BOSTON (06/05/2000) - Mike Giesler, vice president of business development and technology at Richmond, Virginia-based Envera LLC, is building an online trading hub for chemical companies. He wants the site to run smoothly, but he must solve a major problem first: automating the bill-paying process. After all, a high-tech transaction that ends with employees shuffling paper would lose its new-millennium shine.
Envera is a global electronic marketplace for business-to-business transactions and services that was established earlier this year by an international group of chemical and petroleum companies.
Giesler turned to McLean, Virginia-based XMLSolutions Corp. for an approach that relies on the content-tagging language XML to translate electronic data interchange (EDI) information into business objects that anyone in the marketplace can read and process. XMLSolutions' XEDI Translator was a natural fit, he says, because its focus is on marrying XML, the emerging lingua franca of intercompany data sharing, with EDI, which large chemical companies use for bill processing.
EDI systems handle 20% of the transactions at the major chemical industry players, and about one quarter of all industry companies have EDI capabilities, Giesler says.
Vendors have traditionally seen EDI translation as a way to get two similar but incompatible systems to talk to each another, says Kate Fessenden, an analyst at Boston-based Aberdeen Group Inc. This perception arose because EDI evolved into slightly different flavors. As long as a company had a limited number of trading partners, the information technology staff could handle a few variations. More partners meant more complexity.
Now, with a transformation engine like XEDI Translator, she says, IT can toss out the one-to-one software adapters. The new paradigm is to translate EDI into XML, checking for errors in code, formats and sequences along the way, to format the document according to the receiver's preferences and place it in a browser window.
"XML is breathing life back into EDI," Fessenden says. "Companies that have gone through the huge expenditure of investing in EDI don't have to worry about it going away and being replaced by anyother technology." In addition, smaller companies that didn't have the resources to support EDI can now join these trading communities with a smallerinvestment in XML.
To benefit from XEDI Translator, a company can't be too small, says XMLSolutions CEO Kevin Kail. If your current costs for handling documents are less than $10,000 per year and the system works well, keep using it, he advises.
XMLSolutions' target customers are companies that spend more than $10,000 per year to shepherd documents through their offices, have more than 100 trading partners and currently support EDI, Kail says.
Cost savings is the major benefit of the XEDI Translator, Kail says. He claims that the product can decrease overhead ranging from $30 to $100 for processing an invoice to$2 per document. Fessenden estimates the cost savings at a more conservative 70%.
Fessenden says the competition is more customized and less flexible. By using XML,a general-purpose metalanguage, companies can continue using their EDI infrastructures. XMLSolutions adds a layer for flexibility, eliminating the time and expense involved in implementing a new system.
It bases the translations on general-purpose technology, so a change in a company's infrastructure won't break the process. XML translation is also bidirectional, so a firm can both send and receive documents.
Finally, XML can handle language translation, so French and Italian companies, for example, can trade and see documents in their native tongues.
Kail said the firm's products still have room for improvement. XMLSolutions has embarked on projects to improve XML Translator's communication capabilities, expand the document type definition and schema database and increase security features.
XMLSolutions' products are young, acknowledges Fessenden, but they're good enough to fulfill the needs of largecorporations. "It's like the next wave of how to deal with EDI - the next leap of technology," she says, noting that XMLSolutions is the company that others need to catch up with. wJohnson is a Computerworld contributing writer in Seattle.
The market in which XMLSolutions operates is in flux, says Kate Fessenden, an analyst at Aberdeen Group. EDI translation isn't the only problem, she says.
The underlying business need includes elements of enterprise application integration, a larger area that involves tying together diverse business applications for better data sharing and more powerful analytic opportunities.
Another issue is business-to-business integration - the linking of a company's value chain of partners, suppliers and distributors so that information and operations flow more smoothly.
The stalking-horse here, EDI translation, has been attacked in two ways: through value-added networks, whose advantage is an established EDI infrastructure that others can tap; and through adapters, which tackle each EDI-to-EDI translation separately.
XMLSolutions and its newer competitors are trying to create a Star Trek-type solution, a universal translator that will also contribute to the expanded goals of integrating applications and business partners.
Netfish Technologies Inc.
Santa Clara, California.
Netfish is firmly in the EAI camp, using XML as the glue to bind the companies in a value chain. It has a large war chest, having secured $30 million in financing from Oracle Corp. and Bain Capital Inc. in April.
San Ramon, California.
OnDisplay takes an adapter approach, which is a more expensive solution because its one-to-one translators require constant upgrades, says Fessenden. Recently acquired by Vignette Corp., OnDisplay has plenty of backing.
WebMethods' platform for business-to-business integration is more of a shotgun approach than what Fessenden calls the "rifle shot" strategy of XML Solutions.
WebMethods does intercompany integration, a piece of which is hooking together EDI systems. The difference is that WebMethods' approach requires some programming on top of the application.