XML: Enabling the Next Stage of the Digital Revolution

XML Enables the Next Stage of the Digital Revolution by Eliminating Barriers Between Systems and Devices

REDMOND, Wash., July 10, 2000 — What does it take to revolutionize an entire industry? It starts with a fresh new approach, of course; a better idea that brings new speed and new efficiency to an old way of conducting business. But in the digital age, revolutions are also driven by the implementation of leading-edge technologies. For most of the late 1990s, that meant using HTML as a vehicle for adapting old business models to the Web.

When Seattle-based CapitalStream set out to transform the business financing industry, it faced technical challenges that HTML could not handle. The company’s goal was to create a single, central marketplace where providers and consumers of business funding could quickly exchange information and conduct transactions. The issues involved in creating such a marketplace are extremely complex. Each of the primary sources of capital — including banks, insurance companies and finance companies — has its own set of business processes and data requirements. Individual companies within those segments operate the widest possible range of computer systems and software, much of which is proprietary. Until now, exchanging data has been cumbersome, costly and complex, with most interaction conducted by fax and telephone.

Integrating loan processing methods across the Babel of data formats, operating systems and finance applications required an approach much more robust and flexible than HTML. To achieve the kind of fundamental changes that CapitalStream was aiming for, something different was needed. That ‘something different’ is Microsoft’s XML-based BizTalk Framework. With BizTalk, CapitalStream created a revolutionary new Internet marketplace for the commercial credit industry that facilitated an estimated $8.5 billion in asset-based financing for such customers as Mellon Bank, GE Capital and SAFECO in 1999.

“With CapitalStream.com, we have created a one-stop neutral marketplace to handle the entire credit origination process from beginning to end,”
says Michael Pinckney, vice president of Business Development at CapitalStream.
“CapitalStream.com subscribers can set up programs that define their business relationships with their trading partners, including pricing, credit guidelines and contract documents. Then they can execute transactions over the network, starting with the credit application and completing all of the steps right through to approving the deal. XML and the Microsoft BizTalk Framework make this electronic marketplace possible.”

Data is Paramount

What is it about XML that makes it the ideal tool for tying together an almost infinite variety of systems, processes and data types into a single, streamlined marketplace? The key lies in part in how it is different from HTML. David Turner, Microsoft product manager and technical evangelist for XML Technologies, explains:
“The Web today is like a long-distance slide projector: it throws up words and pictures on a distant screen and captures some keystrokes in return. It’s not especially good at moving data to distant computers while retaining the structured character of the information that allows it to be further processed. While we can easily send a picture of, say, a loan application, to a browser screen using HTML, we cannot easily capture the data contained within that loan application in a database.”

Retaining the character of information so that it can be processed within a database is precisely where XML’s greatest strength lies. XML allows businesses to represent data in extremely precise ways so they can use the information to power processes of all sorts. Because it is infinitely extensible, XML can describe any kind of data for any industry, allowing a date, for example, to be identified as either a date of birth, the date that a loan application was submitted, or the date of an injury, depending on the purpose of the data. With HTML, that is virtually impossible.

At the same time, XML is a standardized, universal language that operates independently of the underlying system and applications. Once users have an agreed-upon scheme for naming standard data elements, information can be passed back and forth without having to worry about the compatibility of the underlying hardware and software.

“XML makes it possible for computers to communicate — with people and with other computers — in a World Wide Web of interactions in which the data is paramount,”
Turner says.
“It does so by hiding all of the implementation detail and eliminating all of the private protocols. It means that interactions can now be defined in terms of what is said, not the details inside the computer system one is talking to.”

This has profound implications for business. Instead of simply serving up HTML snapshots of information that users can look at but not actually manipulate in any useful manner, businesses will be able to interact with each other and their customers in real time through Web sites that provide rich, interactive, collaborative services that can capture and use data in powerful ways.

“Today’s Internet has a lot in common with the old mainframe computing model, where information was locked up in centralized servers and users relied on them for everything. It’s hard for today’s Web sites to communicate with each other in a meaningful way, or collaborate to provide broader, deeper services,”
said Microsoft President and CEO Steve Ballmer in a recent interview.
“Industry standards like XML . . . unlock information so it can be organized, manipulated and programmed, then displayed on any kind of device or system, any way you want it. A platform built around these standards will put control of information back into the hands of the people that need to use it.”

CapitalStream’s Internet financing marketplace is just one example of the power of XML. From the automobile industry, where the Ford Internet Retail System has created an entirely new way to buy and sell vehicles; to manufacturing, where the Sequencia Corporation has constructed an online trading community that allows producers of specialty chemicals, pharmaceuticals, food and beverages, and consumer goods to share information about site capabilities, factory capacities and product demands; to the retail business, where England’s 700-store Sainsbury’s chain has linked all of its 1,700 suppliers into a single transaction-based system, XML is serving as the enabling technology for a far-reaching transformation in the way business is done.

Setting Standards, Pioneering Implementation

Microsoft was among the first companies to recognize the potential and power of XML. The company was an original member of the working group formed in 1997 by the World Wide Web Consortium (W3C) to set standards for XML. Since then, Microsoft has been actively involved in all W3C work related to XML, says Turner, who currently serves as Microsoft’s representative to the W3C’s Advisory Committee.

Because of the importance of XML as a vehicle for enabling business-to-business data exchange, Microsoft has also been a pioneer in the implementation of XML standards. Microsoft shipped its first XML-enabled product in the fall of 1997 when it released Internet Explorer 4.0, which included an XML parser, the engine needed to interpret and process XML data.

When the company released Internet Explorer 5.0 early last year, Microsoft significantly expanded its support for XML with the inclusion of a number of new XML services and standards that had been developed in the interim. Because the XML standard development process is moving more rapidly than traditional product cycles, in January, Microsoft moved its XML parser into a separate product-development cycle, with regular updates available via the Web. This allows the company to respond very rapidly whenever new standards are announced.

Moving quickly to adopt and implement new XML standards has important benefits both for Microsoft and its customers, Turner says.
“Customers benefit because they can take advantage of these standards early, which gives them powerful new tools that they can put into production immediately. We benefit because we get the customer feedback we need to help us understand what people need from us both in terms of product development and driving the standards process.”

The Importance of Data Types

An example of the kinds of standards where Microsoft has taken a pioneering role is XML schema language, which Microsoft began supporting with the release of Internet Explorer 5.0. XML schema languages overcome a critical limitation of the XML 1.0 standard, which relies on something called Document Type Definition (DTD) to define the names, relationships and order of the tags contained in a document. Among the problems with DTD, says Turner, is that it does not support a crucial concept called
“data types.”

“If you have the figure 99.99 within a text document, to the computer it is just a bunch of characters,”
he explains.
“When I start moving database information around, I need to know that it represents dollar and cents, or that it is a date, and what format that date follows. Without that information, the receiver must know more about the data in advance and do a lot more work to process it.”

Just before the final release of XML 1.0, Microsoft and several other members of the W3C submitted proposals designed to help overcome the limits of DTD, which led to the formation of a working group in 1999 to develop a language for XML schemas. That work is expected to be complete by the end of this year. In the meantime, Microsoft included an interim solution based on its schema submission. This solution is critical to the efforts of companies like CapitalStream, which has made extensive use of schema language support in building its Internet-based business finance marketplace.

“We are a leadership company in the finance industry, and we joined with Microsoft because we want to drive the standards that are going to drive our industry,”
says CapitalStream’s Pinckney.
“Microsoft has a leadership role in XML, and its BizTalk technologies make XML practical to use. We adopted XML because we think it’s going to be the long-term solution to application interoperability. Furthermore, with BizTalk.org, it’s easy to publish schemas, and we like that whole approach to enable interoperability with business partners. Now our partners can freely access these schemas, and that’s the first step needed to integrate business processes.”

By providing an interim solution while the W3C completes its work, Microsoft is able to give its customers the benefits of this important new emerging technology while putting them on a path that ensures that the systems they put in place will transition seamlessly to whatever final standard the W3C produces. This approach has led many companies to take advantage of the schema language support that is available for use on the client side in Windows 98 SE and Internet Explorer 5.0 and as a high performance server-side component that ships as an integral part of Windows 2000. Among those companies are Ford, Sequencia and Sainsbury’s.

“Our supply chain is increasingly being organized in a virtual way,”
says Sainsbury’s Director John Rowe.
“This will bring huge benefits, but relies on information support systems that are integrated across company boundaries. We see Microsoft’s solution as the motorway — a road on which we need to drive to get information moving around between companies. The standards need to be there to make sure we all gain the benefit of the motorway and drive on the same side.”

.NET Gains

With the announcement of the Microsoft .NET platform in late June, Microsoft has taken the next big step in utilizing XML technologies to drive the digital revolution. A sweeping vision for the future of computing, .NET is designed to overcome the drawbacks of today’s Internet, which is limited by the inability of Web sites to communicate with each other on a user’s behalf in any meaningful way, and which is designed to transmit individual pages to individual users — pages that mostly present HTML snapshots of data, rather than the data itself.

Microsoft .NET takes a fundamentally different approach, shifting the focus away from individual Web sites or devices connected to the Internet, and instead providing a framework that will allow the broadest possible range of computers, devices and services to work together to deliver broader, richer solutions. People will have control over how and when information is delivered to them, and what information they receive. Computers, devices and services will be able to collaborate with each other to provide rich services, instead of being isolated islands where the user provides the only integration. Businesses will be able to offer their products and services in a way that lets customers seamlessly incorporate them into their day-to-day lives.

“The Internet revolution must now move to its next stage: ensuring that the ocean of information and resources that is out there actually work together,”
says Ballmer.
“By creating a unified platform through which devices and services cooperate with each other, Microsoft will unleash a new wave of developer opportunity and creativity that will move us to a level of power and simplicity.”

XML is the glue that will make this all possible. By providing an open standard for the exchange of data, XML provides a framework that will eliminate the barriers between systems and devices. Today, passing data back and forth requires careful orchestration to ensure first that the systems can even talk to each other (for example, they have to first agree on programming models and proprietary protocols), and then that the information from one system is compatible with the other. This means that data that is accessible on one device — a PC for example — may not be usable on another.

“It’s all about building systems that can talk to each other,”
Turner says.
“The world that we describe with .NET is this infinitely heterogeneous environment where I have access to the same rich data on many different devices from my cell phone, to my Pocket PC, to my desktop PC and more. Each device will be able take the same information and adapt it to the needs of the device. And if you’re the provider of that data, it won’t matter at all what device your data is being used on. It will just work.”

This vision has been enthusiastically embraced by many of the technology industry’s business leaders.
“Microsoft .NET really brings to the Web what we’ve been missing, and that’s the ability to drive greater consistency and simplicity,”
says Michael D. Capellas, president and CEO of Compaq Computer Corp.
“Compaq’s full range of products and services, coupled with our longstanding partnership with Microsoft, puts us in a unique position to take .NET to market.”

“Andersen Consulting is really excited about Microsoft .NET because this is a big win for our clients,”
adds Joe W. Forehand, managing partner and CEO of Andersen Consulting.
“It lets our clients leverage their IT investments. It lets them move to the Web-enabled world. It lets them simplify systems integration so that they can concentrate on what they do best, and that is changing their business to compete in this new economy.”

Ironically, while XML is the center of intense attention today, odds are that within a couple of years, you won’t hear too much about it, says David Turner.

“Everyone is talking about XML because it really is the next big thing,”
he explains.
“But as these things mature, few people will think about it. The fact that systems simply talk together and people think about information at a higher level will just be taken for granted, and XML will be sort of like water: everyone needs it, everyone uses it, and nobody thinks about it because it is just there. In my mind, the definition of success for XML is when XML is everywhere but no one talks about it anymore.”

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