Going Where No Business Data Have Gone Before

August 4, 1999

Alan Kotok

Developing a new paradigm for business data exchanges means thinking both in new ways and old, combining the promise of XML with the lessons from EDI. Here are a few ways to encourage it happening:

Aim to improve the business process. EDI has taught the business world that the real payoff comes from the improvement in the business process, not just automating the status quo. Innovations like evaluated receipts settlements or vendor-managed inventories happened when trading partners used the data sent electronically to streamline operations, get products to market faster, or better serve the customers. XML applications should begin with a business and data model that tries to improve the ways of doing business.

Perhaps the best example of XML applied this way is the RosettaNet project undertaken by the information technology industry. The RosettaNet project first identifies a series of partner interface processes or PIPs that directly attack inventory or customer service problems identified in the business. These PIPs then drive the development of XML exchanges. RosettaNet provides a good model for other industry and standards groups to follow.

"RosettaNet provides a good model for other industry and standards groups to follow."

Sweat the details. We have seen far too many announcements of XML 'frameworks' in the past several months. It is time for details to start emerging. By details I mean individual well-defined data elements, with the relationship among the elements clearly spelled out. Details also mean a universal system for identifying trading partners, uniquely identified transactions, and fine levels of granularity for the contents of the transactions. Suppliers for example may identify shipments or even individual pallets in a shipment, but if one can identify individual cartons, why not do it? The more detail one can provide, the more information one has about the shipment, and thus more control one has over the inventory.

Aim for interoperability. One of the buzzwords in our business is interoperability, but in some key sectors it has become critical. With more use of just-in-time deliveries, vendor-managed inventories, and supply chain integration, we have become more reliant on transportation and warehousing services. Yet these vital services need to carry products from many different businesses, so either they reconcile different industry vocabularies or impose their own standards on the trading partners.

"With the increasingly fluid nature of mergers, acquisitions, and alliances, one needs ways of quickly realigning ones business terms and rules, and Bizcodes offer a means of meeting that test."

A better approach might be for XML applications to develop glossaries that link their data elements and tags to a neutral set of terms, known as Bizcodes or basic semantic repositories. While it adds a little to the development process, it pays off much later down the road. Also, with the increasingly fluid nature of mergers, acquisitions, and alliances, one needs ways of quickly realigning ones business terms and rules, and Bizcodes offer a means of meeting that test.

Link to other technologies. While we may marvel at XML, there are other technologies out there that also offer opportunities for significant business process improvements. Many of these exciting new technologies involve automatic identification, such as smart cards or radio frequency identification (RFID). Smart cards, that allow for replenishment of monetary value for example, have had a mixed record in the United States but have gained much more acceptance overseas. RFID however has become a hot technology at gas pumps and toll booths as it eliminates the need for small cash exchanges.

"If we can meet these privacy concerns, the combination of XML and smart cards can encourage more personalized deliveries of goods and services."

Smart cards and RFID allow for the tracking of individuals, in much the same way as bar codes allow for the tracking of things. Using these technologies in the tracking of people however raises basic privacy questions that need to be addressed. If we can meet these privacy concerns, the combination of XML and smart cards for example, can encourage more personalized deliveries of goods and services, much like push technology on the web provides for personalized information deliveries.

Develop a core set of standards for small business. When Volkswagen had its original beetle in the 1960s, it had a print ad campaign around the theme 'small is beautiful.' Small business nowadays is also beautiful, and it offers the largest potential market for XML business data exchanges. For many of these companies, the business model consists of a passion for the work they perform and a deep caring for the customers. This group, perhaps more than any other, deserves the benefits of XML data exchanges that improve the way business is conducted. But it can only happen if XML becomes part of the $100 accounting package and the $25 browser, or downloaded from the industry XML repository. Until these businesses start reaping the benefits of XML, our work is not done.