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Standards, Industrial Convergence, and Semantic Interoperability

My recent BPX Community paper Business Network Transformation and Semantic Interoperability talks about how the lack of semantic interoperability drives up costs of integrating computer systems when weaving networks of suppliers, distributors customers, partners, and employees into functioning ecosystems. 

Low levels of semantic interoperability have generated substantial economic friction for some time now, but the increasing overlap among vertical markets is severely exacerbating the problem to the point where a number of industry standards groups are starting to genuinely understand that we can no longer afford to ignore the issue.

It’s bad enough when there is only a low degree of semantic interoperability among a single standards body’s own published messages, where all of those messages target the same vertical market.  It’s an order of magnitude more difficult to deal with semantic interoperability when messages devised for different vertical markets need to work together because traditional borderlines among vertical markets are breaking down.   Here are just a few sample data points that illustrate this blurring of the lines:

  • Today, 33 percent of the components in an automobile are high tech components.  Thus, messages defined by standards bodies for the high tech vertical market, such as RosettaNet messages, must interoperate to some extent with messages designed by standards groups that target the automotive industry. 
  • IBM recently spent $745 million to acquire Telelogic.  Telelogic’s model-driven development tools target the embedded systems space.  The walls are coming down between the embedded systems and enterprise systems worlds, and IBM is voting that way with its wallet.
  • HIIMMS, the Healthcare Information and Management Systems Society, is spearheading an initiative to put together a health information exchange in Southeast Michigan.  Major stakeholders include the Big 3 automobile companies who are feeling a particularly acute amount of pain due to health care costs.   Financial institutions that are directly involved in healthcare payments are also stakeholders. This initiative could have ramifications beyond the Detroit area.

In an economy that is gradually eroding the barriers among vertical industries, the demand for interoperability increase dramatically.  Keeping up with the message formats for multiple markets and understanding how they interrelate is daunting. 

The specter of industrial convergence is putting semantic interoperability on industry radar screens.  The pain level has reached a threshold such that we who have been pushing for better semantic interoperability are getting a hearing.  Quite a number of vertical market groups have embarked upon or are seriously considering semantic interoperability initiatives.

In the manufacturing industry, multiple standards bodies are cooperating under a venue provided by the Open Applications Group (OAGi), using the UN/CEFACT Core Components methodology for achieving semantic interoperability.  The parties have established a common repository for semantic components.  SAP is active in this endeavor.

In the finance industry, a number of standards bodies are collaborating around an initiative managed by the ISO’s financial services committee.  The ISO 20022 standard defines a common methodology and sets up a common repository for semantic components.  Version 1.0 of ISO 20022 has fairly wide buy-in but also has some limitations that a future version 2.0 of the standard will address.  SAP is directly involved in this project.

UN/CEFACT and ISO’s financial services committee have an MOU to strive for convergence between the Core Components and ISO 20022 methodologies, which will help this finance convergence effort to better address semantic interoperability. 

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  • I am interested in finding out where SAP is at with ISO 20022 as I am working on Customer Credit Transfer Initiation pain.001.001.02 currently using XI – any plans for getting this in the SAP payment medium formats, etc. incorporating this standard in payment processing in future?  Thanks. 
    • SAP does support Credit Transfer Initiation pain.001.0001.02 in the Payments Medium Workbench, via a Support Package for R/3 Enterprise(for SAP_APPL 470, SAP_ABA 620) and higher. –David
  • Hi,

    I am interested in establishing how far SAP has moved ewith regards to the delivery of the various message formats defined by the ISO 20022 standards. There seems to be credit and debit payment initiations available but nothing else seems to be available. Anyone with information on the currently available messages will certainly provide much needed information regarding this topic.


    • Hi Veekash,

      With Enhancement Pack 4, The Bank Communication Management (BCM) application now supports the ISO 20022 Payment Status Report message.  BCM is part of Treasury Applications in ERP Financials.  Release of the ISO 20022 BankToCustomer Statement is coming soon.

      With ISO 20022, our focus has been supporting SEPA.

      • Veekash,

        I meant to ask you if you would care to tell me a bit about your interest in ISO 20022, i.e. how you are using it or plan to use it in the future?