'Next EDI' gains key proponent

A major commitment from the Department of Defense is expected to give a critical boost to a Web-based, business-to-business communications framework that supporters call the next EDI.

The framework is called electronic business using XML (ebXML) and has been under development through a United Nations-backed effort since 1999. While ebXML has gained some momentum overseas, it has yet to catch on as a requirement for doing business in the U.S.

But now the Defense Department is adopting ebXML as a common format for transactions conducted via its EMALL online procurement portal, from which military personnel order equipment and supplies. Separately, analysts say General Motors is close to adopting ebXML as its global corporate IT standard. A GM spokesperson confirms the company is a strong supporter of ebXML and says it is currently finalizing its evaluation of technologies to implement the ebXML standards within GM.

"This [Defense Department effort] is definitely a big move for ebXML," says Charles Abrams, research director at Gartner. "When ebXML was proposed in the late 1990s, many of us thought it would have made more inroads than it has by this point."

Like electronic data interchange (EDI), ebXML securely supports a variety of transactions, such as invoices, purchase orders and receipts. But unlike EDI, ebXML is designed for Web environments and has ties to Web services standards such as the Simple Object Access Protocol. EDI, on the other hand, relies on expensive, proprietary transport connections.

Issues that have held back ebXML include its unfinished nature - Gartner's Abrams estimates the ebXML specifications are only about half-complete. In addition, a lack of vendor support for ebXML is hindering adoption.

Defense goes on ebXML offense

The Defense Department's official adoption of ebXML is thus far limited to EMALL, which is processing an average of $3 million to $4 million in sales per week, according to Debby Roobol, program manager for EMALL and chief of the e-commerce and standards branch of the Defense Logistics Information Service, which operates the procurement portal.

This amount represents only a fraction of the estimated $24 billion in goods that the Defense Logistics Agency buys each year from more than 20,000 suppliers. However, EMALL traffic is growing rapidly. The procurement portal is expected to process about 475,000 transactions in fiscal 2004, up from 360,000 transactions in fiscal 2003, Roobol says.

In addition, analysts expect the Defense Department's endorsement of ebXML will have a trickle-down effect. For example, suppliers that want to do business with the department might be pressured to adopt ebXML, for example.

"The [Defense Department] is signaling to its suppliers that ebXML is the next iteration of integration technology it's going to use in procurement and sourcing," says Scott Lundstrom, CTO at AMR Research.

The Defense Department has stopped short of requiring its suppliers to support ebXML, but will encourage them to do so, says Don Brown, president of PartNet, a software vendor and government contractor that maintains a catalog of products available on EMALL from internal Defense Department sources and vendor-direct sources.

GM says it is not currently contemplating any mandates to its dealers that they use ebXML. But the automobile manufacturer has been working with ebXML and has created a reference implementation of ebXML covering certain business interactions between GM and its retail dealer networks.

"GM will probably mandate something but how much will be ebXML, how much will be Web services and how much will be UDEF" is unknown, says Jason Bloomberg, a senior analyst at consultancy ZapThink. (Universal Data Element Framework [UDEF] describes an effort to tackle the lack of interoperability among e-business standards.)

Part of the appeal of ebXML is that it makes doing business with a partner electronically for the first time a lot easier than with EDI, AMR's Lundstrom says. "In legacy EDI, there is a fairly labor-intensive one-time start-up process when you add a new supplier or customer," he says.

That goes away with ebXML, thanks to its XML base. "A lot of the complexities around how to integrate messaging from one system to another happens on an automated basis because of the self-descriptive nature of XML," Lundstrom says.

For this reason, companies that have dynamic environments, where the composition of their suppliers and customer groups changes on a regular basis, are going to find ebXML attractive, Lundstrom says.

Nonetheless, ebXML isn't expected to replace EDI any time soon.

"EbXML would need a lot more adoption, a lot more time spent with the standards, in terms of defining transactions, to match what has happened with EDI," Gartner's Abrams says.