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SOA-Based Inter-Organizational Architectural Framework For B2B Marketplaces

Catalyzing inter-organizational collaboration and transactions

B2B marketplaces facilitate efficient search and transactions by offering services such as buyer/supplier and product/services searches and transactions such as procurement and asset disposal.

Besides their market making functions, marketplaces also offer integration services such as supply chain and ERP integration and have allied with various firms to offer value-added services such as vendor ratings, logistics, and payment processing. B2B marketplaces differ from traditional marketplaces in offering increased personalization and customization of products and aggregating and disaggregating information-based product components to match customer needs. They can overcome some of the problems related to richness versus the reach of information because they can facilitate real-time transactions. They also enable new kinds of price discovery to be employed in different markets. B2B marketplaces improve information sharing between buyers and sellers, helping lower the cost of logistics and promoting quick just-in-time deliveries and reduced inventories.

B2B marketplaces can be broadly classified as horizontal or vertical, buy-side or sell-side. Here we classify them as public/independent, private, and consortia.

Public Marketplaces
A public marketplace, also known as a neutral marketplace or third-party marketplace, brings together buyers and sellers in a particular industry for purposes of commerce. It provides content, value-added services, and transaction capabilities.

Private Marketplace
Private marketplaces are owned and operated by one company to do transactions with a select group of suppliers. They have the potential to provide high performance and tight integration with current suppliers, a facility provided by the traditional electronic data interchange (EDI) model. Examples of enterprises that have embraced this model include: Wal-Mart, Dell, Sun Microsystems, Amtrak, and Cisco.

Consortia Marketplace
Consortia marketplaces are jointly owned by several large enterprises that deploy applications and infrastructure to facilitate collaboration and conduct business among trading partners. They are highly customized and integrated with the process of its founders and hence require a large investment and have longer implementation schedules. An example would be E2Open.

Inter-Organizational Commerce Using Web Services
Inter-organizational information systems (IOIS) facilitate technology-based cooperation across organizations such as interactive product improvement, forecasting, and inventory control in addition to offering improved integration, collaboration, and access to business intelligence. B2B marketplaces offer dynamic forward and reverse auctions, payment services, valuation services, e-procurement services, industry news, market analysis and reports, virtual private marketplaces, and indigenously developed procurement software licenses. The B2B marketplaces have allied with partner firms to offer value-added services (VAS). Value-added services are defined as services that supplement the actual transaction, cataloguing, and search capability. These include financial services, logistics services, analytics, inspection, and settling disputes.

Integrating their products and services with their customers' assured B2B marketplaces of regular revenues in the form of license fees. Integration with corporate systems is achieved through enterprise application integration methods. Typically a common metadata repository maintains process and data maps for translating the data, and a message broker routes the data to the right application. Integration also involves modeling, automating, and integrating business processes and trading relationships between partners. Integration of information refers to sharing information among participants of the B2B marketplace such as buyers and suppliers. This includes data such as inventory data, demand data, capacity plans, production schedules, promotion plans, and shipment schedules. B2B marketplaces at this stage also facilitate collaborative activities such as joint design and execution plans for product introduction, demand forecasting, and replenishment. They also facilitate workflow coordination, which refers to streamlined and automated workflow activities between supply chain partners.

To facilitate integration and collaboration B2B marketplaces are building their technological capabilities such as data mapping repositories including XML (Extended Markup Language) document exchange formats and trading partner agreements that let customers switch from one market to the other at any time. This is important since the customer may not find relevant buyers or sellers on one particular marketplace. Web Services show promise in enabling B2B marketplaces to offer inter-organizational commerce by offering open standards-based interfaces. Web Services have standardized interfaces that enable seamless interoperability among heterogeneous IT implementations. Web Services are becoming the technology of choice today for solving pressing point-to-point integration needs because of the inherent cost benefits of the approach. Interoperability is the most important capability of Web Services and has the potential to reduce IT integration costs in and across enterprises. A Web Services-based SOA reduces the redundancy by offering a high level of reuse. A further requirement relating to investment in conventional legacy infrastructure is key to justifying any architecture. SOA preserves investment in legacy by providing the endpoints for the legacy functionalities to be accessed by other applications across any channel.

Now we'll explore the viability and potential of Web Services with regard to inter-organizational commerce related to the key services offered by B2B marketplaces such as auctions, reverse auctions, catalog-based e-procurement, private marketplace services, third-party transaction services (payment), and third-party data services (valuation and industry news and reports).

Forward & Reverse Auctions
Forward and reverse auctions are the key service offered by B2B marketplaces. The various auction formats include the English auction, the Dutch auction, and the Vickrey auction. Web Services would provide an open standard way for buyers and sellers to connect to auction service interfaces. The usefulness of Web Services is pronounced when the service offerings of B2B marketplaces are orchestrated by linking up with their other services as well as linking with third-party service providers.

Catalog-Based E-Procurement
Catalogs are fixed-price catalogs that create value for buyers or sellers by aggregating demand or supply into a meta-catalog and negotiating volume discounts (up to 20%). For buyers, B2B marketplaces provide a gateway to thousands of suppliers and service providers across a spectrum of industries. This reduces the search costs of buyers and helps improve supply chain efficiencies by identifying suppliers that can match their expectations in the price-quality-delivery equation. So depending on the sourcing needs of the buyer they can post their requirements on the site so that suppliers can get in touch with them. Web Services could be adopted to integrate the buyers/sellers with the catalog offered by the marketplace resulting in more efficient and flexible transactions.

Third-Party Transaction Services
Third-party transaction mechanisms come into play to send, execute, and settle orders that have been agreed to in the marketplace. Payment services fall under this category. These rely on the features of the communication infrastructure, either to transfer a payment physically or transmit information about credits and debits to the accounts of buyers and sellers. Web Services would facilitate easy interoperability between the systems of the B2B marketplace with those of the payment service providers.

Third-Party Data Services
This includes data services such as rating and valuation services. Examples include services offered by the global rating agency Dun and Bradstreet such as DUNS numbers and Indicative Risk Scores. Other services include international quality control, inspection, testing and verification, vendor assessment services, quality and quantity certification, and valuation services. To ensure competitiveness in catering to a geographically dispersed market, it has become essential to build the confidence about the quality of the offering and the underlying process among players in the marketplace. Independent specialized agencies play a pivotal role in promoting this through services such as inspection, surveying, analytical testing, accreditation and certification, and consultancy. Other content services include content sourcing from multiple vendors such as Gartner and Forrester Research.

Third-Party Distribution Services
This includes services such as logistics services offered in association with logistics service providers. Logistics services provide the link between electronic business transaction and effecting order fulfillment. The B2B marketplace provides a medium for interaction between logistics players and sellers and buyers. This is aimed at facilitating the easy movement of equipment and other assets transacted through the marketplace.

Architectural Imperatives for B2B Marketplaces
Architectural requirements for an online auction site include application functionality, interoperability, performance, and scalability, flexibility, and manageability. The physical architecture consists of databases, servers, software applications, Web servers, and networking and Application Protocol Interfaces (APIs) to link them all together. Due to the risks of system failure, redundancy at the database and server levels is necessary. Software applications must be able to support multiple auction models (single seller-to-many buyers, single buyer-to-many sellers, multiple buyers and sellers) and auction types like Dutch and Vickrey auctions. They should also be able to support special rules such as role-based prioritization, where the best customers get priority. Further, a key requirement is to be able to interoperate with the multiple data representation formats of the buyers and sellers as well as partners. Overall, a flexible and interoperable architecture is needed to keep up with the pace of change in the industry.

One of the key components to online auction applications is the ability to manage and report dynamic information. The application runs in conjunction with a database that stores all of the information and metadata necessary for each auction transaction. The database contains data like bid and bidder information, rules for the auction, and information about the item for sale alongside metadata about the bidders and sellers and the items for sale. The application should provide mechanisms for representing items and services from both buyers and sellers in a manner so that matching buyers and sellers is seamless. The applications gather, store, and then access the matched information in real-time and display pertinent information in the GUI. The application must be able to handle hundreds of concurrent bids a second and instantly post the results. The marketplace architecture should support appropriate open standards-based messaging infrastructure besides providing a registry for repository of the buyer, seller, and other partner information. The architecture must support a flexible way of incorporating workflows or orchestration to enable typical transactions.

The architecture at a successful online auction concern should streamline client services including e-mail notifications, searches, automatic bidding (including pre-set bid thresholds), customization capabilities, and auction management features for sellers. At a minimum clients also expect customer service, security, fraud prevention, and ancillary features like online payment and logistics services. All of these services and applications must be part of the application architecture or integrated with the auction application via standard APIs over standard messaging standards. Because of the number of features and functionality a B2B marketplace must possess to be competitive, it should be able to integrate new functionality, applications, and partners continuously. Interoperability needs to be quick and seamless.

A Proposed Service-Oriented Architecture
In this section, we'll describe a typical transaction scenario for the three types of B2B marketplaces, public, private, and consortia and then describe the proposed Web Services-based architecture to address this scenario. The key requirements of the IT architecture supporting a B2B marketplace are:

  • Ability to integrate with buyer and seller systems
  • Ability to integrate smoothly with other partners (e.g., credit card firms, courier companies, etc.)
  • Ability to configure/reconfigure services
  • Ability to match the information of the participants in a transaction
Given the nature of the scenario and the number of stakeholders involved (e.g., the B2B marketplace, sellers, buyers, credit card companies, courier companies, etc.), a Web Services-based Service Oriented Architecture would be the ideal solution to the problem. Due to the loosely coupled nature of Web Services, the B2B marketplace doesn't have to have hardwired connections with the buyers, sellers, credit card companies, or logistics service providers. This lets the B2B marketplace have access to more services, offering more options to its customers. This wouldn't only address current needs but would also address future needs when the B2B marketplace may be needed to make fast business connections with partners without going through the conventional pattern of making large-scale changes to the system. Web Services would enable the B2B marketplace to isolate the business logic from integration. Most conventional integration solutions embed part of the business logic in the integration layer thereby requiring considerable effort in making modifications. Web Services address the key requirements of this scenario. Based on open standards like XML and SOAP, they define a means by which the services of the B2B marketplaces and their partners can be published, discovered, and invoked.

A Web Services-based Service Oriented Architecture for public B2B marketplaces is shown in Figure 1. At its core a marketplace architecture should support the appropriate messaging infrastructure for seamless connectivity with buyers, sellers, and partners. This may rely on industry standards like SOAP or ebMS (ebXML messaging) to provide universal messaging interoperability.

A marketplace also needs an appropriate registry to maintain the list of buyer and seller services and items. This kind of registry should be open to partners, buyers, and sellers via the messaging infrastructure and should be capable of registering and de-registering services, items, and documents. Ideally this can be a UDDI registry or an ebXML registry.

The registry is mandated to provide a matching infrastructure between buyers and sellers of the exchange. This matching infrastructure has to be in multiple tiers for reasons that will be explained a little later. Over and above the infrastructure layers of messaging, registry, and matching infrastructure, there's a need to provide a range of horizontal services to the buyers, sellers, and partners. These services are enabled by proving a B2B service management layer, which provides the point of interaction with the registry of the exchange as well as with the buyers, sellers, and partners. A key function of the B2B service management platform is to provide lifecycle management for the different services provided by the exchange. In particular, the platform performs key functions related to security including authentication, access control, and defenses against DOS attacks. It is also responsible for the key tasks of registry management, messaging, semantic matching, and process orchestration.

1)  Service Lifecycle Management: The main function of a B2B service management platform is managing the lifecycle of the infrastructure as well functional services offered by the exchange, including auction-related services, listing-related services, etc.
2)  Security: The platform accepts standard credentials from the service requestor. If a seller wants to access a particular Web Service on offer (say an auction service) the request is passed on as a SOAP message across the service gateway. The validity of the request is checked against the customer's login ID and password.

Due to the ease of availability of crucial functionalities as services, there's an increased possibility of repeated or malicious invocations of these services. The platform performs the function of SOAP content inspection enabling it to detect repeated attacks or malicious content sent as part of SOAP requests. The platform also ensures that all access control rules and policies internal to the organization are followed in service invocations
3)  Semantic Matching: The management platform has to provide the appropriate matching infrastructure to interact with the registry as well to enable transactions. This infrastructure can be multi-tiered depending on the complexity of the transaction. The bottom tier of the matching infrastructure has to include data item-level interoperability that can be ensured by adopting industry standard classifications like UNSPC or domain-specific vocabularies like ACORD for insurance, or may rely on horizontal standards like ebXML core components, or in highly specific case there could be an ontology specific to the transaction.


More Stories By Dr. Srinivas Padmanabhuni

Dr. Srinivas Padmanabhuni is a principal researcher with the Web Services Centre of Excellence in SETLabs, Infosys Technologies, and specializes in Web Services, service-oriented architecture, and grid technologies alongside pursuing interests in Semantic Web, intelligent agents, and enterprise architecture. He has authored several papers in international conferences. Dr. Padmanabhuni holds a PhD degree in computing science from University of Alberta, Edmonton, Canada.

More Stories By Dr. Jai Ganesh

Dr. Jai Ganesh is a Research Associate with the technology research division of Infosys Technologies Limited. He obtained his PhD in information systems from the Indian Institute of Management Bangalore (IIMB) in 2003 and holds an MBA degree in corporate strategy and marketing. His research focuses on Web services, IT strategy and adaptive enterprises.

His research has been published in journals such as Information and Management, Journal of Global Information Management, International Journal of Retail and Distribution Management, etc. and conferences such as AMCIS, ICWS, ICEC, ICEB etc. He serves as a reviewer for a number of peer-reviewed journals and conferences, and has consulted for many software firms.

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