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Coming to life
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UCC and EAN will officially join in January as the newly named GS1, a global organization that will oversee the GDSN and the Global Registry. UCCnet, in turn, is becoming a separate data synchronization pool that will compete with WWRE, Transora and others for data synch customers. A data synchronization pool is a mix of software and data standards experts who review a company`s product data, poring over spreadsheets and other documents, to make sure that product descriptions are uniform, meet GS1 standards and coincide with the descriptions used by the company`s trading partners.
As a sign of the growing interest in this market, WWRE, Transora and GXS face competition for data synch services from the likes of software companies Click Commerce Inc. and QRS Corp.
The pricing controversy
To stand out in the market, each exchange touts its unique set of value-added services supported by data synchronization. Their hope is to provide services that will lock in the most clients long-term, building loyalty even after the GDSN further develops and supports, at least theoretically, interoperability among all industry data pools worldwide.
Global eXchange Services, which has a history offering EDI VAN services, serves about 1,500 companies in the U.S., offering data synchronization services as well as a recently launched web-enabled Trading Grid that provides real-time messaging between trading partners and integration with back-end ERP systems.
Transora, which has more than 12 manufacturers and more than 10 retailers from six countries in data synchronization projects (including Kroger Co., Wakefern Food Corp., Schnuck Markets Inc. and Publix Super Markets in the U.S.), is taking what some analysts say is the most aggressive approach to offering value-added services supported by data synchronization.
Most of its participating retailers are planning to use Transora`s direct store delivery pricing service, which sends pricing and promotional data from a Transora server to all of a retailer`s stores. Transora reasons that since pricing is part of the product data, there`s no reason pricing shouldn`t be one of the elements that Transora provides.
Transora is the first to offer the direct pricing service, a move that has brought critical comments from its competitors, who contend that GS1 has yet to set industry-wide DSD data standards. "Transora is mismanaging expectations in that regard," WWRE`s Parnaby says.
Sprieser counters that Transora is responding to several of its retailer clients. "Companies told us they didn`t want to wait for standards," she says.
Moreover, she says, Transora`s early move into DSD, a service that analysts say appeals to many retailers, gives her organization the opportunity to work more directly with the DSD standards-setting process. "By going live with the application early, we`ll know what works and what doesn`t," Sprieser says.
Analysts say Transora`s aggressive approach will benefit the retail industry by helping to develop and test an effective DSD system as well as give it an early market lead. "DSD was a nice coup for Transora," says Kara Romanow, an analyst with AMR Research.
Adds AMR analyst Garf, who recently wrote a report on GS1: "Transora`s strategy for staying more involved in developing the DSD standard is the same approach many software vendors are doing relative to RFID prior to having all the standards set. The industry needs leading retailers and software/service providers to push the envelope when it comes to standards, or we wouldn`t have the bar code today, for instance." RFID, or radio frequency identification, uses a system of radio frequency tags and Internet-connected readers to track products throughout the supply chain.
Transora is also offering price-and-promotion management and new-item management services that channel information between retailers and suppliers. The new-item management service is designed to include more retailer-specific product identifiers, such as the particular units per pack ordered, than is included in product definitions within basic data synchronization, Transora says.
WWRE is planning to introduce DSD and other services in the near future, but for now is focusing mostly on data synchronization in addition to services Transora no longer offers--auctions and procurement services.
The broader market reality, experts say, is that the exchanges are moving toward a market where they cooperate as well as compete in serving the same clients, experts say. "It`s co-opetition, we compete on value-added services," Parnaby says.
Publix, for instance, is a WWRE equity member that uses Transora for data synchronization but WWRE for auctions, Parnaby says. WWRE also partners with GXS, a competitor in data synchronization services, to offer a product information management tool that organizes a company`s back-end product data for integrating with WWRE`s data pool. GXS recently acquired product information management system provider Haht Commerce.
Inevitability of interoperability
Other internal data integration companies--including Velosel Corp., Cyclone Commerce, SeeBeyond, WebMethods, Microsoft Corp. and Trigo Technologies, a unit of IBM Corp.--are cooperating with the exchanges to prepare retailers` internal product data with the industry data pools offered by WWRE, Transora and UCCnet. "Retailers are looking at the interoperability between data pools and internal product management systems," Garf says.
GNX offers data synchronization services through Transora, but focuses its direct services on auctions, sourcing and supply chain collaboration services.
A retailer`s decision on which data synchronization service to choose depends on its near-term needs, such as getting connected with suppliers already involved with a particular exchange, experts say, noting that all data pools will eventually interoperate.
"If the bulk of your suppliers are attached to one exchange or the other, it could be quicker to get product updates through that exchange," says Langowski of BearingPoint.
Adds Garf: "The exchanges don`t care who you use as a data pool, they just want you to use one, because once they get a critical mass of companies adopting data synchronization, they`ll have more opportunities to sell these value-added services."
Ahold, a grocery company with nine branded operating units and $39.4 billion in 2003 retail sales, including $27 billion in the U.S., is one of the early adopters of data synchronization and related services, which it addresses through the WWRE.
The grocer, whose U.S. brands include Stop & Shop, Giant, Tops and Peapod, expects to share product information through the WWRE with 80-90% of its thousands of suppliers within 18 months, van der Pluijm says. The grocer sees the WWRE and data synchronization as key elements of its strategy to improve supply chain efficiencies and in-store service, he adds.