e-Business and XML
XML can be applied in many ways to solve a variety of problems. However, critical business communication issues are some of the most important problems that XML is being applied to today. Many attempts in the past, such as Electronic Data Interchange (EDI), have had only limited success in attempting to electronically connect the different parts of a business organization. It is intended for XML to change this track record by introducing business-specific functionality aimed squarely at solving the business needs of all industries and all firms, large and small alike.
Yet there are many parts to the business equation. Enabling business collaboration and communication is a complex endeavor with many lessons to be learned from past experiences. As a result, successful implementations of e-business technologies and specifications require proper application of experience learned from past e-business endeavors in order to create stronger, more robust trading capabilities.
All products have to get to customers at one point or another. In some cases, the consumers are actual individual consumers rather than business entities. Individual customers are a well-defined group of buyers that have long been the objects of marketing, advertising, and other targeted selling activities. Many of the early developments on the Internet were focused at helping businesses sell their goods directly to customers. This model of selling goods directly to individual end-users is known as Business to Consumer (B2C) sales processes.
The promise of B2C commerce is that it eliminates the "middleman" and the expenses of going through multiple distribution and sales channels before reaching the end customer. Of course, with the greater direct connection to the customer comes increased marketing, sales, and support costs that would otherwise be borne by various other elements in the channel. Some well-known B2C companies include Amazon.com, Buy.com, and other such direct-to-customer companies that provide services such as online banking, travel, online auctions, health information, and real estate.
The other main source of customers for a business is other businesses. Transacting with other businesses as customers is, comparably, a much larger market than selling directly to end-users. The Business to Business (B2B) market is estimated at over 10 times the size of comparable B2C markets. However, selling to businesses involves many differences and complexities that are not present in traditional B2C sales environments.
Of course, the major difference between B2C and B2B commerce is that the customers are different--B2B customers are other companies, whereas B2C customers are individuals. However, a more important difference between the two business goals is that B2B transactions are more complex and involved than the comparatively simpler B2C transactions. Selling to another business involves negotiating prices, sales terms, credit, delivery, and product specifications. Business buyers need to be approved in advance and their business needs to follow allowable parameters. Companies selling to other businesses also need to simplify and, in many causes, automate their purchasing interactions so processes can be as smooth as possible. B2C transactions, however, are made for the benefit of individuals, and are, for the most part, important purchases for daily operations and the production of manufactured goods. Business-to-business activity is an online as well as offline phenomenon, although the term B2B has primarily been used to describe solely online transactions.
The Internet has changed all the rules, from servicing customers to licensing and installing applications. Not all models for business-to-business interaction are the same. As the technologies and mechanisms for e-business evolve, so too do the models for B2B business. In particular, B2B business models are migrating from long-term one-to-one relationships to rapidly changing and fluid many-to-many relationships. Rather than establishing fixed relationships with a set of identified supply chain partners, there has been an increasing trend towards fluid and, in some cases, spontaneous supply chain partnering.
As we have seen countless times before, XML provides a coherent, effective, and efficient solution to these various problems and has provided a number of improvements beyond technologies, such as EDI, that have attempted to solve these problems in the past.
Such XML standards and robust specifications, including ebXML and RosettaNet, have provided users with a framework by which they can reliably exchange e-business information and transact efficiently in a supply chain. The advent of these frameworks and their hopeful widespread use will no doubt herald an era when even the smallest business operation can effectively communicate online with its customers, suppliers, and partners.