Business%202%20Business%20integration

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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.

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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.

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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.

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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.

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Advantages of B2Bi

• Reduced Purchasing Costs
• Increased Market Efficiency
• Decreased Inventory Levels
• Increased Capacity Utilization
• Greater Market Intelligence

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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.

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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.

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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.

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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.

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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.

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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.

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B2B Integration Techniques

• Direct Application B2B Integration
• Data Exchange B2B Integration
• Closed Process B2B Integration
• Open Process B2B Integration

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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.

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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

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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

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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

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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.co
  m) 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

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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

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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)

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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)

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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

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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

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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

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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

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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.

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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.

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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/bar
  rett_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/PIT2000122
  1S0018, Dec.21.
• Yee, A., 2000, Order Out of Chaos Understanding
  B2B Integration Patterns, http//b2b.ebizq.net/eb
  iz_integration/yee_1.html, Nov.