Putting E-Commerce Into Words
Business-to-business electronic commerce is blocked by a war of words.
Companies doing business on the Internet keep returning to the same point: Buyers and sellers aren’t speaking the same digital language.
RosettaNet, a high-tech global business consortium, hopes to change all that. The Santa Ana-based organization is using a new technical language on the World Wide Web as the base for building a lingua franca for the electronic marketplace.
This digital pidgin aims to close the gap between the Internet’s promise of an open electronic marketplace and today’s reality of incompatible, proprietary systems.
“Today it’s as if we’re all trying to play basketball but can’t agree on the size of the court, kind of ball or height of the hoop,” said Fadi Chehade, chief executive of RosettaNet. “We have seen the financial promise of the Internet, but we can’t achieve it.”
Chehade notes that corporations share many of the same problems as traders in the Middle Ages, when merchants throughout Europe and the Middle East shared no single common language. To conduct business, they developed a dictionary whose terms were understood within the bustling passageways of a town bazaar.
Enter the Internet, which has become the modern bazaar. Companies want to use the global network to let their suppliers and customers get product information, place orders, receive updates and check inventory status. But firms own different kinds of computers, rely on particular software programs and configure their in-house networks in unique ways.
Electronic commerce, while still a novelty for the public, is hardly new to businesses. Large corporations have been connected to many of their suppliers over electronic networks for decades, using a system called electronic data interchange, or EDI.
But EDI requires complex and expensive computer systems that many companies cannot afford. Analysts say it also uses a limited digital programming language, which makes electronic purchasing, invoicing and billing an extremely chaotic process.
Such problems have followed business efforts off private networks and onto the public Internet. Business-to-business sales on the Net, estimated to hit $1.3 trillion by 2003, barely squeaked past $43 billion last year, according to Cambridge, Mass., consulting firm Forrester Research.
RosettaNet’s Chehade believes that order can be achieved--and the Internet transformed--by using a tool called extensible markup language, or XML.
The language, often touted as a cure-all for organizing the jumble of information housed on the Web, extends the capabilities of hypertext markup language, or HTML, today’s standard. Proponents insist that the Net and e-commerce will be transformed if XML becomes the universal format for structuring data.
XML stems from electronic-document theories developed in the 1960s. While HTML tells Web browsers how a page looks, XML describes the information the page actually contains.
By using XML, computers can better talk to one another and people can use the same data in different applications. The president of a company may have a Word file, a marketing executive a database and the customer various spreadsheets stored on his server. All three want to swap their information but don’t know how to do it.
The language acts as a common medium. Merchants and manufacturers would be able to insert invisible “tags” around the data, which could specify prices, part numbers, sizes and thousands of other characteristics.
The result, proponents say, is that the Web becomes a more orderly place in which it’s easier to navigate and find things. XML might tell your browser every time a news story is updated. Or find the latest price of a new car. Or synchronize your medical records so they can be updated by either the doctor, hospital or pharmacy.
RosettaNet’s focus is to create XML codes--and the business processes that use these codes--for the high-tech industry. Chehade took a two-year leave as vice president of Ingram Micro Inc.’s global electronic-business development group to head the industrywide effort.
Drawing inspiration from the Rosetta Stone--the ancient slab inscribed with three dialects that enabled linguists to decipher Egyptian hieroglyphics--RosettaNet was launched in early 1998 to get the high-tech distribution business in sync. Hurt by Dell Computer Corp.’s and Gateway Inc.’s direct-sales models, the rest of the computer industry spends between 2% and 4% of its overall revenues fixing problems in this area, according to USC researchers.
Analysts insist that RosettaNet’s efforts won’t slow either Dell or Gateway--neither of which joined the venture. But it could give the tech industry a boost--if it meets its self-imposed deadline next year.
“Competition, as well as the changing digital landscape, has made it crucial for us to get this done,” Chehade said. “We’re not just enjoying an intellectual exercise, we’re saving and making the entire industry a lot of money.”
Pledging financial support for RosettaNet--and a willingness to adopt its standards starting this summer--is an array of companies from throughout the industry.
Many of them are fierce industry competitors: carriers UPS and Federal Express Corp.; distribution rivals Ingram Micro, Tech Data Corp. and CHS Electronics Inc.; Web browser makers Microsoft Corp. and Netscape Communications Corp.; back-office software specialists Oracle Corp. and SAP; resellers CompUSA and MicroAge Inc.; and hardware manufacturers Compaq Computer Corp., Hewlett-Packard Co. and IBM Corp., among others.
Most of these companies have tried--and failed--to create such standards on their own. Yet with so many competitors agreeing to use the same technology, some XML critics wonder what these firms will use as an edge over their rivals.
“We’ll compete by making the market bigger and finding new services,” said Colin Evans, director of e-business architecture and Web operations for Intel Corp. “I think all of the large companies realized that if this thing is going to work on a global scale, no one company could lead.”
RosettaNet’s success depends on the wide acceptance of XML, Evans said. But that’s only one piece, and XML by itself doesn’t solve anyone’s problems.
“We need to build the words, the dictionary and the grammar rules needed to create real business processes on the Net,” Evans said.
Take something as basic as updating a company’s product catalog. For Santa Ana-based distribution giant Ingram Micro, the process is extremely complex. Phone calls lead to faxes lead to e-mail. Paperwork gets shuffled back and forth. Each change has to be entered into a computer system, which can mean delays and occasional errors.
Another challenge is that each manufacturer describes its products in its own way. Microsoft software requires one process, Oracle software another.
Using Ingram as a case study, RosettaNet members developed a series of XML codes for describing individual items. The group also developed a simpler way to move the data from the manufacturer to Ingram and on to the customer.
Before, each product update took 22 hours and cost Ingram $29.54. With the XML codes and the RosettaNet process, the task took half the time and cost $17 less.
Multiply that by 60,000--the number of new products from U.S. firms that Ingram adds to its catalogs each year--and the savings top $1 million.
Such financial success has created a buzz for both RosettaNet and the potential power of XML. The World Wide Web Consortium, the international body that sets Web standards, created XML and is still tweaking the language. Microsoft and Netscape plan to support XML in the next versions of their browsers--Internet Explorer 5 and a project code-named Seamonkey.
“Powerful backers, as you see in RosettaNet, will help XML have incredible value,” said Joshua Walker, a software analyst at Forrester Research. “But XML falls apart when there are companies developing standards for their own self-interest.”
Over the last year, more than 100 major industries, such as banking, retail and newspapers, have announced initiatives to establish XML tags. Some have attracted major players. Mutual fund giant Fidelity Investments, for instance, supports the Financial Information Exchange initiative and its effort to streamline the process of digitally swapping research among banks. And the proponents of voice XML--driven by a group of about 20 companies led by AT&T; Corp., Lucent Technologies Inc. and Motorola Inc.--hope to let people access online information by phone.
But other vendors, mostly software makers, are cluttering the marketplace in their eagerness to have people buy into their protocol.
The Information and Content Exchange, or ICE, venture is led by Vignette Corp., an Austin, Texas, developer of Web content management software. Analysts note that, unlike RosettaNet, Vignette failed to attract all the major media players. ICE now faces serious competition from a key Vignette rival, Cambridge-based Allaire Corp., experts say.
“Of everyone out there, RosettaNet has the muscle to make this work,” Walker said.
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Times staff writer P.J. Huffstutter can be reached via e-mail at p.j.huffstutter@latimes.com.
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Organizing The Web
The World Wide Web, so crowded with information, can be a frustrating morass both for companies looking to sell their products and customers eager to shop. Advocates of eXtensible Markup Language, or XML, are hoping to change that.
While today’s standard Hypertext Markup Language tells Web browsers how a page looks, XML describes the information the page actually contains.
Take, for example, a drug maker that wants to use the Internet to handle business transactions with different pharmacies. With a traditional Web entry, the company might only build a page that lists its customers’ information.
By using XML, the drug firm could build a series of custom “tags” that lets the computer understand what the information is and why it is important--such as knowing the difference between names, addresses and zip codes. The computer can then automatically perform various functions, from swapping changes of address to marketing new products to customers based on their geographical region.
Source: World Wide Web Consortium
