When I was at school, yes I know many years ago now!, I always found it difficult to try and find the right information at the right time.  Whether this was to complete a classroom exercise or finish some homework, it always seemed to take a long time to find the information I was after.  This may be due to the fact that the internet was not around when I was at school, (this is obviously something we all take for granted now)  and the computers that we used back then were somewhat technically challenged to say the least !

This is a picture of the beast we use to wheel into the classroom during our computer sciences lessons, a Research Machines 380Z, and I am not joking when I say that the lights in the room use to dim when we switched it on!, how times have changed….

However even today with almost unlimited online resources, it still seems difficult to find one website that can answer all your EDI or B2B e-Commerce related questions.

Many years later, the internet has transformed the learning process considerably, online books, tutorials and endless research articles are available on virtually any subject you choose.  When I joined GXS in April 2006, one of my first tasks was to try and learn about EDI and the associated industry.  Having come from a totally different industry, the Product Lifecycle Management (PLM) software sector, this was no mean feat.  I had hoped to find a lot of information internally, after all, GXS has been around for over 35 years, so you would think that there would be plenty of materials for me to look through.  Unfortunately this was not the case and instead, all I could find was an EDI ‘101’ style reference booklet which was last updated in 1995.  In addition I then had to trawl the internet to plug all the missing gaps with the information that wasn’t available in the booklet,  I also had to try and find out about the best ways of implementing an EDI solution and how GXS customers were using our solutions.

So I began the journey of creating a microsite to provide an introduction to EDI, a totally self contained website that provides an overview of EDI, B2B solutions, document formats and connectivity options etc.  The EDI Basics Microsite has been up and running now since November 2006 and we have seen an immense amount of traffic going through this website.  The intention was not to develop a heavily branded site to allow you to learn about GXS B2B solutions, but more of an informal and non threatening way to learn about the fundamental aspects of trading electronically between companies.  The site is very easy to navigate and allows you to download a number of useful EDI related resources.  

There appears to be many EDI resources on the internet, but not many attempt to provide all the information you will need on EDI or B2B e-Commerce in one location.  I hope you find the site useful and if you have any thoughts or comments on how it could be improved still further then simply leave a comment below!

The biggest news in the automotive industry this week is that Chrysler has finally been sold to a private investment firm called Cerberus Capital Management for $7.5Billion.  Compared to all the other bids that came in for the company the private investment option probably represents the best opportunity for Chrysler to finally turn around their business.

Chrysler was bought by Daimler in 1998 for $36Billion, yes you read that correctly!, this represents a $30Billion loss on the investment in less than ten years.  So what has gone on here, how can Daimler Group shareholders have allowed this to happen?.  Well one of the reasons for Daimler acquiring Chrysler was to get a strong foothold in the U.S market.  Daimler thought that with some strategic platform sharing they could improve the volume car production side of their business.  Their Mercedes Benz brand has always been perceived as a premium brand.  What they thought they could do was acquire Chrysler in order to go head to head with Ford and GM in the high volume car production market. Over the past ten years Chrysler has been taking previous generation Mercedes car platforms and using them for their product range.  For example the Chrysler Crossfire is based on the previous generation Mercedes SLK and the successful Chrysler 300C Saloon is based on the previous generation Mercedes E-Class saloon.  In fact the Crossfire was the first car to be jointly developed by Mercedes and Chrysler.  So why the history lesson on platform sharing I hear you ask?, well it is an important trend in automotive manufacturing today and serves as an excellent way to reduce costs and improve profitability per vehicle.  So the question now is where will this leave Chrysler?, will they have to reduce their product portfolio to offset the additional costs of developing their own platforms once again?

Well the answer seems to be that they want to find new partners around the world, less than three days after the sale was announced, Chrysler were already talking about finding global partners to help grow their business.  Chrysler itself is an extremely strong brand which also incorporates another iconic brand, Jeep.  Cerberus felt that there was obviously something here that could be turned around and at the end of the day Daimler more or less paid Cerberus to take Chrysler off their hands.  However interestingly, as part of the deal, Daimler will retain a 20% stake in Chrysler. This was probably negotiated to ensure that Chrysler could retain the supply of key Daimler components, eg engines, switchgear and other underbody components. This is no different to the deal that Ford negotiated recently with Prodrive, the UK company that bought their Aston Martin division.  Ford will continue supplying engines etc and at the same time Ford gets to protect its intellectual property rights to the components that it provides to the Aston Martin range of cars.  This type of partnership agreement was essential to ensure the long term survival of Aston Martin and exactly the same deal has now been negotiated between Daimler and Cerberus.

Most private investment companies will try to look for some sort of exit strategy within a five to six year time frame, so apart from the obvious restructuring requirements within Chrysler it will be interesting to see how Cerberus can turn around this business.  They will be looking to cut costs significantly to improve profitability, they will be looking to streamline Chrysler’s supply chain and find global partners to reduce product development costs.  For this type of situation, outsourcing resource intensive parts of the business must be considered as a relatively easy way to help reduce costs across Chrysler.  Their B2B infrastructure will have to be reviewed for example, a plan worked out on how to separate this infrastructure from Daimler and then find a way to continue working seamlessly with the network of suppliers that they have built up during their time as part of the Daimler Chrysler Group.  This is an ideal scenario where GXS Managed Services could be introduced to help manage Chrysler’s B2B infrastructure.  As you may have seen from some of my earlier posts, GXS Managed Services basically allows a company to potentially outsource their entire B2B infrastructure to our company.  GXS Managed Services has been proven in many large companies worldwide as a B2B outsourcing solution which can help reduce network, transaction and overall B2B infrastructure costs.  With extensive restructuring going on in the automotive industry as a whole at the moment, it will be interesting to see how Cerberus handle the management of Chrysler’s suppliers.

I have been fortunate enough to visit the Daimler Chrysler Head Office in Detroit, a very impressive facility where no expense was spared in its construction.  One of the things I remembered from someone I spoke to during the visit was that the building was designed in such a way that sections of it could be easily partitioned off and converted into a large shopping mall if required.  Now I am not saying that this will happen but it was interesting that the architects of the building had the foresight to include this as part of the design of the building!  Chrysler will inevitably have to go through some sort of downsizing process but one thing is for sure, the company will come back leaner and meaner and ready to take on their key rivals Ford and GM.

So this is an interesting concept, if it were possible to conduct B2B trading in a virtual world, would companies use it?.  Well according to this story over on silicon.com  it may not be that far away. The virtual world Second Life , is a computer generated virtual world with nearly 6 million ‘residents’ and nearly $1.5Million ‘real world’ monies are exchanged on a daily basis.  Individual users sign up, choose an avatar or 3D likeness of themselves and then they can begin roaming around the virtual world.  Up until recently the virtual worlds were restricted to ‘visitor’ type attractions, such as the Kennedy Space Centre, but now large companies are starting to see Second Life as a superb marketing tool to showcase their products to a large and a fairly captive audience.  So here are some examples of what these companies are doing:

BMW have established a virtual car showroom to allow visitors to see their latest concept cars and see how they plan to develop their cars in the future.  I wonder if you will eventually be able to configure and order your car through Second Life in the future.  People said that online trading, eg buying a car through a website would never takeoff, but it has.  This way of displaying your products enhances the buying experience.

Picture credit: Second Life/Linden Lab

Cisco Systems have built their own house to showcase their networking technology and how it can be used to control all aspects of the house.

Picture credit: Second Life/Linden Lab 

IBM have built a whole campus which is used to explain what they do as a company, the type of products they sell and how companies are implementing their solutions.  In marketing we often use case studies to showcase how our customers use our B2B solutions, imagine how these case studies could be brought to life in a world like this.

Picture credit: Second Life/Linden Lab

So with companies entering Second Life, individuals buying goods, casinos offering online gambling, what you also need is a law firm to keep things under control!.  Just as law firms can offer companies advice on using the internet to conduct business etc, so a similar requirement is now needed in Second Life as well.  This is one of the reasons why the law firm Field Fisher Waterhouse have recently setup an ‘office’ in Second Life. 

Picture credit: Second Life/Linden Lab

Second Life is growing very quickly, housing a large virtual  population and big brand global companies fighting to get a presence, if the residents are able to buy goods from virtual shops, how long will it be before companies could  buy goods from each other?  If this happens, how do companies then manage this buying and selling process in a virtual world?  Will we see 3D virtual invoices being sent from one company to another, will we see bar code labeling somehow being applied to goods in the virtual world and then being able to track the movement of goods within second life?  The internet has totally transformed the way in which companies conduct B2B trading between themselves, are we now seeing a new type of trading environment emerging?

One thought I have had, picking up on the virtual bar code labeling idea above, what about if you could use this environment as a ‘visibility’ platform for tracking the movement of your goods from your suppliers or to your customers.  Today, visibility into the supply chain is one of the most important areas that companies want to improve.  RFID , bar code labeling etc have all been introduced to help improve the visibility of globally shipped goods.  What about if you could setup a virtual environment that simulated your supply chain and you could see in 3D where goods were within their shipping process.  For example setting up virtual distribution centres, cargo ports, airports etc, this could provide the holy grail of visibility solutions for companies wishing to improve visibility of shipped goods.

Another example is Google Earth, companies are already finding ways of exploiting this from a commercial perspective, for example VW are looking at using Google Earth as their next 3D mapping environment for their next generation satellite navigation system. Could Google earth be used in a similar way to Second Life for improving visibility into a supply chain?

So an interesting insight into the possible direction for future B2B trading environments, as mentioned earlier, the internet has transformed the way in which companies conduct business between each other, could these new 3D virtual environments provide the next generation B2B platform?, only time will tell.  My colleague Justin Duewel-Zahniser, who also posts on the GXS blog site, is very experienced in the use of Second Life and I am sure it won’t be too long before he posts his thoughts on the potential business opportunities for Second Life…

I went to visit one of our customers yesterday, a global OEM with a presence in all the main regions of the world. We spent a considerable amount of time discussing their present B2B environment and it was interesting to find out that each of their main regional business units seems to have their own strategy for document transfer and supplier enablement.   As with most OEMs worldwide, they have a manufacturing and sales division and even these divisions appear to have their own B2B strategies.  They said that one of their biggest challenges was trying to improve visibility into their supply chain.  As they operate an efficient Just In Time (JIT) environment, they need a quick turn around from their suppliers, often within three days, and they therefore need visibility of any potential short shipments. 

So the questions is, when you are trying to promote your business as a single global OEM, why do these companies insist on making it so difficult for themselves to transfer information around the world, between different operating divisions and across their numerous supply chains?  The company has a significant presence in Europe and a joint venture project in Eastern Europe.  Both of these operations are totally independent from a B2B perspective, may be due to the fact that they do not want to share sensitive information with their joint venture partners.  In Japan they are using a communications protocol that is only used amongst their suppliers within that region. The same goes for their U.S division, once again using a different set of B2B standards. 

Globalisation is one of the biggest buzzwords being used in the automotive sector at the moment, but globalisation is more than simply setting up a manufacturing plant in another country or region.  From an OEM perspective, globalisation should not just include establishing manufacturing plants in other regions, but some of the other centralised functions, such as design for example, could also benefit from being located in other regions.  We all know that there are various B2B standards around the world with Odette OFTP messaging and EDIFACT documents being the most common B2B standards being used within the automotive sector.  So you would think that it would be relatively easy for a global OEM to exchange information easily between different regions.   

However despite not having a common B2B and communications platform, this hasn’t stopped this particular OEM from being one of the world’s leading producers of cars, so may be, in their case at least, having a fragmented B2B environment has actually contributed to their success.   Probably a controversial statement there!, but when you think about it, they probably have less politics to deal with and it may provide a more flexible way of working to meet varying local market requirements. It could simply be down to the culture of the company to do things their own way, no matter what the rest of the automotive industry is currently doing. 

Naturally GXS are able to help global OEMs and their respective suppliers resolve their global B2B infrastructure, communication and visibility issues, for further information on how we can do this, please take a look at our website, www.gxs.com.  

Time for an apology, you may be reading my blog this morning thinking I have been extremely productive today putting up my fourth post in less than an hour, the fact of the matter is that the server we use for hosting our blogs went down at the weekend! 

Ok, nothing too serious as I had back ups of all my entries anyway, but it just goes to show that sometimes you have to expect the unexpected.  Which got me thinking, it must be time to discuss the subject of disaster recovery!

Now just in case you think I have turned into some sort of ‘tree-hugger’ since I last posted, I found some interesting articles this week on how companies are trying to run environmentally friendly B2B infrastructures.  We all know that the politicians are working hard to persuade the automotive industry to develop environmentally friendly cars in order to try and reduce green house gases etc.  We also know that EDI helps to reduce paper based transactions,  again cutting down on the number of trees being used!, but how many people know that one of the topics getting on the agenda of today’s CIO is how green the IT environments are of the vendors supplying their companies? 

The following article from silicon.com, Virtualisation Powers Up Energy Group, reviews how E.ON, one of the world’s largest gas and electricity suppliers, is using a Virtualised B2B infrastructure across their global business. This has resulted in them using 56% less power than their previous B2B environment due to the unique way in which the B2B infrastructure is able to call on extra processing power as and when it is required.  In addition, by consolidating their numerous IT infrastructures across multiple divisions into one environment, they have seen a 50% reduction in their operating costs.

Just in case you thought that it was just the energy companies that are keen to show a green side to their business, as I mentioned earlier many CIOs are taking this seriously now as well.  Again over on silicon.com, I found this article, CIOs Dump Environmentally Unfriendly Suppliers,  which discusses how today’s CIO are taking green issues seriously even when deciding which IT suppliers to work with.  So it is interesting to think that many CIOs in the past were focused on how much cost savings or business improvement could be realised by working with a particular IT vendor, but now they have to demonstrate how green their solutions are as well! One of the companies mentioned in this article is LDV (Leyland DAF Vans), a leading UK manufacturer of commercial vehicles, they said that every supplier they work with, either for production or non-production purposes is assessed for environmental performance.

This is an area which I had never really considered before, from a B2B infrastructure perspective, and LDV seem to be leading the way in terms of defining a strategy for using green suppliers for their IT and B2B environment.  LDV are a relatively small company but can you imagine what would happen if one of the top three North American automotive OEMs started to implement a global ‘green’ strategy for their IT environments around the world.  I am sure some are already starting to think about or are already implementing green IT sourcing strategies, but there doesn’t seem to be much information out there on exactly what these companies are doing. 

GXS has recently upgraded their data centres around the world, our new high availability B2B infrastructure called Trading Grid® Ultra is based on a virtualised environment running on Blade servers from eGenera.  This provides us with a highly flexible environment where we can use as much or as little processing power as our customers require.  In addition the new data centre infrastructure takes up less floor space than the old one and hence requires less lighting and power in the room!, OK the reduction in lighting may be a minor detail but it all helps to reduce power consumption in our data centres.  The entire Ultra infrastructure uses new state of the art servers, storage devices and network routers. As a result, our customers’ B2B transactions are flowing across one of the most efficient data centre infrastructures available today.  In addition, our Outsourced B2B or Managed Services customers can be rest assured that they are using B2B solutions hosted within the same environmentally friendly B2B infrastructure. 

So I have to pose the question to anyone reading this blog, how green is your B2B environment and what steps are you taking to make it more efficient?

OK, time for me to drive off into the sunset, may be I should think about buying one of these VW camper vans, often associated with environmentally friendly communities. This one however has had it’s petrol engine replaced by an all electric drive powertrain system!

There was an interesting article posted over on BusinessWeek Online a couple of days ago, highlighting the need to develop ultra low cost cars for the emerging markets. Renault – Nissan have just announced that they want to manufacture a small car in India with a retail price of $2500.  According to the Monitor Group, the production of low cost cars is now the single most important trend in the automotive industry today. 

So this begs the question, how do you go about making a profit on a car with such a low selling price? More likely, the automotive manufacturers will be selling them at a loss initially in order to gain traction in a new and potentially lucrative market such as China or India.  To make any sort of profit on a low cost vehicle at this pricing level will mean that operational costs will have to reduced still further and the use of IT and B2B solutions to help drive down costs will become more important. 

The emerging markets have huge infrastructure related issues at the moment, unreliable power supplies, and inferior telecommunications links to the outside world.   In order to reduce associated IT costs, the use of hosted applications will become very important for these low cost manufacturers.  There is a danger that by producing cars at $2500 then the quality of the product will deteriorate and the quality of the resulting information flowing across the supply chain will be poor quality as well.   

My previous blog entry eluded to the fact that outsourcing a B2B environment can help to reduce costs and improve efficiencies etc, and I think in the case of low cost car production, this has to be the way to go in terms of setting up a reliable, low cost B2B infrastructure.  The car manufacturer doesn’t have to worry about managing the B2B infrastructure and more importantly the hosted environment can be managed outside of the region where the cars are being manufactured. In addition to hosting B2B environments, low cost manufacturing projects such as this could see the growth in the use of Software as a Service (SAAS) environments as well.  Well I guess it is OK for me to speculate what could happen, but if this Renault – Nissan vehicle and other low cost car projects are successful in the emerging markets then it could help to rapidly increase the adoption of more hosted B2B environments within the automotive industry.

Today’s car manufacturers face a constant challenge to sell more cars and at the same time reduce costs in order to become more competitive in the market place.  Over the years, OEMs have had to change the way in which they manufacture cars and source components from suppliers.  It no longer makes sense for a car manufacturer to try and make everything in house and today many OEMs are becoming known as ‘Branded Integrators’.  Branded integrators are companies who derive the initial design for the vehicle, conduct final assembly and look after the brand management and marketing.   

What has happened is that the original Tier1 suppliers have now become more involved with the actual manufacture of cars, many Tier1s such as DANA Corporation are producing entire suspension assemblies which are delivered track side and fitted straight to the vehicle.  The original Tier2 suppliers have now become the ‘new’ Tier1s and hence there has been an entire shift in the automotive supply chain.  This process of introducing outsourced manufacturing to the vehicle assembly process has meant that OEMs have been able to reduce costs considerably and streamline their respective supply chains. 

Automotive OEMs are also outsourcing parts of their IT infrastructure, typically starting with the management of PCs and associated networking. It is more difficult to outsource the management of software environments because software applications are complex and are often seen as ‘mission critical’ so are typically managed by an inhouse IT department.  However, the management of a B2B infrastructure is an ideal candidate for being outsourced, particularly those infrastructures which are required to be global in nature and need to be managed on a 24/7 basis anywhere in the world.  Compared to managing a network of PCs or software applications, looking after a B2B environment must also take into account the day to day management of a company’s network of trading partners as well. 

So when should a company decide to outsource their B2B infrastructure?, well there is no right and wrong time to do this but there are a number of significant benefits that can be realised if a company does decide to outsource their B2B infrastructure:   

• Lowers costs – less time spent maintaining complex B2B infrastructures and staff can be re-deployed on other projects
• Accelerates time to market – allows manual tasks to be automated and less time will be spent searching for information
• Improves operational efficiencies – allows users to be shielded from the complexities of using a B2B system, improves visibility, back up and reliability of B2B transactions
• Improves customer satisfaction – ability to trade with any partner, in any location worldwide and more importantly helps to reduce payment cycles and delivery times

Now in the ideal world most companies will be looking to gain all of these benefits from outsourcing their B2B infrastructure, but realising these benefits does not happen overnight. However there is one more benefit that automotive companies can obtain by outsourcing their B2B infrastructures, it will allow them to return to what they do best, which is to design and manufacture vehicles, now that can’t be a bad thing! GXS Managed Services is well positioned to help any company address their B2B outsourcing requirements, if you would like to find out further information about this and other services that we can offer please visit our website, www.gxs.com.