In 2004, when Don Davis embarked on an XML-based payments pilot involving U.S. semiconductor maker Intel Corp. and Finnish cell phone manufacturer Nokia Corp., he would have readily admitted that he had modest expectations about when Intel would enjoy significant benefits. At the time, the proposed standard built around extensible markup language (XML) represented the latest effort at bringing straight-through processing to b-to-b payments, and Davis, Intel's systems and business solutions manager and a veteran of earlier supply chain automation attempts, figured it would take at least a year to realize respectable success at matching incoming data to payments with the new global messaging standard. But ISO XML–as it came to be known after its publication by the International Standards Organization last summer–surprised Davis, and right from the start, he reports, he was matching a stunning 80%. "My expectations were 30% initially and then growing that rate to 80% as we gained experience setting up the match parameters," Davis notes. Instead, "the pilot started at 81.5% and has grown to more than 95% auto-matching today."

But as successful as ISO XML would appear from the Intel experiment, that accomplishment won't necessarily translate into sweeping adoption across industries or across the globe–at least not this year or maybe for the next five. It won't even translate into total conversion by Intel, which currently uses the new standard only for receivables. Standing in ISO XML's way is the barrier to any new standard seeking broad-scale adoption: It costs money, and if the current system isn't broken, then–well, you know the rest. "A major challenge for ISO XML is that there are investments in A/P and A/R in place that are working today and are not going to vanish overnight," says Leonard Schwartz, the director of SWIFTNet MACUG and FileAct for channel management at Dutch bank ABN Amro Bank.

The good news for ISO XML, however, may be that it has one of the best shots of any of the recent payments standardization efforts for eventually achieving widespread implementation. "I see a relatively small number of corporates moving forward with the XML standards in 2005," says Mark Sutton, the London-based global product manager for delivery services in HSBC Corp.'s global payments and cash management unit. "However, a large number of companies will be actively watching this space with a view to adoption in the next three to five years as financial and operational benefits become clearer in the short to medium term."