Steve Ballmer this week came up with a novel explanation for high levels of software piracy in emerging economies. Hardware, he says, is too expensive. What these people need, he said, is a "$100 computer."

Market leaders spearheading business-to-business (B2B) initiatives can
often convince supply-chain members to fall into line, but building
solid business cases for XML and other Internet technology investments
is complicating the corporate game of follow the leader.

Firms are acquiring software to eliminate obstacles hindering the
timely exchange of information between themselves and their customers,
suppliers, and service providers, according to "Build an Effective
Business Case for B2B Integration: Assess TCO and Benefits," authored
by Kosin Huang, senior analyst of business applications and commerce
for the Yankee Group. And as the economy improves, states the report,
businesses will allocate more of their IT budgets toward externally
facing supply-and-demand management solutions.

But while market leaders have successfully reworked their supply
chains, the companies hoping to follow the market leaders' lead are
struggling with issues relating to the TCO (total cost of ownership)
and the business objectives.

"Companies like Wal-Mart, Intel, Lucent Technologies, and
Hewlett-Packard are market influencers," said Huang, adding that
streamlining B2B processes with the help of XML (eXtensible Markup
Language) tools can produce many business benefits. "They tend to
wield more influence within their supply chains. They're leading edge.
It takes someone with that kind of initiative to get the rest of the
chain to follow suit."

Companies grasp the importance of investing in B2B XML-industry
standards like UCCnet, RosettaNet, and AS2 direct-connect, the report
states, but these companies are wary of the long-term viability of
these new technologies and of the
potential hidden costs. When respondents were asked what they consider
to be the single greatest inhibitor of B2B standards adoption, the
three biggest concerns were software and services too costly (29
percent), too many standards for one industry (26 percent), and too
many stakeholders defining standards (13 percent).

XML adoption is increasing, though from a small base, according to the
Yankee Group, which also estimates XML transaction volumes increased
about 160 percent in 2003, while EDI (electronic data interchange)
transaction volumes increased by just 18 percent in 2003. Although EDI
remains a popular standard for electronic document transfers, XML
offers added bonuses, such as flexible file format, rich data set,
increased process control, and real-time data exchange.

"Business-to-business is about people-to-people," said Steve Sherman,
vice-president of supply-chain strategy at Lucent in Murray Hill, N.J.
He added that his company's strong IT leadership has played a key role
in determining the value proposition of technology implementations.
"We spent a significant amount of time on the supply chain and working
with partners. Our supply chain strategy is well aligned with Lucent's
overall strategy."

Roberta Fox, president and senior partner at Fox Group Consulting, a
Canadian firm based in Markham, Ont., agreed with the notion that
bellwethers tend to lead B2B integration by example.

"Companies like Wal-Mart have been very insistent in saying, 'If you
want to buy from us, here's what you do.' This is good because it
reduces the cost of buy-in for companies, who can then pass down the
savings to their own customers," said Fox.

As for the concerns some companies have about investing in B2B, Fox
stressed that using an application service provider could
significantly reduce TCO. There is more interest nowadays in using
service providers, said Fox, because companies are starting to realize
they don't have to do B2B integration in-house. Companies can start
with the ASP model, for instance, and then bring the solutions back
in-house at a later date, she added.

"Sometimes IT managers are so busy running shop that they don't have
enough time to step out onto the balcony to see what's happening,"
said Fox.