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It is the dawning of shrink-wrapped Extranets

• By Ameet Patel
• July 10, 2001

Over the past two years, the Internet community has focused on building infrastructure, software platforms, development tools and revenue models for Web-based systems. The focus continuously shifts from marketing-based Web sites to Intranets to large-scale content systems to the nowemerging Extranet platform for conducting electronic commerce-based applications.

Only recently have viable solutions come on the scene to tackle real business-to-business electronic commerce applications. Consumer-based merchant shopping and selling centers have been around for some time, and valid revenue-generating business models have appeared in this segment. The vast majority of business-to-business electronic commerce processes stand untouched by Web automation mechanisms.

This missed opportunity was clearly due to the initial mantra of the Net, a consumer-driven "one-size-fits-all" shopping and information mall. As business users joined the Net and lost interest in "surfing," they began building business transaction conduits.

Business-to-Business Electronic Commerce (B-B EC) applications ranging from Internet-based procurement, supply chain management, business selling and financial process management came into light and accelerated into the forefront of Web development. Like all pioneering technology segments, development shifted from in-house/consulting-based development -- and automation of manual processes (paper + phone + labor) and existing electronic systems (ERP+EDI+FAX) -- to package integration and commercially viable platforms for automating and conducting business transactions and processes on the Net.

This defining trend propelled my belief that B-B EC applications will, in the next two years, re-engineer how we use the Net for reducing process and operating costs. B-B EC applications will work to improve cycle times, increase revenue via this channel, and most importantly, drive customer satisfaction and response to a new competitive level.

B-B, Business-to-Business

Most of the B-B EC application solutions focus on addressing problems in the areas of procurement, business selling, supply chain management and coordination, and customer information management. Some of the more interesting solutions can be found in the area of procurement process efficiency automation. Most of these solutions target and address the typical low-dollar item, high-volume manual-driven purchasing taking place in corporations today. The procurement cycle involves the following components: order requesting/generation; catalogs; approvals; suppliers; distribution; receiving; and payment.

Systems vendors, such as Microsoft and Sun, are providing valuable electronic commerce platform enablers for building these business applications. Innovative technology leaders and products include: Ariba's ORMS; Commerce One's BuySite; Netscape's BuyerXpert; and Connect's PurchaseStream. For example, Commerce One's EC suite leverages Microsoft's Internet platform foundation by building on top of Windows NT, SQL Server, Site Server and Transaction Server to provide a robust and comprehensive EC suite. On the other hand, Connect's PurchaseStream leverages multiplatform technology from Oracle, Netscape and Sun to build a scalable and flexible EC application for procurement. Ariba's ORMS system leverages key N-tier architecture concepts, and quite successfully incorporates Java in its core application framework and engine. Netscape's BuyerXpert incorporates SuiteSpot and builds a scalable EC backbone based on Corba and Java.

I have identified some features to be used to compare and benchmark the various packaged B-B EC procurement applications on the market. They are as follows:

• Support of multiplatform environments;
• Application architecture built for realtime transactional support;
• Business Process Design and graphical workflow configurators;
• Flexible business rules and approval control engines;
• Intuitive user interface;
• Enterprise integration adapters;
• Centralized management console;
• Rules-based event and status notification mechanisms;
• Intuitive and advanced catalog multimedia display and management;
• Ability to integrate multiple supplier-based catalogues;
• Extensive payment services;
• Leverage existing and emerging Internet security standards;
• Robust API and development toolkits; and
• Support for Internet-based purchasing standards and processes.

When implementing Web-based procurement systems, there are some important issues to be aware of that could slow down the successful deployment of B-B EC procurement applications. Back-end ERP and legacy integration and business workflow rules and controls seem to be the major obstacles. Constant attention is needed to ensure the processes are streamlined and re-engineered in order to see improvements in cycle time and reduction in operating costs.

Technical issues include cross-enterprise interoperability and standard availability for multiple buyer and supplier interactions. Part of this issue stems from the lack of catalog format, management standards and robust Web-based interchange mechanisms. Usually, companies want to have a unified catalog that represents multiple preapproved suppliers as one cohesive entity and with minimal catalog maintenance. This is necessary since most organizations do not want to be bound by multiple supplier-based catalog systems.

Lastly, the stability and maturity of the underlying application engines will come into play when deploying these systems since most of the software infrastructure is based on technology that has come into play in the past year. Users will gravitate towards vendors with a proven deployment and customer driven development track record. Extreme focus will be placed on those companies that can deliver integration and customization methodologies.

The biggest question pertaining to the survival of these applications and vendors will be whether ERP vendors (SAP, Oracle, Peoplesoft, BAAN) will extend their power base into the emerging areas of Web-based procurement, supply chain management, business selling and customer information management. We have seen strategic movements by SAP through partnerships and equity investments, and we will see more direct involvement from these vendors and a natural consolidation of the market players.

My advice is to closely monitor these developments in the long term and focus your attention (with the appropriate integration insight placed on your back-end operations system vendors) in the short term on implementing systems based on technology from leading players in the technology from leading players in the market.