Don't let confusion over competing standards derail your e-business strategy
By Jim Fulcher, contributing editor -- Manufacturing Business Technology, 6/1/2005 6:00:00 AM
That old adage, "Too much of a good thing ... " just may apply to B2B standards.
While having a common way of formatting and transporting documents across electronic networks does make it easier for trading partners to conduct e-commerce, it gets complicated when companies are forced to choose between what seem to be competing standards. And it becomes downright confusing when doing business in more than one vertical industry, because each industry, for the most part, has its own set of standards.
In fact, standards proliferation appears to be keeping a fair amount of companies from adopting any formal e-business strategies, a position that ultimately hurts their ability to lower operating costs.
Late last year, Boston-based Yankee Group surveyed companies about their use of B2B standards, and 26 percent of respondents cited the existence of too many vertical industry standards as the second-largest impediment—after cost—to adoption of B2B standards. Also, of those surveyed, 13 percent said the existence of too many standards-making organizations is impeding adoption in the supply chain arena.
"Companies will continue to buy software to remove barriers that inhibit quick and accurate information exchange," says Kosin Huang, Yankee Group program manager for business applications and integration. "However, a fairly high level of frustration with efforts to establish standards for implementing those systems will slow adoption."
Miko Matsumura is a VP with Infravio, which sells software for managing Web services and developing service-oriented architectures—both of which rely heavily on the use of B2B standards. He says the frustration over standards proliferation is real.
"It's very frustrating to think about standards, because it seems like the wheel is being reinvented over and over again," Matsumura says. "It makes you wonder why each vertical industry needs its own standards, and why there are competing standards."
Matsumura adds that many manufacturers fear choosing the wrong standard, and thus "end up sitting on the fence, doing nothing."
Driven by necessity
Mark Schenecker, a VP with supply chain network integration vendor E2open, attributes standards proliferation to early adopters' desires to get on with the business of conducting e-commerce instead of waiting for the perfect infrastructure to be in place.
"Optimally, it would have been great if members of vertical industries could have gotten together to create universal standards that span industries," says Schenecker. After all, he points out, there are only slight differences among the purchase orders, invoices, and other documents used across industries.
"But the reality," maintains Schenecker, "is that most industries—and particularly the leading companies in those industries—couldn't wait for some type of governing body to first be formed to make decisions on these things. Faced with various business pressures, companies in all vertical industries forged ahead and solved the problem of a lack of standards by creating what was needed."
Schenecker predicts a method of developing standards that can span vertical industries eventually will emerge, but in the short term he says manufacturers will have to continue wading through various standards to find the right ones for their business.
That can be easier said than done in some industries. For instance, manufacturers of electronic and high-tech components have rallied to make RosettaNet a near-defacto industry standard.
The RosettaNet standard is managed by RosettaNet, a nonprofit consortium that counts more than 500 manufacturers of computers, consumer electronics, and high-tech products among its membership.
RosettaNet recently unveiled a set of technology and standards, called Rosetta automated enablement (RAE), for helping members get their trading partners engaged in e-commerce.
E2open is working Intel, the Santa Clara, Calif.-based chip-making giant, to prove that RAE will work as intended. "Based on our experience, we believe RAE has the potential to significantly reduce the cost and time to integrate trading partners, which will result in greater adoption of the RosettaNet standard," E2open's Schenecker says.
The validation program involves Intel using E2open's integration technology to connect with five Intel suppliers in Asia, North America, and Europe. Intel has more than 10,000 suppliers. Most of the larger ones already are using the RosettaNet standard to conduct e-commerce. Intel's involvement with RAE is aimed at small and midsize suppliers that are most afraid of the costs—and typically are most confused about standards—of doing e-business.
"We've had myriad integration strategies, so it's been time-consuming and expensive to communicate with all our suppliers," says John Cartwright, supplier B2B integration manager, Intel. "We expect RAE to go to all levels of suppliers. We've gone into production with some of our smaller suppliers, and they're finding it easier than expected. Their time-to-info is much quicker than it has been, and it requires less human intervention than it did in the past."
Take the next step
For manufacturing executives seeking to better understand standards and best practices, Yankee Group's Huang recommends turning to standards organizations and consortia. Indeed, almost 70 percent of respondents to the analyst firm's survey currently use organizations or consortia—such as OASIS (Organization for the Advancement of Structured Information Standards); and UCC (Uniform Code Council)—as an information source, she says.
Working with these organizations gives people the chance to keep up with changing standards, and to better understand complex technical requirements. Of course, it also gives them the chance to contribute to the development and convergence of standards.
"Anyone who's on the sideline watching a standard be developed should get involved," says Infravio's Matsumura. "Especially if there's no clear-cut standard for the industry. The companies that have the most to gain from a standard should be the most involved in its development."
