OBI origins

The OBI effort began in October 1996, when a group of Fortune 500 companies and their key suppliers formed the Internet Purchasing Roundtable. The group's goal was to provide access to easy-to-use, open, standards-based Internet purchasing solutions for the procurement of high-volume, low-dollar indirect goods and services. American Express Co. organized the effort and SupplyWorks, Inc., a business-to-business Internet commerce company in Lexington, Mass., facilitated it.

Over the following nine months, through a consensus-based process that included close consultation with technology providers and financial institutions, roundtable participants developed OBI Version 1.0. With the roundtable's work finished, the OBI Consortium was formed with the goal of improving and promulgating the standard, as well as developing other standards and shared business practices for conducting business-to-business Internet commerce. Membership is open to buying and selling organizations, technology companies, financial institutions and other parties.

OBI at work

OBI 1.0 describes how the data should flow between the buyer and seller.

First, intranet users access OBI-compliant servers and use indexes to pick the products they want. The indexes connect the users through the World Wide Web to the suppliers.

At that point, a shopping basket is created on the supplier's Web site. When filled, the shopping basket is transmitted to the buyers' servers for processing. The purchasing application gets the information needed for processing the orders from user input or a default user profile.

Completed requisitions are routed through the users' organizations for approval. Once approved, the requisition is turned into a purchase order and transmitted back to the supplier's server for order processing.

Finally, the supplier updates order acknowledgement information and publishes it on its Web site. Although OBI developers recognize the importance of payment options, they purposely left them out of the first version in the interest of time.

OBI defines the supplier side of the business process more specifically than the buyer side, but the standard will have to evolve to meet each equally.

For suppliers, OBI provides a process standard that creates a somewhat predictable environment for business-to-business electronic commerce. OBI leverages an existing electronic data interchange (EDI) infrastructure as well as Web sites that companies have developed to market and sell their wares.

Challenges ahead

Among large supplier organizations, support for the OBI standard is strong but remains uncertain. The challenge for large suppliers will be in their willingness to work with technology vendors to ensure that requirements not met by OBI 1.0 are addressed.

For example, the OBI standard must address challenges such as slow and unpredictable Internet performance, ways for users to search for products rather than suppliers and a means of accommodating suppliers that are not OBI-compliant.

The challenge for smaller suppliers remains the same as that of EDI: cost of implementation. Microsoft Corp., Netscape Communications Corp. and other major players must release cost-effective, OBI-compatible products if the standard is to achieve critical mass.

OBI cannot succeed without vendor adoption of buyer- and supplier-side requirements. To date, most key vendors have acknowledged conceptual support for the standard and many have joined the consortium. But new standards and technologies are rapidly emerging that will provide competition for OBI and require mind share and development resources from vendors.

Two of these new standards are Internet EDI and the Extensible Markup Language (XML). Recently approved by the World Wide Web Consortium, XML holds tremendous promise as a competing technological solution. XML allows compatible tools to capture XML tagged information dynamically from Web sites without requiring a transaction.

The business benefits derived from OBI for buying organizations are extremely compelling. However, with the exception of Office Depot, VWR Scientific Products and a few other companies that have demonstrated OBI- compliant solutions, supplier acceptance is a ways off.

Regardless of whether OBI becomes the accepted standard, the Internet Purchasing Roundtable, American Express and SupplyWorks deserve credit for launching the drive to establish standards in a rapidly changing arena.

Ostrander is vice president of marketing at Elekom Corp., a business-to-business electronic commerce solutions provider in Bellevue, Wash.