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Find this article at: http://www.business2.com/content/magazine/indepth/2000/10/16/21267

The Fight for Lingua Franca

Consortia and traditional standards groups battle over who will set future technology benchmarks.
From the October 24, 2000 issue

Amy Zuckerman

Illustration: James Kaczman

View the "Consortium Versus Standards Group" Xplanation

In the not-too-distant future, visionaries say, we'll live our business lives completely networked. Orders and fulfillment, contracts, and the myriad details of everyday commerce will be transmitted instantly over the vast, seamless, interoperable Net-linked network. And, thanks to the evolution of wireless technology, entrepreneurs will be able to run a company from the Gobi Desert carrying only a cell phone and a laptop.

It's a nice dream.

But that world probably seems like a sci-fi landscape to someone sitting in front of an office computer now, trying to convert a WordPerfect 5.1 file to an MS Word document he or she can actually read. Take this sort of simple problem and magnify it throughout a company, and it's obvious why systems integrators and "middleware" consultants are living the high life these days.

A fully networked business world needs a lingua franca in order to conduct transactions across multiple platforms, software packages, and networks. But that would involve creating agreed-upon data standards. And standards have long been a struggle in the chaotic world of the Net. Traditional standards-setting organizations, such as the International Organization for Standardization, with its heavy reliance on procedure, have admittedly been slow in adopting benchmarks for the Net-driven business world.

This business network-language void is fast being filled by organizations with arcane acronyms like IETF, OMG, OASIS, and NIIIP. These are just a few of what are called high-tech consortia, organizations set up by such corporations as IBM, Intel, Compaq, and Hewlett-Packard. These consortia allow their members to lay their technology cards on the table in the form of intellectual property rights. By sharing intellectual property–a sort of high-tech copyright for computer code–members can evolve new, more compatible technologies, which are then applied to product design.

Consortia are nothing new, although high-tech mythology would have it that new technologies emerge from the basements of struggling entrepreneurs. (There are indeed technology breakthroughs, like the development of the Linux operating system, that can be attributed to individuals.) But for the last 15 years or so, many standardized approaches to technology–and many of the technologies that are promoting a Web-based world–have been developed inside groups like RosettaNet, the World Wide Web Consortium (W3C), and the Wireless Application Protocol (WAP) Forum.

Consortia also play a secondary role. They can offer previews to technology's future course, whether it's what cell phones the world will be buying next year, innovations in Internet security, how trading partners will communicate, or how cars will be networked for Internet access.

But there's a flip side to these groups. Critics fear that this new breed of tech alliances has the potential to create corporate collusion that could lock down markets and drive out future innovation.
Anatomy of consortia
Most consortia are born and operate in the same way. Companies, sometimes with government assistance, choose a specific type of technology they want to make standard so it can be applied over and over without new research and development. The programming codes for computer clocks, for instance, were hammered out in the Object Management Group (OMG) consortium.

Consortia can have thousands of active members–like the Internet Engineering Task Force (IETF), which supervises Internet maintenance–or as few as five. The international specifications for 56K modems were developed by a small consortium in 1998. Larger groups usually develop standards for existing, but conflicting, technologies. The Open Group (TOG) has helped standardize Sun Microsystems' unified Unix operating system, which drives most of the Web.

Some consortia, such as RosettaNet, are even more ambitious. RosettaNet's 250 active corporate members are developing more than 100 specifications for integrated business-to-business communication. As part of this larger process, RosettaNet has developed what it calls Partner Interface Processes (PIPs), which will allow the computers of trading partners to communicate directly with each other.

As Keith Goldsmith, director of technology services at CTI Logistx in Jacksonville, Fla., explains, computers will be able to talk to each other about invoicing, parts, or whatever is required to conduct business, in much the same way humans talk on the telephone. "‘I need these parts, I don't have these parts.' It will be that sort of communication from computer to computer and in real time," Goldsmith says. He believes the first generation of PIPs will be used by "the large 800-pound gorillas–first-tier manufacturers supporting their original equipment manufacturers to reduce inventory and costs because of the drop in processing time."

Retail giant L.L.Bean, for instance, is conducting a pilot program using PIPs. If all goes well, the company has announced it will cease working in a paper-based system.

Another large consortium, the Organization for the Advancement of Structured Information Standards (OASIS), is developing common Web languages like SGML and XML that are crucial to the widespread adoption of ecommerce. Its major role is coordinating global standardization efforts for these languages to ensure worldwide compatibility among computer systems and Web browsers.

Sometimes consortia work in tandem with governments to develop technology that will promote a networked economy. The National Industrial Information Infrastructure Protocols (NIIIP) Consortium has entered into a cooperative development agreement with the U.S. government to create open industry software protocols through the government-backed Advanced Research Project Agency. These will allow manufacturers and their suppliers to effectively become, data-wise, the same enterprise, even though many of these intracompany interactions occur between both sophisticated and relatively unsophisticated users and operating environments. These protocols are precursors to "virtual enterprises."

NIIIP defines a virtual enterprise–of which there are currently none–as a temporary alliance of independent member companies formed to quickly exploit fast-changing, worldwide product manufacturing opportunities, usually centered around an individual product. Virtual enterprises will assemble themselves based on cost effectiveness and product uniqueness, without regard to organization size, geographic location, computing environments, technologies deployed, or processes implemented. Virtual enterprise companies share costs, skills, and core competencies that collectively enable them to access global markets.
Consortia craze
Consortia are sprouting up like new mansions in Silicon Valley. Participation provides companies with some security that they are synchronized with the dominant market forces, and that their products won't be obsolete as soon as they come out of the box. While these companies may lose their unique product design, they gain by having a hand in setting the standards for an entire market segment, according to consortium proponents like Carl Cargill, director of standards at Sun Microsystems.

"Consortia tend to go where standards organizations won't go," Cargill says. "The Open Group can enforce compliance because it's a voluntary organization. A company signs a contract that commits it to certain activities. Sun, for example, gives up certain rights, such as its freedom to change specifications, in exchange for speed and market clout."

Laura Walker, executive director of OASIS, argues that consortia also offer the only viable way to facilitate development of specifications in ways that are neutral and democratic. "As a neutral party, we can promote cross-industry work and bring competitors to the table."

Speed is another major factor for the success of consortia. According to Cargill, consortia allow industry representatives to hash out standards as a team, developing specs far more quickly than traditional approaches allow. And in the high-tech world, where new technologies are being created so rapidly, speed equals survival. Explaining the proliferation of consortia since the 1980s, Guido Guertler, director of standards and regulation at Siemens, says that high-tech marketing and product-development people found that interface design and testing went faster with the consortium model. "We are much quicker, have people who understand the problems in the same way, and if we're willing to agree on something, then there's a wonderful basis for agreement," says Guertler. And, he adds, "Industry has said, ‘Why should we, for normal tiny IT interface standards, subject ourselves to all the traditional standards organization procedures, including a public vote and inquiry?'"

Even the European Union is getting into the consortium game. EU standards chief Didier Herbert says his unit was promoting the development of European consortia to address "technologies that aren't mature enough to be a standard or would lose value if they had to go through the whole standard-setting procedure."

Standards fight
Not everyone, however, has jumped aboard the consortium bandwagon. Critics, especially those from the traditional standards-development arena, view them as interesting models for getting work done in a fast-paced, global economy. But they also see some groups as closed systems that–with the wrong leadership–could end up being competition-busting cartels. Traditional standards organizations also believe that consortia's technology standardization methods are inferior, since they don't involve the worldwide openness and accountability of the traditional standards process. Ronnie Amit, general secretary of the International Electrotechnical Commission (IEC), a leading technology standards group, says this is "one of our major concerns," because consortia are drawing industry away from bodies like the IEC, which he believes better protect global consumers.

However, Amit admits that these groups are better able to keep up with the fast pace of technology. "It's much easier to reach an agreement by picking up a phone with someone you know than to start the whole process of starting standards creation with national, international, or regional bodies," he says. "They're looking at standard development time–a bare minimum of a year-and-a-half, and most are developed in three years–where you have a product life cycle of six to nine months."

Amit doesn't object to the consortia approach as long as "everyone realizes that what's coming out of consortia are not standards–even if they're touted as standards." True standards, argues Amit, are those that have been scrutinized by a large number of interested countries, and that represent the best compromise that has been reached on that issue. Amit believes the proper standards-setting groups are traditional standards developers such as the IEC.

What also bothers both Amit and Mike Smith, head of standards at ISO, one of the world's premier standards developers, is the fact that both organizations already offer fast-track approaches to developing high-tech standards. But they have had few takers. Smith, particularly, questions why the IT industry will spend "enormous amounts of money supporting consortia, setting up parallel structures to ISO, when we came up with new deliverables–a fast-track system for IT–a few years ago."

At best, Smith sees consortia as formalized schmoozing and corporate intelligence networks, drawing executives curious "to know what's going on. They can't afford not to play." At worst, Smith says, consortia are a form of corporate welfare, staffed with executives from the downsized corporations of the 1980s. "Many of these people became consultants and many started consortia," Smith says.

From his perspective, consortia won't become a serious rival to the standards industry. "We met with aerospace, petroleum, and automotive, and all say they don't want consortia in their fields," says Smith. "They feel [ISO] gives them a level playing field."

Still, both Smith and Amit understand the appeal of consortia. Says Amit, "Personally, I believe the standard process is the right solution and is appropriate. But we can't hold back the technological solution and keep industry from developing a product. There must be a compromise."

In consortia we don't quite trust
The debate on consortia, however, always includes the antitrust issue. Critics believe these groups, without the proper supervision, can easily exclude competitors and eventually use the groups to dominate markets with their homegrown technologies. Consortia have had a few close calls on the antitrust litigation front. An antitrust suit against the former Open Software Foundation (OSF)–now part of TOG–was eventually tossed out of court when the judge ruled the plaintiff had failed because of bad business practices, not because the OSF had forced it out of business by promoting competing specifications. A recent battle between a cable modem manufacturer and a consortium in that arena was narrowly averted last year because the company in question was bought out, and the new owner shut down the complaint process.

But Cargill, who has publicly argued the case for consortia with Smith and other traditional standards developers, believes consortia are far more open than what he calls the "rule-bound" traditional standards arena.

"You aren't in danger of being a cartel if you're open enough," says Cargill. "Traditional standards groups are closed. If you're not on the committee in the working group, you can't participate."

Because of their usually large memberships, Cargill argues, consortia are less prone to market collusion. He cites such examples as the OMG (800 participants) and W3C (448 and growing).

And he says that the rules of consortia–or lack thereof–make consortia less prone to monopoly behavior.

"Take a formal standards group; their big thing is in rules, because that's all they really have," says Cargill. "They have no ability to force participation. They're a group of experts from various companies coming together to set the rules," he says.

By rules, Cargill is talking about what others would call process. As Amit notes, traditional standards organizations convene working groups to address issues. Drafts are circulated among all members in the organization, not only those interested in technology, and several rounds may transpire before a standard is voted and then publicized for market use.

Cargill says consortia have and should have rules. In fact, the IETF has an intricate set of rules and procedures that allows it to operate without any formal governance. Consortium behavior is based on "common interest," explains Cargill. "In the traditional standards world, you're there for a reason, but you may not have a focus on the subject. In consortia you can focus on one small piece of technology and say that anyone who participates has the same mindset, and must be committed to it and believe in it."

Cargill points out that traditional standards organizations are so rule-bound today precisely because of the antitrust concerns raised in the 1960s and '70s. "Congress was concerned about 102 companies working quietly behind professional associations and twisting standards," Cargill says. "By publishing rules, they could ensure they weren't working behind closed doors. But in an effort to address those concerns, they've become so rule-bound as to be too slow to address market needs."

While that debate goes on, consortia continue to proliferate, mostly because they offer a model that works for today's hyperactive, cyberspace-bound economy. Whether this model will implode from lack of accountability and whether consortia will end up the targets of antitrust suits remains to be seen. But for now, at least, consortia are the place to track technology's trajectory.

Amy Zuckerman ([email-masked]) is a freelance writer based in Amherst, Mass., at work on a book about the worldwide boom in technology consortia.

Content copyright © 2000 Imagine Media Inc.