234
Challenges for Deploying Web Services-Based E-Business Systems in SMEs
PXVWEHWWHUDUWLFXODWHWKHEXVLQHVVEHQH¿WVRIWKHLU
technologies to bridge this gap. For instance, if
SMEs can back up their products’ claims using
real case studies and metrics that drive home their
points and provide industry-relevant details.
Problems are encountered when WS use a dif-
ferent platform than the client application. This
leaves the developers building a client application
unable to understand and appreciate the strengths
and limitations of services their applications call.
Typically, WS are developed and maintained by
groups other than those building the application.
Application developers working with WS lack
insight into the application details, and even the
platform upon which the service is built. Provid-
ing customer support would facilitate technical
appreciation of how the Web service does its
chores. This may assist with issues surrounding
how to make calls to that service or help devel-
opers resolve problems that are inherent within
the service itself. Hence, SMEs should allocate
enough resources to help developers analyze and
diagnose problems they encounter with the Web
service.
Web service developers have a good under-
standing of what the Web service should do, and
how to implement those requirements. However,
they lack the real-world experience of designing
an application directly in support of end users.

Developers of client applications can assist WS
providers by providing real-world feedback on
their performance and reliability. This enables
application developers to better understand Web
service strengths and limitations, while providing
service developers with invaluable information
on service use. This type of information is es-
sential to SMEs when architecting and building
Q H Z V H U Y L F H V6HU Y LFHFRQ V X PHU V F D Q¿HOG W H VWW KH 
work of service providers, which may provide the
only true test of the Web service.
Demand Management
$JUHDWEHQH¿WRI:6LVWKDWLWFDQEHUHXVHG
This may have unintended consequences. For
example, many different consumers can reuse
these services that the provider did not anticipate.
Since Web service providers are loosely coupled
from their consumers, a service can experience
an unexpected demand as consumers increase
their usage. The risk that an SME service pro-
YLGHUIDFHVDVLWVVHUYLFHV¿QGQHZXVHUVLVDQ
increased risk of downtime or lower performance
for critical users. The application servers used
by the SMEs can address some of the risks of
downtime that results from unexpected WS traf-
¿FEXWQRWDOORIWKHULVNV7KXVDQ60(KDVWR
create an active WS management solution that
provides dynamic routing, load balancing, and
prioritized messages.
CONCLUDING REMARKS

E-business adoption and use in organizations
LQFOXGLQJ 60(V KDYH UHVXOWHG LQ VLJQL¿FDQW
¿QDQFLDOEHQH¿WVWRWKHPZRUOGZLGH,QUHFHQW
years WS have generated considerable excitement
in the global computing industry because of its
SURPLVHRIIXOOÀHGJHGDSSOLFDWLRQVRIWZDUHWKDW
needn’t be installed on ones local computer, but
that allow systems running in different environ-
ments to interoperate via XML and other Web
standards. The integration of WS in e-business,
consequently offers an enterprise considerable
opportunities for integration within the enterprise,
either with legacy applications or new business
processes that span organizational silos.
+RZHYHU :6 FRPSXWLQJ RIIHUV VLJQL¿FDQW
technical and managerial challenges to its stake-
holders — suppliers, consumers and standards
organizations — as they determine how to help le-
verage the emerging technologies to create service
235
Challenges for Deploying Web Services-Based E-Business Systems in SMEs
components and automate individual applications.
WS technologies are maturing and industry ana-
lysts predict that the market for WS components
is either about to take off or has already arrived.
This study investigated the challenges that ex-
ist for each of the stakeholders and presented a
framework that organized and interrelated these
challenges in an easily understandable manner to
help study the factors that impact the deployment

of WS. SMEs were studied and then analyzed
using the framework to provide insights into the
managerial challenges they need to overcome
to deploy WS-based e-business systems. It was
suggested that SMEs should start deployment
of these technologies now, but they should start
ZLWKLQWKH¿UHZDOOLQVLGHWKHHQWHUSULVHDQGZRUN
outwards as they gain experience and knowledge
along the way.
The challenges framework presented in this
paper is by no means exhaustive; however, it does
provide a useful insight into the factors that im-
pact the deployment of WS. The next stage of our
research is to investigate some of these factors in
more detail. We expect this article to shed some
light for researchers and practitioners to better
understand the important issues and future trends
of Web services-based e-business systems.
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238
Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Chapter 1.16
B2B E-Business
Robert J. Mockler
St. John’s University, USA
Dorothy G. Dologite
Baruch College, USA
Marc E. Gartenfeld
St. John’s University, USA
INTRODUCTION
Every organization can be viewed from two
perspectives. There are external processes such
as procurement and sales, and internal processes
VXFKDVPDQDJHPHQWDQGRSHUDWLRQV¿QDQFH
marketing, and human resources.
This article primarily focuses on external,
commercial e-business processes. B2B (business-
to-business) e-business is the sale of products or
services, or information exchange, among two or
more businesses through electronic technology,
usually involving the Internet, through a public
or private exchange. The following background

section gives a very brief general overview of
B2B e-business history. In the main thrust of this
article, we discuss making the B2B decision by
examining key B2B business requirements and
EHQH¿WV as well as describing basic approaches to
B2B e-business implementation. In the subsequent
section, the article provides a future outlook for
e-business.
BACKGROUND
During the technological explosion of the late
1990s, virtually every company in the world was
talking about B2B. The concept was sound and
the possibilities were endless, so many companies
rushed into implementing something, anything
that would make them part of this new business
revolution. As often happens when concepts
are implemented, many unforeseen problems
arise during the early stages of their application.
Although the development of B2B e-business
has provided opportunities for organizations to
improve their purchasing systems and so enhance
SHUIRUPDQFHDQGSUR¿WDELOLW\LWLVQRWWKHPDJLF
solution once believed, but rather just another
239
B2B E-Business
useful business tool when implemented under
the right circumstances.
Despite the burst of the dot.com bubble and the
global recession, online B2B trading exchanges
continue to expand. Online B2B e-marketplaces

have remained resilient by providing valuable
advantages over off-line transactions, including
lower costs for buyers, greater access to customers
for suppliers, and increased transparency through-
out the supply chain for all participants (Krell,
2002). For example, members of the WorldWide
Retail Exchange, an online B2B exchange, have
saved over $1 billion since 2000 when the exchange
ZDVIRXQGHG³6XUYH\´
Internet-based B2B e-business tools help
companies master a multitude of objectives,
ranging from reducing raw material, process,
and transaction costs as well as cycle times, error
rates, and inventory, and it improves transparency
(Hartman, Salehi, & Vallerien, 2003).
In 2001, B2B e-business represented about
one third of all e-business volume on the Inter-
net, but it was expected to grow at an accelerated
rate and eventually become the largest segment
of e-business.
MAIN THRUST OF THE ARTICLE
Before the appropriate B2B e-business implemen-
tation approach can be determined, a company
needs to identify key business requirements and
EHQH¿WV2QFHWKLVKDVEHHQHVWDEOLVKHGWKHFRP-
pany can then choose from various implementa-
WLRQDSSURDFKHVWKHRQHWKDW¿WVWKHGHWHUPLQHG
UHTXLUHPHQWVDQGEHQH¿WV7KH%%LPSOHPHQWD-
tion approaches discussed in this article have been
derived from researching thoroughly company

experiences as well as theoretical studies. Based on
these experiences and studies, the ways companies
have targeted their B2B implementation endeavors
can be grouped into four basic approaches, which
will be discussed later in this section.
Identifying Key Business
5HTXLUHPHQWVDQG%HQH¿WV
3ODQQLQJ LV WKH ¿UVW VWHSWR WKH VXFFHVVIXO DS-
plication of any e-business strategy. A company
needs to identify key or core business processes
LQLWVVSHFL¿FFRPSDQ\VLWXDWLRQDQGWKHEHQH¿WV
to be derived from e-business B2B applications
within these key processes. A well-designed B2B
e-business system can be extremely valuable in
achieving basic strategic management objec-
WLYHVLQPDQ\GLIIHUHQWDUHDVRISUR¿WJHQHUDWLQJ
HQWHUSULVHVLQFOXGLQJ LQFUHDVLQJ HI¿FLHQF\DQG
reducing costs, improving management control,
and expanding revenues.
Improve 3XUFKDVLQJ(I¿FLHQF\DQG
Reduce Procurement Costs
This was initially and continues to be a major
application area for B2B. Procurement in its
conventional form is a costly, labor-intensive,
paper-based process. Purchasing personnel often
complain that a high percentage of their time is
spent on non-value-added activities such as data
entry, correcting paperwork errors, expediting
delivery, or solving quality problems. Managing
supply chains through public or private online

B2B exchanges enables companies to (a) directly
LPSURYHWKHLURUGHUWRIXO¿OOPHQWF\FOHE\VWUHDP-
OLQLQJZRUNÀRZDQGEXVLQHVVSURFHVVHVVRDVWR
achieve better order processing and tracking, (b)
better leverage company spending and increase
return on investment, and (c) ultimately optimize
RYHUDOOSURFXUHPHQWHI¿FLHQF\7KLVFDQOLWHUDOO\
save a company millions of dollars.
For example, Unilever, a major consumer-
products company, was able to cut $902 million in
procurement costs over a 2-year period, and by the
end of 2002, was expected to have achieved more
than $1.58 billion in total savings from procure-
PHQWHI ¿FLH QFLH VZLW KLWVQHZ %%V\VWHP7 KHVH
improvements were achieved through Unilever’s
240
B2B E-Business
replacement of a hodgepodge of procurement
systems in use across dozens of product divisions
with standardized e-procurement, online-auction
purchasing management, and demand-planning
systems (Hicks, 2002).
Improve Overall Controls
The information exchanged among companies and
their suppliers through B2B portals creates a stra-
WHJLFSDUWQHUVKLSHQYLURQPHQWWKDWLGHQWL¿HVDQG
builds partnerships with new suppliers worldwide,
strengthens relationships and streamlines sourc-
ing processes with current business partners, and
U D S L G O\ G LVW U LEXW H V L Q IRU PDW L R Q D Q G VSH F L ¿ F D W LRQV

to business partners. Internet-based buy sites en-
able companies to manage inventory levels more
HI¿FLHQWO\E\SURYLGLQJDFFHVVWRGHPDQGOHYHOV
through B2B portals. Through B2B exchanges,
companies can receive rapid responses, shorten
IXO¿OOPHQW F\FOHV DQG LPSOHPHQW MXVWLQWLPH
procurement strategies, which help reduce lag
times and allow companies to more effectively
control inventory levels and so carry less inven-
tory reserves on hand.
A good example of this is Cisco Systems. The
sharing of information between Cisco Systems,
a large Internet product provider company, and
its suppliers on customer demand, product defect
rates, and engineering reportedly enabled them to
substantially reduce manufacturing recycle times
and build better products (Corbitt, 2002).
Expand Revenues
The public exchange of information provided
through B2B exchanges has allowed many compa-
nies that sell to other companies to reach a greater
number of potential commercial buyers of their
products, which has lead to increased sales. It also
provides greater visibility between customers and
suppliers. Web exchanges enable customers and
suppliers to peer into one another’s operations
via a secure Internet connection, and decrease
the suppliers’ time to market with new products.
Also, sellers gain instant access to global buyers,
with over $1 billion in purchasing power.

B2B E-Business Implementation
Approaches
There are four general B2B implementation ap-
SURDFKHVLQXVH7KH¿UVWLVindependent B2B
marketplaces, such as Commerce One, Ariba, and
Freemarkets. The second approach discussed is
the private B2B approach, such as the one found
at Unilever and Cisco. A third commonly en-
countered B2B implementation approach involves
consortiums, as have been formed in the auto,
aviation, chemical and petroleum, building-ma-
terials, aerospace, and retailing industries. There
is a fourth, transitional approach that was imple-
mented by GE (General Electric), for example.
Independent B2B Marketplaces
7KH¿UVWDSSURDFKGLVFXVVHGZKLFKLQYROYHVDQ
H[LVWLQJFRPSDQ\¿QGLQJDQLQGHSHQGHQW%%
marketplace (e-marketplace), is a commonly en-
countered one. Many companies begin the B2B
integration process by focusing on the purchas-
ing cycle. Obtaining goods from suppliers using
independent B2B marketplaces very often is the
fastest and most economical way to acquire B2B
capabilities. This is done by selecting an inde-
pendent B2B provider, such as Commerce One,
Ariba, or Freemarkets, to come in and integrate
the company’s internal systems with the selected
independent market exchanges (e-marketplace).
An independent B2B marketplace or e-market-
place is an Internet destination where businesses

from around the world can come together to buy
and sell goods and services in an auction format.
The destination and the auction are controlled
and managed by the independent B2B provider.
Buyers prepare bidding-project information and
241
B2B E-Business
post them on the site. Suppliers then download
the project information and submit their bids.
Buyers evaluate the suppliers’ bids and may
negotiate electronically to achieve the best deal.
The buyer then accepts the bid of the supplier
that best meets their requirements, and the sale is
¿ Q DOL]HG 3 X UFKDVH U V D QGVX SSO LHUVF D QHLW KHUS D\
a general fee, a per-transaction fee, or a combi-
nation of the two to the B2B provider, otherwise
known as the Web host. Each one of these B2B
providers has its own software applications and
host Web sites.
For example, Commerce One uses its trade-
marked Enterprise Buyer proprietary software to
link companies to all e-marketplaces of the Global
Trading Web community on its Web site Com-
merceOne.net. Commerce One’s Global Trading
Web is the world’s largest B2B trading community
and provides unprecedented economies of scale
for buyer organizations (mer-
ceone.com/company/global_trading.html). This
software can be purchased and installed by an
existing company in order to obtain access to

the Global Trading Web community that enables
commercial transactions to take place between
e-marketplaces.
Private B2B Exchanges
The second approach discussed is private B2B
exchanges. A private B2B exchange is an e-mar-
ketplace created by a single company to provide
e-business capabilities to its business units and
preferred trading partners (-
merceone.com/company/global_trading.html).
In 2000, in the early stages of e-business devel-
opment, many companies trying to be ahead of
the curve jumped into public B2B marketplaces
usually run by third parties. They soon discovered
that there were many inherent problems. Although
at times they were obtaining better prices, many
times the diminished quality and increased rate of
defects in the products were hurting their bottom-
line gain. There were also problems in returning
defective items, receiving orders when promised,
and maintaining continuity in the supply chain
(Prince, 2001).
Today, more and more businesses with the
necessary resources are developing their own
private exchanges. The e-market focus of some
companies, such as Wal-Mart, has turned away
IURPSXEOLFH[FKDQJHVEHFDXVH¿QDQFHVXSSO\
chain, purchasing, and IT managers realized that,
in many cases, their systems and employees were
ill-equipped to handle the technical and procedural

requirements of large public exchanges (Krell,
2002). Wal-Mart has invested in middleware or
enterprise application integration (EAI) technol-
ogy to link its internal applications together and
to a few (up to 12) critical suppliers in the supply-
chain process. The real value of e-procurement,
e-billing, and electronic supply-chain initiatives
is realized through real-time, hard-coded integra-
tion (Krell).
Other companies, such as Siemens AG, have
turned to private exchanges in order to limit ac-
cess to procurement information (Konicki, 2001).
Siemens prefers a private exchange because it
does not want its competitors to have access to
its production plans. Private exchanges are gain-
ing momentum because, for those companies
that have the resources to develop them, they
are able to deliver the capabilities many public
e-marketplaces promised but have not delivered:
the ability to centrally manage procurement across
many business units, the ability to enable real-
time design collaboration and integration with
back-end systems, and the linkage of production-,
inventory-, warehouse-, and order-management
systems.
Consortium
The third B2B implementation approach discussed
is a consortium: a quasipublic online marketplace
approach. A consortium is a group of compa-
nies within a particular industry establishing

an exchange connecting each of them and their
242
B2B E-Business
suppliers. Today, there is a consortium exchange
in almost every industry. Consortium members
fund most of these exchanges.
One example of a consortium is found in the
auto industry. Ford, General Motors, and Daim-
lerChrysler together established Covisint.com as a
global, independent e-business exchange. Covisint
is the central hub where original equipment manu-
facturers (OEMs) and suppliers come together
to do business in a single business environment
using the same tools and interface. Covisint
enables companies to compress planning cycles
and enhance supply-chain planning (http://www.
covisint.com/about/). In February 2002, Covisint
was handling 100 million supply-chain procure-
ment transactions per month. These transactions
take place between the exchange’s members and
more than 2,000 of their suppliers (Krell, 2002).
In 2004, however, Covisint experienced some
major problems that led to the acquisition of the
FRPSDQ\E\WZRRWKHU¿UPV&RPSXZDUH&RUS
and Freemarkets, Inc. (Sullivan & Dunn, 2004).
Transitional
The fourth approach involves an existing com-
pany moving from a private B2B exchange to an
independent, external marketplace venture. A
good example of this would be General Electric

( General Elec-
tric, given its vast capital resources and diversity
across many industries, decided to develop and
establish its own B2B software and private B2B
operations. Subsequently, it used this experience to
set up its own external, independent B2B exchange
(called GE Global eXchange Services) to compete
with the likes of Commerce One and Ariba in
the B2B provider market. This type of approach
would require a large amount of resources and
is therefore not practical for many smaller busi-
nesses. Even for businesses the size of GE, the
resources necessary to maintain such an exchange
can become cost prohibitive (Barlas, 2002).
FUTURE TRENDS
B2B e-business experienced an initial boom
based on unrealistic projections and expecta-
tions, followed by a few years of gloom based on
the process of a new technology outgrowing its
adolescent phase of development.
Recent projections by Standard & Poor’s,
however, indicate that the future of B2B e-busi-
ness looks bright. The growth of B2B e-business
is forecasted to reach $3.6 trillion in 2005, $4.9
trillion in 2006, and $6.4 trillion in 2007 (Kes-
sler, 2004).
One of the more successful B2B implementa-
tion approaches for the future seems to be that
of large, private exchanges, such as Ariba and
Freemarkets. According to Ordanini, Micelli, and

Di Maria (2004), large, private B2B exchanges
especially represent a promising phenomenon and
offer superior capabilities of generating higher
turnovers than smaller niche exchanges.
Electronic B2B transactions, as shown earlier,
are already improving the competitiveness of
enterprises through sinking costs, faster informa-
WLRQDQGHQKDQFHGÀH[LELOLW\DPRQJRWKHUEHQ-
H¿WV,QWKHIXW XUHKRZHYHU%%ZLOOEHQRWRQ O\
the application of technologies, but also a motor
of change for economic processes and industry
structures: B2B applications have an enormous
potential for the alteration of economic processes
in the direction of the knowledge society (Schedl
& Sülzle, 2004).
In the B2B e-business arena, increased activity
through mergers and acquisitions is expected to
continue into the future, not only in the middle
market among small- and medium-sized competi-
tors, but also among the larger B2B exchanges
³0$2XWORRN´
In the near future, more and more companies,
HVSHFLDOO\¿QDQFHDQGLQYHVWPHQW¿UPVZLOOEH
adding multilingual dimensions to their B2B e-
EXVLQHVVVWUDWHJLHV³,QG\0DF%DQN´
Manoj Nigam, president of Micro-D, predicts
that in 2005, we will see leading retailers and
243
B2B E-Business
PDQXIDFWXUHUV³FRPSOHWLQJWKHLPSOHPHQWDWLRQ

RIZKDWZHGH¿QHDVDµIXOOFLUFOH¶%%´&DU-
roll, 2004). Nigam describes this as a sales and
transaction process that begins with accurate and
standardized electronic catalogs from manufac-
WXUHUVDQGÀRZVWKURXJKWRSXUFKDVHRUGHUVDQG
PO acknowledgments.
Because of these and other trends not men-
tioned here, B2B e-business seems to be on the
SDWKWRDKHDOWK\UHFRYHU\HQVXULQJDSUR¿WDEOH
marketplace for its many competitors.
CONCLUSION
The recent economic downturn has forced com-
panies, with reduced budgets and shrinking bot-
tom lines, to perform internal analysis in order to
determine which B2B implementation approach,
if any, to select and integrate in order to achieve
WKHPD[LPXPEHQH¿WVRIHEXVLQHVV(VSHFLDOO\
in light of the upcoming B2B e-business recovery
and the positive future trends in this industry, as
indicated above, a company should carefully select
and integrate B2B e-business into their existing
business in a way that is most appropriate for the
company’s current situation, which makes this
process a situational, contingency-based one.
Organizations should be aware that although
HEXVLQHVVPD\SURYLGHPDQ\EHQH¿WVDQGWKH
future looks bright, it is not the magic solution it
was once assumed to be but rather just another
potential business tool to be implemented under
the right circumstances.

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