Enabling Standards
Business process management standards are evolving to enable selective BPO, selective insourcing and selective captive sourcing. The Extensible Markup Language (popularly known as “XML”) permits interchangeability of text in one format, just as “HyperText Transport Protocol” (“HTTP”) serves as the message transport system for the Internet. The “Business Process Execution Language” supports uniform definitions of business procedures for rapid development of software to implement the defined business processes.
Within industries such as the Human Resources Outsourcing industry, trade associations are active in defining standards for communications of commonly used information classes. As such, XML databases can be developed for easy interchange of data between enterprises and between enterprise customers and their outsourcing service providers.
Competitive Considerations
Standards organizations promote competition by giving enterprise customers a choice of suppliers that meet well-developed, written industry standards. Yet standards organizations can restrict competition, such as when they promote as a “standard” the services, software or products of one supplier that has no competition, either due to early development or to the monopoly of such supplier’s patents and other intellectual property.
The “De Facto” Standards Organization: The Incumbent Software Developer
The advent of Enterprise Resource Planning (“ERP”) software in the 1990’s created de facto standards for software that supports business administration. With such standards, the choices in hiring of employees or outsourcers to manage such software become more transparent. Once implemented, ERP software is likely to remain in place forever, in the absence of a merger or failure of the software vendor. This stability creates an environment favorable to IT outsourcing because of the economies of scale that are required to effectively obtain the benefits of the ERP software.
What the CIO and the CEO Should Know
Before adopting a standard, therefore, the CIO and the CEO should understand the nature of the competitive and collaborative processes that are in play that result in the adoption of the “standards,” the antitrust implications and the cost implications of being committed to standards that might later be superseded or made irrelevant by emerging technologies. As “open source” and open standards enable a freer flow of information with strong security, standards can be used for competitive procurement of services from service providers who follow the same procedures.