ebXML: The New Spin on Old Ways that Make E-business Work
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In the past year, the world of electronic business has learned, through dramatic reversals of fortune, the importance of gaining cultural acceptance to match technical innovation. The remedy for its revival may lie in greater use of collaborative commerce rather than online trade to deliver pervasive business interactions through electronic means. This kind of e-business interaction requires open standards, which helped fuel the Web-centric boom in the first place. Fortunately, a new set of standards has emerged called Electronic Business XML or ebXML that could meet both cultural and technical requirements.
At its core, the ebXML initiative itself is an attempt to make e-business easy, ubiquitous, and inexpensive for the millions of smaller companies (meaning any enterprise involved in the production or marketing of goods and services, including those in the public sector and not-for-profit organizations) not yet part of the e-business experience. This project started in November 1999 and aims to make it possible for any company in any industry to conduct business electronically with any other company in any other industry anywhere in the world.
More than Just Buying and Selling
To most observers, including many people in business, e-business means buying and selling retail goods over the Web. But the real opportunities and largest payoffs for e-business are found in business-to-business commerce. According to Giga Information Group, the value of electronic business-to-business commerce could reach up to $5.2 trillion by the year 2004, up from $3.3 trillion in the year 2000.
What makes e-business with other companies so lucrative? Commercial interactions among businesses go well beyond trade in goods and services. The big payoffs result from improved business processes that create more opportunities and reduce overhead. These collaboration opportunities contribute to the bottom line not only today, but keep paying off well into the future.
When supplier and customer companies work together, the results can be significant. One of the lessons learned from the productivity increases over the past decade is that suppliers and customers need to coordinate their operations through all phases of the planning, production, and distribution cycles, an idea known as supply-chain integration. And much of that cooperation takes the form of routine and systematic sharing of information among companies, so they can synchronize their operations, predict demand, reduce inventories, respond quickly to change, and improve cash flow.
By its very nature, supply chain coordination and integration requires standards. Few individual companies can go out and develop their own systems and formats for exchanging data, and expect their suppliers to adopt them. This practice may work for some very large enterprises – the famous "800 pound gorillas" – but the development of standards in an industry makes it possible for all parties to talk the same language and develop systems that work together, thus reducing the burden on small suppliers struggling to meet the demands of larger partners.
An even better idea is cross-industry standards. Companies rarely work only within their industries. For example, businesses will deal daily with financial and transportation services. Also, businesses need to grow into new markets and take advantage of new opportunities. Industry standards can meet a company's needs today; cross-industry standards help prepare companies for the future.