In-Depth

Showtime for XML

• By Jack Vaughan, John K. Waters
• May 29, 2001

The world is about to become an electronic buyers' market, and General Motors Corp., the world's largest seller of vehicles, wants to be there. In one of the most startling initiatives of the young Internet era, GM is going online with its GM TradeXchange, a Web presence that will match direct and indirect suppliers to the automotive industry.

The fact is that while modern businesses are computerized, the interactions between businesses are still ruled by phone, pencil, paper and invoices completed in triplicate. GM's Web initiative is expected to shake traditional auto parts procurement processes until buckets of dollars fall to the bottom line.

For business, the promise of automated, streamlined processes - IBM calls it e-business - is the real promise of the Web, and this is the objective GM pursues. Others have taken note. Credit Suisse First Boston Corp. estimates that U.S. firms spend $1.3 trillion on indirect goods and services, and that the typical manufacturing company spends one-third of its revenue on indirect goods and services. Small improvements in cost control can mean a lot to a corporation, and micro-cuts of payments could mean a lot to an e-commerce software service provider.

GM expects the TradeXchange site will reduce purchasing cycle times by automatically handling purchase authorization, accounting and contracting. Involved is everything from paint and bumpers for cars to paper clips and computers for knowledge workers.

As is so often the case in online business-to-business undertakings these days, the eXtensible Markup Language (XML) is part of the story. XML is the proposed lingua franca for data transfer in the cyber realm. GM's and other upcoming rollouts represent the end of dress rehearsals and the beginning of what may be described as preview performances for implementations utilizing the promising XML format.

XML is helping to move this type of business along, according to Mark Hoffman, CEO at CommerceOne, the Web start-up that is very much responsible for making GM's TradeXchange happen.

GM, despite having access to massive IT resources, turned to CommerceOne because - no surprise here - this all has to happen in Internet time. The unique requirements of e-commerce (now including XML and online auction capabilities) mean you have to bring in people with a head start, even if it is only to be measured in months.

The financial terms of the deal - which both parties describe as a 'partnership' - have not yet been disclosed.

Walnut Creek, Calif.-based Commerce- One has been a visible proponent of XML for some time now. But the company is truly putting the infant technology through its paces. Experience with XML has led CommerceOne developers to propose an XML schema language that is meant to meet some of the perceived shortcomings of XML in the real world. To look at the issues this schema seeks to address is to look a little into the future of e-commerce and XML.

CommerceOne calling

But first, how did Commerce- One get this chance at the dance? No doubt it is due very much to the maneuvering of CEO Hoffman. For Hoffman, CommerceOne is surely a sweet return to the limelight after a slightly gloomy exit from relational database star Sybase. In fact, Commerce- One is said to have beat out Hoffman's old RDBMS nemesis, Redwood Shores, Calif.-based Oracle Corp., for the General Motors project. The competition continues. Oracle is at work on a powerhouse e-commerce site for GM's age-old foe, Ford. Others vying for this nascent electronic-market niche include SAP, Newton Square, Pa., and Ariba Inc., Sunnyvale, Calif.

Hoffman set the stage for the GM project by, among other things, buying VEO Systems, a hotbed of West Coast XML development expertise, and CommerceBid.com, a builder of complex business-to-business auction and reverse-auction service solutions. And CommerceOne may well continue to ride the acquisition wave. It has the purse to make that happen. Its business model calls for a mix of license revenues and fees collected from transactions. The company has parlayed $10.4 million in third-quarter revenue to a nearly $8-billion capitalization at the time of this writing.

CommerceOne entered the e-commerce market in two ways, said Mike Micucci, director of product management. "We first created a Web-based e-procurement application called CommerceOne BuySite, typically installed inside a firewall for Fortune 1000 companies. It's used to automate procurement, things like catalog purchases, workflow management, approval routing - everything to do with automation of procurement using a Web-based application," he said. The first Web release was BuySite 4, released in November 1998, he said. By December 1999, BuySite is expected to be on release 6.

Despite BuySite's promise, Commerce- One recognized that just producing a buying application did not have much to do with e-commerce. This helped people to automate their procurement, but it did not do much to integrate them with their trading partners and suppliers, said Micucci. So, early in 1998, the company started MarketSite, a business-to-business portal. This was certainly a springboard for deals like the one forged with GM. MarketSite was used to connect buyers with all trading partners. In fact, MarketSite is something of a franchisable portal - under the covers, GM's TradeXchange, for example, is expected essentially to work as part of MarketSite.

In March 1999, said Micucci, Commerce- One announced MarketSite 3.0, its first XML-based product. With a hospitable front end in place, the product, said Micucci, was aggregated as a business-to- business portal.

"As part of that strategy, we wanted to scale this to other portal properties around the world - using our MarketSite technology - to run a business, recruit trading partners and execute transactions. We also announced strategic deals with British Telecom to establish a portal in the U.K. and Europe, and with NTT [Nippon Telephone and Telegraph] to establish a portal in Japan," he added. "We have replicated this model around the world, and announced subsequent portals with Singapore Telecom, and with Cable and Wireless Optus in Australia," said Micucci.

"What we're doing is linking all of these portals together into a global trading Web. The idea is that we expand this type of network to help enterprises aggregate their buying power, and connect them to a network of trading partners [suppliers] to execute 'B-to-B' transactions and to receive catalog content," Micucci said. "And then we started to layer on top of that incremental business or e-commerce services."

Said Steve Viarengo, product manager for BuySite: "All of our products are evolving to take into account the global requirements of e-commerce on a worldwide basis. If you look at our strategy and our plan, it's focused on the way e-commerce is changing the way businesses interact with each other. Barriers are coming down. You no longer have to go to the supplier down the street. If a supplier on the other side of the world can meet your price and do a better job for you, you can buy there. That's the opportunity that e-commerce and the Internet are bringing to business worldwide."

As to the role of XML, CommerceOne's Micucci said the company realized that apps that used fixed APIs would not scale on a global basis. "We took a harder look at the market and we saw that XML was going to become the lingua franca to exchange information over the 'Net. It was going to allow application-to-application communication using what we call a 'loosely coupled document model.'"

Thus a partnership with VEO Systems turned into an eventual company purchase.

"VEO was pioneering a 'B-to-B' e-commerce infrastructure around a loosely coupled document exchange model," said Micucci. "They had already written the first cut of their specifications. One was called the Common Business Library [CBL], released in September 1998. They had also created a business-to- business XML-based transaction server. It was used to exchange XML business documents in a simple and open way."

CommerceOne's XML efforts will come into developers' hands as CBL, SOX (a proposed standard for XML schema) and as the CommerceOne XML toolkit for schema creation. The kit is available as a free download at www.marketsite.net, where development managers can also see MarketSite in action.

Hello, VEO - Hello, XML

"We ended up partnering with and subsequently acquiring VEO in January 1999 as a basis for MarketSite from the technology standpoint," said Micucci. "We took the VEO technology and abstracted it to create a lightweight trading partner integration solution that really is an XML server that allows us to send and receive XML-based business documents back and forth with trading partners. It is embedded in our buying applications.

"It's part of our ISV program, so that we have partnerships with PeopleSoft, RightWorks and Extensity," he added. "On the supplier side, we did the same thing. If the buying applications are sending XML business documents to the portal, we had to have a way to send those to the suppliers.

"We have an XML toolkit that suppliers can use to integrate directly into their back-office or e-commerce systems. We have hosted solutions that, instead of suppliers installing some software to integrate to their back office to send and receive XML documents, we essentially have a hosted order management system that receives the XML documents from buyers via the portal," explained Micucci.

What are the hurdles? What Micucci is seeing is that a lot of the trading partner community is still coming up to speed in e-commerce. "We're here pioneering a method of document exchange using XML, and these guys are still coming up to speed with EDI and other methods that have been used in the past. We recognize that not everyone is going to want to do full-scale XML document processing. That's why we have the hosted solutions," said Micucci.

XML in the city

While XML seems a simple scripting language to experienced programmers, its large-scale implementation will not be without hurdles. Is it ready for showtime? It is very likely that heavy-duty transaction-oriented undertakings will stress XML in unforeseen ways.

System architects at CommerceOne, in fact, have pretty much concluded that XML DTDs, an essential element of enterprise XML, are not adequately robust for electronic commerce. The XML DTD is a Document Type Definition, a set of rules for using XML to represent the proper architecture of a document. The concept comes out of XML's Standard Generalized Markup Language (SGML) roots, and provides considerable power to the basic XML document type.

Others will find various flaws in XML in diverse settings. That found by CommerceOne in the XML-in-commerce setting is notable, though not a showstopper, and the company has proposed an interesting object interface for handling DTDs' programmatic shortcomings. It is known as SOX, or Schema for Object-Oriented XML.

A sense of the real-world issues that XML solves, and the new ones that it is just now encountering, emerge when you give a hearing to Matthew Fuchs, senior architect for XML technologies at CommerceOne, and an author of SOX. Fuchs spoke on the benefits and challenges of XML in e-commerce as part of last November's OOPSLA '99 conference in Denver, where, in fact, the intersection of objects and XML was a major topic.

Fuchs came to CommerceOne as part of the firm's purchase of VEO. At VEO, Fuchs worked for Jay Tennenbaum, now chief scientist and director at CommerceOne. Tennenbaum is an XML and e-commerce pioneer known for stints at SRI, Enterprise Integration Technologies (now part of HP/Verifone) and CommerceNet (where he still serves on the board). Although Fuchs is grounded in object technology (he studied mobile object systems as part of his Ph.D. work at NYU) he has also been a denizen of the so-called SGML swamp.

While working on mobile object technology in the mid-'90s, Fuchs looked at the CORBA IDL. He needed to be able to move software objects around the Internet. He wanted the objects to be able to communicate with each other - 'silicon-to-silicon' in his words. And he also wanted the objects to be able to communicate with humans - 'silicon-to-carbon.'

Fuchs saw machine-readable SGML, the forerunner of XML, as a simpler, more loosely coupled approach to this problem, and a preferable choice to CORBA IDL in the role of meta language for describing agent communication languages.

But SGML was, many observers agree, overly complex. Fuchs soon found himself among early World Wide Web Consortium (W3C) members seeking to simplify SGML and to create XML as a Web-based method for handling data. XML answers a lot of modern systems' needs. But Fuchs has found wedding it with programs to be tricky.

Fuchs has continued to work with XML at VEO and now CommerceOne. "We realized that people were going to be using XML to exchange messages, and that we needed to build software that would deal with these messages. We had Java programmers who needed to be able to write the software to deal with these messages. And we needed to enable them to do so as fast as possible," said Fuchs when ADT caught up with him at the SIGS XMLOne Fall '99 conference in Santa Clara, Calif.

There is a need to formalize the relationship between markup and code - and DTDs may not be the best way, Fuchs suggests. "DTDs are monolithic beasts," he has said. Also, they are verbose.

Then, too, they may have to be continually written and re-written, which may seem pointless to modern Java programmers who know that traits can be inherited, not always written from scratch. With such issues in mind, Fuchs and others came up with SOX. [Go to www.xml.com/pub/r/SOX_2.0 for specification details.]

The best way to quickly get Java programmers moving with XML messaging was to express the XML information in a way that mapped naturally into programming languages, Fuchs said. "The reason you have these object-oriented facilities and programming languages is that there are some good ideas in there. Those ideas have legs and are applicable to the issue of how you evolve marketplaces [like the one CommerceOne has built]. The models are very similar," he noted.

Fuchs et al. built the SOX schema language and toolkit to enhance XML in action. The schema language describes constraints to be placed on the document. "There are lots of reasons why schema languages are great," said Fuchs. "They change the whole nature of how you do things in XML. They make this whole vision work." SOX tries to provide strong data typing, polymorphism and reusability, where DTDs may not do so (see "The year for SOX?," below).

CommerceOne's Hoffman points to the usefulness of the SOX schema toolkit as a handy means of making SOX happen. It is, in fact, a catalyst to the e-commerce portal business, he commented during an online interview at www.stockhouse.com in December.

"It gives us a standard way to bring on suppliers. Putting that out to the marketplace and getting people to build catalogs around our XML strategy is extremely important to us," he said.

Hoffman contends that the company has been very open with its XML development work, and SOX has been offered as a standards proposal to Oasis, BizTalk and W3C.

Steven Jones, vice president of marketing at long-time XML-force DataChannel, Bellevue, Wash., said SOX is a good effort toward providing a universal description of data. "It is the Commerce- One language for unifying data," Jones said.

The CommerceOne toolkit was made public in early November. CommerceOne combined efforts with tool maker Extensibility, Chapel Hill, N.C., to produce this offering. The firm launched a Web site (www.xmlschema.com) in December intended to provide online validation of XML schemas.

The tools from CommerceOne and Extensibility join a somewhat shallow pool of XML tools now being offered by industry. Microsoft has XML Notepad. IBM has a suite of disparate tools that have come out of the company's AlphaWorks advanced technology commercialization program. There are others. XML hoopla would have us believe the technology is ready to thrive - but the depth and range of XML tools belie such an assertion.

Brick-and-click for GM

Procurement and distribution has been a key to GM's success throughout its long history. Whole industries and cities were created in GM's wake in the states along the Great Lakes. In My Years with General Motors, company patriarch Alfred P. Sloan makes a point of highlighting procurement as an early instance of his success in bringing together the diverse companies that came to be known as General Motors. Today, the business is global and GM is betting heavily that CommerceOne can succeed in its endeavor of creating a powerful virtual market. "GM will move from being in a smokestack industry to a brick-and-click industry," said Harold Kutner, GM vice president and group executive, Worldwide Purchasing. "This is a way to digitize GM and to digitize our suppliers as well.

"We are talking about a global site of over $5 billion, which dwarfs the other B-to-B or Consumer-to-B sites that are available today on the 'Net," commented Kutner at the time of the CommerceOne/ GM announcement.

"Consider the way so-called 'Big Box' marketers such as Home Depot and Sam's Club changed retailing," he added. "We envision a day not far off when GM [TradeXchange] is considered the 'Big Box' of wholesaling."

The plan will succeed, indicated Kutner, "not because we're going to tell our suppliers to do this, but because it's an easier, better and faster way to do business."

Alan Trufe, executive director of GM TradeXchange, said "we were looking for a partner to bring two things: enabling technology to link buyers and suppliers, [and an] understanding of how to facilitate host and manage a trade exchange.

"It's a marriage that's going to work," he said of the GM/CommerceOne deal.

Trufe notes a typical goal of Trade-Xchange would be to reduce the cost of a purchase order from $100 to something less than $10.

GM is re-making itself to take advantage of the Internet, he said. Of CommerceOne he said, "we had an aggressive due-diligence program," and the signs turned up favorably for the Web commerce start-up. Standards are important, he indicated, saying "CommerceOne gives us an open environment." The GM undertaking may help drive XML (and not incidentally, CommerceOne), note CommerceOne company representatives. Said BuySite's Viarengo: "GM is clearly very motivated, and they have motivated all of their tier-one suppliers.

"This is the 'network effect' working here," he added. "The more large buyers you bring on board, the more large suppliers you'll bring on board." In fact, GM has more than 30,000 trading partners.

Meanwhile, the sort of arrangement GM and CommerceOne are forging will spread throughout the auto industry, admits Robert Marcus, chief architect and director of technology transformation and deployment for GM's information systems and services. "Now we're looking at virtual systems across supply chains," Marcus told an ADT reporter at OOPSLA.

"The Big 3 will have big commerce sites with XML coming in and out," Marcus said.

This will be a challenge to other companies in the chain. One obvious problem is that companies are going to have to respond to several car makers, said Paul Harmon, senior consultant with Cutter Consortium's Distributed Architecture Service, and editor of the Component Development Strategies newsletter. "The problem with XML is that it only works if everyone agrees on a standard set of tags," said Harmon.

"XML is great for passing data, but really doesn't support programming. If [data] exchange requires some intelligence - as for example, agents that dynamically negotiate over price - then that's going to require more than XML," he said.

Fuchs and his CommerceOne colleagues think they may have a prescription for this ill. They also attest that their software strategy will allow suppliers to interact across trading networks. On each of these points, time will tell; but this being Internet time, time will tell soon.

For large- and mid-sized organizations alike, new trading partner arrangements will be key in years to come, said Ted Schadler, group director, Forrester Research, at Forrester's November 1999 "Beyond e-Commerce Forum." In the Internet economy, said Schadler, sole-source suppliers will sink companies because they will not be flexible enough to respond to customer demands. "This is about specialization and working with others in real time to deliver solutions together," he said.