Languages for electronic business communication: state of the art

Electronic commerce (ecommerce) is the new buzzword for doing business on the Internet. A main problem for business-to business e-commerce lies in the need for the information systems of the involved organizations to exchange meaningful information . For letting the information systems of business partners accomplish electronic business communication , semantic interoperabilit y is necessary to ensure that exchange of information makes sense ± that the provider and receiver of information have a common understanding of the `̀ meaning’’ of the requested services and data. Traditional EDI is not sufficient to solve electronic business communication problems in an open and dynamic environment. Summarizes the development from traditional EDI towards new advanced electronic business communication approaches offering agent-based e-commerce marketplaces in which the meaning of business messages is managed by means of shared repositories for formally specifying the semantics of business messages. Within this framework, XML is the practical foundation for structuring the information to be interchanged. summarize approaches to XML/EDI standardization and to global, shared repositories for business communication standards respectively. Formal semantics for business communication languages are discussed in Section 5, and the role of agents in Section 6. Section 7 discusses some initiatives for establishing electronic marketplaces before Section 8 summarizes the paper with a look at further issues. 2. Background: e-commerce Electronic commerce (e-commerce) is a somewhat emerging area. The literature and trade press tend not to clearly delineate among `̀ electronic commerce’’, `̀ electronic business’’, `̀ electronic markets’’ and related terms. This is not so surprising because the field of e-commerce and inter-organizational processes is subject to fast and often dramatic technological changes. As it is often the case in emerging application areas, terminology is often used inconsistently (Hasselbring, 1999). E-commerce is about the use of information technology for the support of business transactions. Business transactions can be, for example, pre-sales activities, sales, purchases, finance and insurance, placing an order, delivery and payment, after-sales service and maintenance, joint product-development, transactions with the government, etc. E-commerce comprehends trade in physical products as well as trade in services. Concerned are products and services that are traded electronically, but usually end in physical delivery, as well as services that are traded and delivered electronically (e.g. software or music). The applications that support these transactions can be broadly divided into two major categories: 1 Business-to-consumer (B2C) transactions: examples are electronic retailing (shopping malls offering consumer goods) and electronic payments. 2 Business-to-business (B2B) transactions: an example is a company that uses a network (with EDI) for ordering from its suppliers, receiving invoices and making payments. Additional categories such as business-toadministration are sometimes introduced, but the basic distinction can be made between B2C and B2B e-commerce. Much has been written about B2C e-commerce via the Internet. One of the best-known examples is Amazon.com. B2C e-commerce is growing rapidly, but it loses some significance when compared with the expected growth of B2B e-commerce, as predicted, for instance, by IDC (1999). Although the term e-commerce has only recently started to receive a lot of publicity and attention, the fact is that e-commerce started more than two decades ago with the introduction of electronic data interchange (EDI) between organizations. This means that organizations exchange orders and information about deliveries as well as payments electronically. Consumer-oriented e-commerce also has some history. Automatic teller machines (ATM) that automate `̀ money business’’ have been in existence for many years. The systems for EDI and ATM, however, are closed systems. They only operate between the parties involved in the transactions and are shielded from the outside world. E-commerce now is no longer only the electronic ordering and supply of products, but it means doing business electronically, in any possible way. E-commerce can also support negotiation about terms and contract conditions, building up electronic business relations, exchanging product information, and all the other things that also take place in traditional business. 2.1 Business-to-business e-commerce The objective of B2B e-commerce is to eliminate manual trading processes by allowing internal information systems of different companies to directly exchange information. Hereby, inter-organizational information system integration is required (Hasselbring, 2000b). B2B e-commerce encompasses a wide range of (business) operations and transactions among the involved parties, for instance: the establishment of an initial contact between a potential consumer and potential supplier; the delivery and exchange of information; preand post-sales support; contract negotiation; electronic payment; distribution and distribution management of goods. Seen from a buyer-seller perspective, and using a life cycle model, electronic commerce can be used in all the phases of business transactions. In this paper, the focus is on B2B ecommerce, as opposed to B2C e-commerce, which only covers a small part of the global electronic market. B2B e-commerce has a few specific requirements, which should be taken into account when addressing this type of ecommerce. Factors like standardization of communication protocols between [ 218] Wilhelm Hasselbring and Hans Weigand Languages for electronic business communication: state of the art Industrial Management & Data Systems 101/5 [2001] 217±226 organizations, and the fast implementation of new technologies to gain competitive advantage are of critical importance in B2B e-commerce. 2.2 Traditional electronic data interchange (EDI) Traditional electronic data interchange is conducted using an automated system of business-to-business data exchange. The two most important areas of EDI are data interchange and electronic transfer of money. Data interchange is used for sending orders and invoices between companies, while electronic transfer of money is mainly used among banks (the SWIFT organization has managed this since the 1970s, www.swift.com). The major goal of EDI is to replace paper documents with their electronic versions for reducing the time spent on printing, mailing and re-entering information. EDI links the computer processes, so that duplicate data entry is not necessary. EDI is an approach that can save costs and time and also can improve customer service (shorter delivery times). Compared to the Internet, traditional EDI offers high security and safety measures because EDI runs on closed, private value added networks (VANs). This is an advantage, but also a big disadvantage, because the number of trading partners is always limited to those who are connected to these VANs. Standards like ANSI X12 (the dominant EDI standard in the USA, www.x12.org) and UN/EDIFACT (the international standard defined by the UN, www.disa.org) are established. While traditional EDI is very costly and difficult to implement, the potential benefits are significant. EDI may help organizations by, for instance: improving efficiency by enabling companies to eliminate expensive and slow manual methods, like the processing of purchase orders and bills; improving intercommunication between dissimilar systems and databases; managing the supply chain efficiently; improving the inventory control. Although many standards for EDI were developed, the majority of the business community still has not accepted EDI as a way to do business electronically. It is too expensive and even though there has been a lot of effort to standardize the transactions, the software developed to date still does not make it easy to use EDI as a trading protocol between different trading partners. Lacking powerful computing systems, a common transport mechanism, and a file format that allows for flexibility, strict transaction data sets have been defined for traditional EDI. These transaction sets are defined by standards bodies such as the United Nations Standard Messages Directory for Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT), and the American National Standards Institute’s (ANSI) Accredited Standards Committee X12 sub-group. These standards specify fields for purchase orders, shipping documents, invoices, payments, etc. Transaction sets define the fields, the order of these fields, and the length of the fields. Together with these transaction sets come business rules, which are referred to as implementation guidelines. EDI standards define: data elements (e.g. purchase order number and quantity on order); segments, which are logical groupings of related data items (e.g. addresses); message interchanges, which are groups of segments selected for a specific purpose; functional groups, which are groups of messages of the same type; syntax rules, which specify the concrete file structure for an EDI dialogue. To actually implement EDI, trading partners (e.g. a customer and a supplier) have to follow the following steps: 1 Trading partners enter into an agreement, called a trading arrangement. 2 They select a value added network (VAN). 3 The trading partners build or purchase custom software that maps between the two data set formats used by the trading partners. Each time a new trading partner is added, new software has to be written to translate between the sender’s data for the recipient. Traditional EDI suffers from many problems that have limited its growth. Some of the problems are: EDI is based on the transfer of fixed transaction sets. This rigidity makes it extremely difficult to deal with the normal evolution necessary for companies to introduce new products and services, or evolve and replace their information systems. Fixed business rules are encapsulated in the definition of the transaction sets as implementation guidelines. EDI is hampered by a slow standard evolution. The process for defining standards for transaction sets can take years. This simply will not work in today’s business environment, which is characterized by accelerated change and increased competition. [ 219 ] Wilhelm Hasselbring and Hans Weigand Languages for electronic business communication: state of the art Industrial Management & Data Systems 101/5 [2001] 217±226 EDI has to be carried out over protocols that use a VAN. A situation that can be very costly, particularly for small-tomedium enterprises. The low adoption of EDI and the lack of alternatives causes many organizations still to use paper-intensive, manual, and thus costly ways to exchange business documents and messages with their trading partners. The big problem, however, with both `̀ traditional’’ systems is inflexibility. EDIbased as well as manual paper-based processes are simply not able to change at the same speed as the business environments surrounding today’s organizations do. 2.3 Open EDI Traditional EDI is mostly used in communications between companies which have high volumes in relatively small numbers of data items, and a long-term relationship. Also, because setting up EDI is expensive, only large organizations can afford it. As a result, the actual implementation of EDI is limited. This also has consequences for the development and use of standards for EDI, because cooperating organizations often develop their own standards forcing their business relations to use the same, proprietary standards. To cope with these difficulties, Open EDI (ISO, 1997), a more flexible EDI, which can carry more diverse types of data and is more cost-effective for short-term operations, was proposed by ISO. For Open EDI to work, new standards for communications are necessary, such that the problem of EDI only being possible between firms with long-term relationships can be solved. 2.4 EDI and Internet technology The widespread use of personal computers, coupled with the proliferation of telecommunication networks and the Internet, as well as their joint integration, has made paper-free trading a reality (Wigand, 1997). With the development of the Internet, new possibilities arose for e-commerce. Because the Internet is open for everybody, is accessible all over the world, and has an easy user interface in the form of the World Wide Web (WWW), many people and organizations can be reached. By using the Internet instead of a VAN some of the problems of traditional EDI are solved. The use of the Internet is much cheaper than the use of a VAN. VANs charge money for each individual message or for a collection of messages. The Internet costs almost nothing and is `̀ free’’ to be used by anybody. EDI makes use of expensive software, for example, for message conversion and delivery. Internet software is usually not expensive, for instance Java parsers for XML are available for free from software vendors such as IBM and Sun Microsystems (although more software is usually needed for deploying XML/EDI, such as enterprise application integration tools like Mercator from TSI Software, www.mercator.com). VANs for EDI require a prior relationship, which is not necessarily needed for the use of the Internet. Anyway, the Internet does not `̀ replace’’ EDI. The Internet can be exploited as an EDI infrastructure. Because the Internet consists of a large number of decentralized networks, security is a big issue, if the Internet is used for EDI purposes. VANs are relatively secure in comparison with the Internet because VANs are closed networks. 2.5 The eXtended Markup Language (XML) To solve the problems mentioned with traditional EDI messaging, the business documents and messages that flow between organizations must be manageable for each involved organization, independent on which information systems are used. XML (McGrath, 1998) is a technology that may be used for structuring business documents and messages that are interoperable and comprehensible. Moreover, XML is easy to understand. Therefore, XML is one of the developments that enables the new Internet economy. XML actually is a markup language, used for creating self-descriptive data. It is a subset of the Standard General Markup Language SGML. XML is platform and application independent, because of its simple text-oriented structure. Both humans and computers can understand the syntax of XML documents, which makes XML a suitable tool for advancing the existing Web applications for e-commerce. The fact that XML is understandable by humans and computers is very important. A major drawback of EDI was that handling errors by humans was very difficult, because of the lack of information in the EDI messages. The only way to solve problems was with the use of thick manuals explaining all the codes in EDI messages. When using XML as a representation for the EDI messages, interactive Web applications can be used with the existing EDI processes. The easy-to-use Web interface makes it possible for humans to review and edit EDI documents easily, provided that appropriate