XML: New way to do business

XML is touted as an industry-neutral language that could revolutionize information exchange in much the same way that HTML has defined the Web. But XML's greatest strength--allowing developers to custom-build systems for data exchange--could also be its downfall, leading to incompatible versions that could tarnish XML's cross-industry appeal, analysts said.

The fear is that software companies will drive incompatible versions of XML that best fit their own product strategies. Even within specific industries, companies must agree on XML usage for the language to become truly useful, analysts said.

XML "is just an alphabet for building new languages," said Josh Walker, an analyst with Forrester Research. "It gives companies a way to start with a common foundation and a common alphabet. But it's up to the industry to define the specific terms they use."

For example, enterprise resource planning (ERP) software maker SAP said today that it plans to integrate XML into its Business Application Programming Interfaces, which give developers access to the internal workings of the company's R/3 software. SAP joins PeopleSoft, Oracle, and other business software makers in adopting XML.

If ERP makers agree on a common XML format, developers will gain a standardized, vendor-neutral way to access human resources, financial, and manufacturing data stored in R/3. But, incompatible XML tags will be no more useful than the proprietary APIs they were meant to augment or replace.

The need to agree
Already, "vertical XML vocabularies" have sprung up in finance, content management, wireless access, voice recognition, air traffic control, and the footwear business, according to Zona. The number of industry-specific dialects of XML will quickly mushroom out of control unless cross-industry standards are hammered out.

For XML to work, every company in specific industries must put their competitive differences aside and agree on standards, said analyst Ron Rappaport, of Zona Research. "You're talking about a cola XML schema rather than Coke's or Pepsi's XML schema. There's a threat of XML balkanization if vendors pursue individual means," he said.

A generic XML standard is being adopted by many software makers. But now each industry must work to develop an XML "metatag schema" so everyone can start deploying it, said Toby Corey, president and chief operating officer of Internet consulting firm USWeb/CKS.

For example, Corey said the travel industry needs to decide how it will exchange information based on an XML standard. The industry must define the data structure for types of travel, carriers, destination, restrictions, and pricing models, for instance.

"XML has given us the grammar and syntax. Now we have to define the words," said Corey, whose company does very little XML work today but plans to dive into it within the next year.

Forrester's Walker said the real action in the XML world is taking place within standards bodies that are defining vendor-neutral ways to link industries.

For instance, Commerce.net, Oasis-open.org, RosettaNet, and the World Wide Web Consortium have forged standards for e-commerce, supply chain, and other areas.

XML flavors: Valuable but limited
If industry consensus isn't reached, XML can still be a valuable, though limited, technology, Walker said. Various flavors "won't make or break XML," he said. "XML will find a place in pockets of large companies. But it won't be the silver bullet that people [hope that] it becomes."

On the vendor side, Microsoft and IBM are walking the fine line between supporting neutral standards and pushing their own XML products. But clearly, standards bodies are driving adoption, as corporate developers and IS managers seek consensus on standards, Walker said.

Microsoft has introduced BizTalk Server, an XML-based server intended to link business-to-business e-commerce providers. SAP, along with other software makers, is working with Microsoft on the initiative.

Microsoft has also embedded XML support in its Office 2000 desktop application suite, and is expected to link XML and its COM+ server software architecture in the near future.

"DataChannel and Microsoft are trying to take some of the [standards issues] in their own hands and act as a resource for people building applications," said Rappaport. "But the tendency in the marketplace is to perceive [vendors], despite their best intentions, as having an agenda."

Walker agrees that users have become wary of vendor-backed standards efforts. "Standards organizations like RosettaNet have been most successful, as users seek out help for their own projects. We really see them taking the lead more than the software makers."