Analysts: XML growth helps extend online purchasing

Greater interoperability between e-procurement systems will encourage companies to increase the range of goods they buy electronically, say analysts. However, though exchanging data is getting easier, obstacles remain for firms wishing to transform their procurement systems with new processes.

The growth of XML-based e-procurement platforms will enable more firms to extend online purchasing beyond limited areas such as maintenance, repair and operating contracts, said Eduardo Gonzalez of analyst firm Frost & Sullivan. "The evolving XML provides a common data interchange format facilitating companies' electronic communication," he said.

Until now, many firms have struggled with aggregating supplier catalogues into one uniformly accessible data format, said Gonzalez. "(This problem) is further compounded by the confusion surrounding the multiple standards for tagging catalogue information and exchange," he added.

Beth Barling, senior analyst at AMR Research, said that XML will improve data exchange between suppliers, but there will still be difficulties in the integration of procurement processes. The use of standards-based e-procurement systems will enable firms to transfer data more easily but there may be problems arising from transactions, such as automatic e-billing, she said: "Coordinating processes is the harder bit."

According to AMR Research, indirect procurement accounts for the bulk of European e-procurement. Indirect procurement involves the purchase of items not used in production, such as stationery.

E-commerce software manufacturer i2 recently launched its updated supply chain solution, Five.Two, containing an XML-based application programming interface (API). This will simplify integration with other applications, and allow firms to take a modular approach to installation, choosing individual components such as e-procurement, to meet their business needs, said Caroline Kelly, vice president of product marketing at i2. "It is hugely important to be able to address multiple disparate enterprise resource planning (ERP) systems. Standards are vital to this," she said.

Vendors are developing a number of XML protocols for specific requirements. E-procurement developer Commerce One has been working on XML Common Business Language (xCBL) to provide a smooth migration path from Electronic Data interchange (EDI)-based commerce. Rival Ariba has developed its own XML specification, called Commerce XML (cXML), to facilitate electronic transactions.

However, e-procurement is still in its infancy at many firms. AMR's Barling advised firms buying procurement systems to carefully consider their needs and analyse spending patterns and suppliers' ability to support systems, before making a decision.