Business-to-Business Model

Primarily electronic commerce between businesses First form of business-to-business was Electronic Data Interchange EDI defined as 'a way to electronically exchange business documents' Internet-based EDI

Business-to-business electronic commerce is primarily the conduct of commerce between businesses via the electronic medium. It is expected that the most significant growth of electronic commerce will be in business-to-business sales and according to Forrestor Research of Cambridge, one of the leading research companies in the US, business-to-business sales are expected to reach US$7 billion by the year 2000. This is based on the expectation that at least 60% of current privately held electronic data interchange (EDI) business services will shift over to use of Internet technologies in the next four years.

EDI is one of the first form of business-to-business electronic commerce established in the commercial environment and is defined as 'a way to electronically exchange business documents, such as purchase orders and invoices, between companies'

EDI relies on a standard messaging structure to maintain the supply chain between a company and its trading partners. Each industry has a different standard set of rules administered by the American National Standards Institute's (ANSI) committee. EDI typically runs on a Value Added Network, which is primarily a proprietary network. In a typical EDI scenario, Company A which trades with Company B typically will sent a purchase order through an EDI standard message which will be receive and acknowledged by Company B through a EDI acknowledgement standard message. One of the fundamental disadvantages of EDI are its costly set-up due to its proprietary and complex nature making it accessible only to large companies.

The Internet has lower the barriers to business-to-business e-commerce in both the cost and complexity of the system. However, internet commerce will not replace the traditional EDI systems because companies have invested millions in the establishment of the infrastructure. Rather it will most likely give rise to hybrid Internet-EDI solutions.

One of this hybrid solution proposed by the XML/EDI Group is to extend EDI's functionality by connecting it on the Internet with the emerging Extensible Markup Language (XML) standard.

XML is a derivative of the Structured Generalised Markup Language (SGML) and is midway between SGML and HTML in complexity. XML adds to HTML the ability to create one own markup tags, and to specify how those markup tags should be handled by the XML-parsing browser. Also, a person can use XML to structure documents in a way that can be interpreted by the XML reader software.

For instance, a person could use XML to define section headings, paragraphs, and footnotes within their document and an XML-capable browser reading that document could appropriately format the elements, and automatically construct a table of contents based on them. Another example is where a purchase order in XML, defining and using , , and tags to indicate what to buy. Then, when the document is sent to the supplier, their software could automatically extract these tagged elements and feed them into their order entry system for automatic processing.