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B2B Integration A Practical Guide to Collaborative E-commerce Imperial College Press

B2B Integration A Practical Guide to Collaborative E-commerce

This page is intentionally left blank

B2B Integration A Practical Guide to Collaborative E-commerce

Gunjan Samtani Divisional Vice President Information Technology Group UBS PaineWebber

editors

Marcus Healey & Shyam Samtani

Imperial College Press

Published by Imperial College Press 57 Shelton Street Covent Garden London WC2H 9HE Distributed by World Scientific Publishing Co. Pte. Ltd. P O Box 128, Farrer Road, Singapore 912805 USA office: Suite 202, 1060 Main Street, River Edge, NJ 07661 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

B2B INTEGRATON: A PRACTICAL GUIDE TO COLLABORATIVE E-COMMERCE Copyright © 2002 by Imperial College Press All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the Publisher.

For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher.

ISBN 1-86094-323-3 ISBN 1-86094-326-8 (pbk)

This book is printed on acid-free paper.

Printed in Singapore by U t o P r i n t

Dedications

I would like to dedicate my work to my parents — Dr. Shyam Samtani and Kaushlya Samtani, my parents-in-law — the late Ashok Sadhwani and Neeta Sadhwani and my loving wife Dimple. Thank you for your prayers, encouragement, love and care, I could not have made it without you all. It is great to know I am where I belong.

V


Acknowledgements

The journey from mental conception to ultimate execution in black and white is arduous, hurdled with various set backs. At such moments, one's kith and kin inspire and encourage; colleagues cooperate and sometimes collaborate; friends motivate and lend helping hands. I am indeed fortunate enough to have such a galaxy of well wishers to whom I owe my gratitude. I express my sincere thanks to Mrs. Dimple Samtani, my spouse, who ran errands for me, gathering material, formatting the chapters, designing the graphics and showing remarkable patience while I was busy authoring the book. I owe my gratitude to my parents Dr. Shyam Samtani and Mrs. Kaushi Samtani, who came all the way from India to help and inspire me when I worked both ends of the clock. My dad, who is himself a professor of English Literature and has worked as an editor and author of several publications, was of immense help in language editing of the book. I thank Dr. Marcus Healey for his seasoned suggestions, experienced contribution and guidance that have gone into the shaping of this book. I thank Mr. Evan Schwartzman and Mr. Kenneth Tamburello, my dear colleagues, with whom I frequently discussed the lay out, contents of and approach to the book. They were ready with ideas and insightful comments when I was sometimes low. I can hardly overemphasize the role of Mr. Aran Sharma, Mr. Abhay Singh and Mr. Soumya Mawane whose invaluable graphics and images substantiate the points made by me in the book. I owe my thanks to all of them for their time and efforts. I am indebted to Ms. Geetha Nair of Imperial College Press and Mr. Loo King Boon of World Scientific for publishing this book. Without their cooperation the book could not have gone to print and thereby to the readers. vu


About the Author

Gunjan Samtani is Divisional Vice President, Information Technology at UBS PaineWebber, one of the world's leading financial services firms. Prior to joining UBS PaineWebber, Gunjan was Associate Director, Global Information Technology, Bear Stearns and Company, the 4th largest U.S. brokerage and financial firm with more than $30 billion in assets. In this capacity, he was responsible in pioneering, managing and directing several critical, multi-million dollar business applications. Prior to Bear Stearns, Gunjan worked as a Senior Business Analyst with Amdahl (a Fujitsu Company), one of the largest companies of the world specializing in integrated computing solutions. At Amdahl, Gunjan was responsible for managing the design and delivery of multiple projects for financial industry. Before joining Amdahl, Gunjan was working as Senior Systems Analyst and Webmaster at New Jersey Technical Assistance Program. Gunjan has also worked as an interim CIO of India's first online investment portal EquityMaster.com and Personalfn.com. Gunjan brings together a very strong technical and business experience in various industries. He has several years of experience in the management, design, architecture, and implementation of large-scale EAI and B2B integration projects. Gunjan has an M.S. in Computer Science, M.S. in Management Information Systems and M.S. in Computational Finance from Carnegie Melon University (on-going). He has been involved in business and technical writing for several years and is the author of more than 100 articles and research publications in the field of finance and technology. He has also presented papers and given guest lectures at several national and international conferences. His email address is [email protected].

IX


Preface

Changing Business Landscape In the present day digital economy, business values and competitive advantages lie beyond the boundaries of the enterprise, focusing on the relationships with business partners. The changing business landscape not only affects how enterprises conduct business with their suppliers, customers, distributors and other trading partners, but also how they must manage their businesses internally. Collaborative e-commerce, which is the wave of the future, requires dynamic creation of trading relationships with new partners, public and private business process automation and increased adaptability and flexibility delivered by open architecture based integration middleware. In order to truly automate external trading partner interactions, the back-end internal business systems of the enterprises need to be seamlessly integrated into the same process. Transforming an organization to compete in this environment mandates enterprise application integration (EAI) and business-to-business integration (B2Bi). They are the pervasive enablers of most current business strategies, such as collaborative e-commerce, collaborative networks, supply chain management (SCM) and customer relationship management (CRM) across multiple channels of delivery, including wireless devices and the Internet. B2Bi strategy should be laid out and executed in such a way so as to: have an integrated, real-time application-to-application, system-tosystem interaction with all the existing and new trading partners; eliminate all manual steps in business processes; conduct secure and real-time commerce transactions over the Internet; have the flexibility to accommodate the different mode of interactions of each partner; and, finally, have the ability to adapt to change — quickly and easily in this XI

xii B2B Integration — A Practical Guide to Collaborative E-commerce

dynamic age of B2B collaborative e-commerce. This is what B2Bi is all about — the end-to-end automation and integration of cross-organization business processes, data, applications and systems.

Description of the Book B2B Integration (B2Bi) provides a comprehensive guide to the key elements of successful B2B integration and collaborative e-commerce by highlighting business needs, technologies and development strategies. It clarifies and demystifies the intricate dependencies among all the components of B2Bi, including integration patterns, enterprise application integration (EAI), business process management (BPM), internet security, extensible markup language (XML), XML standards, Web services, middleware technologies and integration brokers. The book includes future technologies that will have a significant impact on B2Bi architectures, such as intelligent software agents, wireless technologies and peer-to-peer (P2P) computing. Furthermore, it includes in-depth discussion of B2Bi-enabled applications such as supply chain management, e-procurement, e-marketplaces and collaborative networks. Finally, the book provides a suitable framework for the design, development and implementation of B2B integration, along with several real world case studies. This framework is based on the latest XML standards defined in the B2B domain, such as RosettaNet, ebXML and Web services, to support cross-organization business processes, data, applications and systems. In crux, the book provides practical guidelines to companies so as to rapidly implement a successful B2Bi strategy and prepare them for the next wave of B2B integration and collaborative e-commerce.

Why This Book? There are several books on the shelves, which cover just one or the other aspect of B2Bi. But I dare say there are none that discuss all the technical and business components, tools and frameworks of B2Bi and illustrate how to conceptualize and implement a successful B2B integration solution, all in one single binding.

Preface

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In this book, I ventured to take a unique and systematic approach of combining the technical and business aspects of all the components of B2B integration. I have endeavored to show where and how the individual components link with one another and in the whole chain of B2Bi. The book covers a mix of business management and technology trend issues, presented with examples, general conclusions and recommendations. The book discusses how companies can speak the same language when doing business with companies spread around the globe. It presents business integration models, which would enable companies to integrate their enterprise systems with digital markets and strategic business partners. It also prompts one to "imagine the future" through an in-depth analysis of possible scenarios for future business-to-business integration models.

Who Should Read This Book? This book will be useful for business executives, MBA students, IT managers and programmers looking for a clear, detailed explanation of the whole landscape of B2B integration, insightful review of the current technologies being used in B2Bi and knowledge of the future trends in B2Bi domain. It will be equally appealing to the senior management in the industrial-age companies, Internet services companies and entrepreneurs who are heading for B2Bi, which is still largely undefined and cryptic. This book will be useful to CIOs and decision-makers keen to improve productivity using B2Bi, while building upon prior investments, and prepare them for the next wave of collaborative e-commerce. In short, this book is useful to everyone who is seeking a clear understanding of how to leverage the convergence of IT with business processes to attain the much sought-after strategic advantage, greater revenue, greater profit and more-competitive market positioning.

How is This Book Organized? This book is modeled on an architectural design, laying the foundation first and then building the structure with distinct elevation features.

xiv

B2B Integration — A Practical Guide to Collaborative E-commerce

The organization of chapters is as follows:

Chapter 1 — Introduction This chapter introduces the subject of B2Bi and collaborative e-commerce, providing a roadmap for a successful B2Bi implementation. It covers the key features required in a B2Bi solution and its return on investment (ROI).

Chapter 2 — Components, Benefits, Challenges and Applications of B2B Integration This chapter provides an overview of all the major components of B2Bi. It discusses the benefits enterprises would reap and the obstacles they may be confronted with during the process of implementation of B2Bi. Furthermore, it introduces some of the most important B2Bienabled applications to the readers.

Chapter 3 — Integration Patterns This chapter explains the different types of B2B integration patterns: data oriented integration (data replication; extract, load and transform solution; data warehousing; and data federations), portal oriented integration, direct application integration (API, RPC processes) and business process oriented integration (closed and open processes). It discusses the right B2Bi implementation pattern for individual companies.

Chapter 4 — Enterprise Application Integration (EAI) This chapter describes the integration of internal systems, such as legacy applications, CRM, SCM and ERP, which constitute the backbone of B2Bi implementation. It also provides an introduction of the leading commercial EAI brokers and convergence and divergence of EAI and B2BL

Preface

xv

Chapter 5 — Business Process Management (BPM) This chapter discusses the fundamentals of business process management (BPM) as they relate to B2Bi. It provides an in-depth discussion on process modeling, workflows, workflow management and leading BPM software solutions.

Chapter 6 — Extensible Markup Language (XML) This chapter provides an introduction to extensible markup language (XML) and its components. It also discusses the traditional mode of communication electronic data interchange (EDI), its coexistence with XML and features of XML/EDI servers.

Chapter 7 — XML Standards For E-business This chapter is devoted to the description of different XML standards that enable XML-based, cross-organization business process integration. It covers RosettaNet, ebXML, cXML, SOAP and BizTalk with elaborate examples.

Chapter 8 — Middleware Technologies This chapter reveals all the major middleware technologies, using which B2Bi solutions are implemented. It specifically discusses TP monitors, message oriented middleware (JMS, MQSeries) and distributed objects and components (J2EE, COM+, CORBA).

Chapter 9 — Integration Brokers This chapter explains all the components, architectures and services of integration brokers. It also introduces all the major commercial integration brokers enabling B2Bi from BEA Systems, IBM, Vitria and webMethods.

xvi B2B Integration — A Practical Guide to Collaborative E-commerce

Chapter 10 — Internet Security This chapter dwells upon the security aspects of B2Bi. It explains the different types of security solutions for B2B transactions over the Internet, along with real world case studies.

Chapter 11 — Web Services This chapter brings in the latest concept in the B2B world — Web services. It explains the subject with supporting technologies — UDDI, WSDL, WSFL and SOA with adequate examples.

Chapter 12 — Wireless Technologies This chapter focuses on the explosive growth of wireless technologies for B2B e-commerce and its impact on B2Bi architectures. It also details technologies such as WAP, WML and WMLScript, along with explanations of security aspects involved in mobile systems.

Chapter 13 — Software Agents This chapter describes the fundamentals of software agents and how they automate the manual processes that are involved today in B2B e-commerce.

Chapter 14 — Supply Chain Management (SCM) This chapter deals with the fundamentals of supply chain management (SCM), e-procurement, e-logistics, SCM systems and how SCM enables collaborative e-commerce.

Chapter 15 — E-marketplaces and Collaborative Networks This chapter brings under focal analysis the different types of B2B e-marketplaces along with services offered by them. It discusses the integration challenges that crop up while participating in e-marketplaces.

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xvii

It also introduces the need, concepts and examples of collaborative networks.

Chapter 16 — B2B to P2P Evolution This chapter deals with the evolution of peer-to-peer-based applications and architectures that would play a prominent role for B2Bi in the future.

Features of the Book Some of the key features of the book include:

Key concepts Each chapter begins with a discussion of the key concepts related to the subject under study. Readers will find this very useful as it introduces the ensuing chapters.

Discussion of leading software solutions The book provides in-depth coverage of the latest commercial softwares available in the market. This will acquaint readers with the developments in the software industry as far as B2B integration solutions are concerned. It will also be extremely helpful to the decision-makers to have a review of various solutions for B2Bi out there.

Case studies There are several real world case studies cited in each chapter. They have been chosen very carefully to illustrate practical usage of the concepts under focus.

Graphics/Images The book contains a lot of relevant images, which provide a pictorial view of the text concerned. Readers will find the images very illustrative and useful in grasping the theory presented therein.

xviii


Acronyms The book contains acronyms of technical and business terms that are relevant to the subject of B2B integration.

References/Bibliography The book acknowledges various sources used by giving references and a bibliography. This will help readers to plumb the originals if they so desire.

Editors and Contributors I consider myself extremely fortunate in having got the invaluable support and able guidance of several persons from different walks of life. They are distinguished professionals who have carved a niche for themselves in their respective fields. Undoubtedly, their contribution has embellished this book. It is my privilege to give hereunder a pen portrait of these contributors.

Dr. Marcus Healey Dr. Marcus J. Healey is the Strategy Consultant for InfoFirst Inc., USA. Before joining InfoFirst, Dr. Healey was the Director of Engineering Implementation at Mobilocity, Inc., U.S., a thought leader in wireless services. Prior to Mobilocity, Dr. Healey was a Project Engineer at Organic, Inc., a prominent web integrator in New York City. While at Organic, Marcus managed client projects from an implementation perspective and acted as a technical liaison to the Strategic Services and Business Development groups. Prior to Organic, Dr. Healey was a Program Director and Adjunct Professor at the New lersey Institute of Technology where he pioneered the Envirolnformatics program as the Director of the New Jersey Program for Information Ecology and Sustainability. Dr. Healey has six years of direct IT experience, possesses multiple MS degrees in science and engineering, an MBA and a Ph.D. He brings a diverse technical and business background, broad public and private

Preface

xix

sector experience and extensive editing skills. He is the primary author of one book in Environmental Science (Pollution Prevention Opportunity Assessments, John Wiley & Sons © 1998) and one of four co-authors on a soon to be published book (Information Mining on the World Wide Web, Kluwer Publishers © 2001). Dr. Healey is the author of over fifty publications and presentations in the fields of Environmental Science and Information Technology.

Dr. Shyam Samtani Dr. Shyam Samtani is presently Head of the Department, P.G. Department of English, Indore Christian College, Indore (India). He is also on the visiting faculty of Devi Ahilaya University, Indore. He has been in the teaching profession for the last 35 years. During this period he has supervised scores of dissertations both at M.A. and M.Phil levels. He has presented papers at various national seminars and also published many research papers and supervised Ph.D candidates. He has coauthored books for use by university students. He has also been a Resource Person for the Refreshers/Orientation courses conducted by different universities. Dr. Shyam Samtani has done the language editing of this book.

Pawan Samtani Pawan Samtani has over eleven years of IT, MIS and Finance experience. He has extensive experience in different industries like E-commerce Consulting, Oil and Gas, Manufacturing and Finance. He is currently working as Country Operations Manager, India, with Oracle Corporation, overlooking the implementation of various multi-million dollar projects. Prior to joining Oracle, Pawan was the Senior Vice President with Petrogas LLC where he was overseeing the implementations of Ariba e-Marketplace and Oracle Financials in several offices of the company all around the world. His responsibilities include project management, strategic planning and supervising finance operations. Prior to Petrogas, he was working as a Senior Consultant with Whittman Hart, U.S., supervising several SAP implementations world over. He has worked with Premira Fashions Limited, Onida Finance

xx B2B Integration — A Practical Guide to Collaborative E-commerce

Limited, Analysis Finance Limited and M. Mehta & Company, Chartered Accountants, in various capacities. He has extensive experience with the re-engineering of business practices for various departments. He also specializes in implementing and customizing ERP packages to integrate with the business process, workflow and existing IT applications of the company. He possesses indepth knowledge of data modeling and database schema designing, supply chain management, logistics systems and their integration with e-commerce. He has worked with reputed concerns in different parts of the world (United States of America, India and The Middle East) with different business practices and cultures. He is an Associate Member of Chartered Accountants of India. He also has an MBA from Baruch College, New York, U.S.

Kenneth Tamburello Ken Tamburello is a Senior Consultant Specialist at Bluesphere (an EDS company), U.S., the industry's largest interactive integrator and e-business consulting firm. Ken is the e.Design and e.Marketing delivery manager for the New York Metro region, responsible for delivering solutions in the areas of Enterprise Application Integration (EAI), workflow automation, security and enterprise portals. Prior to Bluesphere, Ken was an Associate Director at Bear Stearns & Co., NY, where he was responsible for the delivery, support and enhancement of a mission-critical, multi-million dollar Web-based account portfolio database system. Prior to Bear Stearns, Ken was a freelance consultant designing and developing client-server solutions. Ken has over 6 years IT experience, having worked in the past with PowerBuilder, Sybase, Oracle, UNIX, Java, UML and database design and modeling. He received his MS in Engineering from Stevens Institute of Technology, U.S., and his BS in Engineering from Rutgers University, U.S.

Deepak Bajaj Dr. Deepak Bajaj is the Course Coordinator of Project Management at the University of Technology Sydney (UTS). Dr. Bajaj served as Director of the Project Management Program prior to his present role.

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Dr. Bajaj has fifteen years of combined experience in contracting, consulting and academia. Dr. Bajaj has a PhD in the area of strategic risk management and the topic of 'The Development of a Risk Averse Business Strategy in the Procurement of Constructed Facilities' and a Masters in Construction Management. He brings a diverse technical, research and business background. He has published extensively in the area of project risk management and has been author and co-author of book chapters in the past. He has been editor of the AIQS Refereed Journal and referee to a number of journals in the area of project management and economics. Dr. Bajaj is the author of over forty publications and presentations in the field of project management, risk management and information technology in the construction industry.

Dimple Sadhwani Dimple Sadhwani is Senior Software Engineer at Island ECN based in New Work, USA. Prior to joining Island, Dimple worked as a Senior E-commerce Consultant with BusinessEdge Solutions, a next-generation consulting firm providing industry-specific e-business solutions. She was a project manager for several eCRM, B2B integration and EAI projects. Prior to that she worked with Citicorp Information Technology Industries Ltd. (CITIL), based in New Jersey, USA, and Bombay, India. She has a Bachelors in Computer Science from VJTI, Bombay. She has worked on and evaluated the latest tools and solutions in the B2B, EAI and Internet security fields.

Not the Final Word Justice can hardly be done to such an elaborate subject with all its dimensions and ramifications, on an intensive or extensive scale, in a book of this length. It would require more than one volume to cover the subject exhaustively. The endeavor is to acquaint the readers with the concepts in a nutshell in one place without having to wander about to different sources for various topics related to B2Bi. I wish I could promise you a book perfect in every way. There are bound to be some errors, omissions and typographical errors. I am open

xxii B2B Integration — A Practical Guide to Collaborative E-commerce

to corrections and modifications. I shall appreciate critical opinions and objective suggestions from the esteemed knowledgeable readers, which would shed light my future undertakings. The suggestions can be sent to me via e-mail at: [email protected] or [email protected] I will respond immediately. Well, that's it for now. I would like to welcome you to the exciting world of B2B integration. Good luck!

Gunjan Samtani

New Jersey, USA April 2002

Contents

Dedications

v

Acknowledgements

vii

About the Author

ix

Preface

xi

Part I The Big Picture

1

Chapter 1 Introduction 1.1. Evolution of Next Generation Enterprises 1.2. New Rules of Engagement 1.3. B2B E-Commerce 1.3.1. What is B2B e-commerce? 1.3.2. B2B vs. B2C: Differing strategies 1.3.3. Explosive growth in B2B e-commerce 1.3.4. What is collaborative e-commerce? 1.4. B2B Integration (B2Bi) 1.4.1. Integration: The top priority 1.4.2. A daunting effort 1.4.3. Getting beyond the starting line 1.4.4. Selecting the right B2Bi solution 1.5. What is the Return on Investment (ROI) on B2Bi? 1.6. Conclusion

3 4 4 5 5 6

Chapter 2

Components, Benefits, Challenges and Applications of B2B Integration 2.1. The Word is Out 2.2. B2Bi Components

6 8 9 10 12 13 17 20 23 24 25 25

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2.2.1. Integration patterns 2.2.2. Enterprise Application Integration (EAI) 2.2.3. Business Process Management (BPM) 2.2.4. Extensible Markup Language (XML) XML standards for e-business 2.2.5. 2.2.6. Web services 2.2.7. Middleware technologies 2.2.8. Integration brokers 2.2.9. Internet security 2.2.10. Wireless technologies 2.2.11. Software agents 2.3. Benefits of B2B Integration 2.3.1. Dynamic business relationships 2.3.2. Real-time information 2.3.3. Lower transaction costs 2.3.4. Participation in online marketplaces 2.3.5. Streamline business operations 2.3.6. XML-based integration 2.3.7. Increased customer service and retention 2.3.8. Opportunity to re-architect internal systems 2.4. B2Bi Challenges 2.4.1. Internal application integration 2.4.2. Disparate internal corporate data 2.4.3. System heterogeneity 2.4.4. Data security 2.4.5. Transaction integrity 2.4.6. Internal business process management 2.4.7. Inter-enterprise business process integration 2.4.8. Internal resistance

25 26 27 27 29 29 30 30 30 31 32 32 32 33 33 34 34 34 34 35 35 36 37 38 38 38 39 39 39

Contents

2.4.9. Standards and industry issues 2.4.10. Distributed control 2.4.11. Performance and scalability 2.4.12. Expensive 2.4.13. 24/7 availability of the system 2.5. B2Bi-Enabled Applications 2.5.1. Supply Chain Management (SCM) 2.5.2. E-marketplaces and collaborative networks 2.6. Conclusion

xxv

40 40 40 41 41 41 41 42 43

Part II Established Integration Components

45

Chapter 3 Integration Patterns 3.1. Types of Integration 3.2. Data Oriented B2B Integration 3.2.1. Data replication 3.2.2. Extract, Transform and Load (ETL) solution 3.2.3. Data warehouses and data marts 3.2.4. Multi-database server 3.2.5. XML and databases 3.2.6. Data oriented integration and B2Bi 3.3. Portal Oriented Integration 3.3.1. Types of portals 3.3.2. Components of a portal server platform 3.3.3. Portal oriented integration and B2Bi 3.4. Application Oriented Integration 3.4.1. Application Programming Interfaces (APIs) 3.4.2. Remote Procedure Calls (RPCs) 3.4.3. Application oriented integration and B2Bi 3.5. Business Process Integration (BPI) 3.5.1. Business process integration patterns

47 48 49 50 54 59 60 65 67 68 69 70 74 74 75 82 88 89 89

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3.5.2. Business process integration and B2Bi 3.6. Which Approach to Use for Your B2Bi Implementation? 3.6.1. Agreement among the trading partners 3.6.2. Your integration goals 3.7. Conclusion Chapter 4

Enterprise Application Integration (EAI) 4.1. Today's Enterprise 4.2. What is EAI? 4.3. Where Did Things Go Wrong? 4.4. Benefits of EAI 4.4.1. A word of caution 4.5. Types of EAI 4.5.1. User interface integration (Refacing) 4.5.2. Data integration 4.5.3. Function or method integration 4.5.4. Business process integration 4.6. Types of Enterprise Systems 4.6.1. Legacy systems 4.6.2. Client/server systems 4.6.3. Enterprise Resource Planning (ERP) 4.6.4. Customer Relationship Management (CRM) 4.6.5. eCRM 4.6.6. CRM and EAI 4.6.7. Supply Chain Management (SCM) 4.7. Leading EAI Solutions 4.7.1. BEA eLink 4.7.2. TIBCO ActiveEnterprise 4.7.3. IBM — WebSphere MQ integrator 4.8. Convergence of EAI and B2Bi 4.9. Divergence of EAI and B2Bi 4.10. Conclusion

91 93 93 93 95 96 97 97 98 100 101 102 102 103 103 104 105 105 106 106 111 113 115 115 115 115 116 118 121 122 123

Contents

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Chapter 5 Business Process Management (BPM) 5.1. Existence of 'Organization Silos' 5.2. Fundamentals of BPM 5.2.1. Business processes 5.2.2. Participants 5.2.3. Activities 5.2.4. Business transactions 5.2.5. What is BPM? 5.2.6. Workflow 5.2.7. Roadmap to BPM 5.3. BPM Systems 5.3.1. BEA WebLogic integration 5.3.2. Vitria BusinessWare 5.3.3. Extricity B2B Alliance Manager 5.4. Universal Language for BPM 5.4.1. Business Process Management Initiative (BPMI) 5.4.2. XLANG 5.5. Standard Business Processes 5.6. Conclusion

125 126 126 126 130 130 130 132 133 134 139 142 143 144 147

Chapter 6 Extensible Markup Language (XML) 6.1. The Need for a Universal Language 6.2. What is Electronic Data Interchange (EDI)? 6.2.1. How does it work? 6.2.2. Limitations of traditional EDI 6.3. What's Wrong with the First Language of the Internet — HTML? 6.4. XML: The Universal Language of Data Interchange 6.4.1. The power to know 6.4.2. What is XML? 6.4.3. XML: A derivative of SGML 6.4.4. Sample XML files 6.4.5. XML strengths 6.4.6. XML limitations

152 153

148 149 149 150

154 154 155 157 158 159 160 161 161 163 166

xxviii


6.4.7. XML namespaces 6.4.8. Brief introduction to the components of XML 6.4.9. Advantages of XML over traditional EDI 6.5. XSL — Extensible Stylesheet Language 6.6. Coexistence of XML and EDI 6.6.1. EDI is here to stay 6.6.2. EDI based on XML 6.6.3. Characteristics of XML/EDI 6.6.4. Benefits of XML/EDI over traditional batch EDI 6.6.5. Key features of XML/EDI server 6.7. Conclusion Chapter 7 XML Standards for E-business 7.1. Standards Imperative for B2B Application Integration 7.2. RosettaNet's Solution 7.2.1. What is RosettaNet? 7.2.2. Components of RosettaNet's e-business solution 7.2.3. Benefits of using RosettaNet solution 7.2.4. RosettaNet embraced by software vendors 7.2.5. What's the ROI (Return on Investment) in implementing RosettaNet solution? 7.3. FpML — Financial Products Markup Language 7.3.1. What is FpML? 7.3.2. Benefits of FpML 7.4. Commerce XML (cXML) 7.5. Electronic Business XML (ebXML) 7.6. Simple Object Access Protocol (SOAP) 7.6.1. SOAP messages

167 168 174 175 178 178 179 180 181 182 186 187 188 189 189 190 196 197

198 200 200 200 202 204 205 205

Contents xxix

7.7. BizTalk Framework 7.7.1. Components of the BizTalk Framework 7.7.2. The envelope 7.8. Conclusion

207 207 208 212

Chapter 8 Middleware Technologies 8.1. What is Middleware? 8.2. Transaction Processing (TP) Monitors 8.2.1. How they work? 8.2.2. Benefits of TP monitors 8.3. Message Oriented Middleware (MOM) 8.3.1. Why use message queues? 8.3.2. Types of communication 8.3.3. MOM frameworks 8.3.4. MOM middleware 8.4. Distributed Objects and Components 8.4.1. Distributed components 8.4.2. Distributed object frameworks 8.4.3. OMA — CORBA 3 8.4.4. Windows DNA — COM+ 8.4.5. J2EE — EJB 8.4.6. J2EE application servers 8.5. Conclusion

213 214 216 217 218 219 221 222 224 226 231 233 234 235 239 244 249 253

Chapter 9 Integration Brokers 9.1. Introduction 9.1.1. Integration brokers enable (best-of-breed) BOB approach 9.2. Architecture of Integration Brokers 9.2.1. Hub-and-spoke architecture 9.2.2. Message bus architecture 9.2.3. Multi-hub architecture 9.3. Components of Integration Brokers 9.3.1. Messaging services 9.3.2. Application adapters 9.3.3. Data transformation component 9.3.4. Workflow manager

254 255 256 256 256 257 258 259 260 262 264 266

xxx


9.3.5. 9.3.6. 9.4. Services 9.4.1. 9.4.2. 9.4.3. 9.4.4. 9.4.5.

Metadata repository Administration tool of Integration Brokers Enable all types of integration Web services Interoperability Open architecture Support for all communication protocols 9.4.6. Directory services 9.4.7. Trading partner management and personalization 9.4.8. Security 9.4.9. Scalability 9.4.10. Transactional integrity 9.4.11. Integration broker connectivity 9.5. Selecting an Integration Broker for Your Company 9.6. Leading Integration Brokers 9.6.1. Microsoft BizTalk Server Suite 9.6.2. SeeBeyond eBusiness Integration Suite 9.6.3. webMethods B2B platform 9.6.4. BEA WebLogic integration 9.6.5. ROI on integration brokers 9.7 Conclusion

266 266 267 267 268 268 268

Chapter 10 Internet Security 10.1. Internet Security (E-Security) Critical for B2Bi 10.2. B2Bi — Makes a Company Highly Vulnerable to Security Risks 10.2.1. Complex nature of applications 10.2.2. Anonymous relationships in B2B e-commerce 10.2.3. Software undergoing frequent change 10.2.4. Human factor involved

287

268 269 269 270 270 270 271 273 274 274 278 279 283 285 285

288 289 289 289 289 290

Contents xxxi

10.3. Employees and Other Insiders Pose the Biggest Threat 10.4. E-Security Strategy 10.5. Basic Security Services in B2Bi 10.5.1. The strength of the chain is as strong as its weakest link 10.6. Key Concepts in E-Security Solutions 10.6.1. Cryptography 10.6.2. Private key encryption 10.6.3. Public key encryption 10.6.4. Best of both worlds — The digital envelope 10.6.5. Digital signature 10.6.6. Digital certificates and role of Certificate Authorities (CAs) 10.6.7. Using SSL (Secure Sockets Layer) to establish secure sessions 10.7. Shielding an Organization from the Outside World 10.7.1. Firewalls 10.7.2. Functions performed by firewalls 10.7.3. Types of firewalls 10.7.4. Considerations in choosing a firewall 10.7.5. Enterprise firewall appliance 10.7.6. Virtual Private Networks (VPNs) 10.7.7. Check Point's VPN solution 10.8. B2Bi and E-Security 10.8.1. Revamp your security 10.8.2. B2Bi software 10.8.3. Security features in the leading B2B integration servers 10.8.4. E-security tailored to XML 10.9. Secure Payments Over the Internet 10.9.1. Need for trusted third party entities 10.10. Security Trends for the Future 10.11. Conclusion

290 291 291 292 293 293 294 295 296 296 300 301 302 302 303 304 306 306 308 310 311 311 312 313 314 315 316 317 322

xxxii B2B Integration — A Practical Guide to Collaborative E-commerce

Part III Evolving Integration Components

323

Chapter 11 Web Services 11.1. Service Oriented Architecture (SOA) 11.1.1. Components and operations of SOA 11.2. What are Web Services? 11.2.1. Application of SOA-based framework to B2Bi 11.3. Essential Features of a Web Services Environment 11.4. Universal Description, Discovery and Integration (UDDI) 11.4.1. What is UDDI? 11.4.2. UDDI built on SOAP 11.4.3. UDDI data structure 11.4.4. UDDI APIs 11.5. Web Services Description Language (WSDL) 11.5.1. WSDL schema 11.5.2. WSDL and UDDI 11.6. Web Services Flow Language (WSFL) 11.7. Putting Everything Together 11.8. Essential Features of a Web Services Framework 11.9. Security Requirements for Web Services 11.9.1. Authentication 11.9.2. Authorization 11.9.3. Data protection 11.9.4. Non-repudiation 11.10. Where to Start? 11.10.1. Leverage existing assets 11.10.2. Build an internal repository for web services 11.10.3. Bottom line 11.11. Web Services Networks 11.12. Conclusion

325 326 326 327 328 329 330 330 331 331 333 333 334 334 335 335 336 337 338 338 338 338 339 339 340 340 340 341

Contents

Chapter 12 Wireless Technologies 12.1. Introduction 12.2. The Wireless Internet Today 12.2.1. Definition and growth 12.2.2. Mobile benefits 12.3. Wireless Application Architecture and Components 12.3.1. Wireless Access Protocol (WAP) 12.3.2. Wireless Markup Language (WML) 12.3.3. WMLScript 12.4. Wireless Security Issues 12.4.1. Security of mobile systems 12.4.2. Security issues in WAP 12.4.3. Generic mobile solutions 12.5. B2B Wireless Applications 12.5.1. Business uses of the mobile Internet 12.5.2. B2B wireless portals 12.5.3. On-demand trading 12.5.4. Business-to-Employee (B2E) connections 12.5.5. B2B, B2C, B2E and wireless 12.6. Enterprise Integration Issues for M-commerce 12.7. Leading M-commerce Solution Providers 12.7.1. BEA WebLogic m-commerce solution 12.7.2. IBM's WebSphere everyplace suite 12.8. To be or not to be... Wireless: Pertinent Strategic Considerations 12.8.1. Goal and business definition 12.8.2. Formulation of technology strategy 12.9. Conclusion

xxxiii

342 343 344 344 345 347 350 351 352 353 353 355 358 360 360 362 363 363 365 366 369 369 372 372 372 374 379

xxxiv


Chapter 13 Software Agents 13.1. Software Agents Enabling the Formation of Virtual Organizations 13.2. What are Intelligent Software Agents? 13.3. What are Agent Systems? 13.4. Agent Classification 13.5. Agents and Autonomy 13.6. Multi-Agent Environment 13.6.1. The 3 Cs of prime importance 13.6.2. Advantages of a multi-agent environment 13.6.3. Disadvantages of a multi-agent environment 13.7. Agents and Negotiation 13.7.1. Types of negotiation strategies 13.7.2. Not revealing negotiation strategy paramount 13.8. Agents and Mobility 13.8.1. Benefits of using mobile agents 13.8.2. Potential risks involved in use of mobile agents 13.9. Agents' Role in B2B E-Commerce and B2Bi 13.9.1. Information gathering and filtering 13.9.2. Uncovering quality sales prospects 13.9.3. Value chain integration 13.9.4. Optimization of business processes in light of B2Bi 13.9.5. Efficient e-marketplaces 13.9.6. Maintaining customer relationships 13.9.7. Effective e-procurement 13.9.8. Integration with legacy systems 13.9.9. Enable privacy in B2B transactions 13.10. Need for a Universal Language 13.10.1. XNS: A dictionary and address book for web agents 13.11. Conclusion

381 382 382 384 384 387 387 388 388 388 389 390 390 391 391 392 393 394 395 395 396 397 399 399 400 400 402 404 405

Contents

xxxv

Part IV B2Bi-Enabled Applications

407

Chapter 14 Supply Chain Management (SCM) 14.1. Introduction 14.2. Fundamentals of Supply Chain Management 14.2.1. A few definitions of SCM 14.2.2. What is a supply chain? 14.2.3. A typical business process flow in a supply chain 14.2.4. Activities in a supply chain 14.3. Legacy Supply Chain 14.3.1. Push-based supply network 14.3.2. What's wrong in a legacy supply chain? 14.4. B2Bi-Enabled Supply Chain 14.4.1. Principles of SCM 14.4.2. Pull-based supply network 14.4.3. ROI in moving from pull-based to push-based supply network 14.4.4. Features of B2Bi-enabled supply chain 14.5. Supply Chain Planning and Execution 14.5.1. Supply Chain Planning (SCP) 14.5.2. Supply Chain Execution (SCE) 14.5.3. E-procurement — The transformation of corporate purchasing 14.5.4. E-logistics: Integrating warehouses, distribution centers and customer interaction processes 14.6. SCM Challenges 14.6.1. Synchronization in supply chain 14.6.2. Building trust through supply chain 14.6.3. Operational stability 14.6.4. Inertia for change

409 410 410 410 411 412 413 415 415 416 417 418 419 420 420 422 422 423

424

427 428 428 428 428 429

xxxvi


14.6.5. Supply chain complexity 14.6.6. Managing supply chain for short lifecycle products 14.6.7. Integration challenge within the organization 14.6.8. Integration challenge with supply chain partners 14.6.9. Inter-company business process synchronization 14.7. SCM Techniques 14.7.1. Vendor Managed Inventory (VMI) 14.7.2. Just-in-Time (JIT) 14.7.3. Collaborative Planning, Forecasting and Replenishment (CPFR) 14.8. SCM Systems 14.9. Conclusion Chapter 15 E-Marketplaces and Collaborative Networks 15.1. What are E-Marketplaces? 15.2. Basics of B2B E-Marketplaces 15.2.1. Pre e-marketplace era 15.2.2. E-marketplace era 15.2.3. Classification of e-marketplaces 15.2.4. Market makers 15.2.5. Dynamic trading through B2B e-marketplaces 15.2.6. Governance of e-marketplaces 15.2.7. Benefits of B2B e-marketplaces 15.2.8. Which e-marketplace to join? 15.2.9. B2B e-marketplaces services 15.3. How E-Marketplaces Fit into a Company's B2Bi Plans 15.3.1. Catalog publishing 15.3.2. Receiving and processing orders 15.3.3. Data transformation

429 429 429 430 430 430 431 431

431 434 437 438 439 440 440 440 441 444 444 445 445 449 453 457 457 458 459

Contents

15.3.4. Integrating credit, financing and collection system with ERP 15.4. Emergence of B2B Collaborative Networks 15.4.1. Just another point of connection 15.4.2. Lack of support for collaborative commerce 15.4.3. B2B collaborative networks 15.5. Conclusion

xxxvii

460 460 460 462 462 466

PartV Conclusion

467

Chapter 16 B2B to P2P Evolution 16.1. Why Peer-to-Peer? 16.1.1. Let your imagination run wild 16.1.2. What is P2P? 16.1.3. What is a peer group? 16.1.4. Features of a P2P application 16.2. Leading P2P Protocols 16.2.1. Jabber 16.2.2. Juxtapose — JXTA 16.3. Examples of P2P Applications 16.3.1. NextPage — NXT 3 16.3.2. FirstPeer — Professional servant 16.3.3. Groove networks — Groove 1.0 16.3.4. Gnuetella 16.3.5. Applied MetaComputing — Legion 16.4. Benefits of P2P-Based Applications in B2B Integration 16.4.1. Collaboration 16.4.2. Enhanced performance 16.4.3. Intelligent agents 16.4.4. P2P marketplaces 16.4.5. Information discovery using search engines 16.4.6. Eliminate the need for cataloging in multiple formats

469 470 470 471 471 471 473 473 474 477 477 478 478 478 478 479 479 479 481 481 483 483

xxxviii


16.5. But the Road is Winding 16.5.1. Network bandwidth 16.5.2. Security 16.5.3. Complex architectures and difficult maintenance 16.6. Conclusion Acronyms Appendix A. PIP2A1: Distribute New Product Information

484 484 484 485 485 487

B. UDDI Technical White Paper

493 519

Bibliography

531

Index

541

Part I The Big Picture

i


Chapter \

Introduction

The focus of this chapter With B2B integration, collaborative e-commerce will truly come to life — moving from the phase of revolutionary idea to becoming a common aspect of business operations. In this chapter, we will introduce the subject of B2B collaborative e-commerce, differences between B2B and B2C, concepts of B2B integration, formulation of B2Bi strategy, the roadmap to a successful B2B integration strategy and implementation, features of a good B2B integration solution and return on investment on B2Bi implementation.

3

4


1.1. Evolution of Next Generation Enterprises The Center for Research in Electronic Commerce (CREC), at the University of Texas-Austin recently conducted a large study to assess collaborative e-business value in small, medium and large companies across the U.S. and Europe. The study, which included leading manufacturers, retailers, distributors and wholesalers, identified a strong link between e-business drivers such as system integration, customer and supplier oriented processes, financial indicators and operational excellence measures. It reveals that many companies have either not engaged in B2B collaborative e-commerce or just started to move towards it. The study indicates that most companies have only scratched the surface of e-business and have yet to realize the gains in efficiency and productivity that can be achieved through using the Internet. But a few companies are going through a phase of Internet revolution in terms of restructuring their business processes, providing real-time customer service, integrating their internal applications and supply chain. They are increasing their profitability through digitization and integration of business processes — especially in business-to-business transactions. They are flexible, adaptable and eager to change, and have an unprecedented global market access of 24/7/365. They are utilizing their investments in e-business initiatives to achieve operational excellence. These are a new class of companies, known as Next Generation Enterprises (NGEs) that will dominate tomorrow's markets. Companies that are not participating in this revolution may not remain competitive and profitable in the future. Becoming the next generation enterprise is not a matter of choice anymore. No modern business, regardless of its size, can survive without digitizing business. Your company can join the race, or get ousted by the competition. It is still not too late — the long-term race has just begun.

1.2. New Rules of Engagement The e-business world is growing at an unprecedented pace. Businesses all over the world are realizing that future survival and success are dependent upon the collaborative commerce capabilities of the organization and its ability to act at Internet speeds. The new dimensions

Introduction

5

of business will involve robot shopping agents, business process coordination, business-to-business exchanges, collaborative networks, online billing, auctions, digital cash, mass customization, markets for trust, cyberization of markets and concepts yet to be invented. Companies in many sectors of the economy will be forced to adapt to these new market realities with improved information technology infrastructures as well as automated and re-engineered business processes. The new rules of engagement, enforced by the new online economy, require a complete transformation of a legacy company to an e-business driven company. Technology plays a vital role in this transition and transformation and it is changing from a cost of doing business to a way of doing business. However, companies cannot, and should not abandon the classic concepts of successful business: product, price, promotion and place — or channel synergy — as well as customer service and fulfillment. What is required for survival in the new economy is an appropriate balance between established business practices and the implementation of today's information technology. The next generation enterprises will be successful only through the right integration of technology and business processes.

1.3. B2B E-Commerce B2B e-commerce is being talked about everywhere. And it is not just jargon — it is the next level in the e-business revolution, when businesses collaborate with business partners in real-time and put management of all their processes online — from supply chain and purchasing to manufacturing and product development — for increased control, rapid response, improved efficiency, global intelligence and unprecedented cost savings. B2B e-commerce is a revolution, similar in magnitude to the Industrial Revolution, that will fundamentally change relationships among business partners — how they exchange information, collaborate, communicate and close transactions.

1.3.1. What is B2B e-commerce? B2B e-commerce is an acronym for business-to-business, a type of e-commerce involving a transaction from one business to another via

6


the Internet. Thus, it occurs when systems of two or more businesses exchange information electronically that, directly or indirectly, results in a transaction. Multiple organizations can exchange information as part of a single transaction. A transaction in B2B e-commerce can involve traditional purchases and other related business activities such as request for a quote, setup of new accounts, order management and status information. A transaction generally is real-time, but based on the transaction requirement, the aggregation and distribution of data across companies may not be real-time. B2B e-commerce can be as basic as a manufacturer putting up a bare-bones Internet site to let distributors securely order a handful of products, or it can be as complex as a distributor offering companyspecific pricing and content, complex product configurations and realtime access to inventory levels for its entire product line to thousands of customers.

1.3.2. B2B vs. B2C: Differing strategies Table 1.1 shows the major differences between B2B and B2C.

1.3.3. Explosive growth in B2B e-commerce Several fundamental forces have driven the explosive growth of B2B e-commerce. Some of these forces arise from the need for global trade, dynamic business relationships, elimination of price differences, collaboration in new products development, forecasts and replenishments and movement to market-driven economies. Though price and functionality remain critical, customer service and value-added relation-ships have become the new drivers of commerce and competitive advantage. Forrester Research has estimated that in the U.S. B2B e-commerce will grow to more than $2 trillion by 2003, about 10% of business sales overall. According to the Gartner Group, the B2B e-commerce marketplace will exceed $7 trillion in 2004. North America's share will approach $2.8 trillion of market revenue; Europe will grow to $2.3 trillion; Asia will account for $900 billion; and Latin America will reach $124 billion.

Introduction Table 1.1. Differences between B2B and B2C

Commerce Activities

Business to Business (B2B)

Business to Consumer (B2C)

Business-to-business encompasses many other types of activities than simply placing orders between businesses (e.g., joint design, development and manufacture). For these issues, there is a need to agree on platforms and/or data interchange standards.

For the business-to-consumer, the business only has to be able to support communications via the Internet, phone, fax and e-mail. The focus is on providing services such as product catalogs, ordering and payment and status checking.

Typical activities among companies participating in B2B commerce include collaborative planning and forecasting, order fulfillment, payment execution and status tracking. Business Models

The business models in B2B are much more defensible than in B2C. B2B is an evolved economy. It is about transformation and evolution of business. In B2B, buyers and suppliers are made more efficient, competitive and profitable.

The B2C models are based on optimizing the ability to directly attract, manage and support the individual customer, thus eliminating the traditional middleman.

Nature of Transactions

B2B orders are governed by the complex business rules of the different parties (such as buyers, sellers and distributors) involved in the transaction. Each side wants visibility in the transaction from inception to completion.

B2C orders are often impulse or spot transactions with a short life span. There is more leniency in fulfillment of these orders.

Order Size

In most cases, the average order size (in value) in the B2B world is large.

In most cases, the average order size (in value) in the B2C world is small.

In B2C, it is a case of new vs. old: it is Amazon vs. Borders. They are fighting for a share of the same customer.

7

8

B2B Integration — A Practical Guide to Collaborative E-commerce Table 1.1 (Continued) Business to Business (B2B)

Business to Consumer (B2C)

Flexibility to Change Relationships

The switching costs in B2B are much higher because the companies are much more tightly connected through integration into back office ERP systems. The companies must evolve business processes and develop trust with buyers and suppliers that goes well beyond delivering a product.

B2C relationships are very flexible. Buyers have full flexibility to change their suppliers.

Customer Relationships

Relationships are much more complex, long-term, often contractual and involve bigger dollar amount. They involve intricate procurement models, supply chain automation, engineering and planning collaboration.

B2C relationships are usually one-sided, where businesses define and control the relationship with the consumer.

Companies that have not yet put any resources into developing a comprehensive B2B strategy will most likely face immense pressure, sooner rather than later, either from customers, suppliers or competitors that have started reaping the cost benefits of doing business over the Internet.

1.3.4. What is collaborative e-commerce? Collaborative e-commerce, also known as c-commerce, allows Internetenabled companies to share intellectual capital and leverage the core competencies of their trading partners. It promises to deliver significant increases in corporate innovation, productivity and profitability and create new opportunities for dynamic B2B collaboration over the Internet. According to the Gartner Group, by 2005 nearly half of all Web-based commerce will be collaborative in nature.

Introduction

9

Collaborative e-commerce is enabled by B2B integration which leads to shared databases, open tracking systems, enhanced inter-enterprise visibility and cooperation, streamlined business processes, new cost efficiencies and an expanded customer base for every collaborative partner — all resulting in a competitive advantage that traditional business models simply cannot duplicate.

1.4. B2B Integration (B2Bi) B2B integration or B2Bi is basically about the secured coordination of information among businesses and their information systems (see Figure 1.1). B2Bi provides a technology framework for B2B collaborative e-commerce. It promises to dramatically transform the way business is conducted between partners, suppliers and customers. All companies (i.e., large, medium, small and new) can experience increased growth and success through tightly integrated partnerships.

Customerl>\^

Large Company

Buyer

**^JTO™^

^"-^•"*

Legacy Systems

Database Interfaces

Figure 2.2. — Enterprise Application Integration components

2.2.3. Business Process Management (BPM) B2Bi is as much about business process management as it is about technology. B2Bi implementation provides every corporation with the opportunity to redefine and automate core business processes, which results in streamlined business operations and reduced cost. BPM for B2Bi is focused on how business partners can refine their business processes so that the applications supporting them can be seamlessly integrated. With effective BPM, companies can become a part of a unified business process flow and unified supply chain. Unified workflows allow the dynamic sharing of state information among trading partners, through which all communication can be tracked and recorded. Since B2B transactions can span over multiple days, unified workflows become critical in ensuring the completion of automated business transactions.

2.2.4. Extensible Markup Language (XML) XML (Extensible Markup Language) is a technology based on open standards that standardizes and simplifies the communication of business

28 B2B Integration — A Practical Guide to Collaborative E-commerce

processes among companies. All life forms are carbon based. All e-business applications will be XML based. XML provides an open platform for businesses to communicate over the Internet, enabling dynamic 'anywhere-to-anywhere' business interactions. It is the universal language that makes structured Web data meaningful and enables computers to recognize easily and to exchange contents and business documents, such as purchase orders, catalog inventory and invoices. XML is self-describing and provides an efficient means to separate the data and structure in electronic business documents from processes. With the use of XML in B2B applications (see Figure 2.3), trading partners do not have to go through the cumbersome process of mapping one another's business processes into

Buyer

Buyer

Supplier

Tl

Supplier

II II Internet E-marketplace

Di l i i h u l f i i s J Internet Users

Buyer

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Supplier

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cXMLl f>

Internet cXML

XML

~ Distributors 4

E-marketplace

- Internet

Buyer

Buyer

Supplier

Supplier

Figure 2.3. — Example of use of XML in B2B applications

Components, Benefits, Challenges and Applications of B2B Integration

29

complex EDI-based messages. This completely changes the dynamics of communication in B2B applications. For a successful B2Bi implementation, the companies will have to reengineer their business processes to be XML-centric. Their new infrastructure must support critical XML standards, enable transformations and provide links to legacy applications.

2.2.5. XML standards for e-business Just as the explosive growth in the usage of Internet was made possible by the standardization of the Web browser, the adoption, growth and success in B2B e-commerce will be controlled by the standardization of XML communication representing business processes among trading partners. There has to be a common set of business processes and a common grammar for B2Bi to work. In B2Bi, interoperability issues exist at almost every level — catalog management, order management, collaboration tools, EDI protocols, shipping services, etc. Standards for data exchange for all the business processes involved in B2Bi help in overcoming the interoperability issues. Several industry organizations, such as RosettaNet, are defining their market-segment-specific definitions.

2.2.6. Web services Web services are Internet-based, self-describing and self-contained software resources that form the building blocks of distributed applications and business processes spanning across multiple organizations. Web services offer complete interoperability as they are based on open messaging standards. They work in conjunction with other Web services to complete part of a complex work-flow or business transaction. Web services can be invoked by partner applications at run-time, over the Internet. The client applications may not even have any prior knowledge of their existence. In essence, Web services enable just-intime B2B application integration.


2.2.7. Middleware technologies Middleware is a layer of software between the client and server applications that provides a uniform 'conduit' for them to communicate with one another. Middleware provides a platform for the integration of applications (developed in different programming languages and installed on different operating systems) and data sources (provided by different vendors). Middleware can be classified into different categories that include: transaction oriented middleware, message oriented middleware (MOM), distributed objects and components-based application servers and communications middleware.

2.2.8. Integration brokers Integration brokers built on top of messaging middleware, known as message brokers, provide intelligent translation and routing of messages from the source to the target application. They enable content-based, sequential and conditional routing of messages. They also provide a message warehouse or repository for storing raw, unprocessed messages for archiving and retrieval. Companies will be able to achieve faster and reliable B2Bi with integration brokers than with any other middleware solution. Integration brokers provide adapters for application servers, packaged applications such as CRM applications and SCM applications, legacy applications and databases (see Figure 2.4). They support all open standards and enable communication irrespective of the transportation protocol. Integration brokers also impose a structure on the integration development process, thereby reducing the cost of maintaining application integration solutions. Integration brokers are the middleware of extranets that link applications and transactions not just across the enterprise but also across business-to-business networks.

2.2.9. Internet security In B2Bi, companies connect their internal systems to the Internet and through that single pipe they can potentially lose everything. A B2B

Components, Benefits, Challenges and Applications of B2B Integration 31

/

/Rosetta\ Net EDI ebXML BizTalk', Standards

\ Swift

CXML OASIS X12

\ /Constr-

/

/

SQL / CRM

Applications

Business Rules Formulas Actions Conversion /'

/ Name Value

/ I [

ERP

Integration Broker

Fixed Length \

1

/

Sybase

\

Message Transformation 1j \ Object Streams

Internal Accounting

Variable

SCM

Legacy Financial /

MS-Access

InformixX

i

i

Databases \ Oracle

SQL Server Db2

\ 11

/

\

Figure 2.4. — Integration broker connectivity

transaction usually involves sharing proprietary information, electronic exchange of huge assets and potential involvement of multiple partners. It would be disastrous for a company to ignore the security requirements before participating in such transactions. B2Bi infrastructure requires a cohesive security and network infrastructure through which the enterprises (buyers, suppliers and distributors), B2B exchanges and service providers are able to manage securely complex relationships with both users and partners.

2.2.10. Wireless technologies According to the Gartner group, more than 108 million employees worldwide will regularly work outside a traditional office. Companies


are facing the challenge to provide these employees with access to corporate computing resources. The access cannot be limited to basic features, such as e-mails, but needs to be a complete hookup into applications that enable them to be productive anytime, anywhere. Companies have to design and implement solutions that extend Internet, intranet and extranet applications wirelessly to handheld devices, based on the Palm and Windows CE platforms, as well as Internet-enabled phones. Integration of these mobile devices with a company's internal and trading partners' applications is now becoming an integral part of B2Bi.

2.2.11. Software agents The B2B e-commerce environment is both information and process rich. In the current environment, there are a lot of manual processes, such as information gathering and catalog management. Agent technology is very relevant in such an environment, as it is useful where a personalized, continuously running semi-autonomous behavior is desired. Most of the work of information gathering and process management tasks can be delegated to agents. However, decisions in which the agent can possibly make a suboptimal choice, such as which stock to buy and approving a big contract, cannot be left to the software agent as the consequences of missed opportunities or unfavorable decisions can be severe.

2.3. Benefits of B2B Integration Following are several tangible and intangible benefits of B2Bi, which directly affect a company's bottom line:

2.3.1. Dynamic business relationships B2B integration enables dynamic business relationships and processes that respond flexibly and quickly to new business models and changing


33

customer demands. B2Bi makes it faster, easier and safer for companies to bring into their ambit new associates and automate cross-enterprise business processes with them. Only a tightly integrated and highly automated organization can have this level of flexibility and adaptability to newer partners.

2.3.2. Real-time information B2Bi enables the secured exchange of real-time partner-specific and task-specific business information over the Internet, which has unlimited benefits. It gives companies the 'power of now'. As an example, let us assume that a company has seamlessly integrated its logistics system with all of its major shipping vendors. With this integration, the company will have a consolidated real-time view of shipments from multiple vendors. Even the company's direct customers can securely access up-to-the-second shipping information through its corporate Website or via direct B2B links.

2.3.3. Lower transaction costs Through B2Bi, companies reduce not only the B2B transaction costs but also the complexity associated with them, while maintaining complete business logic. We are not talking about some small savings here. By exchanging business transactions electronically, companies can save as much as 80% of the costs associated with conducting these same transactions on paper. According to a recent report from Goldman Sachs, Ford and GM, companies predict a savings of up to 20% from their Internet-based supply chain management systems. Likewise, British Telecom expects a 90% per transaction cost savings from its B2Bi efforts. The report also stated that currently less than 0.5% of all intercompany transactions take place electronically. By 2004, this number is expected to be more than 10% driven by the cost savings associated with e-commerce.


2.3.4. Participation in online marketplaces What is the advantage of participating in an online business community? Consider the data provided by Grainger's consulting unit on the advantages of electronic marketplace sales: • Cuts transaction costs by 32%; • Reduces inventory and production costs by 25%; and • Slashes errors and exceptions by 52%. B2Bi allows companies to build digital marketplaces or participate in multiple vertical and horizontal markets.

2.3.5. Streamline business operations B2Bi helps companies to automate, reshape and improve the efficiency of their business processes via business process management. It automates the inter-organizational, inter-functional and inter-personal activities of these processes.

2.3.6. XML-based integration B2Bi over the Internet is completely credited to the use of XML, which fully leverages the open standards of the Internet. Today, companies are faced with the daunting challenge of linking inter-company data and processes for their business-to-business (B2B) e-commerce initiatives — all while integrating customer and packaged applications, databases and mainframe systems within the enterprise. How are the companies addressing these challenges? The answer is by using XML-based B2B integration.

2.3.7. Increased customer service and retention With real-time and quality information companies get an opportunity to provide much better personalized service and upgraded value-added services to valuable customers. Through B2Bi, there is complete transparency of business information end to end, which empowers customers to make better decisions and let companies respond to customers' needs


35

swiftly, helping customer retention. B2Bi is the evolution of how close a company can get to its customers. For example, General Motors Corp. is working with Reynolds and Reynolds to deploy online software that will help the world's largest automaker integrate its supply-chain systems with the inventory management systems of GM's 8,000 North American dealers. The primary goal of the $150 million-a-year alliance is to give consumers a seamless brand experience, whether they walk through the door of a dealer or click on a mouse. The software will link GM and its dealers as well as support the automaker's current BuyPower consumer Web service. The software is designed to make it easier for all involved to share information. Consumers will be able to track the status of their vehicle orders like FedEx customers track packages. GM dealers, for example, will gain access to the service history of a specific customer's vehicle.

2.3.8. Opportunity to re-architect internal systems Companies seeking B2Bi quickly face the poor architecture of many core business systems and current infrastructure, which hardly provide an adequate base for an integrated future. B2Bi presents a tremendous opportunity to companies to clear up the mess within their organization. The properly designed architecture and infrastructure, which fully leverage the existing systems, will be able to conduct secure, nonrepudiated transactions in real-time, be designed to sustain competitive advantages and be flexible enough to adapt quickly to new technologies and business demands.

2.4. B2Bi Challenges Business process and application integration, both between and within enterprises, is a lot more complex than companies think. Companies tend to underestimate the complexity of B2Bi, technically and from a business value proposition. All of the major 15-20 domains of B2Bi, such as customer relationship management, supply chain management, operations management and planning have multiple (4-5) sub-domains.


Each of these sub-domains is supported by multiple applications. The core of the problem is that even applications supporting a sub-domain, for example catalog management within the supply chain, are not designed in such a way that they can exchange data with one another. They do not have a common data architecture, nor do they have a common messaging format. It is like a cartesian product of problems. A word of advice: do not let these challenges deter you from moving towards an integrated enterprise. In this book, we will discuss not only the challenges but also the remedial solutions and how to work around them. Let's review in detail all the major challenges that the enterprises face in achieving the goals of B2Bi.

2.4.1. Internal application integration One of the biggest challenges companies face in B2Bi is integrating information among existing internal business applications. According to EAI Journal, an average Fortune 500 company may have 50 or more internal business applications. Very few of these applications are truly integrated with each other. A typical business process involved in B2B e-commerce is completed by multiple application systems. So, when a company buys a new application, it has to build an interface between the new software and many, if not all, of its existing applications. It is an extremely resource intensive, time consuming, expensive and a complex process to design, develop and maintain so many diverse interfaces. Thus, the first challenge that the companies face in their implementation plan of B2Bi is the fact that the internal applications must be integrated. In fact, in a B2Bi project, most integration dollars are spent on internal integration projects. According to Forrester Research, which conducted a survey on EAI at several companies, the following factors (in order of their importance) make integration difficult (see Figure 2.5): • Internal personnel issues; • The diversity of the applications in the legacy systems that must be linked;


Have you purchased software for internal integration ?

Have you purchased software for B2B integration ?

No 38% Yes

No 76% J = S

24%

62% Percent of 50 companies interviewed

37

Percent of 50 companies interviewed

What was/is the biggest headache surrounding software integration? Vendor problems 10% Dealing with Standards and |egacy systems industry issues 27% 13% Problems with • H M ' * ' data formats 1^^ Internal 8% personnel issues 42% Percent of 50 companies interviewed Figure 2.5. — Factors that make integration difficult

•

Standards and industry issues; A bewildering array of application integration options provided by different vendors to choose from; and Data format problems.

The survey also found that out of 50 global companies, 62% purchased software tools to hook together internal applications.

2.4.2. Disparate internal corporate data Internal data integration is the single most expensive problem to fix. The internal application integration issue becomes pretty complex for companies that have application data scattered across several different databases. For example, a large financial services institution may offer several products — brokerage, mutual funds, insurance, credit cards and savings accounts — but each product may be managed by its own legacy accounting system. There is no easy way to link all of these accounts together to let a customer see his or her entire portfolio of products without having to be authenticated for each account.


2.4.3. System heterogeneity B2Bi poses a double pronged problem — internal systems heterogeneity and external systems heterogeneity. A global 2000 company has thousands of employees and several hundred business partners. Its IT infrastructure is comprised of multiple applications (commercial and in-house), running on several different operating systems, networks and hardware. This is a problem compounded by the fact that each partner (supplier, distributor and customer) has a different IT infrastructure. The technologies to integrate such a heterogeneous (in terms of software, hardware, operating systems and programming environments) and distributed system are very complex and difficult to put in place. As the number of companies participating in the B2Bi process grows, the complexity of the integration challenges increases exponentially.

2.4.4. Data security Companies struggle to find a complete B2Bi solution that would link internal systems with partners' systems quickly, bringing guaranteed delivery, secure communications and transaction traceability over the Internet. B2B transactions involve high value, sensitive corporate data and exposure of internal back-end systems. There is a lot at stake, hence the issue of security is extremely important.

2.4.5. Transaction integrity Transaction integrity is defined as the degree to which a transaction flowing through a network reaches its intended destination without impairment of its function, content or meaning. To leverage maximum value from B2Bi, it is critical to ensure that each business process between applications completed successfully — from the point where the transaction is initiated all the way through to every application where the information is being used. If the transaction fails at any point, the whole transaction has to be aborted. Since B2B applications are distributed, it is a major challenge to maintain transactional integrity.


39

2.4.6. Internal business process management B2Bi cannot be achieved through the traditional thinking of the companies, which treats any integration issue as a technical issue that can be addressed with technical solutions. This approach ignores the root cause of the integration challenge — the lack of business process integration that the technology infrastructure supports. The main objective of BPM is to make business processes effective, efficient and flexible. A global 2000 company is typically crippled with redundant business units, performing redundant processes and using redundant data structures and systems. For example, they may have up to 12-15 different billing applications that replicate a majority of the business processes and about 95% of the billing data. The billing data for each such application usually resides in a separate database and is not accessible to other applications. The root cause of these redundancies is bad design of business processes and the redundant business units that use them. Integration of all such systems requires major business process reengineering, which is obviously met with severe resistance from employees.

2.4.7. Inter-enterprise business process integration B2Bi requires integration of inter-enterprise business processes. To achieve this, teams of business-unit and IT professionals from the trading partners have to get together regularly and redesign core business processes from a business-to-business integration perspective. Business process oriented integration happens at multiple levels, across multiple organizational units and it is an extremely daunting task to coordinate it. Several complex business processes such as materials planning and forecasting are not easily integrated among the trading partners.

2.4.8. Internal resistance Even if the B2Bi implementation team can guarantee the integration of legacy systems, heterogeneous cross-organization applications and business processes, there is no guarantee that B2Bi implementation will


be successful. For the successful implementation of B2Bi, all the business departments of a company have to work hand-in-hand with the technology department. The whole company has to be mobilized and all departments (sales, marketing, distribution, purchasing) have to adopt new business models and that is hard stuff.

2.4.9. Standards and industry issues The lack of industry standards for conducting business-to-business transactions over the Internet is a major deterrent to implementing B2Bi for many companies. The main challenge in using XML is not with document structure and syntax, but with the semantics of the document which represents a business process. Several companies and industry groups have proposed a variety of different XML extensions and protocols. No one knows which standards will survive in the long run.

2.4.10. Distributed control B2Bi involves interaction and congruence among multiple IT groups, multiple business user communities and multiple groups of decisionmakers. Each group has an independent set of goals and requirements. Anything that involves high levels of agreement or the intertwining of systems and people is difficult to achieve and even more difficult to maintain. With the increase in the number of partners that a company wants to integrate with, the problems associated with distributed control take precedence over all other problems.

2.4.11. Performance and scalability B2Bi requires real-time aggregation or distribution of information across dozens or hundreds of companies. Such a type of distributed architecture, if not properly designed, can significantly hurt the performance of applications. Delays of only a few seconds in B2B transactions can result in significant losses to trading partners. This can potentially result in disappointed customers and damaged working relationships.


41

2.4.12. Expensive B2Bi implementation is an expensive process. The most basic B2Bi solution, together with the expense of customization, can cost upwards of $1.5 million. A substantial amount of money is also spent in EAI activities such as data cleansing, legacy-system and internal business process integration, which are prerequisites to B2Bi. Forrester Research puts developmental costs at $1.5 million for a basic B2B site to more than $15 million for the most sophisticated sites, another $700,000 a year to keep up a basic site and up to $4 million a year to run a high-end site.

2.4.13. 24/7 availability of the system 24/7 availability of real-time data in B2B applications, which is one of the key advantages of B2Bi, is also one of its biggest challenges. In most companies, the data is exchanged and loaded through nightly batch processes. However, the logical expectation with B2Bi is that the data is always available and can be accessed over the Internet. Companies can work around a data availability problem through data replication, but it is an expensive process. They have to make the business decision as to whether it is worth the expense of replicating data on a real-time basis, an hourly basis or through nightly batch cycles.

2.5. B2Bi-Enabled Applications The array of potential B2Bi-enabled applications is vast and varies from industry to industry. In this book, we will be thoroughly discussing two critical B2Bi-enabled applications: supply chain management and B2B exchanges and collaborative networks, which are common to most industries.

2.5.1. Supply Chain Management (SCM) Supply chain automation, which builds dynamic communities connecting the enterprise with customers and suppliers, is one of the best B2Bienabled applications. B2Bi uses Web-enabled technologies to join the

42


linnrn

Check Credit History Browse Products and Place Order y

Bank

Response Bill of Shipment

Buyer Check Order Status

E-procurement S,te Purchase Order

Shipper

Ship Products

Statement of Bill Supplier Deliver Products

Figure 2.6. — E-procurement in an integrated supply chain

different 'links' in the supply chain — such as manufacturers, material vendors and retailers (see Figure 2.6). This transforms the traditional supply chain into a supply community. Such a supply chain community, integrated with collaborative technologies, results in a shared value chain that delivers reduced operational costs, lower inventories, increased efficiency and greater customer satisfaction.

2.5.2. E-marketplaces and collaborative networks B2B e-commerce can be transacted either directly between business partners or through an intermediary known as an exchange or an e-marketplace (see Figure 2.7). E-marketplaces allow all businesses including suppliers, buyers, financial institutions and shippers, irrespective of size and location, to collaborate in a real-time basis over the Internet. By participating in B2B e-marketplaces, the companies have the ability to negotiate better pricing, reduce transaction costs and reach a broader range of customers or suppliers.

Components, Benefits, Challenges and Applications of B2B Integration A Typical E-marketplace

Sel lers Sellers

i M

Collaboration

**• '

l 1 Trading Events ~ ^ | Distributors < ^ > * t SpotPurERisi—1 [ » 1

Suppliers

O.

J Shared Wbrfflow/ T Process Matching

43

Buyers Buyers

Resellers

Distributors

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