x and content of different business applications are compatible and have the same meaning to all the trading partners involved.
The international standard for EDI is the United Nation's EDI for Administration, Commerce, and Transport (EDIFACT) definition. Although many national EDI standards exist around the world, most are evolving to the EDIFACT scheme.
Crucial Standards
These interchange standards are crucial because trading partners' computing systems must be able to not only read but also flawlessly process the exchanged information. For example, the arrival of an electronic order from a customer triggers a variety of processes: accounting, production, billing, and inventory. As long as the front-end EDI software complies with these standards, companies can use whatever in-house software they choose.
By automating their process f
low, companies reduce or eliminate their labor costs and rekeying errors. According to a report from Premenos Technology, processing just one paper purchase order costs a company approximately $70, while processing a similar EDI order costs only 93 cents. (Both of these figures are calculated in U.S. dollars.) EDI systems can also help companies reduce their inventories and respond more quickly to customer problems and inquiries.
EDI on VANs
Traditionally, EDI messages have been processed on proprietary VANs offered by international companies, such as General Electric Information Services (GEIS) and IBM, which together account for about 36 percent of the VAN market in Europe. Other carriers, such as AT&T/Unisource, British Telecom, CSnet, and Intesa, have a strong presence in local markets.
These VAN carriers charge their customers on the basis of usage, the level of service, and the traffic that they produce. VANs run protocols such as the emerging X.400 and offer services incl
uding store-and-forward mailboxes; the conversion of electronic messages into fax, telex, or hard copy to be shared with trading partners that aren't on an EDI system; confirmation of message deliveries; and an increasing range of other services, including groupware and work-flow applications.
A large number of telecommunications operators have teamed up with EDI software and service firms to offer a full range of products to customers. For example, British Telecom's EDI Business Team consists of various suppliers of software, systems, and management skills that operate under the British Telecom name.
Ovum, a London-based consultancy, estimates that the European EDI market is growing by 20 percent a year and will reach a total of 1 billion ECU by the year 2001. "EDI has long been a behind-the-scenes technology," says Dick Raman, president of the EDI software company EDI-TIE. "But now, EDI is coming out of the shadows."
Thanks to the rising interest in business on the Internet, EDI will play
a crucial role in electronic commerce (see "Electric Money," June BYTE). "EDI is the backbone of electronic commerce," Raman adds.
VANs vs. the Internet
The Internet has several advantages over today's highly priced VANs. It's inexpensive, open, and global, and it's able to reach millions of business and nonbusiness users alike. Internet service providers (ISPs) charge a relatively low flat fee -- anywhere from $20 to $500 per month -- and most do not charge usage fees. The Internet's universal access also widens a company's potential pool of trading partners; with an open, global network, firms can easily find new trading partners -- something that's fairly cumbersome and expensive to do in the heterogeneous VAN world. In such an environment, EDI might even include consumers and become a person-to-business tool. Once a system can safely reach unknown customers, EDI commerce will really explode.
Technically, sending an EDI message over the Internet is no great undertaking. A mes
sage can be either wrapped in a Multipurpose Internet Mail Extensions (MIME) envelope or sent via FTP. That sounds easy, but of course, the big problem is the Internet's lack of security. This lack of security may be tolerable for Web surfers or even for intracompany e-mail, but it's not acceptable for business documents that have a direct impact on production schedules, shipments, and customer relationships.
In contrast, security is the power of VANs. "As long as you trust your VAN provider, there's no reason to doubt a VAN's security," says Dave Crocker, principal of Brandenburg Consulting (Sunnyvale, CA). "You have a secure path between you and the VAN that you trust, and a path from the VAN to your trading partner that he or she trusts."
Many users echo this view. "We are very interested in [using] the Internet for EDI as an inexpensive alternative to VANs," says Louis Schilders, managing director of the Brussels-based MediBridge, which handles EDI services for hospitals, laboratories, and some
1300 general practitioners in Belgium. "But our sensitive and time-critical data requires security and reliability. Today, this means VAN," he explains.
No Worse than the Mail
With its commercially operated backbone, the Internet's reliability is increasing. "Even with the delays and lost messages due to overloaded gateways and connections, the Internet is probably no worse than sending orders or invoices through the mail," Crocker says.
There are several Internet E-mail security technologies, including PGP (Pretty Good Privacy), Secure MIME, MOSS (MIME Object Security Services), and MSP (Military Service Protocol). But these technologies have rarely been used on a large, EDI-appropriate scale.
Not surprisingly, many vendors are therefore working on EDI software for the Internet that includes encryption, digital signatures for authentication and integrity, and time stamps that confirm delivery of EDI documents. Such products include Albany Software's Netconnect EDI Gateway
, which works with the company's EDIfy and other EDI software packages. It uses a mix of encapsulation and encryption technologies (proprietary as well as DES and Rivest-Shamir-Adleman [RSA] encryption) to provide privacy, automatic confirmation of delivery, and digital signatures.
Templar, from Premenos Technology, deploys RSA public-key cryptography for security at the application level. It works independently of the underlying network and mail protocols, thereby offering protection of all messages moving across the Internet.
CyberGateway, from EDI-TIE, allows users to choose from among transport media -- a VAN, an X.400 network, or the Internet. With this hybrid approach, companies can send their most sensitive and time-critical documents through their VAN while routing less-vital documents over the Internet (see the sidebar "The Best of Both Worlds").
Experts contend that significant technical expertise is required to establish an EDI presence on the Internet and that ISPs have to be wel
l chosen, with reliability and customer service in mind. A report from the Gartner Group, an IT consultancy company, says that companies should use the Internet for EDI only for exchanges of less than 10 MB, in instances where they don't need a quick response, and when EDI systems can be isolated from their main systems.
But products like the ones mentioned above will lower the barrier that the Internet's lack of security imposes on EDI. Brandenburg Consulting's Crocker says: "For technically sophisticated groups and for organizations pushing very aggressively, EDI on the Internet is entirely viable today."
The Internet is a definite threat to VANs; however, that doesn't mean they will be bypassed by EDI on the Internet anytime in the near future. Although the industry pays a great deal of attention to the viability of EDI over the Internet, the Internet will not affect the uptake of X.400, which is rapidly becoming the standard protocol for EDI services.
A more likely scenario, according to t
he Gartner Group, is that VAN providers will change their pricing and charge for the extra services they provide -- auditing, tracing, and security -- rather than for basic, commodity-like transport services. And, of course, they will expand their services and offer complete external handling of EDI operations. Therefore, the struggle between VANs and the Internet can be summarized as one of convenience versus flexibility.
Where to Find
Albany Software, Ltd.
Farnham, U.K.
Phone: +44 1252 717070
Fax: +44 1252 717080
E-Mail:
info@albany.co.uk
Data Interchange Standards Association (DISA)
Alexandria, VA
Phone: (703) 548-7005
Internet:
http://www.disa.or
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Internet + VANs = A Serious EDI Platform
