The one problem e-commerce needs to solve, according to Fadi Chehadé, is scalability.
Now that companies see how electronic links are streamlining their business, raising sales and cutting costs, they want to rev up the e-commerce engine to Internet speed. Thats when they find out the technology isnt ready.
But Chehadé says his company, Viacore, has the answer and is ready to prove it at Cisco Systems, which in June signed Viacore to manage document traffic at its new electronic supply chain hub, eHub. “Cisco wants half a million documents to flow through the system in a three-hour window,” Chehadé says animatedly. “We had to move a lot of translation to the center. It changes the architecture of [business-to-business] from point-to-point to being a hub-spoke model. One needs to shift and look at this from the eyes of a private leader.”
And that change reshapes the entire landscape of business-to-business e-commerce, Viacores CEO believes. It makes the biggest companies even more important to driving the future of Internet commerce. Its key to capitalizing on supply chains and Web services, two of the biggest movements in e-business today. “This validates that real B2B — the way we all imagine it, where machines talk to machines — is real,” Chehadé says.
Or, analysts warn, the Cisco project could demonstrate once again that the vision of integrating disparate computer systems into a unified network is just a mirage.
Just a Mirage?
“It is the Holy Grail, the Holy Land to which we march in many ways,” says David Hope-Ross, a Gartner analyst. “There are many standards. We need to agree on process and syntax. Its not clear that need will ever be answered in full.”
E-commerce has become a hodge-podge of one-to-one connections — company-to-company, company-to-hub, system-to-system — with some hubs thrown into the mix. Its every business for itself when it comes to trying to make sense of the systems and the data formats that plug into them. Even as the Internet suggested the possibility of universal connection in one system, that vision has collapsed. The standards, protocols and formats developed separately to make connection possible have gotten in the way. They have fractured along industry and company lines.
Integration is an incredibly complex task. At the most basic level, electronic communication obliges companies to agree to common definitions of data and formats of data, and to update data at the same time. Data also comes in several kinds of documents, from purchase orders and change notices to invoices and acknowledgments, all of which vary from company to company. Then there are different languages for exchanging data and documents, ranging from HTML — the simplest form — to a variety of electronic data interchange (EDI) formats and now an explosion of “flavors” of XML.
Tying it all together can be a challenge, even within a single company, industry officials say. Systems integrators and enterprise application integration vendors know how to fit these pieces together, within limits. But as companies prepare to connect with multiple systems in a “many-to-many” environment, such limited capabilities fall short. The work that businesses want to pass to machines keeps falling back into human hands, and the vision of automatic business at Internet speed seems as distant as ever.
The mission among analysts and industry officials has been to look for champions — large and powerful companies called “supply chain captains” or “channel monsters”— willing to become the standard bearers of translation and routing. The belief is that only such companies are wealthy enough to finance systems that cost tens of millions of dollars, and drive participation by their own suppliers. Companies such as Dell Computer and Wal-Mart Stores already oversee vast supply chains that they have constructed themselves. Companies such as Boeing, Ford Motor, General Motors, Hewlett-Packard and IBM are not far behind.
The catch, as usual, is money. Why invest in some grand scheme, when the older but functional EDI system works fine? “Whats the incremental benefit? Thats where people have been hesitant,” says Bob Parker, an AMR Research analyst. “You have to have something compelling” to persuade companies to go beyond EDI.
Like other high-tech manufacturers, Cisco has developed an increasingly complex supply chain at a time when its more important than ever to buy parts correctly and avoid being weighed down by excess inventory. The fast pace of product development and the increasing speed of obsolescence of electronic parts means that product that isnt sold quickly becomes a total loss. Cisco discovered that painfully when it wrote off $2.5 billion worth of unusable inventory in the first quarter this year.
In its eHub initiative, Cisco uses software from supply chain specialist Manugistics to give it the intelligence to plan what it needs to buy for production, and RosettaNets Partner Interface Processes to define its data model and map its business processes. RosettaNet is a group founded by Chehadé to develop standards for e-commerce communications in the high-tech industry. The Chehadé connection was undoubtedly one reason Cisco chose Viacore to make sure that eHub managed the document traffic flow based on RosettaNets PIPs. If RosettaNet was set up to make standards, Chehadé and co-founders Linda York and Tony Curwen set up Viacore to build networks that would use the standards.
Cisco officials would not talk further about Viacores involvement, other than to confirm that it is working with the company, but Viacore says it must support the flow of purchase orders, shipping notices, invoices, remittances, acknowledgments and other documents through prearranged processes, such as translation and corporate approvals. At times, the flow of documents reaches 93 documents per second, or more than 334,000 documents per hour, Chehadé says.
Working from a Cisco facility, Viacores solution operates much like a telephone service. Instead of a dial tone, Viacore offers a “process tone,” by which suppliers and Cisco can contact one another and do business, all electronically. It tracks 38 metrics separately to make sure that everything is running smoothly.
“This data stream is the fuel for these [e-commerce] engines. We are the fueling system,” Chehadé says in reference to the multimillion-dollar project.