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On a chilly morning last December, a group of IT and business managers from some of the largest agriculture companies—and fiercest competitors—in the country gathered in a basement conference room of the OHare Hilton in Chicago.
The group, including representatives from agricultural products companies Tyson Foods Inc., Louis Dreyfus Citrus S.A., Monsanto Co., Cenex Harvest States Cooperatives and Archer Daniels Midland Co., had been meeting off and on for three months in an attempt to map out AgXML, a version of Extensible Markup Language that, many thought, could spark a business-to-business e-commerce revolution in the industry. Things, however, were going slowly.
Concerned about losing control of the standard and that AgXML collaboration between competitors could be construed as anti-competitive collusion, the executives, like strangers playing poker, were waiting for someone else to make the first move.
Finally, by Day 2, John Von Stein, vice president of IT for the North America Grain and Oilseed Crush business unit at Cargill Inc., asked what everyone else was already thinking: Who will actually own the standard? How will final technical decisions be made, and what will happen if two organizations disagree on important XML tags?
That day, AgXML LLC, a nonprofit dedicated to determining how partners and suppliers will one day speak to one another using XML online, was born. Picking up on Von Steins lead, participants hammered out how AgXML LLC will be organized and how it will go about defining XML for the agricultural products industry. While a final, complete AgXML standard is still years away, the group has already defined a subset of XML tags that could be used in B2B collaborations by the end of the year.
“If there was a defining moment, perhaps that was it,” Von Stein said. “It became apparent from me asking some blocking and tackling questions that we needed an overriding organization in place. It just pushed the whole thing over the edge and made everyone realize this was worth the time and commitment.”
While broad, vendor-led initiatives such as Microsoft Corp.s BizTalk Framework have attracted the lions share of attention, the real heavy lifting in creating the XML standards needed to drive B2B e-commerce, experts say, will happen in the scores of industry-specific initiatives—such as AgXML—now springing up.
Gartner Group Inc., of Stamford, Conn., estimates that so far 200 initiatives have been launched to create XML standards tailored to 55 industries. (For a related story on industry-specific XML initiatives that are making substantial progress, see Page 50.) While each standard will be tailored for a single industry, the intent of each will be the same: to create a common language—defined in XML—that business partners and even competitors can use to easily and universally exchange information and transactions online, driving cost and time-out-of-business processes as fundamental as placing orders and confirming shipments.
Recently, eWeek was able to find out, through one companys eyes—Cargills—what its like to get in the trenches and help develop an industry-specific XML standard.
The takeaway? First, the challenge is not primarily one of technology but of politics. Competitors must collaborate and embrace industrywide XML definitions, even if that means theyll be forced into extensive, costly system and business process rework. The key to making that happen, Cargill officials said, is to create a fair and unbiased organization to oversee the XML standard process. At the same time, openness—publishing definitions before, as and after theyre established—is the key to making sure that XML standards are accepted and used across the industry, Cargill officials and other experts said.
Whats the big deal?
So why was Cargill so interested in pushing a set of XML standards for the agriculture products industry? First, Cargills interest in XML goes way beyond the agriculture products industry. The $47.6 billion privately owned company, based in Wayzata, Minn., supports the development of XML standards in six industries in which it operates. Cargill officials feel that pushing B2B interactions online could help serve its customers more efficiently as well as cut its transaction-related operating costs by 20 percent to 30 percent annually.
Today, whenever Cargill receives an order, places an order, ships an order or executes any other transaction with a business partner, it generates paperwork—faxes, letters and so forth—and lots of overhead expense. Moving all that to the Web will cut costs and speed business. But first, business partners and competitors will have to agree on the language—the XML tags and schemata—to be used to define standard online transactions and documents such as invoices, purchase orders and contracts.
The potential benefits to Cargill go far beyond improving B2B processes. The company sees AgXML as a way to provide new online data and services to farmers. According to Forrester Research Inc., of Cambridge, Mass., about 35 percent of U.S. farmers are already online, and the company estimates that figure will reach 70 percent by 2004.
Cargill knows that to do business online with these farmers it needs an XML standard. Other alternatives, such as EDI (electronic data interchange), are too expensive for farmers. And faxes are too slow and costly.
Cargills investment in AgXML has been substantial. Some 10 business and IT managers at the company participate in various working groups that meet two days every month.
In all, 32 companies so far are supporting the AgXML standard, including Cargills largest competitors.
In for the long haul
Discussions that led to AgXML started about nine months ago when agriculture B2B marketplace Rooster.com began to push industry leaders to create the standard processes and XML definitions that will allow supply chain partners to integrate their back-end systems. Rooster.com President Gary Carlson, in Bloomington, Minn., said he saw integration as a way for suppliers and partners to link to the e-marketplace and, by eliminating the inefficiencies and unnecessary costs in various business processes within the grain and oil-seed industry, ensure its survival.
The timing was right for Cargill. Not only was it invested in Rooster.com, Von Stein and other officials at the company had been considering for three years how the use of XML documents would enhance the experience of its trading partners and change its internal processes. The company was ready to invest both time and money in AgXML.
“Obviously, theres a lot of interest in getting standards established across the industry,” Von Stein said. “When Rooster said it wanted to develop that standard, that realization was quickly adopted by others.”
Until the December meeting when Von Steins questions lit a fire under the AgXML group, however, AgXML had been going slowly. At issue, of course, was the power struggle that is inevitable between competitors. Each company already had its own established set of business processes and vocabulary to go with them. Where one company in its internal systems and documents might, for example, refer to a supplier with the acronym “SUP,” another might use a combination of letters and numbers.
Switching systems to be consistent with a new XML convention could create Y2K-compliance-like nightmares. So each competitor was motivated to push for its own definitions. And that meant, for a long time, none was ready to fully commit to the AgXML process.
After Von Steins prodding, however, group members got down to business. First, they decided to tweak the AgXML organization structure to maximize fairness and minimize the likelihood that any one company would gain the upper hand on the standards being developed. Representatives of the 32 participating companies decided to set up AgXML LLC as a nonprofit that would own the standard.
And designated to run the organization and make final standards decisions was a steering committee with a representative from each participating company. The committee meets quarterly to present the recommendations of working groups focusing on subsets of the AgXML standard and to discuss the progress being made. The bulk of the work is done by groups working on the vocabulary and documentation for specific applications in the agriculture industry, such as shipping, settlements (invoicing, payables and receivables) and contracts. Volunteers from the participating companies make up the working groups. The meetings are held at a different participants location each time.
The pseudodemocratic setup of the organization, participants said, means they dont have to worry about one company imposing its definitions on others.
“On a conceptual level, youre building a community, and thats the hardest part,” said Michael Dockham, technical architect for Cargill North America Food Ingredients, in Wayzata. “Once you have the working groups in place and understand how the process is going to move along, youve met a major milestone. The rest is just sweating through the details.”
The AgXML group also took steps to assuage participants fears about setting off anti-competitive alarm bells among regulators.
Attorney Steve Schoenebaum, of Brown, Winick, Graves, Gross, Baskerville and Schoenebaum plc., in Des Moines, Iowa, was retained to read a legal disclaimer at every meeting to ensure that no antitrust laws are violated. And participants agreed that, while they will discuss data definitions, they will not compare key business processes. Sharing that kind of information, it is feared, could create the appearance of collusion.
“When youre looking at XML schema, youre just talking about business name definition or agreeing on what customer name youre going to use,” Dockham said. “Business processes can never be discussed.”
The AgXML group made another important decision late last year that, members said, will improve chances that the standard will eventually enjoy industrywide adoption: to publish all its work to the public. Anyone has access to information on what the group is trying to accomplish, the activities to date and the plans moving forward. All information on the groups work is available at www.agxml.org.
Publishing all information about the standard, said Cheryl Gielau, a senior data analyst for Cargill Corporate IT who is participating in the working groups, will encourage even those not currently involved, such as farmers and small businesses, to eventually adopt the standard.
That approach is smart, said Rita Knox, a Gartner Group analyst. Rather than hiding XML data model proposals behind firewalls, enterprises should post them on a public repository and invite input from the outside. XML standards, Knox said, will be used only when they receive broad adoption and cover many requirements, not when one enterprise posts its XML-defined proposal as a fait accompli.
The future of AgXML
The approach of the AgXML group is beginning to bear fruit. After months of little progress, the group since December has identified three process areas it will concentrate on—shipping, contracts and receivables—and has developed proposed XML schema for specific applications such as the language to be used in sending and receiving contracts.
By the end of this year, Cargill officials hope, the group will produce standard definitions that can be used to share XML documents—not yet transactions—between business partners. The U.S. Dairy Association and the National Grain and Feed Association have shown interest in using the AgXML standards being developed, Cargill officials said.
As modest as that seems, its a lot more than whats going on in a lot of other vertical industries, experts said.
“The fact is that theres very little XML out there right now,” Knox said. “A lot of work is going on, but theres still not a lot of it floating around. Everything has to be translated and tested before processes are put in place.”
For Cargill and AgXMLs other members, theres still a long way to go. Cargill officials estimate that a complete, deployable XML definition for the agricultural products industry wont be in place for many years.
Still, they said they consider the initiative so far a success, if only because it represents a blueprint for how to work with competitors who, one day, may be partners. A year ago, the idea of opening the lines of communication between Cargill and competitors such as Louis Dreyfus and Tyson would have been inconceivable, Cargill officials said.
“I would have been shocked at the idea of working much more closely with our competitors,” Von Stein said. “Especially since most of the barriers have already been paved over the last few decades. Hopefully, AgXML will begin to remove some of those technology barriers.”