Microsoft courts vertical B2Bs

The RosettaNet consortium needs to attract smaller companies to its XML-based business-to-business trading network to reach its eventual goal of reducing inventory, transaction costs and time to market.

That's why RosettaNet CEO Jennifer Hamilton was pleased to see Microsoft Corp. last week unveil a RosettaNet add-on to its core BizTalk Server 2000 product, which helps companies translate or map data from one format to another and deliver messages securely and reliably.

A major impediment to luring smaller partners to one of the first vertical industry efforts has been the lack of low-cost, easy-to-implement turnkey software to help drive "the next tier of the supply chain" in the technology, electronics component and semiconductor industries, Hamilton said last week, speaking at the RosettaNet Partner Conference in Anaheim, Calif.

Business-to-business integration packages have typically cost $100,000 to $500,000, she said. "There was a recognition that we were probably going to have to get turnkey solutions in the $20,000 to $50,000 range to get medium-size companies," she explained.

The BizTalk Server Accelerator for RosettaNet, due this summer, will sell in the range of $12,000 to $18,000 per CPU, a Microsoft spokesman said. BizTalk Server costs $4,999 per CPU for the standard version and $24,999 per CPU for the enterprise edition.

"We've really been sending the message to the [vendor] community that we have to get solutions in that price point," Hamilton said, noting that she has been made aware of other vendors that will announce such cost-effective options within the next two months.

The trend bodes well for companies in other vertical industries. Microsoft, for instance, has already announced BizTalk Server Accelerator for the health care industry and plans to "continue to march through vertical industries" with other accelerators, including one for the emerging ebXML standard, as the need arises, according to product manager Dave Wascha.

"If a CIO walks through the door and says, 'I want you to implement the [Health Insurance Portability and Accountability Act] or RosettaNet, there are enormous learning curves. There are phone-book-size documents on how to implement these things," Wascha said, noting the complexity of the RosettaNet Partner Interface Processes.

Wascha estimated that BizTalk Server can get a company 60% of the way to its goal of building, deploying and managing B2B transactions and processes, and the accelerator can push it to 80%. He said companies must either hand-code or outsource the rest.

Analysts noted that Microsoft's accelerators will bring it in line with other vendors, such as webMethods Inc. and Extricity Inc., that already have modules or adapters catering to specific vertical industry efforts like RosettaNet.

WebMethods' and Extricity's "overall packages are more costly, but they're also more flexible to support alternative standards," said Kim Knickle, an analyst at AMR Research Inc. in Boston.

"From a customer perspective, I tthink there's going to be a huge shift. Customers are going to start paying attention more to the application frameworks and vertical standards than they do to the core products over time," said Peter O'Kelly, an analyst at Boston-based Patricia Seybold Group Inc. He said that core products such as BizTalk Server will be viewed as commodities and that the accelerators or adapters will differentiate vendors.

"To some extent, it requires a company like Microsoft to come along and do the pervasive model, which encourages people to come and try this out," Knickle said. "Then, as they get more comfortable with it and see how successful this kind of product can be in the bigger scheme of e-business, they start depending on it more, and Microsoft adds more functionality."

One of the earliest business-to-business commerce initiatives, RosettaNet is still in "early production" mode, Hamilton acknowledged, noting that companies have found the work difficult. So far, most members are engaging in transactions with only a limited number of partners, but Hamilton expects numbers to grow.

"We had a board meeting in February, and there was fairly unanimous agreement that automating a supply chain, using standards, is a long-term investment with a huge payoff," Hamilton said. "But it doesn't happen overnight."

This story, "Microsoft courts vertical B2Bs " was originally published by Computerworld.

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