"The announcement is an important building block for RosettaNet," says Geoffrey Bock, a senior VP with the Patricia Seybold Group research firm. "It's very good when a major vendor puts a number on something because the number will ultimately face accounting scrutiny. We've been looking for external validation in terms of how big this is going to be."
A group of technology companies formed RosettaNet in 1998 to develop a set of XML-based standards to let supply-chain partners automate interactions between computer systems responsible for functions such as collaborative demand forecasting, order management, invoicing, and payments. Intel says its long-term goal is to squeeze as much as $500 million in annual costs out of its supply chain. There's no timetable for the shift. It could take as long as a decade, says Chris Thomas, Intel's chief Web-services strategist.
Much of the savings will come from eliminating the use of EDI to communicate with suppliers and customers. "The costs in EDI are the human overhead costs because IT departments have to meet to design a custom business process each time with each business partner," Thomas says. Intel views RosettaNet as a better alternative because it's a standard that multiple companies can adopt, eliminating the need for individual customer interfaces.
All 90 of Intel's trading partners in 17 countries use RosettaNet standards. Businesses shouldn't wait for the widespread adoption of Web-services standards such as the Simple Object Access Protocol if they want to save money, Thomas says. "XML is a key to getting started with Web services."
Analyst Bock expects other large companies to go on record with RosettaNet successes: "RosettaNet is really the only game in town in terms of replacing EDI links."