Business 2 Business integration
(B2Bi)
"The worldwide B2B market is forecasted to grow from $145 billion in 1999 to
$7.29 trillion in 2004, which is 7% of the forecasted $105 trillion total global
sales transactions" - GartnerGroup, Jan.2000.
What is B2B? Why is it talked
about so much in recent time?
• B2B is the commerce between businesses, where
one business buys raw materials or parts from
another business.
• Potential benefits offered by the developments in
Internet technology, and the way it is being used
in conducting B2B commerce online. Online is
the key word.
Evolution of Online B2B - 1
• For years, large companies have tried to force their
suppliers, usually small businesses, to conduct
business with them electronically.
• EDI (Electronic Data Interchange) was the only
option available at that time.
• EDI required huge up-front investment
• EDI networks were complex and proprietary, and
were notoriously expensive to use.
Evolution of Online B2B - 2
• B2Bi could not gain momentum until recently,
when XML has evolved as the base protocol for
sharing data among different enterprise
applications.
• In less than two years, XML has been recognized
as the ideal alternative to EDI.
• XML has made it possible for businesses to
establish trading relationships without relying on
EDI networks, facilitating the formation of
thousands of e-marketplaces and B2B exchanges.
Advantages of B2Bi
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Reduced Purchasing Costs
Increased Market Efficiency
Decreased Inventory Levels
Increased Capacity Utilization
Greater Market Intelligence
Reduced Purchasing costs
• The most significant advantage of going for B2Bi is the
ability for companies to cut costs by remodeling the way
they purchase their raw materials and parts.
• The National Association of Purchasing Managers says
that the average manual purchase order costs a company
$79. This is because locating goods needed at cheaper
prices and filling out the necessary paperwork is a timeconsuming process.
• Whereas searching for products online and placing an
order at B2B exchanges requires much less time and effort.
Increased Market Efficiency
• Companies can quickly get price quotes from
numerous different suppliers at these B2B
exchanges and thus get products at better price
and/or quality.
• Just as eBay has created an efficient e-marketplace
(C2C) for selling/buying anything, several B2B
exchanges have emerged that make connections
between buyers and sellers that may not have
otherwise happened.
Decreased Inventory levels
• One of the oldest application of B2Bi technology was in
JIT (just-in-time) manufacturing technique, employed by
many major manufacturing giants.
• JIT manufacturing technique demands for filling the
inventory with raw materials just-in-time when they are
needed, thereby eliminating the need to stock unnecessary
inventory for longer periods.
• This just-in-time delivery of raw materials by the supplier
is made possible due to the integration of manufacturer's
and supplier's enterprise applications, thus resulting in
companies which work with less working capital.
Increased Capacity Utilization
• Companies realize better capacity utilization due
to increased transparency in information on
demand-supply, thereby controlling production as
per the market demand.
• Moreover, if a company manufactures excess
product or has extra inventory of raw materials,
B2B exchanges allow that to be turned right back
into cash.
Greater Market Intelligence
• B2B exchanges give manufacturers a better insight
into the time-sensitive demand levels for any
product in any given market, that enables
manufacturers to realize better prices for their
products and make better decisions regarding what
and what not to produce.
ROI (Return On Investment)
Analysis of B2Bi
• Buyers implementing B2B e-Procurements are projected to
have an average ROI of 339%
• Transaction processing costs were reduced by 32% as a
result of B2B online commerce
• Inventory and product costs are reduced significantly for
buyers
• The cost to process B2B transactions is 22% less than
traditional Phone and mail order system
• In summary, B2Bi makes businesses much more efficient
as a whole, and increased efficiency means reduced costs,
which is the ultimate purpose of implementing B2Bi.
B2B Integration Techniques
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Direct Application B2B Integration
Data Exchange B2B Integration
Closed Process B2B Integration
Open Process B2B Integration
Direct Application B2B Integration
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Oldest technique of B2Bi
A natural extension of EAI (Enterprise
Application Integration).
Direct linking of applications in
different corporate entities
Necessitates the ability to interact
directly with application APIs, translate
native application data and support
complex transformations
Requires adapters and transformation
software of the B2Bi vendor on each
end of the flow
All corporate entities involved in the
integration need to use the same B2Bi
vendor.
Data Exchange B2B Integration
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The most prevalent technique of B2Bi
being used since the early days of EDI
Increasingly deployed in recent time by
the B2Bi vendors using XML as the base
format
Unlike the Direct Application B2Bi,
which requires the presence of B2Bi
vendor's components on both ends of
flow, the Data Exchange B2Bi enables
B2B transactions via a common data
exchange format
The corporate entities involved do not
need to utilize the same product, but need
only to understand how to process the
documents received
Relying on common data exchange format
makes it easier to implement and extend
Closed Process B2B Integration
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Exchanging documents alone may not
be sufficient in many situations which
warrant for interaction between
corporate entities
Closed Process Integration B2Bi
introduces the concept of BPI (Business
Process Integration) Services, which
are logical business process elements
that are expressed as activities rather
than data
BPI manages transactions by driving
predefined activities to participants,
such as transmission of a document or
acknowledgement of a receipt
Identifies a principal participant
responsible for managing the
integration process
Open Process B2B Integration
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Unlike Closed Process Integration
where the processes are managed by a
principal participant, Open Process
Integration B2Bi introduces the notion
of shared processes, with each
participant actively managing business
processes within its domain
Requires BPI Services layer that
supports process elements to be
managed as both private and public, so
that each participant can choose to
externalize and share elements of its
process domain
Facilitates all participants to achieve
dynamic efficiency in terms of pricing
the products and managing the
availability of goods and services
B2Bi Companies
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Vertical B2Bi Companies: Vertical B2Bi companies work within a particular
industry so that the corporate entities within that industry can electronically
conduct business with potential suppliers and customers within that industry.
The two largest vertically oriented B2Bi companies are Internet Capital
Group (www.icge.com) and VerticalNet (www.verticalnet.com).
Horizontal B2Bi Companies: Horizontal B2Bi companies operate at different
levels across numerous different verticals, like Ariba (www.ariba.com) and
CommerceOne (www.commerceone.com) enabling companies procure raw
materials electronically, i2 (www.i2.com) helping the manufacturing
processes, and Siebel Systems (www.siebel.com) empowering sales forces
with critical information.
A few B2Bi companies run both vertically and horizontally, like FreeMarkets
(www.freemarkets.com) which is the largest site for B2B auctions in the
world, with over 3000 companies from 45 countries participating in auctions
that encompass over 70 different vertical industries
B2Bi Standards
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Absence of established B2Bi standards resulted in B2Bi companies developing
their own protocols and standards that complicated the integration
Although XML has been accepted by almost all B2Bi vendors, there are more
than 120 standards that extend XML
B2Bi exchanges built on Ariba's software use the cXML (commerce XML)
B2Bi exchanges built on CommerceOne's software use xCBL (XML Common
Business Library) protocol
Electronic components and IT industries use RosettaNet, a collection of
exchange protocols that define products, partners and business transactions
within those industries
Insurance agencies and brokers use AL3 (Automation Level 3) standards.
Banking and finance companies use SWIFT (Society for Worldwide Interbank
Financial Telecommunication) standards
New B2Bi Standards - 1
• SOAP (Simple Object Access Protocol)
• Protocol developed for accessing objects over the Internet
that are described in XML
• Originally proposed by Microsoft in 1999, and is being
supported by IBM
• Recently submitted to World Wide Web Consortium
(W3C)
New B2Bi Standards - 2
• ebXML (Electronic Business XML)
• Proposed to provide a common formatting and
communications protocol between businesses
• Sponsored by the United Nations' Center for Trade
Facilitation and Electronic Business (CEFACT) and the
Organization for the Advancement of Structured
Information Standards (OASIS)
New B2Bi Standards - 3
• UDDI (Universal Discovery, Description and Integration)
• Proposed to provide a registry of e-businesses, the services
and products they offer and how to access their systems
• UDDI will allow e-businesses to share information through
a common registry, much like DNS servers allowing
browsers to find web sites
• Initially proposed by IBM, Microsoft and Ariba, which
were later joined by Hewlett-Packard
B2Bi Security
• Firewalls alone can not make up a successful security
strategy
• Some of the security issues being taken care by the B2Bi
companies are
– Authentication
– Access Control
– Auditing
– Administration
Authentication
• Monitoring carried out for both successful and
unsuccessful logon attempts
• IDs that have continuously accumulated unsuccessful
logon attempts are disabled
• Notification mechanism is being used to send this security
information to the security administrators
• Passwords are frequently changed
• Accounts that have never been used or have not been used
for extraordinary period of time are disabled
Access Control
• Application Servers are used in 3-tier environments for the
application level access control
• While the application servers remain connected to the
database, users are authenticated for access to specific
applications
Auditing
• Application Servers used in 3-tier environments process
transactions in database using one or few application IDs
instead of a large number of actual user IDs
• Auditing strategy is adopted to identify the database
changes to the actual user IDs.
Administration
• No one person or group should be entirely responsible for
database, operating system and security administration
• Separation of responsibilities ensures that no intentional or
unintentional security breach occurs.
References
• Barrett, A., 2000, Making the B2B connection: Why and how companies are linking to
their customers and suppliers, http://b2b.ebizq.net/e_commerce/barrett_1.html, Dec.
• BrainTree Security Software, 2000, Security at the heart of B2B transactions - White
Paper, 6pp.
• Grainger Consulting Services, 1999, Economic impact of B2B e-commerce in the MRO
supply chain, Oct., 21pp.
• Horowitz, A.S., 2000, B2B is for small business too,
http://www.planetit.com/docs/PIT20001026S0017, Oct.26.
• Knowles, A., 2000, B2B: Bonanza or Bust?, www.earthweb.com, Oct.9.
• Larson, P., 2000a, B2B E-Commerce - Internet Report, Motley Fool Research,
www.fool.com, March 14, 35pp.
• Larson, P., 2000b, A short intro to Business-to-Business E-Commerce,
http://www.fool.com/reasearch/2000/features000316.htm, March 16.
• Webster, J., 2000, An alphabet soup of B2B standards,
httl://www.planetit.com/docs/PIT20001221S0018, Dec.21.
• Yee, A., 2000, Order Out of Chaos: Understanding B2B Integration Patterns,
http://b2b.ebizq.net/ebiz_integration/yee_1.html, Nov.