XML Comes Of Age

XML is now widely viewed as the catalyst for building e-commerce sites that interact with multiple trading partners

The Extensible Markup Language has come of age. First considered a better way to create Web pages, XML is now widely viewed as the leading data exchange technology for e-commerce. Why? Beyond simply structuring data, XML "tags" send on the definition of how data is organized and how a user can read the information right inside the file. This ability to more efficiently structure and tag data makes it easier for developers to integrate data from business partners with back-end systems--a critical point for Internet marketplaces forging relationships with numerous trading partners, as well as companies building corporate extranets.

The computer industry's largest players have bought in big time. About 18 months ago, Cisco, Compaq, IBM and Intel organized a consortium called RosettaNet. The goal: Execute real-time inventory, manufacturing and back-office automated communications handling procurement details using XML.

RosettaNet is making steady progress, and the group publicly demonstrated some portions of its transaction systems earlier this year. But if Intel and other deep-pocket computer companies can't integrate their supply chain in less than 18 months, what chance do other companies and industries have to benefit from XML? And what about small businesses?

Actually, the Internet marketplaces such as PaperExchange, Chemdex and e-steel.com are using XML as the foundation for trading exchanges that let businesses order everything from tons of raw paper to maintenance, repair and operations (MRO) supplies. The Organization for the Advancement of Structured Information Standards estimates that well in excess of 100 industry trade groups are working to develop their own industry-specific flavor of XML. The Internet marketplaces got a jump-start, largely because they started small, focusing on specific business transactions rather than trying to take on the entire purchasing process.

Carl Katzeff, chief technology officer of PaperExchange.com, says PaperExchange performed the first online paper transaction using XML about two years ago. Today, PaperExchange resembles an exchange floor, where companies request materials for purchase and offer products to sell. PaperExchange sells paper in all its forms, from pulp to various finished products, including newsprint.

"People can log in with their browser, get real-time information about product offerings on the site and see requests, all in real time," says Katzeff. "We're working on standard XML transactions we can deliver to people," making it easier for companies to tie PaperExchange activity into their own accounting systems.

Savings range from 4 percent to 10 percent for PaperExchange customers, says Katzeff. But when companies measure profit in pennies per ton of paper, every saved penny counts.

Gary Freeman, vice president of advanced technologies for MRO.com, has been working with XML for a couple of years. Freeman's parent company, PSDI, develops Maximo, an enterprise asset maintenance software with XML components. The Maximo software was converted to Java in 1996, right as the new language appeared. XML found a home within Maximo a little more than two years ago, before it became well known. The MRO site went live last April, not long after PSDI bought a company in the maintenance, repair and operations market and renamed the site MRO.com.

Freeman's advice for those new to the XML market: "Look for middleware products such as webMethods that help define XML standards, with tools to extract data and formulate XML, then accept the XML data into your own system," explains Freeman.

Here's how MRO.com works: The Web site supports small industrial suppliers with mroMarketplace, which lets suppliers place their product catalogs online at mroMarketplace, as well as add their products into the site's primary catalog.

MRO buyers make purchases through mroBuyer, a procurement application written in part with Maximo. The data exchange product is from webMethods, XML-based software that provides the bulk of the security and transaction services necessary.

Charles Allen, co-founder and vice president of product development at webMethods, says his company constantly goes beyond simple electronic data situations. "XML can be used for pretty much everything, but XML by itself does not equal business-to-business automatically."

One of the early members in RosettaNet, webMethods understands the frustration of simple business-to-business transactions. It likes to call the b-to-b space Business-to-Business Integration (B2BI) because of the increased level of integration necessary to fit the trading network information directly into company systems.

"Some of the issues not handled directly within XML are real-time controls, security, management of contact points in a trading organization, content validation and sequence validation," Allen points out.

Even more important, says Allen, are the business and cultural issues not related to technology. "Internal systems must be driven by external change. This is a cultural change for many customers, and they aren't used to worrying about real-time accounting transactions." In other words, corporate production systems don't change until the people using them do.

BIG MONEY

The financial industry is developing several XML flavors. One example is the Financial Products Markup Language (FpML), spearheaded by a partnership between IBM, J.P. Morgan and PricewaterhouseCoopers.

"Today, banks have to fax a minimum of 30 or 40 pages to confirm an interest instrument," says Keith Bear, who manages IBM's financial market department out of the company's London offices. "It's expensive and time-consuming, and a person has to check all the pages to verify the terms and conditions are acceptable to both sides."

About a year ago, J.P. Morgan and PricewaterhouseCoopers started working independently on an XML definition for financial derivatives, initially focused on foreign exchange and interest-rate products. By May, they had invited IBM into the loop to help develop what became FpML late last summer. Eight firms had formed an official steering committee for the e-commerce standard process by October, including Bank of America, Chase Manhattan Corp., Deutsche Bank AG, and Morgan Stanley Dean Witter, along with J.P. Morgan.

The FpML group searched through other financial XML initiatives, but nothing else could handle the unique needs of the financial derivatives industry. Unlike standardized transactions, such as consumer and small-business banking or stocks, bonds and futures, interest derivatives each come with its own unique contracts, which require careful human scrutiny--an error-prone and expensive process. Since margins on these financial instruments are thin, every piece of paperwork eats into profits.

Andrew Jacobs, IBM's chief architect for FpML, says while there's no definite date for exchanging live data, the group is working on the final document type definition (DTD) for swapping data and should be ready by May. "Then we'll probably have a live demo some time this year for prototyping purposes," Jacobs says.

Data between banks will ultimately use the XML programs to slide transactions directly into their normal settlement systems. Issues remaining to be answered include whether security will be built into the XML files or banks will need to use a VPN to keep information safe during the trip across the Internet. Encryption and digital signature issues remain high on the list of priorities, since account numbers and other sensitive information become part of every transaction.

XML MEETS ERP

XML is also being used to integrate back-end ERP transactions, a good example of which is at Geon Inc. David Honeycutt, Geon Inc.'s director of e-business, says the company now runs integrated transactions in real time with the company's single largest supplier, via a custom-made XML system built with webMethods servers integrated with SAP software inside both companies.

What's unique is that ERP transactions on one side are immediately entered into the ERP system at the other company, something that not even SAP was able to accomplish.

This is how they did it: About a year ago, Geon and Occidental Petroleum Corp. converted a joint-venture company into its own start-up, now called OxyVinyls. This required moving the shared SAP software system to the new company. The problems showed up immediately.

"We had an SAP system in the joint venture, but nowhere else. After we split the company, we went back to doing things manually, and our errors jumped way up," says Honeycutt. Twenty people from Geon, Oxy and consultants from Andersen Consulting spent between six to 12 months building the new system.

Two webMethods servers--one at Geon and one at OxyVinyls--communicate across the Internet. Unlike the trading hubs and other vertical market partners discussed earlier, each transaction goes deep into the SAP software at each company. A purchase order from Geon turns into an order entered at OxyVinyls, without one person seeing the transaction.

"The day we turned on the new system, says Honeycutt, "inventory levels dropped 6 percent, and may be down 8 percent by now." While 6 percent may not seem like much, Geon orders $250 million worth of product from OxyVinyls each year. Beyond that obvious savings, the partners have been able to reduce the number of rail cars used for transfer and inventory storage. Each car costs $10,000 per year, and 40 cars are now unnecessary.

A project this intricate doesn't happen often, where one company has tight ties to the supplier of more than half its raw material. Worse, says Honeycutt, the self-examination necessary can be painful.

"In a hands-free system, where orders go back and forth machine to machine, sooner or later errors will cause a problem," says Honeycutt. "Going through the process of deciding what to install in the new software link exposed quickly where weak links were in the data enterprise system."

When properly deployed, customers should see little or nothing of the XML itself, while all the work goes on underneath the surface. Huge industry initiatives like RosettaNet will continue to make headlines because marquee players push the process. Yet smaller companies reap the rewards each and every day, delivered via better and faster trading through XML connections to customers and suppliers.

Expect the buzz around XML to continue as e-commerce companies look to tie trading partners to their back-end systems.

James Gaskin is a freelance computer journalist based in Mesquite, Texas. He can be reached at james@gaskin.com.

SGML's Cousin Makes The Big Time

SGML is the source for both XML and HTML. Yet even SGML fans admit the language remains painfully obtuse and confusing. HTML pulled only what was necessary from SGML to provide a reliable display conduit between Web servers and Web clients.

Unfortunately, the SGML subset turned out to be inadequate for the increased demands of Web content providers. HTML includes many vague specifications, even through multiple updates of the syntax. Browsers, forced to interpret what they read in HTML pages and clean up for sloppy files, interpret many loose definitions differently. This is why one Web page sometimes looks startlingly different when viewed with different browsers.

XML cleans up much of the sloppiness in HTML. Browsers will attempt to display even the worst HTML pages, while XML documents that aren't "well formed" and don't follow the rules will not display at all. This becomes critical now that many noncomputer devices read the Web. An ugly HTML page is an annoyance but becomes a critical error if it crashes your cell phone browser, rendering your telephone useless. XML will prevent that crash.

Also a subset of SGML, XML includes more of SGML than does HTML, including the ability to handle European and Asian languages. Additionally, XML contains the power to create its own applications. In a rather bizarre twist, the World Wide Web Consortium recommended a new Web page standard on Jan. 26, called XHTML.

Essentially, XHTML is nothing more than the HTML language created within XML, and conforming to its stricter rules. This level of power controlled by XML makes it the logical choice for structuring data of all types, not just Web pages.

Companies realized about two years ago that separating the format of their data from the data itself would enable them to exchange that information more easily between business trading partners.

--James Gaskin

Trade Groups Make Big XML Push

"XML is more than a buzzword now; industries are latching on. This is a follow-along technology to EDI, and is good for small to medium businesses," says Tim Cochran, speaking for the Data Interchange Standards Association (DISA).

DISA is a nonprofit organization that offers a wide variety of outreach initiatives and extensive educational programs for every e-commerce endeavor. Accredited by the American National Standards Institute in 1987 to coordinate development of e-business standards and EDI formats, DISA functions as a hub for large industry groups such as the XML/EDI Group that's working to develop a standard framework to exchange different types of data.

As vice president of commerce operations for DISA, Tim Cochran sits in the middle of the action, among industry groups trying to coordinate e-commerce issues. "We facilitate standards developed by other industries and associations," Cochran says. XML is the common thread used by small, medium and large businesses, "but everyone is doing it in a different fashion."

Sharing experiences between associations should help speed the process, says Cochran. For instance, two of DISA's members are the Open Travel Alliance (OTA) and the Interactive Financial eXchange (IFX). "Every organization has really good ideas," says Cochran, "and they are all consistent in that they don't want to reinvent the wheel. OTA doesn't want to worry about payment; it wants the IFX Forum to handle those issues."

The IFX Forum announced last September it was adopting a single, interoperable standard for online banking applications. Prototyping and one-to-one transaction projects are underway by DISA group members.

The DISA site at www.disa.org offers a prototype system, under development by the OTA, for public comment and experiment. Visitors to the site create, modify and delete a traveler profile, and can view the resulting XML code to see how the system works. OTA's goal is to create a common vocabulary for the travel industry. XML's flexibility will let partners in the travel industry make the additions necessary for their respective industries while maintaining a single foundation. After all, an aisle seat preference doesn't mean much to a rental car company, but means quite a bit to an airline.

Another group producing XML specs is the XML Industry Portal, hosted by the Organization for the Advancement of Structured Information Standards (OASIS). The OASIS is another nonprofit international consortium dedicated to accelerating adoption of product-independent formats based on public standards such as SGML, XML and HTML. Well in excess of 100 associations are listed on the XML.org site under the XML Catalog link, so it makes sense to check for yours.