Emarkets have been touted as the segment of the Internet with the most growth potential, representing lucrative sales and high profit margins. In fact, Forrester Research projects business-to-business sales to reach $843 billion this year.
For small businesses, eMarkets have the potential to completely alter supply and distribution models. In addition, streamlined e-logistics and e-procurement, arising from the efficiency of automated supply chain processing, promise to downsize things like inventory management from a 60-day cycle to a six-day cycle, all while lowering the cost of processing orders and expediting the delivery of b2b goods and services. But there's a challenge facing eMarkets: They must not only automate the existing supply chain, but also be able to bring in new members on a global scale. Problem is, eMarkets have been heavily criticized for lacking a standard.
According to Forrester's April 2000 report, eMarketplace Hype, Apps Reality, the estimates of how much money b2b procurement will save participating businesses is based on the assumption that all the needs of the procurement process will be met. That includes collaborating with vendors on product specifications, requesting quotes on products, confirming that delivery specifications are acceptable, negotiating prices and more. That's an impossible task without a standard technology or business transaction protocol in place.
RosettaNet, a nonprofit consortium established for standardizing and automating electronic business interfaces for the IT and EC supply chains, began researching and developing a back-office standard based on XML (Extensible Markup Language) in 1998. "It came out of a need from the many IT distributors getting deluged with product catalog information, whether it was new products, updates to products or just having a really difficult time getting the information into their servers. Products weren't getting introduced, and it was causing a lot of excess inventory, with product life cycles being extended," says Mary Schoonmaker of RosettaNet (www.rosettanet.org), which has been approached by both eMarkets and other industry consortiums in their standardization efforts.
RosettaNet has developed PIPs, or Partner Interface Processes, to facilitate the exchange of information within the IT and EC industries. "The first thing we had to set up was transport routing to get from server to server in an efficient and standard way," says Schoonmaker. "XML is the next level from HTML; it actually describes what is in the document." The dictionary RosettaNet developed is based on Global Trade Identification Numbers, and protocol standards are based on best-of-breed practices agreed on by its members. Other Consortiums, such as CompTIA and OAG, are developing standards in their respective industries as well. And, as coalition partners within RosettaNet, they're also working on standards convergence and the issue of interoperability with each industry's standards.
In the case of eMarkets, standards must be developed with worldwide implementation in mind. According to Schoonmaker, a recent summit hosted by RosettaNet found that eMarkets for the IT and EC industries expected their exchanges to be RosettaNet-compliant to ensure they would be able to plug-and-play within different exchanges.
As dotcom start-ups will soon become the next generation of eMarket members, how easy will their entry into standardized exchanges be? It could be as simple as purchasing an XML server and hiring an IT resource to implement the appropriate standards and connect to other XML servers. But don't run out and buy that XML server just yet-standards are still just in the preliminary developmental stages. Not even RosettaNet expects its XML (PIP) work to be completed before next summer.