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With B2B (Business to Business) Refers to one business communicating with or selling to another. See B2B e-commerce, B2C and B2G.

B2B - business to business
 in its infancy, the technology infrastructure is still evolving. There are big providers and smaller ones, and their solutions differ because companies want, and can afford, different things.

Buy or build? The classic question doesn't really apply for most companies plunging into B2B e-commerce (Business to Business Electronic-COMMERCE) Refers to one business selling to another business via the Web. See e-commerce. . Building can be prohibitively complicated and expensive. With a host of vendors jockeying to provide the necessary systems to link companies in every corner of the world, buying is clearly the wiser choice.

But for a CFO See Chief Financial Officer.  concerned about signing off on a major expenditure for B2B software or networking, the near-term payback may be unclear -- in part because the architecture of the systems offers so many potential combinations. The Internet has become the backbone of e-marketplaces, but what role is there for other platforms like faxes and wireless? And what about varying formats, including eXtensible Markup Language See XML.

(language, text) Extensible Markup Language - (XML) An initiative from the W3C defining an "extremely simple" dialect of SGML suitable for use on the World-Wide Web.

http://w3.org/XML/.
 (XML XML
 in full Extensible Markup Language.

Markup language developed to be a simplified and more structural version of SGML. It incorporates features of HTML (e.g., hypertext linking), but is designed to overcome some of HTML's limitations.
) and electronic data interchange See EDI.

(application, communications) electronic data interchange - (EDI) The exchange of standardised document forms between computer systems for business use. EDI is part of electronic commerce.
 (EDI (Electronic Data Interchange) The electronic communication of business transactions, such as orders, confirmations and invoices, between organizations. Third parties provide EDI services that enable organizations with different equipment to connect. )? How will these link to legacy systems at huge companies? How can all the various pieces at myriad companies be integrated and tied back to common systems, including general ledger General Ledger

A company's accounting records. This formal ledger contains all the financial accounts and statements of a business.

Notes:
The ledger uses two columns: one records debits, the other has offsetting credits.
 and accounting systems at the buyers' end? Without that unity, the B2B promise will never be more than just that, promise.

Some B2B technology providers insist that any talk of infrastructure must involve complete solutions that allow for two-way buying and selling and links to corporate reporting systems. "There's a lot more to infrastructure than hosting on a co-lo site," says Jim Fox Jim Fox may refer to:
  • Jim Fox (athlete), a member of the gold medal British modern pentathlon team at the 1976 Summer Olympics
  • Jim Fox (composer), an American composer.
, chief executive of Dulles, Va.-based EqualFooting, using the industry jargon for "co-location site" -- essentially massive computer banks run by companies like Intel and Exodus that will put a company's software on their computers. "Software is not infrastructure. That's where you run into a problem," Fox argues. "If they can't put you up on a platform and provide you with the links you need to operate, they're selling you software."

Yet software sales have driven the top end of the market. Huge, sophisticated providers like Oracle, Commerce One and Ariba have carved out a niche with major corporations, providing the software and platforms for far-flung procurement networks linking offices around the globe. IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , however, decided to partner with Siebel Systems to establish exchanges, combining their technologies and bringing in consultants to make sure their systems could communicate with each other.

The biggest players also sell solutions to other market-makers and industry alliances. Oracle has created an E-Business Suite -- a set of varied products that can be sold individually or bundled as the customer needs. For instance, Oracle is providing the infrastructure backbone for Hostcentric, a hosting solutions and managed services provider with 21,000 customers and 50,000-plus Web sites on approximately 1,500 dedicated and co-located servers. Houston-based Hostcentric is using the E-Business Suite -- including products such as Oracle Database, Call Center Intelligence, CTI (Computer Telephone Integration) Combining data with voice systems in order to enhance telephone services. For example, automatic number identification (ANI) allows a caller's records to be retrieved from the database while the call is routed to the appropriate party.  Middleware, Contracts, Marketing iPayment, iStore and Bill Presentment and Payment See EBPP. .

One Ariba customer, ABN AMRO, one of the world's largest banks, has integrated its financial services "engine" with Ariba's B2B Commerce Platform. Through this Web-enabled platform, the bank's customers gain access to goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax.  and negotiated rates from preferred sup pliers pliers,
n a tool of pincer design with jaws of varying shapes; used for holding, bending, stretching, contouring, and cutting.

pliers, contouring,
n
. The bank is also in the process of implementing the Ariba Buyer[TM] solution for its internal procurement needs.

Not surprisingly, much of the differentiation in the market is based on scale and price. High-end systems from Oracle or Ariba often cost $5 million, according to consensus estimates, while smaller companies offer simpler solutions for far less. Clarus Corp. of Suwanee, Ga., which pro vides B2B procurement software, claims it can deliver a company a hosted auction site with "zero infra [Latin, Below, under, beneath, underneath.] A term employed in legal writing to indicate that the matter designated will appear beneath or in the pages following the reference.


infra prep.
 structure" for $500,000 to $600,000.

At this lower level, perhaps dozens of more specialized firms are offering infrastructure services to smaller companies -- often as application services providers (ASPs) hosting the necessary services. Works.com, an e-marketplace company in Austin, Tex., hosts the application for procurement, with no software needed from the individual buyers and suppliers, which "fractionalizes the costs," says CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  Bo Holland. The company says it has as many as 1,500 companies running on a single application, and offers customers "custom purchase request" capabilities, as well as enhanced reporting and integration with back-office accounting systems.

Works.com has partnered with scores of companies, including Merrill Lynch & Co., Dell Computer Corp. and Grainger's OrderZone.com to provide e-procurement solutions for mid-sized companies below the level of the Fortune 500. With Dell, for instance, customers work through Dell's own business site, www.delleworks.com, and through select Dell Premier Pages; the service, powered by Works.com, gives Dell's smaller customers access to thousands of business products, ranging from computers and other business machines to furniture, office and communications supplies.

At GoCo-op Inc., a Maitland, Fla.-based procurement hosting firm for the hospitality industry, CFO Jack Rybicki says the business model extends beyond simply hosting. "We're an end-to-end solution provider, meaning we do everything -- from providing software to hosting the application itself. We provide the training, the implementation services and upgrades to the software, as well as catalog management, which is a key piece. That means maintaining catalog information in an electronic format so that companies can do procurement online. All those services are included in our business model and in the transaction fee. We charge separately for ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer.  integrations, which we've been able to do successfully and economically for our customers."

If many B2B vendors seem to be offering similar services, that may reflect the fact that they talk about the same things, using common language. Optio Software of Alpharetta, Ga., talks of "high-reliability, high availability and high-volume transaction processing capability." Other providers talk routinely of issues like scalability and security. Press releases are frequently peppered with puffed up adjectives like "mission-critical," "best-of-breed" and "industrial strength."

Similarly, many of the system discussions can veer into jargon -- terms like "object-oriented techniques," "collaborative path management," "user interface programming" and "entity-relational diagramming." For CFOs, this is the time to turn to the CIO CIO: see American Federation of Labor and Congress of Industrial Organizations.


(Chief Information Officer) The executive officer in charge of information processing in an organization.
 or CTO (Chief Technical Officer) The executive responsible for the technical direction of an organization. See CIO and salary survey.  and ask for a translation -- as well as a cost analysis.

A focus for many vendors is the need to accommodate different protocols. Optio Software, for instance, says it provides "infrastructure soft ware that transforms, translates and delivers data in XML, EDI, print, email, fax, wireless and other electronic for mats." Steve Horynak, chief strategy officer at Clarus, however, says XML is more prevalent for software company internal communications. "XML is used to communicate with the applications we've built, and to facilitate upgrades and extensions. It allows you to integrate more easily with back-office ERP systems." Jamie Taylor, chief technology officer at LENDX, a San Francisco-based online corporate equipment financing market place, says that its systems are XML capable, but also handle batch import and export of data on what may amount to "virtual private networks."

A huge challenge in establishing B2B networks is integration -- particularly getting different mainframe and client-server systems to talk to each other reliably. Chris Friedmann, managing director of consortia initiatives for VerticalNet Solutions, estimates that the host of mergers many large companies have done in recent years have left some with up to 25 to 50 different legacy systems.

"We need to reach into legacy systems. There's not enough attention paid on providing service that resolves disputes at the moment the buyer is about to issue the PO [purchase order]," argues Michael Killen, chairman of Killen & Associates in Palo Alto, Calif. "We argue that this is the time for these solutions to provide the service to enable the buyer to resolve conflicts that are going to arise after the invoice is issued."

Vendors are happy to assist, but acknowledge the difficulties. "The biggest hurdle in the process is that from a supplier standpoint, the [customers] own the data," says Clarus' Hornyak. "Often, that data is on several different systems and in multiple taxonomies. We have a brokering mechanism that allows us to go out and work with them, for a nominal fee. We get data from them, host it on a central network and provide access to customers."

"There is a fair bit of integration required" between customers and systems operated by LENDX, Taylor says. "For the types of transactions our clients are doing, it's typically not cost-effective to involve their IT groups. They're frequently using us as a stand-alone, vertical application."

"Deploying a software package generates no real economies for you from the fact that it's already been installed in 20 other locations," says Fox at EqualFooting. "The hard part is putting it all together and integrating it. It's the hidden cost of deployment. You need to understand your total cost of ownership."

Liberty Financial created an e-business platform with the help of Context Integration in Burlington, Mass. Using its BroadVision 4.1 software and a centrally managed content repository, Context was able to integrate a legacy mainframe to BroadVision using COR BA, a popular protocol (see Glossary on this page). Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. , which established an online exchange to buy office supplies, personal computer and servers and other "commodity-type" items, used PeopleSoft to set it up -- in large part because PeopleSoft offered a trading platform linked to mega-sites run in the U.S. and Britain and linked to Commerce One's Global Trading Web.

"Integration is tougher when a company has customized its systems," which makes sharing information more complicated, says Kerry Lam son, senior vice president for electronic commerce strategy and marketing at PeopleSoft. "There is not a good set of semantics that defines things the same way. XML is the new Holy Grail, but you're finding some of the same old problems you had in the past -- everyone is defining their own flavor. There may be 500 different forms of XML," with varying elements, codes and units of measurement Units of measurement

Values, quantities, or magnitudes in terms of which other such are expressed. Units are grouped into systems, suitable for use in the measurement of physical quantities and in the convenient statement of laws relating physical quantities.
.

"Some platforms will be more predefined than others," Lamson adds. "They may only be toolkits, if you've modified your system. Of all your legacy systems, you need to determine what you consider to be the system of record, where most of the business information resides. That's what you want to become the hub and focus of e-commerce."

Kenneth Parkinson, a principal with Treasury Information Services See Information Systems.  in Hopewell, N.J., makes an analogy to earlier technologies like enterprise resource planning See ERP.

(application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses.
. "CFOs and their like have gotten involved rather grudgingly in areas like ERP. They had to." Now, with B2B, they may need to take a more active role, he argues. "The CFO needs to ask, 'How do I stay on top of this? How do I control it?'" Answers may be hard to come by, but they'll be critical to success.

For Speed,

Look to the Net

Speedy and efficient e-procurement is emerging, and the Internet is the force that will deliver it, say industry experts.

According to the Aberdeen Group, early e-procurement systems cost more than $1 million and took 9 to 13 months to implement. Moreover, these systems required "significant internal resources and technology infrastructure" to develop and support -- and were often dependent on software upgrades that "could be costly and complex, often requiring new integration interfaces."

Most of these, Aberdeen argues, were "intranet-based applications with high cost and resource requirements" that focused "on automating front-end, transactional activities, providing little, if any, support for the supplier management, fulfillment, payment and post-order processes that round out the indirect procurement cycle."

Aberdeen argues that "widespread adoption of e-procurement will require the integration of full-cycle procurement automation and fulfillment and supply base management services into a fully hosted procurement service delivered over the Web." The firm says that on average, hosted procurement systems "can be implemented 25 percent faster than premise-based soft ware applications, providing rapid ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot).  and lower risks."

Still, one major problem with the mega-exchange Web-hosted model is that companies may be loath to committing to doing all their purchasing through a single portal. Moreover, "the value diminishes unless you have a robust back end," says Steve Hornyak, chief strategy officer at Clarus Corp. "You need internal controls and organization -- without that, a site becomes more like a Yahoo or Amazon," where anyone can go on and order anything.

GLOSSARY

A few terms commonly used by B2B vendors:

XML:

eXtensible Markup Language

CORBA (Common Object Request Broker Architecture) A software-based interface from the Object Management Group (OMG) that allows software modules (objects) to communicate with each other no matter where they are located on a private network or the global :

Common Object Request Broker Architecture (standard, programming) Common Object Request Broker Architecture - (CORBA) An Object Management Group specification which provides a standard messaging interface between distributed objects.

The original CORBA specification (1.
 

SOAP:

Simple Object Access Protocol (protocol) Simple Object Access Protocol - (SOAP) A minimal set of conventions for invoking code using XML over HTTP.

DevelopMentor, Microsoft Corporation, and UserLand Software submitted SOAP to the IETF as an internal draft in December 1999.

Latest version: SOAP 1.
 

TAP:

Technology Access Plug-Ins

DCOM (Distributed Component Object Model) Formerly Network OLE, it is Microsoft's technology for distributed objects. DCOM is based on COM, Microsoft's component software architecture, which defines the object interfaces. :

Distributed Component Object Model (programming) Distributed Component Object Model - (DCOM) Microsoft's extension of their Component Object Model (COM) to support objects distributed across a network. DCOM has been submitted to the IETF as a draft standard.  

DTD (Document Type Definition) A language that describes the contents of an SGML document. The DTD is also used with XML, and the DTD definitions may be embedded within an XML document or in a separate file. :

Document-Type Definition

PTX PTX Pneumothorax
PTX Pituitary Homeobox
PTX Private Trading Exchange
PTX Practical Training Exercise
PTX Preliminary Training Exercise
:

Private Trading Exchange
COPYRIGHT 2001 Financial Executives International
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Article Details
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Title Annotation:business to business e-commerce
Author:Marshall, Jeffrey
Publication:Financial Executive
Geographic Code:1USA
Date:May 1, 2001
Words:2052
Previous Article:Critical Issues for Digital Exchanges.
Next Article:ADVICE on E--Procurement.
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