XML Comes Of Age
XML is now widely viewed as the catalyst for building e-commerce sites that interact with multiple trading partners
James E. Gaskin (Software AG)
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
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
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
"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
"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.
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
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
Expect the buzz around XML to continue as e-commerce
companies look to tie trading partners to their back-end