E-Business Standards Setting

Abstract

Many industry sectors are facing a number of challenges to the established relations between players (the automotive sector is a particularly prominent case in point; see also Gerst & Jakobs, 2006). To meet the production requirements, standardization of processes, systems, and data are inevitable. A current trend in manufacturing is that OEMs1 attempt to cooperate with fewer suppliers, but on a worldwide scale. The use of ICT2 related technologies, particularly ebusiness systems, facilitates the creation of a network of relationships within a supply chain. Yet, such inter-organizational integration requires interoperability that cannot be achieved without widely agreed standards. But how should standards be set, and who has—or should have—a say in the standardization process? In many cases, an SME3 supplier does business with more than one OEM. In this situation, bi-lateral standardization to improve the cooperation between OEMs and suppliers, and between different suppliers, respectively, is inefficient. Still, this has been the approach of choice in many cases.4 However, possible alternatives are available. In the automotive industry, for example, portals were developed as a form of sector-specific harmonization. Yet, these attempts to develop standardised technology largely failed. This holds particularly for the most prominent example, Covisint. Its failure may be attributed to various technical, organizational, and economic reasons. The main contributing factors, however, included the unequal power distribution during the development process (only the large OEMs had a say; the suppliers were largely left in the cold), and the equally imbalanced distribution of benefits (which mirrored the power distribution). The fact that Covisint was sector-specific probably represented another problem as many suppliers did not only do business within the automotive sector, but with other industries as well (see Gerst et al. (2006) for a far more detailed discussion of this subject). This rather negative example suggests that perhaps yet another alternative approach should be deployed. One straightforward such alternative would be to take these activities to a dedicated standards organization. After all, portal technology relies heavily on underlying e-business standards such the extended markup language (XML), the UDDI registry (universal description, discovery, and integration), the Web services description language (WSDL), SOAP, and many others. Moreover, many of these organizations offer a more level playing field for smaller companies, certainly in theory (see Jakobs (2004) for a perhaps more realistic view).