Business 2 Business integration

1. 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.

2. 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.

3. 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.

4. 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.

5. Advantages of B2Bi • Reduced Purchasing Costs • Increased Market Efficiency • Decreased Inventory Levels • Increased Capacity Utilization • Greater Market Intelligence

6. 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 time-consuming process. • Whereas searching for products online and placing an order at B2B exchanges requires much less time and effort.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. B2B Integration Techniques • Direct Application B2B Integration • Data Exchange B2B Integration • Closed Process B2B Integration • Open Process B2B Integration

13. Direct Application B2B Integration • 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.

14. Data Exchange B2B Integration • 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

15. Closed Process B2B Integration • 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

16. Open Process B2B Integration • 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

17. B2Bi Companies • 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

18. B2Bi Standards • 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

19. 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)

20. 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)

21. 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

22. 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

23. 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

24. 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

25. 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.

26. 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.

27. 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.