From the July 1999 issue of Entrepreneur

Currently conducting beta-testing, Microsoft plans to release an e-commerce framework to customers and developers later this year that analysts say will help make it much easier for entrepreneurs to conduct business-to-business e-commerce with their trading partners and suppliers.

The framework is expected to have a major impact on the way companies communicate with each other because it helps automate the transmission of documents commonly used in business. While electronic data interchange (EDI) has been around for years, it hasn't been widely embraced by many smaller companies because of its considerable expense. Microsoft plans to change all that by making its new automated system affordable to a wider range of companies, both large and small.


Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

Setting The Standard

Microsoft's framework, called BizTalk, is based on Extensible Markup Language (XML) standards--a document format created for the Web that's more flexible than HTML--which is intended to simplify the receipt and processing of electronic documents. Microsoft is betting XML will become the trade standard for all types of Internet commerce. If the standard is embraced by the user and server communities, the Internet will allow companies in all kinds of industries to communicate electronically, regardless of their computer systems' compatibility. Other heavy hitters in the computer industry, including IBM, Netscape Communications and Sun Microsystems, are also jumping on the XML bandwagon.

If XML becomes the standard--and usually Microsoft gets its way in setting standards--a small business using BizTalk-enabled products, including Microsoft's Internet Commerce Server, would be able to generate a purchase order on its computer system and have it appear immediately in a supplier's computer system via a real-time Internet connection. To avoid the prohibitive cost of setting up an EDI system, small companies today usually forego this luxury; instead, they generate purchase orders, print them out and fax them to suppliers. The order may sit untouched for half a day before it's processed, which then requires suppliers to re-key the information into a computer.

Some small companies are forced to speed up these procedures by purchasing EDI-enabling software because their larger suppliers insist on it. To get around establishing a full system, they use cheaper translation software that converts a standard EDI document into a form that's acceptable to the other company's back-end system.

One company working this way is Coastal Tool and Supply, a retailer in Hartford, Connecticut, that sells about 5,000 types of hand and power tools. The 18-year-old company, which launched a Web site in 1995, generally communicates with its 400 suppliers by faxing and phoning in purchase orders, invoices and stock status reports, but it employs EDI in some instances.

For its EDI processes, the company uses translation software called Qualedi from Eventra Software (http://www.eventra.com) and a dial-up connection. This allows Coastal to piggyback on its manufacturers' expensive EDI systems. While this is somewhat efficient, it's not based on any Internet standard, so the information is not transmitted in real time. As a result, Coastal has no idea when its supplier is going to dial up and read its mail.

"I have to check constantly to see if [a supplier has] received my purchase order or my invoice, and then send a response," says Todd Mogren, MIS manager at Coastal. "We really don't want to have to check our EDI box more than once a day."

BizTalk and its XML-based Internet backbone is expected to eliminate those hassles because the information will be handled completely electronically. "[With BizTalk,] we'll be able to send purchase orders, and the responses will be in real time," says Mogren. "This is important because we'll be able to know immediately if and when they got the P.O., what's shipping and what's not, and when products are going to be shipped."

"Right now, we're doing everything the old-fashioned way," says Rob Ludgin, Coastal's owner and founder. "What we're looking for is to work our way into the easiest and possibly the least expensive way to do our ordering."

EDI For The Rest Of Us

By using XML as the format for BizTalk, Microsoft may indeed make EDI possible for all businesses. "BizTalk is about Microsoft bringing together customers, standards bodies and software writers to define the right standards and schemas for XML-based data and process integration," says Rebekkah Kumar, a product manager at Microsoft. "What this means for small businesses is that there will be a standard way to define how to communicate that the industry will rally around, and the ability for them to play will be that much easier."

While Microsoft could not confirm at press time how much it would cost to implement BizTalk, analysts say a BizTalk-enabled Internet Commerce Server from Microsoft should cost entrepreneurs about $10,000, plus the cost of integration services offered by a local Microsoft Certified Solutions Provider. A list of these certified providers can be found on Microsoft's Web site (http://www.microsoft.com/industry). A comparable EDI system costs about $15,000.

In addition, Microsoft hopes manufacturers of other operating systems, such as UNIX and Macintosh, will create tools that will be BizTalk-enabled as well. Other BizTalk-enabled products from Microsoft are expected out later this year.

"Microsoft is basically pushing XML into applications that are inexpensive enough for small businesses to own or operate," says Scott Smith, president of Tera Group LLC, an electronic-business consulting firm in McLean, Virginia. "If you're a small-business owner, ultimately you want all your trading partners to implement it. The more of your trading partners that have XML, the more valuable the investment is to you." In the future, EDI systems should be able to work with XML, but it's too soon to determine when that will be.

Microsoft's BizTalk vision currently includes partnerships with large XML vendors, which will allow smaller companies to communicate with these suppliers' larger systems in real time. For example, webMethods, a Fairfax, Virginia, manufacturer of large XML-based integration servers for major companies, announced a partnership with Microsoft and BizTalk; this will allow businesses that use BizTalk to easily communicate with webMethods' servers.

"A good example of this is Dun and Bradstreet," says Phillip Merrick, president and CEO of webMethods Inc. "Now small companies using BizTalk can get access to D&B's credit information in real time, even if they're running on webMethods' system."

Coastal's Mogren says if XML-based integration becomes widespread, the possibilities for enhancing business communications are numerous. He foresees a situation where if Coastal doesn't offer a product a customer requests, the request could be passed through Coastal's server to query the manufacturer's XML-enabled Web site. All these transactions, including getting word back to the customer about the product, could take just a few seconds.

"If the customer wants to proceed [with the purchase], then the Web site can create the correct document, transmit it in real time to the manufacturer, and get a response back about when it will ship," says Mogren. "The possibilities are endless."

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Next Step

Visit XML Exchange (http://www.xmlx.com), a public forum open to anyone to ask questions and discuss their challenges and successes in making XML work. The site is sponsored by CommerceNet (http://www.commerce.net), a leading industry association for Internet commerce whose membership includes more than 500 companies and organizations worldwide.

Contact Sources

Coastal Tool and Supply,sales@coastaltool.com, http://www.coastaltool.com

Microsoft,http://www.microsoft.com/commerce

Tera Group LLC, (703) 893-3444, http://www.tera-group.com

webMethods, (703) 352-8501, http://www.webmethods.com