Many thought it was archaic and dying, but after almost three decades years of existence, one of the most widely deployed standards for conducing e-Business transactions is as strong as ever, and even continuing to grow. At the same time, newer standards are evolving and competing for ubiquity in an ever-changing technology market.
Electronic Data Interchange (EDI) was created more than three decades ago as a standard way to communicate data between two business entities. EDI allows two trading partners to exchange important information necessary to complete a transaction, such as sending an invoice or submitting a purchase order. e-Business isn’t an invention of the 1990s ? companies have been involved in these types of data exchanges for many years.
But with the 1990s and the explosion of the Internet, EDI got a bad rap. First, EDI was criticized for being too expensive and out of reach to small businesses. Critics also said EDI was too difficult to implement and newer solutions were easier to understand. Another drawback to EDI, they said, was that it doesn’t transmit data instantaneously but rather in ?batches? ? that is, once a day, twice a day, or as defined by the user. And finally, EDI was on the way out, and newer standards, like XML (which was supposed to be everything that EDI wasn’t), were in.You’d be foolish to invest in EDI now? they said.
As is often the case with over-hyped technology issues, the answer to the question of which is the better technology lies somewhere in the middle. The secret to success in this dilemma is looking beyond the assumption that it is an either/or proposition. Depending on the application, sometimes its EDI, sometimes XML, and other times, it’s a different standard altogether. What’s most important is making these technologies work together that will maximize investments and solve the primary challenge to e-Business growth.
While many predicted XML would be the clear winner in the standards fight, EDI is still here and it’s here to stay for a while, at least. According to Giga’s Ken Vollmer, EDI provides stability to the many organizations in a range of industries that use it. Vollmer says that the value of EDI transactions in 2002 is expected to exceed $3.2 trillion and will continue to grow to $3.7 trillion by 2005. EDI clearly isn’t going away.
EDI networks are widespread and active today. Sterling Commerce, for example, has relationships with many other EDI networks throughout the world, industry exchanges, and partners that provided value-based services. On average, 10 million transactions are processed through these networks everyday. The reach and capabilities are a key part of what makes EDI so relevant. There are few examples outside EDI networks where a customer can accomplish data transaction delivery and timing from a single connection.
Small businesses are beginning to get the same value out of EDI, even though critics said it was out of their realm. Recently, vendors have been working to meet the needs of small businesses by introducing products that make it easy for them to work with EDI through simpler software, email, and the use of the Internet.
And it turns out, EDI isn’t all that difficult or expensive to implement. Newer technologies haven’t always proven to be any easier than EDI, even though they make the claim. Businesses are finding that the return on investment for EDI solutions is well worth the cost. And those small business solutions I mentioned are very affordable and also bring in hefty, and quick, ROI.
EDI as a technology still batches out information instead of delivering it instantaneously. This may give one the sense that an EDI service is like a bank, with a posting time and a settlement daily. In reality, it is much more like a stock exchange service similar to NASDAQ. While a stock exchange has some data that is transmitted within a short time, under a minute or two, things like quotes are typically delayed 15 minutes, and reporting and settlement are done daily. In a top-notch EDI service data is typically delivered in less than five minutes 95 percent of the time. Most companies find that by triggering and timing transactions, they have a more predictable, efficient, and lower cost supply chain. Many still find that ?batch on demand? is a much more cost-effective alternative for most of their transactions.
EDI is evolving in ways its critics didn’t anticipate. They ask, ?So what about the Internet? How will it play a role in the future?? EDI vendors are meeting customer demands by introducing effective EDI over Internet solutions to leverage the general capabilities the Internet provides. To an EDI transaction service, the Internet is simply one of hundreds or thousands of destinations that a customer needs to reach. The ongoing commitment of an EDI service is to adapt to these standards, protocols and destinations in a way that leverages three decades of customer investment in infrastructure and processing. There is also a new commitment that is entering the market. That commitment is to provide customers with multiple solutions to the same problem that allows them to meet the culture and biases of their business strategy.
Finding successful ways to integrate all the various standards is the key to ROI and a fully automated business. By bridging EDI and XML, for instance, companies that rely on XML can integrate processes with trading partners that use EDI ? allowing both to automate their businesses, leverage current investments in technology and reduce their cost of ownership.
Even in a period of economic slowdown, e-Business is poised for tremendous growth. The catalyst for this growth over the next few years isn’t based on EDI, XML or any other technology, but rather the combination of the technologies, delivery methods, and corporate initiatives that create the right e-Business solution for nearly any situation. With the emerging capabilities to combine these technologies, companies no longer need to look at e-Business as an either/or technology decision. e-Business is a business decision, based on a company’s desire to operate more efficiently and improve the bottom line.
And that’s what they should have said all along.