XML improves on HTML by allowing tags that not only describe the way information should look on-screen, but also describe the data itself. The language doesn’t use a standard set of tags; XML programmers can define the tags they need as they write documents. The only restriction on this flexibility is that all of the applications that will read an XML document must understand the meaning of the tags the document uses. Suppose that your supplier decides to make its invoices available online in XML rather than HTML. The programmer who creates the Web page can use the tags <type> and <total>, so that the document includes the lines <type>invoice</type> and <total>$50.00</total>. If your accounting system understands the meaning of the <type> and <total> tags, it can read the XML document on the supplier’s Web site and determine that the document is an invoice and that you owe $50.

Business-application vendors are developing standard XML schemas, sets of tags that describe the data in a document. Once vendors reach a consensus on the schemas for common business documents such as invoices, purchase orders and payments, they will have the basis for a common e-business language. Companies running different accounting and business-management applications will be able to exchange documents and participate in cross-system workflow. For example, a customer’s enterprise resource planning (ERP) system might output a purchase order as an XML document and send the file across the Internet to a vendor’s ERP system. Then, the vendor’s ERP system might parse (i.e., interpret) the XML file that contains the purchase order data and post the data as a sales order transaction in the vendor’s ERP system. To exchange business transactions, applications will need only XML parser code and knowledge of the language’s standard schemas.

Universal Data Description

XML has the potential to become a universal data-description language, something that EDI failed to achieve because its high cost and complexity prevented many small businesses from using it. EDI-to-XML and XML-to-EDI translation is already taking place, so EDI applications can function in the world of XML. After all of the EDI transaction formats have been mapped to new XML schemas, EDI-based e-commerce will likely morph into XML-based e-commerce. In addition, other business-document interchange formats, such as those defined by the Open Applications Group Inc., are being converted to XML schemas. Some ERP vendors support Open Applications Group document interchange formats, so those formats’ translation to XML will accelerate collaborative commerce between ERP systems.

Financial transaction data isn’t the only information XML is good at displaying; the language can serve many other purposes. One area in which it might benefit both businesses and consumers is online shopping. If e-auctions used a standard XML schema to describe items in their catalogs or bids users submit, e-procurement systems that understood that schema could search the Web for a particular item. For example, the e-procurement applications might look for sites with a <site type> tag of "e-auction"; then, within each auction site, they might find all items labeled with a certain XML identifier, such as <SKU>12345</SKU>, that are priced below <bid>$100</bid>. If an e-procurement application found the item it was looking for in multiple auctions, it could comparison-shop to get the best price.

Using XML to define the content and structure of a financial report could also have many benefits. A report in XML is easier for applications to interrogate than a report in a proprietary format. XML tags can limit who has access to each part of a report. If an XML reporting schema became standard, applications could extract data from a multitude of similar reports on the Internet for comparative purposes. Reporting portals can better collect and display data from relevant reports if the reports are stored in XML formats rather than text files. And report mining (searching for specific data in a report, applying rules and triggering actions) becomes much more practical when reports use a standard XML format, so this new language might make true exception reporting a reality. Some report-writing products, including Actuate e.Reporting and FRx Software Corp.’s Alytix (formerly called FRx Visual Reporting), already use XML as one of their output formats, anticipating the need for a standard method of data mining, and searching and viewing reports.

XML is being used as a foundation for languages designed to perform specific business tasks. For example, UWI.com used XML as the basis for its Extensible Forms Definition Language (XFDL), which is designed to create complex business forms for use over the Internet. XFDL is already supported by electronic form and workflow vendors, such as Action Technologies Inc. and Optika Inc. Other XML variants that focus on handling specific types of commerce are included in the Commerce Business Library, which Commerce One recently released.