Putting more wind in RosettaNet's sails, Samsung Electronics Co. Ltd. said it is taking steps to migrate its EDI processes to the RosettaNet e-business communications standard.
Samsung last week revealed it is working with one of its suppliers, National Semiconductor Corp., Santa Clara, Calif., to replace EDI links operating within several Samsung business units, including its displays operation.
By July, Samsung expects to have four or five divisions working with National solely through RosettaNet Partner Interface Processes, or PIPs, replacing existing EDI links that handle order management, forecasting, and invoicing, according to Mike Glynn, IS director of business applications at National.
Samsung joins a short list of companies that have voiced intentions to phase out EDI. Intel Corp. a few months ago disclosed plans to retire EDI with suppliers and customers by 2006.
Although other consortium members have long-term plans to transition traditional EDI activities to RosettaNet standards, many still use RosettaNet to supplement existing b2b links and implement PIPs only for certain product lines or for portions of their business.
Analysts speculate that it will take time before other companies follow Intel and Samsung into a full RosettaNet rollout.
"When companies have an existing business process that's running just fine, they won't replace it right away because there is a new standard," said Geoffrey Bock, an analyst at Patricia Seybold Group Inc., Boston. "But when they want to bring on new functionality or consolidate [back-end systems like servers], they'll start to develop more projects that will improve communications between business partners. It's an ongoing, evolutionary trend."
Push is on
Still, consortium executives see a more definitive push toward RosettaNet.
Earlier this year, board members provided a roadmap of their b2b strategies to 2003, said Mary Schoonmaker, vice president of global marketing and strategic development at RosettaNet. This year the priority is to increase the number of partners they are connecting with via the standard. Next year deeper collaboration and higher-level information sharing will be the focus, according to Schoonmaker.
As these more complex activities take shape, the need for an XML-based standard will also gain momentum, primarily because EDI may not be as efficient for such transactions.
"We're starting to see how companies are making RosettaNet integral to their e-business strategies and not just piloting implementations or testing it out," Schoonmaker said. "They're saying they are going to dismantle [existing processes] and rely on RosettaNet to do business."
For both Intel and Samsung, efficiency and cost reduction are key.
Intel, which is using RosettaNet for forecasting, order management, advanced shipping notices, invoicing, and payment functions, sees three times fewer data errors in RosettaNet transactions compared with EDI, a company spokeswoman said. Also, RosettaNet's real-time capability is seen as an advantage over EDI's batch processing.
By moving to RosettaNet, Intel cuts out value-added-network, or VAN, charges associated with EDI, though the company would not disclose what its VAN charges amount to.
The spokeswoman declined to say how many of Intel's suppliers or customers have been converted from EDI to RosettaNet.
Samsung executives in Korea could not be reached, but National's Glynn said similar issues came up in its discussions with Samsung.
"[Samsung's] goal is to move all their suppliers over to RosettaNet," Glynn said. "When we asked them to do RosettaNet last year, they came back and said they wanted to do more than the basic PIP connections."
Samsung and National began using PIPs in August. Today, Samsung sends about 60% of its orders to National via RosettaNet, with the remainder by EDI. By July the number will climb to 100%, according to Glynn.
"RosettaNet standards increase speed and efficiency, which are critical issues in today's fast-paced business climate," said Dong Wook Min, chief of Samsung's procurement strategy team, in a statement. "RosettaNet enhances our ability to connect business processes with both supply and manufacturing partners."
Although it may sound simple, converting EDI to RosettaNet takes time and resources, especially when it comes to making systems respond in real time, Glynn said.
"You can't build on your EDI messaging portion. You have to rebuild all of that," he said. "What you can build off of is the integration to your back end."
While Samsung is National's first customer to go in this direction, Glynn said he is talking with others about making the transition.