In September 1998 in Las Vegas, Nevada, Microsoft hosted its first Business Applications Conference in which the company unveiled its vision of the future IT infrastructure for businesses. This vision relies heavily on COM and Distributed COM (DCOM) to create an internetworking architecture called Windows Distributed interNet Applications (Windows DNA) architecture.

Microsoft anticipates companies will use Windows DNA to create internal digital processes built on a combination of hardware and software that Microsoft calls the Digital Nervous System. Bill Gates describes the Digital Nervous System and Windows DNA architecture in detail in his recent book Business @ the Speed of Thought (Warner Books, 1999). A Digital Nervous System provides the opportunity for a business to make information ubiquitous, flatten the management structure, empower employees to make business decisions, and lower the barriers that exist between trading partners. James Utzschneider, director of evangelism for Microsoft's Application Developer Customer Unit (ADCU), said a component strategy works very well in building solutions of this type, and he presented Dell's successful online store as an example of this technology in use.

At the March Commerce Solutions Briefing in San Francisco, California, Microsoft briefed the press and analysts on its Internet product strategy for the next year or two that uses a new Extensible Markup Language (XML)-based commerce architecture named BizTalk. Microsoft hopes a million new small and midsized businesses will create e-commerce-based trading relationships with Microsoft business partners. Microsoft aims to use BizTalk to provide a cross-platform e-commerce framework for businesses to use to conduct business transactions. BizTalk will result in many new product introductions from Microsoft in the years to come.

Microsoft's strategy is to use the rapidly exploding interest in XML to develop XML as a standard that ties together the company's diverse e-commerce offerings into a set of services that the company and its consultants can sell. Microsoft views XML as a document interchange data transport for cross-platform business exchange—just as Rich Text Format (RTF) is an interchange format for text and formatting. Microsoft also visualizes the XML architecture as EDI for the masses, and the company wants to be the most important industry player developing emerging XML standards.

Why is XML important? You use XML to create tags that explain the structure and content of embedded material. You can tag a document with XML and simply reference that tag to index the document on the Web. You can also use XML as a document map in an EDI-like transaction. In fact, XML tags can be anything that the sender and the recipient agree on. XML's incredible potential for data transport is in the power of the parsing application that reads the XML tags and acts on the data.

At the heart of the BizTalk offerings is a new XML-translation server named Microsoft BizTalk Server. Microsoft hopes to use component architecture to easily let one application connect to another application through the BizTalk Server. For example, a small company running a Great Plains business solution could use a BizTalk connector to send an XML transaction to a large accounting system running a similarly connected solution from SAP. The success of this strategy for Microsoft hinges on how quickly, how well, and how uniquely positioned the company can make its XML offerings while maintaining a standards-based approach. Several other companies are also developing XML application servers. At press time, Microsoft was planning a BizTalk Server beta for July, although all the BizTalk products might not appear until fourth quarter 1999 or first quarter 2000.

Graham Clark, director for product industries at Microsoft, and Marcus Schmidt, industry marketing manager for supply chain and manufacturing at Microsoft, explained that Microsoft sees XML standards arising out of three main areas. The first area is the existing EDI standards various industry groups have created. The second area is from EDI hubs (what GartnerGroup calls channel masters) that are Microsoft partners, such as large automotive companies or oil companies. Internally developed standards from Microsoft account for the last area of XML standards.

Microsoft doesn't have a competitive advantage over other vendors for XML standards. At press time, Microsoft had planned a BizTalk design review and forum for June to make the BizTalk protocols part of an open standard. We need to wait and see what proprietary standards Microsoft develops or acquires in the near future.

Microsoft recently acquired CompareNet, which uses a catalog schema to index objects. CompareNet lets you competitively price and shop for items on the Internet, and Microsoft intends to use CompareNet's technology for BizTalk.

You might see the footprints of BizTalk Server show up as new document templates in Microsoft Office 2000. The next release of Microsoft SQL Server will incorporate native support for XML documents and offer full integration with SQL Server Data Transformation Services (DTS). Microsoft intends for SQL Server to handle XML documents no matter what platform or application creates them. You might also see Microsoft aim new releases of Microsoft Site Server at the small and midsized business markets.

BizTalk Server extends Site Server 3.0 Commerce Edition (SSCE—also called Commerce Server) with interchange and data transformation capabilities and adds these features to the Commerce Interchange Pipeline (CIP) development environment. You can build components using the Windows DNA architecture that are in the CIP for e-commerce applications.

To make BizTalk Server a major business, Microsoft will need to act as a fair broker between business partners— and Microsoft will need to perform this function for a variety of target industries. A large part of Microsoft's development efforts will shift away from general consumer products and target large vertical market industries. Microsoft plans to develop ActiveStore for retail in-store systems, Windows DNA for Financial Services (Windows DNAfs), ActiveX for Healthcare, Windows DNA for Manufacturing (DNA-M), the Value Chain Initiative (VCI) for supply-chain management, and other industry initiatives.

Microsoft plans to have three different consumers of BizTalk services: commercial applications or independent software vendor (ISV)-developed applications, EDI transactions between hubs and spokes (e.g., suppliers), and The Microsoft Network (MSN). Microsoft hopes to develop MSN as a portal through which businesses can offer information and services to businesses and consumers. Businesses would list products and MSN would serve as the intermediary between the purchaser and the supplier, similar to consumers using CompareNet's huge database of product information to compare and research products.

Microsoft might have bitten off more than it can chew—BizTalk is an ambitious program. BizTalk represents the single largest initiative for ADCU since Microsoft's Internet awakening a couple of years ago. But Microsoft does have a talent for doing business with a broad spectrum of business partners. The company might pull off this new undertaking.