GE GXS: Part and Parcel of B2B Exchange

  • Written By: D. Geller
  • Published: November 1 2000

GE GXS: Part and Parcel of B2B Exchange
D. Geller - November 1, 2000

Event Summary provides a trading platform for buyers and sellers of electronic components. The service provides an environment in which buyers and sellers interact anonymously. Bidders locate the components they need in a searchable inventory database and proffer bids based on the information on product specifications, availability and asking price. Sellers may accept or decline the bid or offer a counter-proposal, perhaps based on quantity pricing. When a firm offer to buy is accepted the marketplace generates a purchase order and arranges for shipping. Payment is not released to the seller until the expiration of a five-day buyer inspection period.

GE Global eXchange Services (GXS), the successor to GE's information services unit GEIS (see GE Comes to Lunch. Want to Guess Who the Appetizer Will Be?) provides infrastructure and services to this venture. In particular, GXS is responsible for integration between the exchange and the enterprise systems of the members, including financial and CRM systems, and for processing and routing of transactions between participants.

The exchange and the transactions within it are all XML based. GXS is responsible for mediating these transactions and for translating between XML and EDI for the vendors still using that standard. GXS will also assist members of the exchange in migrating their internal systems from EDI to XML. The exchange uses a dialect of XML defined specifically for it, but GXS says that it expects no difficulties in adopting any XML standards that may emerge because the company uses the same process for EDI-to-XML translation and for translation between XML dialects in other of their projects.

Market Impact

Although has been formally launched, the massive task of integrating partners has barely been scoped by GXS. That makes this no different from most announcements of large digital exchanges, regardless of who the operator and infrastructure provider may be. The ability to even stake out a project like this suggests that GXS will be a force to reckon with, and both giants like the IBM/i2/Ariba alliance and smaller specialists will be doing the reckoning. Commerce One did its reckoning in advance, by partnering with GXS to gain access to GXS' 100,000 trading partners (see GE and Commerce One Turn on the Lights - But You Ain't Seen Nothin' Yet). The exchange software used by is not from Commerce One, but is a custom development of

GXS has an excellent track record in enabling EDI. By demonstrating its ability to take EDI users into the XML world, whether through translation alone or through translation followed by retrofitting, it will capture the attention of the manufacturing world, which is largely EDI dependent. It is also a feather in GXS' cap to partner with an exchange that is not based on Commerce One's software. This demonstrates the company's agility and does not reflect unfavorably on the potential of the Commerce One partnership.

The GXS/Commerce One partnership is missing a supply chain partner with the renown of i2. It could be argued that this is not necessary for two reasons. First, because Commerce One is less involved than Ariba now is with supply chain solutions, and second because GXS' translation infrastructure can support its customers' existing supply chain solutions. However, we don't believe that either Commerce One or GXS wants to give up the market supplied by i2; expect a major supply chain partner to join with them within the quarter.

This announcement of GXS' capabilities puts pressure on such specialists in EDI-XML translation as IPNet (see Secure Transport of EDI and XML for Trading Exchanges) and Cyclone Commerce (see Cyclone Untangles Digital Partnerships). TEC has previously expressed skepticism about the ability of these specialists to survive on their own. They were right to recognize early on the need for such translation services, and have been able to enhance their services with useful ancillaries such as support for collaboration. Still we find it hard to see how they make it on their own in the face of competitors like GXS and IBM, each of which should be easily capable of commoditizing its infrastructure work to serve mid-size companies and which can certainly attract the large enterprises as customers. We think the specialists will end up merging with mid-size supply chain or ERP vendors who have successfully remade themselves into e-commerce companies and are now looking to expand their reach.

User Recommendations

A company that is dependent on EDI for transaction routing should look hard at GXS as its pathway into the XML century. What is most important to you is how smoothly the translation service can be implemented in terms of integration with your other systems. Therefore GXS' size and technical strength are not as important as its experience with the same systems you have; another vendor, including one of the specialists in EDI-XML translation, might be a better match if it has experience with the same systems that you have or has worked with your major trading partners.

In time, if only as a result of its work on, GXS will have experience with almost every relevant back-end and supply chain system. But even if a company has the specific experience you need, it doesn't necessarily follow that you will benefit from it. Therefore, when negotiating terms make sure you have guaranteed access to the individuals who have worked on your kinds of systems. This need not mean that they have to be assigned full-time to your project, but there should be strict guarantees of availability (at least by phone) for planning sessions and reviewing project plans and of response time during implementation, to make sure that you can get the benefit of the experience that was promised.

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