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A New Touchstone for E-Commerce

Feb. 1, 2003
If you have attended a business conference in the last year, and at that conference you sought out an e-commerce segment, you more than likely heard about

If you have attended a business conference in the last year, and at that conference you sought out an e-commerce segment, you more than likely heard about a new programming language called XML, and closely following XML you probably heard the name RosettaNet. Here's why:

RosettaNet has succeeded in laying down business standards for e-commerce on a scale other initiatives have not even come close to attaining. By focusing on a single, vertical market and using a no-nonsense approach to recruiting, RosettaNet is slowly but surely permeating the entire IT and electronics industry with a common language for e-business. It has gained the collaboration, commitment and financial backing of the highest levels of major companies in the information technology and electronic components industries. More than 60 companies representing in excess of $600 billion in annual revenues in the IT and EC industries now provide the mandate for RosettaNet's standards development. Proponents include not only IT and EC giants, but also major players in other industries-American Express, UPS, Federal Express, KPMG Peat Marwick, Deutsche Financial Services, AMP, Lucent Technology and the federal government, just to name a few. Quite a track record for an infant initiative barely two years old.

RosettaNet's mother, like most good inventions, was necessity. But its father was frustration. Several years ago, Ingram Micro, a $20 billion, Santa Ana, Calif.-based hardware and software distributor, embarked on a project with 3Com Corp. to tie its supply-chain partners directly into its own computer systems. After each company spent more than half a million dollars to establish common product definitions and link to a common catalog, they thought they had a cost-saving, efficient model for e-commerce. But when Ingram tried to tie the system to another company, it ran into a snag. It would have to go through the entire process again because the second company used completely different definitions for the computer products and had a completely different way of dealing with data. Fadi Chehade, the director of the 3Com project, knew they could not afford to repeat this process with every vendor. They needed industry-wide standards for product definitions. The seed for RosettaNet was planted.

Chehade, and Linda York, now RosettaNet's vice president of operations, began a cross-country campaign to convince others in the IT industry that back-end procurement applications for e-commerce needed to be standardized. Convincing businesses in a highly competitive industry to hold hands in such an endeavor was no easy task. But soon industry giants such as Cisco Systems, Sun, Netscape, Microsoft and IBM began to look at the advantages. It would create an easier, cheaper way to get their products to market. By February 1998, a small group of IT businesses had agreed to form a grassroots, independent consortium, self-funded and non-profit, to develop standard Web data formats and schema for use and reuse among manufacturers, distributors, retailers and others in the electronics industry. The consortium called itself RosettaNet.

RosettaNet has focused on simplifying the supply-chain component of e-commerce by creating commonly agreed upon language and process standards. Unlike other groups, such as the Open Business on the Internet Consortium, RosettaNet is not trying to define transactions. Instead, it works to define the language used in those transactions. Its business-to-business platform, called eConcert, is built upon Partner Interface Processes, or PIPs, written in XML.

Understanding a little about XML and how it works will make clear why RosettaNet is becoming a beacon to the e-commerce world. XML, or Extensible Markup Language, is a meta-language standard for specifying a document-markeup language based on plain-text tags. It's a subset of the Standard Generalized Markup Language, as is HTML (Hypertext Markup Language), with which most Internet-savvy people have some familiarity. But unlike HTML, whose tags merely tell a browser how to display various elements on a Web page, such as text, images and push-buttons. XML tags specify exactly what those elements are. The inflexibility and limitations of HTML become apparent every time you do a search on the Web. Ask your browser to look for a "price," and it will pull up everything from Price-Waterhouse to Vincent Price. HTML can only recognize a look-alike; it cannot do interpretation. XML's great power lies in its ability to separate the presentation of the data from the data itself. It allows programmers to create text tags that give meaning to element definitions so that a piece of data can be lifted, based on specific tags, from a Web page and used in other applications. The other applications can then identify that piece of data and use it appropriately.

RosettaNet is hardly the first group to attempt to standardize the back-office side of e-commerce. Many businesses have spent years trying to make electronic data interchange (EDI) a viable solution to the lack of standards in the supply-chain. The electrical wholesaling industry is no exception, having experienced the birthing pains of the Industry Data Warehouse. But EDI, with its rigid coding, software and private network requirements, can be prohibitively expensive, especially for smaller companies. This is where XML really shines. With its coding flexibility and its ability to use the Internet as its backbone, it's far less costly to implement an XML-based system-and far more accessible. For these reasons alone XML may soon become the standard for e-business. Scott Deutsch, marketing vice president of Prophet 21, Yardley, Pa., is sure of it.

"This is not three to five years away," he asserts. "Within the next 24 months XML will be the way businesses communicate with other businesses. This is the way different applications will communicate. And most importantly, this is the way businesses will do business with other companies without having to spend a tremendous amount of time and expense to get plugged into this new electronic commerce model."

Joe Buffington, chief technology officer of Prophet 21, adds that another reason for XML's growing popularity is that someone who has never seen XML can look at XML coding and pretty much know what's going on in the program. "It's very similar to HTML, so you have a lot of people [already familiar with HTML] who can look at it and understand it very quickly," he says. "XML also is readable. It's not an obtuse language where you see a data stream and have no clue what it is. It's not only machine readable, it's human readable, too."

Adding new tags to HTML is a time-consuming and complicated process, and, from all accounts, is liberally sprinkled with bureaucracy because the original source code must be changed. XML is a language you can define yourself, on the spot. It's based on rules that anyone can follow to create a markup language of their own, incorporating whatever tags they need. Plus, XML has extensibility (hence its name). "You can extend existing XML schemas," says Buffington. "For example, if a schema for a purchase order has been written by someone in your supply chain, but you need other items included, XML lets you add those items onto the basic schema without going back and rewriting the whole thing."

XML's flexibility and coding simplicity are also a couple of its main problems. It's so flexible thattwo uncoordinated efforts to design schemas using XML can produce incompatible results. This is where RosettaNet's definitions, standards and especially its PIPs come into play. A RosettaNet PIP is an XML specification designed to align a specific business process between supply chain partners. RosettaNet develops its PIPs through process modeling to find out how partners (manufacturers, distributors, resellers, etc.) in the supply chain interact with each other as they carry out day-to-day business activities. One of the first PIPs tested, completed by IBM and Microsoft, allows manufacturers to seamlessly add new products, including standardized technical specifications and part numbers, into their partners' catalogs.

"Our detailed process modeling showed that this first PIP alone translates into an average of $1 million in cost savings per year for each implementer-a 200% ROI," says Fadi Chehade, who until very recently was RosettaNet's chief executive officer. By June 2000, RosettaNet expects to have more than 100 PIPs identified to align most processes in the global IT supply chain. "The IT supply chain stands to reap significant savings from the pervasive implementation of PIPs, possibly as high as $25 billion annually."

RosettaNet has worked with top software, hardware, services, distributor and reseller companies to test PIPs in a number of areas, including order management, inventory management and service and support. One thing they discovered along the way was that they had not taken enough of a global approach. The protocols were too U.S.-centric. "In the last six months or so, they've really globalized and addressed the issues of the European and Asian markets," says Deutsch. "That's important to the electronics market because most of its components come from the Asia-Pacific region. A global perspective is absolutely critical for the electronics industry."

Deutsch thinks RosettaNet will be a sort of light in the sky that people will look to because it's already gone through a lot of the pain and agony of the how-and-why decisions. "What makes RosettaNet beneficial is that they are defining the elements and publishing their schemas," he says. "This makes it easier for other people-they don't have to reinvent the wheel. It's a lot of hard work defining what an element is, how many characters it has, what kind of rules are behind it, and so on. RosettaNet is doing the hard work."

How broadly RosettaNet's standards will be adopted is still unknown, but it's clear that industries outside of IT and EC can look at issues RosettaNet has addressed and use those as a baseline, then make modifications specific to their business to business relationships. "Application providers like Prophet 21 will look to the leadership that RosettaNet has created," says Deutsch, adding that a lot of smart people have been working on this for two years and that it would be foolish to disregard or overlook what they have accomplished.

"If each application provider develops schemas in its own little world, it's counter-productive," he explains. "That is totally contrary to why RosettaNet is such a success in the electronics marketplace. The key is getting together and using a standard that can gain visibility and usability across hundreds of thousands of customers, one that multiple applications providers can work with seamlessly."

Note: For more information about the RosettaNet project, visit and click on "visitor." To find out the latest on XML, visit, a site hosted by OASIS, the Organization for the Advancement of Structured Information Standards.

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