Less Is More In E-Business: The XML/edi Group

This week, David Webber from the XML/EDI Group, in an article co-authored with Alan Kotok from the Data Interchange Standards Association (DISA), presents his perspective on the integration of XML with EDI. The authors argue strongly that simplicity is the key to the widespread adoption of XML e-business solutions. The article urges the W3C to look to the needs of mainstream business as well as publishers, and not to overcomplicate XML standards.

We anticipate that this is going to be an emotive issue. Do the W3C and those involved in XML standards really understand the needs of traditional business? Does traditional business "get" XML? We'd like to hear your opinions and reactions to this article. Have your say in our XML/EDI online forum.

XML Can Provide the "Eureka Event" for E-Business

"... when a breakthrough in technology is achieved, it takes us a while as a culture to figure out what we really have. New developments are culturally assimilated often based on what has come before. We can't help but place the new developments within an historical context.

Related Links

• XML/EDI Group • Bizcodes • Data Interchange Standards Association • The World Wide Web Consortium (W3C) • Graphic Communications Association • Interactive Financial Exchange • Open Travel Alliance • RosettaNet

"Here's an example: In 1844 Samuel Morse invented the ability to transmit information coded into electromagnetic pulses. He sent the first message of dot dash dot dot dash from Baltimore to Washington DC, and therefore people called this telegraphy.

"That first message Morse sent was 'What hath God wrought.' Telegraphy became ingrained into the cultural consciousness. It was easy to understand and deploy.

"Fifty years later, Marconi made a technological breakthrough. He broadcast electromagnetic waves through the air. But what did he send? The ability to modulate a signal was well understood. But Marconi sent dot dash dot dot dash. That is what was ingrained into the cultural consciousness of the time. So people called this wonderful new tool, simply "Wireless Telegraphy." Within their frame of reference, they didn't know what they really had. It took another twenty years for Lee Deforest to apply practical knowledge that had been around for decades. Deforest had the Eureka event, and gave us radio.

"Now let's look at how we do business in the 1990s. In the 30s and 40s and 50s and 60s professional managers defined the common business processes that we use to this day. Then computers and networks were developed. And we set out to take advantage of this new technology and automate our processes, and naturally we did that based on a cultural context. Therefore we called this new capability 'Electronic Document Interchange.'

"But the underlying document model driving the process stayed the same. We called it 'Paperless ordering,' or 'Paperless invoicing,' yet the fundamental process flow stayed the same. Even though it enabled entirely different business methods such as 'just in time inventory,' we still had not reached that next fundamental level of understanding. This is now changing. Eureka events have taken place.

"The existence of the Internet has created the ability to re-invent the way that we fundamentally do business to make us all more interconnected, closer in time and space, with less manual work, our processes more timely, and our operations more and more streamlined."

We have only now begun to see how XML delivered via the Internet can change the way businesses interact with each other. This is a trend we can expect to accelerate. XML may have a history as a powerful tool for content publishing, but business data exchanges are now becoming XML's "killer app."

The question is, how can businesses realize the full power of XML? Using Galewski's radio analogy, how do we move from wireless telegraphy to HDTV?

The XML/EDI Group: Grass-roots Organization Championing XML with EDI

Enabling businesses to realize the benefits of XML in data exchanges was the motivation for the founding of the XML/EDI Group in July 1997. The grass-roots group is formed around an Internet mailing list, now with around 1,400 participants spread throughout the world. The group's focus is on fusing the benefits of traditional EDI with XML, thereby making this new technology more accessible to the vast majority of companies who previously found business-to-business electronic transactions too expensive and cumbersome.

With chapters in North America and Europe, the XML/EDI Group has proposed guidelines for business data exchanges using XML, written a white paper on global XML repositories, and now seeks refinements and simplifications in XML itself to make it a better business engine. The Graphic Communications Association Research Institute provides management support for the group, while the group remains independent, receiving no funding from vendors of XML systems, networks, or services.

In this article we explore critical issues in XML and e-business, and present the XML/EDI Group's XML for E-Business Initiative.

A Simpler XML Standard Can Make the World of E-Business Happen

Establishing the XML-based mechanisms to support e-business interactions is the first critical step. It is with that end in mind that the XML/EDI Group has launched an initiative to determine XML syntax for machine-to-machine exchanges, and develop a set of recommendations on XML for e-business.

The W3C is currently reviewing a complex family of draft documents from XML technology working groups. Many of these working groups have as their goal to add greater functionality to the base XML language for document generation and processing.

While these new functions will no doubt have value in the publishing world, XML's e-business needs are more immediate and offer greater financial rewards than the simplification of syntax mechanisms.

Opportunities for XML are limited by the mechanics of the syntax and the methods and techniques they either enable or mandate. Traditional EDI technology was hamstrung in the past by arcane syntax that only experts could fathom. Much of the success of HTML, on the other hand, has come from the broad accessibility of that technology. Even lay people with little computer knowledge can create Web content. To gain and ensure broad use of XML, general users must get results as easily and consistently as they do with HTML.

The XML for E-Business Initiative will extract from the many XML syntax extensions only the relevant and critical components needed for e-business. This initiative will achieve two goals:

1. Empower software developers.
2. Ensure that XML parser implementations for e-business remain as simple and compact as possible (not overburdened with feature-creep).

This does not preclude developing a more complex XML syntax needed for publishing as a superset later once the urgent needs of e-business are met.

Understanding the Scope and Getting Organized for E-Business

Business data exchange using XML is moving rapidly toward becoming the de facto next generation technology. It is only a little over two years since XML 1.0 became a W3C recommendation, and already many industry groups are adopting XML-based vocabularies. Equally importantly, a broad range of software vendors are providing solid XML authoring tools and server delivery solutions.

While these developments represent a fine start, the real test of the benefits of business data exchange with XML will come from expanding its reach into the tens of thousands of smaller businesses who previously had not had the resources or tools to effectively perform business transactions with their trading partners.

In this context, we look at the needs of supporting an extended network of trading partners without being swamped by the sheer scale and number of interface combinations. Later in the article we recommend ways that the developers of XML can address these needs and provide mechanisms to support tens of thousands of interacting partners within an industry.

First, we need to understand the extent of current business-to-business information exchanges and the forecasts for the expansion in this area via the Internet. While retail consumer Web sites get plenty of media—and investor—attention, the real expanding Internet market comes from data exchanges between businesses.

IDC predicts the value of business-to-business commerce over the Internet will grow from under $100 billion in 1999, to about $500 billion in 2002, and to $1.3 trillion by 2003—truly radio eclipsing telegraphy! IDC expects retail consumer commerce over the Internet to grow to about $100 billion (about where business exchanges stand today) in this same time frame.

To achieve a thirteen-fold expansion in only four years means the number of businesses exchanging data over the Internet will expand dramatically. That expansion will be lead by smaller businesses who are driving the wholesale move to the Internet as a means of conducting business.

Figure 1. Business-to Business (B2B) vs. Consumer Commerce on the Internet
(source IDC Research, and article)

Having identified the present and future scale of the world of e-business, we need to define its characteristics.

IBM has defined the three core factors for e-business success as:

• Reliability that builds trust
• Security that builds confidence
• Manageability that ensures performance

Trading partners want to exchange information both inside and outside their industries with ease. Customers, both business and consumer, want to assume these services work automatically and are as simple to use as a telephone or fax machine is today. For example, fax machines work equally well for domestic or overseas transmissions: exchanging business data outside one's normal circle of trading partners should not require an entirely different protocol from that used for everyday transactions.

Creating XML/EDI specifications that encourage this kind of transparent interoperability will require a focused approach based on an understanding of global business needs—not just North American—as well as a new kind of collaborative relationship among companies creating XML specifications. So far, American companies appear fond of creating business consortia designed to create competitive advantage in their own local markets. But as we have learned in the past five years, the Web, and the commerce it has spawned, truly are world-wide.

The Rise of Business Consortia

Business consortia represent companies in their own industries, as well as those across complementary industries and boundaries. The trend over the past year and a half has been for such consortia (often led by traditional brick-and-mortar trade associations) to take advantage of Web-based collaborative tools, Web sites, Internet listservers, and e-mail to replace the extended comment and review periods of traditional standards bodies.

Despite the emergence of consortia, there is still a role for traditional industry standards bodies, particularly in defining the underlying interoperability technologies. However, they need to take greater advantage of Internet-based collaborative tools to break through the limitations imposed by traditional paper-based requirements for public notice and comment.

Business consortia define scenarios, messages, content models and data elements needed for doing business electronically. Where previous EDI standards exist, they can build on this valuable experience. They can also extend the reach beyond current EDI trading partners, as well as fill in the gaps that predefined EDI transactions have left out. Examples of these collaborative business consortia are RosettaNet in the computer technology industry, the Open Travel Alliance (OTA), and the Interactive Financial Exchange (IFX). OTA and IFX currently work with the Data Interchange Standards Association, the organization that manages the North American standard (X12) for EDI.

Achieving Integration and Interoperability: Moving Beyond EDI

EDI helped pave the way for this looming breakthrough of true e-business. Well before the Web and even the Internet as we know it existed, companies exchanged data using standardized transactions tailored for each industry. Many companies in the automotive, grocery, and electronics industries, among others, achieved significant savings and improved business processes using EDI. In the early 1980s, the American National Standards Institute (ANSI), seeing the benefits of standards in electronic business, established an accredited standards committee for EDI and gave it the designation X12. The X12 standard lead the way in defining and promoting fixed EDI transaction sets in North America. Similarly, the UN/EDIFACT standard is used elsewhere in the world. Since 1987, the Data Interchange Standards Association (DISA) has managed and published the X12 standard.

Many of the current XML initiatives are still wedded to these EDI ideas of fixed transactions, now set down in XML syntax instead. While in some cases businesses need to exchange predefined collections of data that resemble their hard copy or EDI ancestors, companies will need to exchange data more broadly, more frequently, and in different ways than before. For example, if business partners want to tighten the supply chain relationship, have joint planning and forecasting, and more frequent replenishment of inventories in a way that reduces overall costs (see http://www.cpfr.org/), then they need different kinds of data exchanges. Materials, transportation, and warehousing vendors will need a real-time, or close to real-time, view of inventories to get the right materials to the right place at the right time. In these scenarios, traditional EDI-style approaches will not provide enough flexibility, scalability, or maintainability.

One lesson that XML enthusiasts can learn from EDI is the importance of standards to encourage companies to invest in technology. Without standards, each company (not only each industry) will fashion its own way of exchanging data; the result is unmanageable gridlock.

XML brings closer the promise of data integration that EDI enthusiasts often talked about but rarely achieved. EDI transactions constitute a flow of information from sender to receiver. In contrast, the new needs of Internet-driven business relations call for integrated end-to-end information processing. This will allow trading partners to build the logic for integrating e-business data flows into their systems. For example, XML banking vocabularies such as IFX provide for electronic bill presentment integrated with payment and inter-account transfers. Earlier X12-EDI transactions offered electronic invoices, credit-debit adjustments, and payment orders, but did not tie them together with the payment process.

Talking the integration talk is one thing; walking the walk is quite another. To achieve this kind of integration and interoperability requires a fusion of five sets of ideas and technologies involving XML/EDI:

• XML: to take advantage of the Internet for transport and delivery, coupled with using metadata for identifying business objects

• EDI: for the defining of, and linkage to, business transactions and processes

• XML repositories: for storing the glossaries that define the information content used in specific business processes

• Templates: for defining and implementing the processing rules and information interactions

• Software Agents: to provide control, facilitation, and scalability

What Do You Think? Discuss the issues raised in this article in our forum on XML and e-business. Have your say in our XML/EDI online forum.

XML.com recently discussed the symbiotic potential between XML and EDI; see XML and EDI, Lessons Learned and Baggage to Leave Behind.

In the next section, we take some of these ideas further.

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