Inventing e-Business on the AS/400

• 09/28/1998

E-business has garnered more than its fair share of attention in the AS/400 market over the past couple of years. This is not simply because IBM has planted the seeds for its success, but because the AS/400 was inherently designed with all the basic attributes necessary to make it a successful e-business server.

Whereas electronic commerce traditionally consisted of point-to-point online business communications and focused on the elimination of paper-based transactions, e-business expands this concept to include all other enterprise technologies – from back-end database access to Java-enabled client interfaces to Web-enabled store fronts.

As the AS/400 moves into its second decade of existence, it is beneficial to study the evolution of e-business as well as some key areas of growth.

Ten years ago, Electronic Data Interchange (EDI) was a restricted environment where large companies would require their trading partners to transmit information in specific ways, according to Andrew Whinston, professor of computer science, economics and business at the University of Texas Graduate School of Business (Austin, Texas).

"EDI was restricted to private networks, using proprietary and specialized software, and it was also limited in scope, focusing on the issue of trade between companies," says Whinston, who is also the director of the Center for Research in Electronic Commerce (CREC, cism.bus.utexas.edu). CREC is a University of Texas-based organization that conducts research and provides education in the areas of e-commerce and digital products.

"Though there was a high cost of getting involved with EDI – both from a learning point of view and a technological point of view – it did facilitate the elimination of paperwork between companies and provide cost savings," he says. "But it was still very limited because of the high cost of using a private network."

The opening up of the Internet – a public network – has been the primary factor in transforming e-commerce over the past decade, and changing the nature of EDI along with it. "The megachange was Web client, Web server and Web database," Whinston adds. "In the old days you talked about client/server computing, LANs and gateways. These things still exist, but now companies move to Web technology to run their local networks."

The introduction of EDI over the Internet -- also cleverly referred to as Internet EDI -- means smaller companies with smaller budgets can conduct e-commerce. The knock against Internet EDI has been security. As Internet EDI becomes more secure, however, midrange companies will be able to enjoy lower EDI costs than previously offered by Value-Added Networks (VANs), as well as high-speed access and instant connectivity.

"My view is that EDI is now subsumed under business-to-business electronic commerce," Whinston continues. "Now we have all sorts of interactive support for making the deal, for discovering the customer. EDI, which has become more open to the Internet, is now relatively small part of the whole business-to-business e-commerce. The big action is the public network, the Web and all of the developments from that, including Web database connection. The market for software that links users from a Web server to a database is huge. You can’t run a business without having a database. If you go to the Web, you have to have connectivity back to your database."

CommerceNet, a Silicon Valley, Calif.-based industry consortium for companies promoting and building e-commerce solutions on the Internet, reports that six EDI vendors have completed "Secure EDI over the Internet" interoperability testing. Two of these vendors – Sterling Commerce Inc. (Columbus, Ohio) and Harbinger Corp. (Atlanta) – are well-known to the AS/400 market. Such testing is performed to verify that end users can purchase off-the-shelf interoperable software that supports encryption, digital signatures, integrity and signed receipts.

"Standards are an indication of acceptance in the marketplace," Ron Rosenthal says of CommerceNet’s endorsement. Rosenthal, head of corporate marketing and communications for Harbinger, adds, "Standards are helping drive the marketplace and expand the number the of trading partners that can take advantage of a particular type of technology." In the case of Internet EDI, standards provide users with a level of comfort that the technology being employed will meet their security requirements.

Whether or not electronic commerce predates the AS/400 is debatable. When asked if e-commerce existed at the time of the AS/400’s arrival into the area of enterprise computing, Whinston says, "No. People will come up with some exception that they did something 10 years ago that looked like e-commerce. But in terms of public awareness, or a technology focus, I would say no."

E-commerce began to emerge with the development of Web technology and Web database development, when "people saw they could run a real business with a Web interface and back-end it with a Web server and a database," Whinston says. "You can’t run a business these days without some database support, and the Web then really expanded the marketplace in the sense you had a common interface from the customer point of view."

These humble beginnings were followed by developments in Web technology. Security solutions had been around for years before people recognized the possibility of using public key cryptography. "There was a recognition that the somewhat arcane mathematical ideas would play a significant role when you move to a public network," he notes. "When you have a private network, the issues of security and authentication are much less of a concern."

Open networks helped move e-commerce from private networks to the public arena. "If you want to do business electronically, you’ve got to feel there’s a pretty good customer base out there," Whinston points out. Large companies had the option to develop large, private networks, but that would have limited them to selling to their own customer base. "The ability for everybody to connect to publicly-available information is what makes e-commerce an interesting business environment."

From the beginning, the AS/400’s architecture made it a tight fit with e-commerce initiatives, according to Karen Semon, IBM product manager for Sterling Commerce. The midrange market presented a unique business opportunity for third-party vendors as well. "Sterling Commerce’s customers span a whole range of sizes and needs – from entry-level with minimal needs to more of an enterprise commerce to very large, multi-billion dollar companies using AS/400s as their infrastructure for electronic commerce," she says.

"When we started out, we were thinking traditional EDI," Semon adds. "That’s where the market was. Now it’s changing to where we see the need to have more of an enterprise commerce focus. People are not only using electronic commerce with their EDI trading partners, they’re enabling processes electronically within their own companies [through Web integration]."

The transformation from e-commerce to e-business is more than a matter of semantics. "Whereas proprietary [e-commerce] products had been used to link individual companies, the Internet expands the lines of communication," Semon says. "By integrating the Web into an electronic commerce environment, we are able to reach out to an extent that was not possible with traditional EDI."

The jump from e-commerce to e-business is not a large one, it simply integrates more facets of a company with Web technology.

The underlying goal of an e-business is to perform a variety of business functions more easily and cheaply, according to research published by Forrester Research Inc. (Cambridge, Mass). This is best achieved by integrating existing business functions – inventory management, order processing, financials, customer service, etc. – in an online environment and providing adequate security. "The key to a cost-effective integration strategy is to explicitly match the level of investment and complexity of the undertaking to the needs of the business, the dynamics of the market and customer expectations," says Bob Chatham, senior analyst in Forrester’s Commerce Technology Strategies service.

As the definition of e-business continues to take shape, Forrester notes three essential tasks an e-business must enable: customer access to product information, simple order submission and online order status information. From these basic functions, companies may choose to offer a wider array of Web-based services. "Commerce integration is a process, not a project," Chatham says. "Companies should be prepared to constantly evaluate their status, make incremental refinements in their processes, and switch to a new trajectory as customer and systems demands change."

Before the AS/400 could stand on its own legs in the e-business ocean, it needed the capability to run Web technology natively. In 1994, I/Net Inc. (Kalamazoo, Mich.) introduced its Web Server/400 to the AS/400 market, the first Web server designed to run natively on the AS/400.

"We knew the second-level of processing on the Internet was going to draw on reservoirs of information resident on computers," I/Net President and CEO Steve Markee says of his company’s decision to enable Web serving on the AS/400. "We also saw a whole population of potential customers – 400,000 AS/400 users – that had no access to Web serving as it related to the AS/400. So we developed our Web server and went back to Rochester to show them the things it did well and not-so-well."

Just as shoppers will avoid even the best stores if they are located in questionable neighborhoods, e-business relies upon advances in security to promote online spending and information transfer.

IBM and Lotus Development Corp. (Cambridge, Mass.) have already donated industry-standard security software code to the Internet community. This code is designed to make good on the promise of the Internet Engineering Task Force’s (IETF) Public Key Infrastructure (PKIX) standards, which provide the mechanism to issue, validate, revoke and renew digital certificates. Such measures are expected to eliminate interoperability issues that arise due to proprietary source code, enabling businesses to deploy a single public key infrastructure for all of their security applications.

IBM and Lotus plan to integrate PKIX standards throughout their products, including: Lotus Notes and Domino; IBM eNetwork Firewall and Global Sign-On; OS/400, OS/390, OS/2 and AIX; IBM Vault Registry; and SSL toolkits, used in products such as IBM’s Websphere application server and eNetwork Host on Demand. In addition, Tivoli Systems Inc. (Austin, Texas) plans to provide management support for the standards-based digital certificate environment.

Security goes far behind simple encryption, according to Chris Lategan, CEO of Advanced BusinessLink Corp. (Kirkland, Wash.). While in April Advanced BusinessLink was the first company to release a native AS/400 Java client applet that includes 128-bit Secure Sockets Layer (SSL) security, the company advocates a three-pronged approach to defending one’s host system. This approach includes "protecting the host from external attack, keeping secret the data transmitted and verifying the claimed identity of the client," Lategan explains.

A technical standard emerging in the e-business world for secure credit- and debit-card purchases over open networks is the Secure Electronic Transaction (SET) specification. Introduced by Visa International, MasterCard International, IBM, Microsoft, Netscape and other technology companies in February 1996, SET is designed to operate with software from multiple vendors. Such standards govern digital certificates and are designed to protect consumers, financial institutions, merchants and vendors during online transactions.

Lotus Domino enables companies to "manage their intellectual assets as they manage their physical inventory," says Tim Sloan, analyst with Boston-based Aberdeen Group. And with its introduction as a native piece of OS/400 through V4R2, Domino has quickly become a popular e-business enabler, helping companies keep track of the cost and usage of information – who searches for information and what they do with that information.

There is little that can compete with Domino on an all-in-one level, according to Sloan. To produce the same results as Domino, a combination of other products is necessary, including a document managing system with global search capabilities, an e-mail engine (such as Microsoft Exchange) and an instant messaging feature (such as live chat). An IT staff can integrate "two or three NT products together and establish something that comes close to the Domino environment," he says, adding that such integration typically leaves the user with no single source of help.

Lotus has already started to "unbundle" Domino offerings as the product continues to add components, Sloan says. Lotus announced in July a real-time messaging component, available both as part of Domino and split out as a separate offering. "They’ve already started the unbundling, and I would expect to see it continue in some key areas," he adds.

For example, Lotus could break out the directory component into its own Lightweight Directory Access Protocol (LDAP) engine, which could be used across multiple systems, according to Sloan, who adds that breaking out the Web server could make the pricing more specific to target markets. "Domino cuts across many markets that have their own competitors. Lotus may have to unbundle certain functions of Domino to meet competitive price points."

In an industry measured in Web years, it’s difficult to predict what will be popular with AS/400 users in the long-term. The immediate future of e-business on the AS/400 is a bit easier to explore.

HTTP Server – recently improved with V4R3 -- still has "a long way to play out," notes Dick Kiscaden, senior technical staff member for AS/400 strategy and manager of the team that first rolled out the AS/400 in 1988. "This technology has started to incorporate dynamic HTML, and now we see on the horizon XML [Extended Markup Language]. That whole domain of HTTP servers and the various derivatives of HTML has a long way to go, and they’re going to become very sophisticated," he adds.

LDAP will "continue to grow in importance because, as networks grow more complex, ways of finding printers, files, applications and users is important," Kiscaden says. "FTP, SMTP and IP protocols have been important in the past, but I don’t see a lot of evolution there as much as I do on some of these higher-level protocols. In the cases of FTP and SMTP, they’ve probably gone about as far as they can go." There are some elements in the IP protocol area, however, that will continue to evolve, particularly in the area of security and Virtual Private Networks (VPNs).

VPNs will play a key role in the future of e-business, particularly in the areas of network management and cost, according to U. of Texas’s Whinston. "So much of the technology is developed by people who are experts in technology, and that will have to change," he explains. "People who design networks and protocols will have to understand that these are supporting business activities, and they’ll have to start recognizing the requirements of business."

Another area of e-business that looks to be gaining momentum is "push" technology. "We want to push information out to our customers," says Jim Teter, VP of sales and marketing for Business Partner Solutions (San Antonio, Texas), a distributor of AS/400 products and services. Rather than relying upon its customer base to actively seek information about pricing and promotions, Teter envisions a system where relevant information is broadcast to customers on a daily or weekly basis.

One company already delivering on this reality is Advanced BusinessLink, which incorporated push technology natively on the AS/400 with its BusinessLink/Push product announced in September 1997.

Using BusinessLink/Push, both static and more importantly interactive items such as screen scrapers, Java applets, scrolling tickers, HTML documents, AS/400 reports, dialog boxes, emulation screens and Windows applications can be actively distributed to desktops throughout an enterprise.

In the area of customer support, the future is pointing toward "dynamic e-support," according to Ian Basey, marketing manager for JBA International’s computer solutions division (Mt. Laurel, N.J.). "Rather than exchanging e-mails, business partners and vendors will be able to help their clients by offering interactive support around-the-clock," he says, adding that such support could also be used between manufacturers and distributors, or distributors and resellers.

Two other areas of e-business that AS/400 shops should investigate are intranets and e-business outsourcing, as way of simplifying existing workflow, according to Aberdeen’s Sloan. "Intranets will change business as we know it," he says, adding, "As companies solidify their security and their directory strategy around the Internet standards (SSL and LDAP), it will be much easier for companies to look at functions they have inside the company and outsource those functions."

Companies will be able to look at their own vertically-integrated departments and question whether they hire their own employees to do things like human resources or health benefits administration. "By outsourcing, you improve the corporate bottom line, and you make your company capable of reacting to change faster," Sloan says.

Increasingly, software and service vendors in the AS/400 market are devoting segments of their business to outsourcing – Harbinger, Sterling Commerce and Extol Inc. (Franklin Lakes, N.J.), to name a few. While all IT shops have misgivings about relinquishing control of certain functions, "those companies investing too much in functions outside their core business are likely to find themselves at a competitive disadvantage, if one of their competitors discovers outsourcing first," Sloan points out.

Since the bottom line frequently translates into the primary measurement of a company’s success, Sloan suggests companies pay attention to how much of their resources are allocated to functions outside the core business. "If you assume 40 percent of a company’s overhead is typically administrative resources – especially in the manufacturing industry, and if you assume 80 percent of that could be outsourced, I think you’re looking at a significant chunk taken out of your operating expenses," he says.

The AS/400’s potential as an e-business server is without limitations, particularly with recent hardware and operating system enhancements, according to I/Net’s Markee. "[IBM has cranked the cycles up, and they’ve cranked the throughput up to the point where I believe it competes favorably – if not ahead of – most Web serving technologies. Plus, it adds a degree of security, and we can never impress upon people enough about how secure the AS/400 is because of its proprietary nature."