XBox 360's RosettaNet Connection

by Scott Koegler, ec.-bp
Tuesday, June 20, 2006

There are times when the best practices for implementing an e-Commerce solution don't include electronic data interchange (EDI). When Microsoft planned the roll-out of its Xbox 360, it looked at the entire scope of the project and concluded that its best route would be to use its own Microsoft Windows Server along with its BizTalk Server 2004 and complimentary BizTalk Accelerator for RosettaNet. The RosettaNet implementation takes advantage of XML documents rather than EDI. So, while eC-BP.org concentrates its attention on EDI and X12, there are opportunities for XML as the format of choice. From the outcomes described by the Microsoft team, this is one of those opportunities.

A Little History

Microsoft's initial Xbox manufacturing and development process was managed with an EDI system with point-to-point communication. The implementation was batch oriented, transferring EDI documents periodically. Upon examining the results of the project, the company determined that the lack of real-time data flow had cost the company in terms of inventory write-offs and inefficiencies in the flow of not only data, but in manufacturing. According to Robert Meshew, Group Program Manager, Home and Entertainment Division, "We need to be able to see when delays in the stages of supply and production are occurring and when yields are not meeting expectations, so that we can take immediate corrective action. Microsoft is on the hook for supplying its contract manufacturers with GPU's (graphics processor units) that go into the Xbox 360. If we don't get those parts to them on time, we can't expect on-time delivery of the Xbox 360 from them."

Whether the lack of visibility in the EDI implementation was due to the nature of EDI or the specifics of the implementation is beyond this discussion, but based on its experience, Microsoft decided to move forward with its XML implementation.

As part of its decision making process, Microsoft decided that vendor acceptance was a key criteria. Hubs that have implemented EDI are well acquainted with the importance and pitfalls of onboarding vendors. Microsoft's Larry Hamlin, Supply Chain Manager, Silicon Operations, HED put it this way; ""Because this is a dynamic situation in which we expect additional partners, perhaps another three to five,"to join our supply chain over time, we needed a solution that we wouldn't have to rewrite to accommodate future partners. We couldn't meet either of those requirements with EDI." ." Hubs accustomed to onboarding hundreds of suppliers in short time frames may think that adding less than a dozen new trading partners would be a walk in the park, but given the high stakes and world-wide visibility of the Xbox launch, it's understandable that Microsoft decided to use technology over which it had more control.

Components

Microsoft was able to use a range of its own applications and application components an advantage few if any companies enjoy. By using widely used software including Microsoft SQL Server, BizTalk Server 2004, BizTalk Accelerator for RosettaNet version 3.0, the company was able to integrate its resulting Business Integration and Intelligence (BII) framework with its internal functions. The integration was made with its SAP R/3 ERP system for financial processes like purchase orders, payables, and material ledger. In addition, Microsoft connected to its Business Solutions Axapta solution for manufacturing planning, work-in-process tracking, and yield management.

The combined components make for a private-to-public data integration process that enables the standardization of the data exchange interfaces. RosettaNet is an industry standard based on Extensible Markup Language (XML). It is designed to enable companies to integrate applications and processes with their supply chain partners in much the same way EDI works.

The advantages to using XML or EDI to enable e-Commerce is an ongoing debate with proponents of both systems espousing each as the "best" solution. Like any other set of technological choices, "best" is highly dependent on the situation. In the Xbox case, XML may be a better solution because it fits Microsoft's overall plan and the software components the company knows best. In addition, it may fit with the company's longer term plans for its BII platforms than would EDI.

Use and Measurement

While the various transactions automatically flow between Microsoft and its trading partners, data is being collected in the company's BII system, visibility is provided through another Microsoft product, its Office SharePoint Portal Server 2003. The SharePoint portal delivers a web based dashboard displaying real-time information on such vital business processes as order disposition, inventory reconciliation, and updated supplier scorecards. Performance is measured against supplier SLAs for an integrated view of real status.

After the Fact

The evaluation criteria for implementing its RosettaNet solution included an expected increase in on-time deliveries of 20%, enhanced visibility of possible problems by one day, and an overall 10% reduction in inventory losses. In addition, Microsoft expected to see a 126% ROI on its BII Framework in the first year of operation. "By making our supply chain process faster and more efficient, we expect to see significant savings on the bottom line "while increasing product quality and on-time delivery," says Larry Hamlin, Supply Chain Manager, Silicon Operations, HED.

According to Robert Meshew, Group Program Manager, HED-IT Systems for Microsoft, "A one-day increase in responsiveness is huge in outsourced manufacturing. It means you have the time to respond to problems to save thousands of dollars in unnecessary air freight and expediting costs."

The group stated that by using the BizTalk Server and its associated Accelerator for RosettaNet, the company would save 50% of its expected development time over an EDI implementation. The company created 12 interface points (called PIPs) to exchange data with its trading partners. These PIPs are generic enough t allow the company to add other suppliers to the system without requiring additional programming.

Nearly one year later, the results on ROI and complete savings are not yet available, but the project is still expected to fulfil its plan.

Could this project have been accomplished as successfully using an EDI based system? According to Microsoft's research the answer is "no." That evaluation has to be taken in context with the software company's overall position in its own industry, where it has substantial resources and existing facilities on which to build. Certainly there are advantages to an XML based e-Commerce system, as there are to and EDI based system. Deep and current supply chain visibility is one of the issues facing many EDI implementations today, and as system providers increase their offerings, it may not take the resources of a company with the resources and stature of Microsoft to attain the same results. \