This document discusses opportunities and risks in the automotive supply chain data exchange industry. It notes that the industry is undergoing shifts from large to smaller suppliers, increased electronics/regulation, and more competition. While EDI has historically dominated, XML standards are emerging. The document analyzes the potential for fundamental XML networks, utopian ESB superplatforms, and realist multi-format hubs. It argues a hub approach balancing EDI, XML, and applications is most realistic to compete against entrenched EDI providers and enable more suppliers.

1. Automotive Data Exchange
Economies
• Separating Strategy From Technology
• Understanding the Industry Dynamics
• Spotting Trends
• Seeing Business and Competitive Issues
Clearly
• Understand the Risk / Opportunity
• Place Your Bets !

2. What’s Happening Now?
Domestic Automotive Biz Technology Evolution
• Punch Cards, Mag tape,
• Rough Few Years
Mainframe systems, EDI,
• Michigan IT all Auto Sectors off
avg. 60% IT contracts 2006 Exchanges, VANS, Hubs,
Portals….whew!
• Auto IT Data Ruin Rate is some
portion of 5-9 billion. They want
• XML Standards….the
it back. Just getting wise.
messiah is expected
• Supply Chain has diversified
• Canons, Live Semantics,
since 1950’s – smaller
suppliers, electronics, on the wire conversions,
regulation, Vehicle EOL issues, and better
competition.
• Where are the carriers?
• It’s Frothy. It’s getting even
more interesting. Alt fuels…

3. Shifting Sands
• Largest Supply Partners in Fiscal Free-Fall
• Pushing from lean, JIT, to real time.
• Small, Medium Biz, are the industry’s
saviors
• Aforementioned not 100% EDI
(historically)
• Also, EDI or not, do not have same IT
resources for BizProc as giants (fat good it
did them).

4. Shifting Sands (cont.)
• Did bad IT practice start the slide?
• AIAG says it was prime contributor
• IT waste in Supply chain sucked 5B out of
industry’s pocket; enough to cover labor
margin competition shortfalls between US
& Japan
• Will the crumbling supply chain, shift to
medium/small biz, repeat the crisis?

5. IT Industry to the Rescue
• We ride the white horse – ASP, Internet, XML
• From VANs (license to steal), to Hubs, Supply Portals,
now ‘XML Super Supply Bus’; IT industry takes costs
back out through architecture and innovation.
• Even VANs, the evil culprits, are starting to deliver more
value, and telcos are on a buying spree to consolidate
and streamline
• At any moment, the E2E industry can drop pricing by up
to 50% and still compete!!!
• Microsoft uses ADP !!!!! For HR and Global Logistics

6. Trends
As OEM’s diversify from the major suppliers, two
things happen:
1. Need more SMEs, and more data interfaces
2. OEM’s (domestic) become less the total focus
of suppliers; still huge, but just a large piece of
a diverse puzzle
3. As SME to OEM market transitions to open
architectures to enable (WS-SOA) lower cost
of interfacing – more opportunities for the
medium and little guys enabled through hubs.
Why?

7. Why?
• OEM’s, victims of own inertia to change
have started initiatives (AMDX, JADM)
• Huge Disparity between sponsors and
Doers (Big – Small)
• Commerce hubs and SOA open mid-tier to
the market. Re-use. Become Free of
Captive Networks. What took so long.
W3C!

8. Competitive Issues
• Supply Chain Sector IT services 1.5B
• Smallish pool – stable < 66% use EDI
• <1/3 remainder is paper/email/custom/ New Age VAN
• Retail OEM to Dealer services sector and aftermarket
dominated by ADP/Reynolds 2-4b (how sliced) 85% of
total EDI market.
• New hosted hubs, ASPs, commerce nets on per use
basis….never a better time for the last third of the supply
chain to sign up.
• New Supplier Hubs all the time – Telco VAN
partnerships, Cutting edge IFR systems (Covisint)

9. It may not be enough to just compete -
• VANs can slash KC pricing by 50% and
survive, thrive. Traffic growing by 20-30%
year.
• Offering equivalent services is no incentive
• Catering to ‘XML Faithful’, is a marginal
biz proposition (Covisint lost 500M, Grand
Central Tanked).
• These services are core cash flow to end
users – none dare mess with that.

10. Technology Jungle Guide
• EDI to XML Religious Wars
• Hubs EDIINT
• SuperPlatforms
• E2E (end to end providers)
• B2B Portals for Verticals
• Fundamental and Layered
• Industry ESB
• World Core Component Net
• Demand Data Format
Translation using Global
Semantics – UDEF or CCM IFR

11. Three Architectures
1. Fundamental XML
2. Utopian AMDX-JADM ESB World CCM
Enabled (SuperPlatform)
3. Realist SuperHub for EDIINT and XML
Universal Access
Three Competitors that Pose Risk:
1. E2E /VANS
2. Supplier Portals
3. Other Telcos on the acquisition warpath

12. Functionally
No matter what path, they all must do certain,
minimum things:
1. Provide interface edge to the CLOBS
2. Bear the data to the recipient, format blind
using IFR or native data (with a promise)
3. Provide access to SME’s from browsers to mid
range IS
4. Provide enough application diversity, to fill
holes. Each product philosophy has holes.
5. Without all of the above, plus reliability,
economy, and speedy cutover, there is no
reason to leave a VAN or E2E

13. Fundamental XML Network Services
• Let’s bust a myth – there is no routing at doc level. WS Address and
Routing are NRFPT. No Global System. No back end. No one is
home. Rather, anything can be routed at element level – even Flat
files via FTP – if you wanted to. Nobody cares. All commerce policy
is conducted at ends or in hubs, by databases, and by applications.
• Basic services are security, validation, management (policy,
monitoring), transformation is the specialty. Leaders are XPATH
accelerator geniuses. Lets bust another myth – the XML promise is
“canon” – the elimination of need to transform. If you are wasting
cycles doing repetitive transforms, then get back to mapping your
BODs. Transforms are transient in a utopian XML world.
• Validation. Nuff said. If originating CLOB is clueless as to schema,
we have a fundamental problem. Databases have been doing this
well for years. Validation must be tied to exception handling in
enterprise backbone. Native database communications are good at
this.

14. Fundamental XML Services Cont. (XML BOX)
• Wiring this to CLOB is as time consuming as any software approach
• If there is any hope for this, look to network and datacenter engineers to
justify.
• Migrating existing services from corp. to carrier requires registry services –
hardly well understood. Or, not yet common (there has been some
progress). Waiting for ITU, CCITT, IETF
• Don’t believe me? The entire industry is tiny, unstable, deployments of
record are small, focused, particular, fussy. Hardly a good bet for a Telco to
offer a vertical as a services offering
• Too low level – to remote from business operational goals, too disconnected
from the work of standards and trade bodies; except in focused, rare, crafty
handmade deployments (RouteOne DataPower).
• Let industry mature one more year – and see who survives as the general
server market and SOA get cheaper, faster. It has happened every time and
in every instance of hardware coprocessor specialization.

15. Utopian ESB SuperPlatform
• A SuperPlatform contains a well integrated OS, RDB,
ODB, WS-Stack, HTTP Services (Web Server
Virtualization), and Virtual Database that uses ODBC or
native agents to make all connected systems appear as
a normalized data model. Some can run Java, .Net,
MonoCLR, Ruby, C#, etc. OpenLink has Semantic
Extensions.
• An ESB is similar, without object store, they make you
buy that, and language runtimes are optional. Put them
both together, you get mother. XML Powerhouses,
XQuery, XSLT. Cape Clear is one such ESB.
• ESB’s are much easier to interface to CLOB, they were
made to not only replace, but to augment legacy and
ERP with SOA.

16. Utopian ESB SuperPlatform
• Why Utopian? Caters to Emerging standards that are
actually in use (JADM, STAR)
• No EDI (Not precluded, just not ideal).
• Bearer encapsulates OAG CCM State and Registers
BOD, holds standard XSL, and makes applications work
a little less hard, and removes costs by not requiring
every mid size system to be failsafe. But wait, there is
more!
• Much easier for application vendors to get it up.
• Likewise for advanced application vendors that have
been shut out by the VAN Mafioso, these are XML savvy
companies that have been singing the hymn longer than
there were believers. Utopian ESB is best way for them
to get traction. Need them for comprehensive delivery.

17. Realist
• B2B Hub and Spoke Architecture
• An Application server built for commerce with design/runtime features.
• Sticks to CLOB and ERP like gum in hair.
• Some have software component manufacturing; the ability to split off zero footprint
runtimes for special applications
• Most have orchestrator for state
• All are EDI and XML ready. CCM state I am unsure, but can be extended.
• The is the way to get to profits while the XML messiah takes time getting here.

20. I stole a picture of an ESB !

21. Bottom Line Risk Opportunity
Opportunity:
Risk:
1. XML Push is now with Orgs.
1. A Bruised Auto Industry
2. Start before the shine is dull
2. Entrenched Competition on OAG
3. ATT Sterling – need say 3. Partnerships abound
more? 4. One good case applicable to
4. Hosted Solutions EDIINT many industries
make entry into market trivial 5. One mature service package
applicable to other solution
5. E2E can Slash KC costs with
resellers and carriers
a key stroke
6. Small % of OEM –Retail VAN
6. Innovation Purveyors are 3
revenues = ~1B.
years ahead in architecture
7. Model has been proven at
7. EDI may never let go…may
Rt. One – in a tiny way.
be too…’there’.
8. EDI 95% - XML <2% Now…?

22. How Get In?
• Pry In – Operate and Compete at Value
supporting EDI and XML
• Will In – ride standards and forward
thinking to pull OAGis into vogue.
• Buy In – Partner, Acquisition – leverage
hard work of other innovators.

23. Super Future of Demand IFR Via UDEF and
Carrier Services
1. Global Semantics via registry – DNS for
Data Definitions
2. Global State bearing services / Test,
stage & service guarantee
3. SDO standards via ITU – CCITT - IETF