GE GXS: Part and Parcel of B2B Exchange
eeParts.com 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.
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.
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.
Although eeParts.com 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 eeParts.com is not from Commerce One, but
is a custom development of eeParts.com.
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.
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
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
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.
time, if only as a result of its work on eeParts.com, 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.