows sales orders as
The ability of XML to identify relevant data according to its meaning to each part of the business enables the previously nonintegrated systems of XYZ its order entry, credit control, invoicing and accounts receivable systems to be integrated throughout the enterprise. Of course, this is a gross over-simplification of what is indeed a very complex undertaking: application integration. Yet, it illustrates the power and potential of XML. Each application system (legacy or otherwise) can continue to perform the processing for which it was originally designed. But the terminology meta data used by application systems and databases of XYZ can also be used with XML for application integration.
XYZ Corporation, thus, has the best of both worlds: it can realize enormous benefits from e-business if it can achieve application integration. By using XML, it does not have to throw out still valuable legacy systems. XML enables it to add a transformation front end to each system for application integration. Many software tools and products to assist this integration using XML are becoming available.
But consider the problem now from the perspective of ABC. We saw that ABC is a customer of XYZ. So XYZ is a supplier to ABC. The ABC procurement system in its purchasing department produces purchase orders to send to XYZ which are received by XYZ as sales orders. Mailing, faxing or e-mailing purchase orders as documents from ABC to XYZ is presently used for this inter-enterprise communication. XYZ sends back an order acknowledgment document, a delivery advice and finally a supplier invoice.
For each document sent and received, the receiving organization presently must reenter the relevant details into its own systems. It can then progress the order through the relevant procurement or order entry process. But XML also allows this reentry step to be bypassed. The data in each physical document is transformed using XML into self-describing electronic documents, sent automatically as messages between systems.
Using XML in this way also overcomes the terminology problems that exist between different enterprises. The ABC procurement system can thus communicate automatically and seamlessly with the XYZ order entry system. Relevant XYZ systems can then send appropriate acknowledgment, delivery and invoice documents in XML as messages back to ABC. Thus, XML permits relatively easy integration of business processes and application systems within and across enterprises.
It is through XML and enterprise application integration (EAI) that B2B e-business has the greatest potential. EAI can save enormous processing costs in most enterprises and industries. It bypasses many error-prone and costly manual steps by replacing them with XML document messages for automated B2B streamlined processes within and across enterprises. These cost savings go straight to the bottom line of most enterprises. This is a compelling reason for the growth of B2B e-business.
The example of XYZ and ABC is repeated also between XYZ and DEF. Each pair of businesses can agree on the relevant XML meta data tags for document messaging. In turn, each of these enterprises can also use XML for document messaging between them and their respective customers and suppliers. But then another problem arises. Each enterprise has its own terminology its own meta data and each pair of enterprises must use XML to translate to and from the unique meta data used by each trading partner. Great complexity arises from these multiple enterprise interactions. To address this problem, buyers and suppliers in each industry are coming together in trading communities with agreed XML document tags for intercommunication and B2B e-business.There is increasing activity in the growth of trading communities and products and services to support them.
A corporate portal provides a single gateway via corporate intranet to relevant workflows, application systems and databases integrated using XML and tailored to the specific job responsibilities of each employee. In this form, the corporate portal is called an "employee portal." With appropriate security and firewall protection, it also can allow employees to access relevant processes, systems and databases via the Internet from anywhere in the world.
A corporate portal can also provide a single gateway across the Internet, or via a secure extranet, to details about products and services, catalogs, and order and invoice status for customers. This is a "customer portal" integrated using XML and tailored to the unique requirements of each customer. This offers opportunities for one-to- one customer personalization and management that is the intent of most customer relationship management (CRM) systems.
A corporate portal can provide a single gateway to purchase orders and related status information for the suppliers of an enterprise. This is a "supplier portal" that addresses e- procurement another important e-business application. Or it can provide a gateway for business partners or shareholders in a "partner portal" or a "shareholder portal."
A corporate portal is all of these. Because each portal is tailored to the needs and job responsibilities of each individual, it can appear different to each. It represents a single point of access to an enterprise, with systems and databases integrated using XML and tailored to the specific interests of each individual. This is how we can expect the e- businesses of the future will interact with each of their internal and external stakeholders (employees, customers, suppliers, partners and shareholders).
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access