Unlocking the Motion of Industry XML Enabled Transactive Content and Its Impact on B2B

1. Introduction

With the so-called old economy now leading the vanguard of B2B e-business, we have progressed beyond the initial hype and recognized that what looked easy is in fact hard, and that what looked hard can be truly daunting. However, as XML standards mature and provide a framework for greater collaboration and integration, the key to unlocking these issues is within our grasp.The truth is that B2B is not hard because of the technology issues, but because of the nature of dynamic B2B relationships. The failure of Net Markets to reach critical mass and deliver on the promise that inflated market expectations last year has not been down to the inability of the technology to deliver the auction and match-making functionality promised, but by a recognition that these functions in themselves are insufficient for business markets. The struggle to build liquidity has been caused by a failure to provide a clear value for suppliers as well as buyers. Limited data interchange and dynamic pricing suit spot-market buyers and sellers with a need to offload distressed inventory but not established trading relationships. As a result, sellers have been slow to engage with the exchanges, focusing their attention instead on internal initiatives to streamline operations and the upstream supply chain where their role as channel master provides a degree of control that is not available in the exchange. Far from the much vaunted revolution, e-business technologies have simply enabled further fine-tuning of existing processes, rather than the creation of new opportunities.

2. Unlocking the motion of industry

Industrial productivity is driven by the flow of information as much as by the flow of product. When this information fails then the surrounding processes also grind to halt. Products cannot be shipped without orders, orders cannot be raised without the right information and the right information is not available without timely and cost effective means to share it between organizations. As the supply chain evolves into a network and e-business grows, the flow of information threatens to swamp existing business methods. The traditional dependence upon paper, telephone, fax and even EDI has always relied on people. The complexity of information shared and the scale of its distribution has relied upon skilled management and patchwork solutions. Electronic Data Interchange was a giant leap forward at one time, but as a proprietary system exchanging limited types of proprietary data it inevitably remains dependent upon knowledgeable users and custom installation. Extensive point-to-point EDI networks are costly and time consuming for both buyer and seller to deploy. Furthermore, they separate the transaction from the rest of the business process. As E-business brings an increasing volume of transactional data, and a need to share information across a broader network at a lower cost, business demands a robust and scalable solution.

3. XML enabled Transactive Content

XML allows e-business strategists to connect the information flows that drive the business. By making content both more usable across organizations and more open to integration with other systems, XML resolves the problems of the manual / EDI process. The transaction and the information that drives the transaction are no longer separate, but are combined in one application in the form of Transactive Content. This concept is perhaps best illustrated with reference to an example: The sale of aircraft engines is no longer as profitable as it once was, and the core of profitability lies in the ongoing sale of services and spare parts, which attract a significantly higher margin. The sale of spares and services is closely related to the maintenance of the equipment by the airline. Every manufacturer produces large amounts of complex information to help their customers best maintain the equipment to highly regulated industry standards and provides ongoing improvements that drive spare part sales as product upgrades. Airlines are largely dependent upon the engine manufacturer for the information that they use in both determining maintenance schedules and in purchasing spare parts. The Maintenance Manuals, Illustrated Parts Catalogues and Service Bulletins that keep this information up to date extend to many thousands of pages. Traditionally these have been supplied as paper manuals in hundreds of bound volumes supplied to each maintenance location. This information is difficult to use and separated from the parts ordering EDI process. As the industry moved to SGML and then later XML, the content became easier to access and more usable. Electronic distribution via CD enabled productivity improvements for both the manufacturer and the airline, but retained the divide between the content and the business process it controls. The maintenance and repair procedures are as much a part of the ordering process as the price list. Indeed, accurate parts identification at this stage is critical to the rest of the order cycle. The arrival of the Internet and Intranet technologies allows content to be brought out of the library to improve the accuracy and efficiency of the transaction. Integration of the Maintenance Manuals, Illustrated Parts Catalogues and Service Bulletins with Back Office, Order Management or Procurement technologies means that the information and transaction flow freely together. Key to this integration is XML.The deployment of XML enabled Transactive Content created a single application that brought the complete business process into an e-businesss environment

4. The impact on B2B

As the leading innovators have used XML to make their content transactive they have created significant opportunities for competitive advantage.

• The integrated process is both easier and faster to deploy than a network of EDI point-to-point connections. The application is built once and access is provided on a personalized basis

• The costs of operation are lowered through the elimination of manual hand-off points that give rise to interpretation and error.

• The opportunity to drive revenue through related selling is far greater.

• Customer relations are made much stronger through creation of customer specific support environment that leverages the sharing of knowledge into installed base selling.

As we move into the second-generation of e-business it is clear that there is no one size fits all solutionor indeed any magic bullet. In assessing their direction in e-business, companies should understand the true complexity of their situation and the role content plays. XML enabled Transactive Content promises to have a dramatic impact on the performance of B2B for complex industries such as Manufacturing, Energy, Aerospace and Telecommunications. As always, those that get it right will triumph over those that do not

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