Business Data Standardization

March 13, 2020
Oliver Thamm

Wouldn't it be wonderful? The car industry will come together, agree on a set of common business data standards and become leading actors in a competitive global plug-and-play API ecosystem. This will allow them to trade data and services and create new business opportunities for themselves and a new generation of startups. 

I believe we can get there, but the speed of progress will be determined by traditional enterprises and their supplier networks.

The Dream

Business data standardization happens when two organizations need to exchange data in a reliable fashion, often as a result of contractual obligations and financial incentives. The core requirement is software that can produce data according to the provided specification. ISO 8000 provides a framework for such bilateral data standards. But the global API community views such data standards between two parties as just the first step towards their dream of a truly global data exchange standard. 

However, global standards need consortiums of like-minded organizations and only come about through external pressures, such as safety or consumer protection. Without legislative deadlines, such consortiums tend to divert or even break down and competing standards emerge. In the automotive space, we already see this with the ISO and W3C standards for connected vehicle data.

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Example: IATA NDC in the airline industry

In 2013, airlines identified a need to create direct distribution channels and weaken the existing booking and distribution networks. The IATA created a standards framework to distribute tickets, services, and content via third-party vendors. The IATA NDC standard launched in 2016. 

Roughly a dozen airlines were in the original committee. British Airways released early but implemented a different standard. Others only used a subset of the services or added restrictions. Some members departed, new members joined. Today, 7 years later, IATA NDC lists 22 airlines on their leaderboard out of 800 commercial airlines.

Unfortunately, there is no information on which airlines implemented which parts of the standard and how far they diverge from the latest version. However, out of the many industry-led initiatives, I argue IATA NDC is actually one of the successful ones. But it still falls far short of the vision of a global API data standard. 

The Challenge

From my perspective, there are three significant challenges carmakers face in creating a global car data standard.

  1. Data Integration: There is a bewildering amount of heterogeneous data coming from new and legacy systems and stored in data silos. Legacy systems are often poorly documented and lack domain experts. Operations and administration are split over many departments with different data processing regulations and decision processes. And there is already a mess of different partial integrations between systems, typically with no documentation. This makes system upgrades expensive and slow. This poses a massive data cleaning challenge before any new standard can be adopted.
  2. Corporate politics: Often, corporations lack any motivation to adopt common business data standards. There are many reasons why corporations do not want to participate in standardization efforts, and may even go as far as to sabotage them. Upper management sees its market position threatened by a more level playing field and tightly integrated IT processes are seen as a competitive advantage to defend. 
  3. Innovation Culture: Most corporates are not good at intrapreneurship. They lack individual accountability and quick decisions, deal badly with failure, and lack experience and knowledge. Their size creates a deep hierarchy and the overhead in administration and processes slows them down. All this puts corporates at a disadvantage when leading consortium initiatives and winning budget and support for the corresponding internal standardization initiative.

The Solution

I strongly believe our economy will achieve huge gains in productivity and competitiveness by adopting an API ecosystem. Corporations and supplier ecosystems will become more resilient and competitive, while stakeholders will enjoy the benefits of easy data exchange. To get there, industry-specific business data standards must be adopted. But this means we must solve the challenges faced by corporations.

  1. Tooling. At Xapix we believe everyone should be able to contribute to data integration projects. We make this easy using our drag-and-drop UI and Excel-like transformation syntax. Low-code tools like Xapix are the future.
  2. Legislation. Industry-led initiatives produce mixed results due to weak incentives. On this matter, I believe only legislative regulatory measures can drive progress and true and broad industry commitment.

Education. Continuing to educate corporate management and employees in proven intrapreneurship techniques such as agile methods and design thinking will help form more effective and faster-executing teams for specific topics outside of the usual corporate context. Keeping up with fast-paced environments, such as the rising API ecosystem, will help corporations adopt new business models and thus incentivize them to contribute.

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