Commerce One (CMRC) is forming an alliance with a small Internet software startup to help solve a big e-marketplace problem.
The startup, XML Solutions Inc., has developed software that lets large companies set up Web-based trading networks using XML -- the lingua franca of Web-based business communications -- while still using their expensive EDI -- electronic data interchange -- commerce systems.
Over the last week, Commerce One has been busy inking deals that boost its ability to actually build the Net marketplaces and exchanges it has touted over the last six months.
The technology provided by XML Solutions is expected to figure prominently in the launch of Covisint, the auto exchange being formed by Ford (F), General Motors (GM) and DaimlerChrysler (DCX). XML Solutions will also play a role in Commerce One's aerospace exchange for Boeing (BA), Lockheed Martin (LMT) and others.
Last week, Commerce One inked a partnership with enterprise software giant SAP (SAP) and its e-business arm, SAPMarkets. On Monday, the company said it was in talks to acquire AppNet (APNT) for $1.38 billion, a consulting firm that helps build e-marketplaces.
Moving business to the Web
Founded in June 1999, closely held XML Solutions makes it easy for large companies to move their business to the Web. These companies, most of which rely on EDI to transact electronically with partners, have been reluctant to ditch the system for New Economy solutions such as Web-based marketplaces built around XML.
This structural hurdle has been frustrating for small and midsize businesses as well. Smaller companies lack the millions of dollars required to invest in EDI systems, so they've been shut out from electronic trading with large customers.
Adding to the problems: Almost every industry has evolved its own "flavor" of EDI, which further hinders inter-industry electronic commerce.
Upstart business-to-business software companies such as WebMethods (WEBM) and OnDisplay (ONDS) have tackled this problem with customized adapters that convert EDI into XML. But these adapters don't always work when a company is trading electronically with hundreds of partners, all using different flavors of EDI, says Kate Fessenden, an XML analyst with Aberdeen Group.
Fessenden says XML Solutions solves that problem with a "transformation engine" that translates seamlessly all flavors of EDI into XML and vice versa. The company's technology even understands different languages, so a French company using EDI can transact seamlessly with a small U.S. customer using XML.
"Companies like us because we save them time and money, and they don't have to ditch their EDI systems to participate in Web-based commerce," says Daryl Walters, XML Solutions' vice president of marketing.
Aberdeen's Fessenden says XML Solutions is not as well known as WebMethods, but that should change as more online marketplaces move from drawing board to launch.
"XML Solutions is very clever about making e-business less painful for companies," she says. "EDI is such a huge investment for large companies, so with XML Solutions, they don't have to give that up."
XML Solutions also opens new selling opportunities for smaller companies that don't have to worry about handling EDI documents, she adds.
[Fessenden is careful to note that while XML Solutions and WebMethods compete in some respects, their respective technologies can also be complementary.]
Commerce One intends to use XML Solutions to link companies using EDI into the online marketplaces and exchanges it powers. The two companies already share one large client, General Motors. Commerce One is the e-commerce software provider for GM's TradeExchange marketplace, which will be morphed, in some form, into Covisint. XML Solutions was hired by GM to provide EDI-to-XML translation technology for its network of thousands of suppliers, many of which have been using phone and fax to process orders because they don't have EDI systems.
"We believe that XML Solutions will assist the rapid integration of EDI systems with Commerce One's MarketSite portal and that XML Solutions provides an outstanding product for EDI to XML mapping," says Kevin Schick, vice president of product strategy for Commerce One.
XML Solutions was founded by Kevin Kail, Jeff Ricker and Michael Bailey. The company raised $3.6 million in venture financing in mid-1999.