Joe Mullich
Freelance Technology Writer
818-907-9109
Microsoft
BUILDING A BETTER B2B
All together now
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"We believe the key driver of B2B commerce will be the ability to enable buyers and sellers to move to a full spectrum of business functions--from basic to complex--online, and in so doing reengineer and streamline these processes," says Mark Mutkosky, an analyst with Deutsche Banc Alex in Baltimore, Md., who recently wrote a report titled "Hospitality B2B: Enter the Revolution."
The unique business model of hsupply.com lets hotel managers immediately reduce the time and money spent placing and processing orders, while providing the trending information they need to make more effective purchasing decisions.
"We are already starting to see cultural changes emerge," says Ravi Kalakota, chairman and CEO of hsupply.com. "In the old days, all the properties in the hotel business had centralized procurement. Everyone faxed in orders and someone in the central office rekeyed that into a green terminal." Result: orders were incorrect up to 30% of the time.
Kalakota chose the Microsoft platform, including Site Server and SQL Server, primarily because of the speed of development, but also because of the degree of integration required by an exchange. "Microsoft's tools were the only ones we found that provided both forward and backward integration," Kalakota says. "The Microsoft platform was very compatible with existing legacy systems, which preserves the existing technology investment. Platforms like Java and Solaris were good for forward integration, but not for connecting to legacy systems."
Extranet or exchange?
By Joe Mullich
By 2003, Merrill Lynch estimates that online exchanges will capture more than 20% of the $2.5 trillion marketplace of B2B commerce. Today, however, most B2B integration is done through point-to-point extranet solutions. And with many analysts predicting a coming shakeout in the online exchange industry, settling on a B2B integration strategy can be tricky.
Ken Vollmer, an analyst with Giga Information Group Inc. in Cambridge, Mass., notes that exchanges are ideal for certain transactions, such as auctions and bidding. "If you are exchanging highly confidential data, most companies prefer to use an extranet," Vollmer says.
Exchange proponents, however, claim a push back from clients who don't want the burden of connecting to potentially hundreds of suppliers through a proprietary solution. "Many of our client companies are small and can't afford a big infrastructure investment," says Michael Saucier, chief technology officer and founder of Sequencia Corp., a Phoenix-based company that runs an exchange for manufacturers.
Microsoft's BizTalk, which provides a platform to exchange data in different formats including XML, EDI and flat files, can eliminate one concern for IT directors selecting which exchanges to interface with. "BizTalk allows you to create a generic integrator in an inexpensive way," says Ravi Kalakota, chairman and CEO of hsupply.com in Atlanta. “That way you don't have to do a proprietary interface with only a few exchanges."
Officials at Petrocore.com, a Houston information exchange for the petroleum and gas industry launched by PricewaterhouseCoopers, says the BizTalk initiative will spread adoption of the XML schema by all application software vendors. The use of XML, in turn, will allow Petrocore to interface with other oil and gas product/services exchanges. Such interfaces are the next wave in the development of exchanges, analysts agree. "The EDI standard is too limited," says Jay Brockman, product manager for Petrocore.
Analysts agree that users should make sure exchanges they partner with have a strategy to link to back-end systems. Only 10 of the 600 exchanges tracked by Boston-based AMR Research Inc. have application integration built into the exchange. Most exchanges now need to telephone, fax or e-mail orders they receive.
"Larger buyers and sellers are forcing exchanges to rapidly adopt standardized integration into the leading supply chain management, customer relationship management and enterprise resource planning systems,” according to a report from AMR.