Section: SOFTWARE & TECHNOLOGY

World traders have always searched for common ways to communicate, be it by common language, currency, or international treaty. The digital age has extended the search for commonality to data and the electronic exchange of business documents.

Electronic data interchange (EDI) was the first valiant attempt, but for all its potential, EDI never extended beyond industry fiefdoms of usage; even though EDI has been in use for a quarter century, only an estimated 80,000 of the 6.2 million businesses in the United States have an EDI system in place, according the XML/EDI Group, an industry consortium (www.xmledi.com).

The disappointing usage is not surprising; trading partners want and need to exchange information both inside and outside their industries with ease, as simply and automatically as a telephone or fax machine. Exchanging business data outside one's normal circle of trading partners should not require different protocols. EDI has simply proved too costly, complex, and proprietary for many small and medium-sized businesses.

Things may be different now with a new data language. It goes by the cryptic name of XML, which stands for extensible Markup Language. It's being used heavily in the Internet world for web design and communication, but it's also being touted as the Esperanto of digital transactions on and off the web.

And not a moment too soon. The value of business-to-business commerce over the Internet will grow from under $100 billion in 1999 to about $500 billion in 2002, and to $1.3 trillion by 2003, according to IDC, a market research firm in Framingham, Massachusetts.

XML Corners Well on the Infonet

How will companies manage this tremendous expansion? IF XML boosters are correct, the answer will be with ease. All that's needed to create XML is an off-the-shelf software package (in fact, any editor or program that can generate text files can be used to create XML documents). And all you need to read and use an XML document are the Internet tools virtually every business person has on their desktop--a computer, an XML-enabled browser, and an Internet connection.

In truth, XML is a metalanguage (a language used to create other languages) that was created a few years ago as a way to create better web documents. It's nothing more than a set of rules, guidelines, and conventions for manipulating data. Users, for example, can send order forms--individually or in batches--to customers, who can interact with the document and send them back.

But it's when the flexibility of XML is combined with the structure of EDI that the language shows its true commercial potential. While in some cases businesses need to exchange predefined collections of data that resemble their hard copy or EDI ancestors, the pace of the Internet is forcing companies to exchange data more broadly, more frequently, and in ad hoc ways.

Materials, transportation, and warehousing vendors, for example, need real-time, or close-to-real-time, views of inventories to get the right materials to the right place at the right time. In these cases, traditional EDI-style approaches don't provide enough flexibility or scalability to get the job done. But XML/EDI can get the job done, because the exchanged XML/EDI documents are created on-the-fly, while still adhering to predefined business rules and definitions before being sent on their way. The Internet may be the highway, but XML/EDI is akin to the traffic laws and the messenger services that keep things running smoothly.

Hence XML/EDI promises to be the standard framework for exchanging everything from invoices, to bills of lading, to contingency updates, to the hundreds-if not thousands--of other business documents and exchanges that grease the wheels of commerce every day. Every digital appliance, be it a mainframe or a handheld PC, has the capacity to share and manipulate XML/EDI messages.

What's more, XML/EDI documents include embedded instructions on how the transaction should be processed or displayed, in addition to the data to be manipulated. Based on user-defined rules, for instance, the document will automatically route itself to the correct point in a predetermined workflow process, even trigger events on its own, like generating shipment orders and invoices.

Earlier EDI transactions, in comparison, offered electronic invoices, credit-debit adjustments, and payment orders, but these transactions could not be tied to many back-end processes.

Prototype for Productivity

Of course, there's more to the XML/EDI framework than meets the eye. XML and EDI are really but two of five components that make the system work.

• Templates hold the whole process together. Templates travel inside the XML as a special section and let two organizations understand each other's data and instructions for that data.

• Agents interpret the templates to perform the work needed, and also interact with the transaction and the user to create new templates for each new specific task.

• Repositories are shared and agreed-upon Internet dictionaries that allow users to agree on the meaning and definition of XML/EDI elements.

Together all these elements help companies create a wide variety of electronic commerce systems; from searchable online catalogs to robust machine-to-machine transaction subsystems. Each system will have its own requirements and goals, but XML/EDI holds the promise to be the foundation of them all. And, the operative word here is "promise." While initial developments represent a smooth start, the real proof of XML/EDI's success will come when the hundreds of thousands of smaller businesses who previously couldn't afford the resources or tools to effectively perform electronic business transactions come on board.

But there is good reason to believe the promise will become reality. Almost every vendor in the market has committed to supporting XML in one way or another, and that's a rarity in an industry where the word standard usually means anything but. XML/EDI is also an evolutionary rather than a revolutionary approach. It's built upon legacy EDI systems, so companies using EDI don't have to abandon their expensive and entrenched systems.

Most importantly, XML/EDI is an open standard. That means no single company can own the code or demand prohibitive licensing fees. Vendors can--and do--build new tools and extensions, ensuring a deep tool box for companies looking to deploy XML/EDI in innovative ways.

It all adds up to a relatively cheap and easy way to conduct business with anyone, anywhere, in any industry. And that's what world traders have been searching for since currency was made of clay.

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By Eric J. Adams

Adams is a Petaluma, California-based writer specializing in global and small-business technology.