Preparing for the E-Generation: HP and BEA Help Build the New One-to-One Economy with E-Services

B2B e-commerce is breaking down the walls between partners. It doesn't matter if you're a pure-play B2B company or a pure-play B2C company. Your walls are crumbling at this very moment -- and that's good.

• 03/01/2000

The Web has spawned many new words – amazoned, browser, clickstream, e-generation, spam – and added new meanings to many more – cannibalize, page, portal, site, surf. But the vocabulary renovation has only begun.

Take "supply chain," for instance. As a pithy phrase and apt visual metaphor, it has served the business community well for three decades or more. The phrase brings to mind a picture of discrete companies linked one to another, usually via EDI wires, with purchase orders and product parts moving between the companies in a linear progression until a completed product finally pops out the end. Discrete companies engaged in linear interchange, however, no longer work in the Internet age.

Consider the auto industry: In the same week in November 1999, both Ford and General Motors announced that they are forming online automotive trading exchanges. Through a site it will call AutoXchange, Ford plans to conduct business – $80 billion in transactions yearly – with most of its 30,000 production suppliers. Similarly, GM, through its site, which it will call TradeXchange, intends to manage all of its parts procurement.

Ford and GM exemplify one of the principal trends driven by the Internet, a massive movement toward collaboration that is reshaping business as we know it. In place of EDI, we’ll have extensible markup language (XML). In place of discrete companies, we’ll have intimate collaboration among multiple partners. In place of linear interchange, we’ll have multidimensionally integrated businesses. In place of time-consuming hand-offs, we’ll have lightning-fast simultaneity.

These two auto makers will soon merge with their suppliers; in effect, all of them will become a single, large, distributed meta-company. Once integrated online with their suppliers, where will Ford and GM end and their suppliers begin, and vice versa? Their software will be linked, their systems will overlap, and the lifeblood of information and transactions will flow among them as though they constituted a single body.

Business-to-business (B2B) e-commerce is breaking down the walls between partners, transforming businesses into companies of companies. It doesn’t matter if you’re a pure-play B2B company – supplying rubber to tire manufacturers, for instance – or a pure-play business-to-consumer (B2C) company – selling books Amazon-style. Your walls are crumbling (or they ought to be) at this very moment – and that’s good.

In other words, B2B e-commerce is the new business mandate because, even if you’re strictly B2C, B2B is at the core of what you do. Once that book is ordered, you had better be able to deliver it promptly to the right doorstep, and that requires that your systems be tightly coupled with your service and distribution partners’ systems. Many Web companies, of necessity, are in effect merging with their fulfillment partners to ensure their success. The ones that haven’t – a certain toy company that stumbled badly this past holiday season comes to mind – have had to learn a painful lesson.

In this brave new world, phrases like "supply chain," "distribution chain," "service chain," and so on, just don’t cut it anymore. We need new words. Then again, we already have several that capture the ongoing transformation pretty well, and they all begin with "e."

One new word is "e-business" – not the most comfort-inducing word for many companies. Change is often painful and scary, wholesale industry transformations even more so by orders of magnitude. And transforming the sense of company identity with which we’ve all grown so comfortable in order to merge with our partners adds new dimensions of uncertainty. So why are the Fords and GMs of the world becoming e-businesses?

The easy answer is prosperity. Ford and its Internet-connected suppliers will be able to share more information quicker, which will reduce inventories, cut manufacturing cycles and save money – the estimate is that exchange participants will cut 10 percent to 20 percent from their cost of doing business. Likewise, GM believes that online efficiencies will slash the cost of each purchase order from $100 to $10.

More urgent than the call of prosperity, however, is the shriek of the survival instinct.

The Web has enabled the "e-generation" to seize control. This new e-word refers to the 200 million people worldwide that today are connected to the Net, more than the total population of adults in the United States. Joined by seven new Internet users every second, those 200 million are expected to multiply, in half a decade, to one billion Internet users – one-seventh of the world’s population. This new e-generation is the most powerful force in business today.

Because the e-generation insists on controlling when, where, with whom, and how they do business, the balance of power is shifting from the company to the customer. Windle Priem, CEO of executive search firm Korn/Ferry, as quoted recently in Fortune, speaks of the "charmed existence" business has enjoyed for 30 years. "We could take as long as we wanted, charge as much as we wanted. The Internet will end that, like it or not. Customers will have control – and companies are better off voluntarily surrendering the keys to the city now, before customers have fled."

J. Ferron takes it a step further. The head of the automotive practice at PriceWaterhouseCoopers was quoted in a recent InformationWeek: "The auto industry has had a very long history of saying to consumers: ‘You buy what we build.’ But consumers are saying ‘No, you build what we want to buy.’"

Ford and GM are transforming their mass-manufacturing industry into a business driven by consumers. They understand that, to survive in this new reality, no company can go it alone. So, they are preparing to dynamite the divisions between their partners and suppliers to make way for integrated systems that enable cross-company collaboration.

In the new one-to-one economy of the Internet, e-commerce will be about delivering products and services on the fly to serve one need for one individual. Hence "e-services" will be provided by businesses that come together, for a single purpose, and then dissolve. These combinations may last years, months, weeks, and eventually, even just hours. To enable the creation of these spontaneous business communities on the Web, businesses will need to build so-called "adaptable applications" instantaneously (i.e., applications that are used once and only once).

"The Internet-based economy is about to shift gears again," wrote industry analyst Patricia Seybold in a 1999 report entitled "Preparing for the E-Services Revolution." "E-services are Internet-based applications that communicate with one another, fulfilling requests and/or triggering other e-services that, in turn, carry out their parts of some complex workflow or transaction … An application running in any device – on or off the Net – can request an e-service. Once the request is received, the appropriate e-services will kick into action."

E-services, for example, are turning Web storefronts into automated business centers, replacing the underlying monolithic applications with more flexible, modular e-services that can be combined nimbly. And this is transforming the Web into an open-services marketplace.

Consider the Internet Travel Network, for example, which combines the portal concept with e-services. Not only can you book your airline, hotel, rental car and restaurant reservations at one site but also, because all these e-services communicate with each other, the interrelated commitments are automatically adjusted (e.g., a delayed flight).

Several companies are leading the e-services charge. Among them are HP and BEA Systems Inc., which forged an ongoing strategic alliance in April 1999.

HP is the leading proponent of a new e-services architecture. The company has entered into numerous industry alliances to develop a global standard for e-services technologies. Such technologies will enable large organizations to integrate their enterprise applications, so they can communicate with one another, as well as extend back-end environments to the Internet to deliver fully integrated e-commerce solutions.

What makes e-services possible is a new, open software platform for creating, composing, mediating, managing and accessing Internet-based services. The platform, called e-speak (See "e-speak" on page 8), enables e-services to be accessed easily and intuitively using a wide array of devices and platforms, including personal digital assistants (PDAs), PCs, information appliances, supercomputers and, soon, cell phones and set-top boxes. Through e-speak, e-services can interact with each other to advertise capabilities, discover and ally with each other to offer new capabilities, even negotiate to broker, bill, manage and monitor each other – all in a dynamic, ad hoc, yet secure manner.

How? e-speak allows a resource (computing device, application or data content) to be virtualized and re-deployed as an Internet-based e-service. To "virtualize" a resource, e-speak breaks the linkage that constrains applications and data to specific hardware or operating system environments. The e-speak core software consists of two elements: universal e-services APIs and a runtime e-services engine. e-speak runtime software is installed on each computing device or information appliance that connects to the virtual services environment. The runtime software then provides basic infrastructure capabilities, like messaging, mediation, security, naming and monitoring for the e-speak e-services hosted on, or accessed by, these devices. Through the consistent e-speak services interface (APIs), developers can design and create any e-service using a set of elegant, simple e-services programming interfaces.

The HP/BEA alliance will provide customers with a complete software infrastructure for developing and integrating robust e-commerce applications that support e-services. HP is bringing the e-services infrastructure to market with dedicated BEA sales, marketing and support programs. HP is also building a worldwide enterprise application integration (EAI) solution practice using BEA products and services. BEA products included as part of the agreement between the two companies are BEA eLink, for EAI, and component-based e-commerce solutions built on BEA WebLogic Server and BEA Tuxedo. These products are key components of BEA’s end-to-end E-Commerce Transaction Platform. For HP’s e-services initiative, the BEA eLink and component products are being developed on HP’s platforms and integrated with HP’s business-process engineering technologies.

BEA eLink allows diverse packaged and proprietary applications to interact seamlessly across multiple operating systems, standards and programming languages, through a single integrated interface. Several dozen customers around the world are using BEA eLink to integrate applications for realtime, straight-through processing within their enterprises, as well as across their supply- and value-chains.

For example, Portugal Telecom, Portugal’s only full telecommunications service provider, has selected BEA eLink Adapter as its core technology for integrating customer and financial applications that support its nationwide wireline business. Portugal Telecom’s Customer Billing system employs BEA eLink to enable 4,000 users of client PCs at the company’s business offices, retail stores, and call centers to access and update information in more than four million customer accounts. Through BEA eLink, the company’s back-office financial systems can also exchange information with the Customer Billing system.

Portugal Telecom’s Customer Order Entry and Customer Problem Management systems, which use Oracle database software on UNIX servers, allow customer service representatives using PCs to open new accounts and enter detailed information on telephone service problems registered by customers.

"With BEA’s eLink, we were able to integrate our key customer billing, order entry, and problem management applications, improve customer service, and more productively use our thousands of distributed PCs nationwide," says Luis Silveira, manager of information systems and technology at Portugal Telecom. "It has enabled us to rapidly implement a robust, high-performance transaction solution that would have entailed a costly and time-consuming development effort if we had undertaken it ourselves."

It is simply not possible to provide e-services if you are programming every application from scratch. Developing with reusable components is necessary. These pre-built, ready-made building blocks of software functionality can be snapped together quickly to create unique, adaptable e-commerce applications.

For example, Vattenfall, one of the largest energy companies in Europe, is using BEA components, along with the BEA WebLogic Family of e-commerce transaction servers, to build an integrated network for providing "smart building" subscription services throughout Sweden.

The services let customers remotely monitor their refrigerators, ovens, electricity consumption and power mains status, and control their burglar alarms and heating and air conditioning units from afar. Vattenfall estimates that, before the end of 2000, 150,000 Swedish households will be using the new services, which are being offered by Sensel AB, a wholly owned Vattenfall subsidiary launched last summer. Sensel hopes to add 200,000 new customers a year.

The foundation for Sensel’s services is a network integrated with the Sensel Box, or home gateway, which provides customers with secure access to the service through their choice of a telephone or Web portal.

Sensel’s development team is working closely with BEA’s Denver-based Component Development Operations (CDO) to build some of the components for the system. Once the formidable job of building a Nordic-sized electrical-wire-to-Web communications network and fashioning the great variety of applications that run the services is done, the ongoing service rollout is scheduled to reach a breakneck pace.

"We’ll be able to add new services much more quickly after the base apps are done, on a monthly basis, maybe even weekly," says Bjorn Haggquist, CEO of Sensel AB. These accelerated delivery schedules highlight the power of component development: The more applications you build, the larger your library of reusable components and, hence, the faster your development time.

Speed – we’re repeatedly told – is the need in e-commerce. But without reliability, speed kills. To ensure the availability and reliability of e-services that the e-generation demands, businesses must use robust e-commerce servers to guarantee that their e-business works 24 hours a day, no matter how many customers are trying to use the site.

As the first company in Sweden to offer smart-building services on a vast scale, Vattenfall, for example, needed to choose the most reliable and scalable application servers on the market.

"We looked at available products and consulted with other companies in the Nordic countries to get their recommendations," says Haggquist. "We found that BEA’s application and transaction servers offered both the right price/performance and the proven ability to reliably scale to support millions of customers." BEA’s e-commerce servers currently include the BEA Tuxedo transaction server for building and managing high-performing e-commerce applications; BEA WebLogic Server for developing and deploying Java-based e-commerce solutions; and BEA WebLogic Enterprise, which combines the extremely high-volume transaction processing capabilities of BEA Tuxedo, the Java support found in BEA WebLogic Server, and both Common Object Request Broker Architecture (CORBA) C++ and CORBA Java support to enable large-scale CORBA and heterogeneous solutions.

By enabling businesses to quickly and completely integrate their enterprise applications and extend the enterprise straight to the e-generation, companies, such as HP and BEA, are taking sledgehammers to the walls of old-style businesses. As the dust settles and the sunlight of a new day streams in, what we’ll soon find is a one-to-one economy driven by e-services – a world in which every consumer has his or her own tailored supply chain built instantaneously to meet each and every request.