EDI, the backbone of enterprise conversation via document exchange, is still holding strong as the transmission stalwart of transaction sets. However, the cloud is storming its front and changing its delivery. Meanwhile, the middleman, Value Added Networks (VANs) is facing a smack-down.

VANs, down for the count

“VANs typically charge 1/8 of a cent per line in a transaction which can add up quickly, especially for large transactions,” says Louis Rosas-Guyon, president of R-Squared Computing. “Because the VAN doesn’t really always fulfill the ‘value-added’ portion of their name, it’s just easier to skip the middle man and transmit data directly via FTP or even email.”

The move away from VANs, especially between well-established trading partners, is picking up momentum at an almost frightening pace. But, it is a pace many enterprises find thrilling.

“Our customers are recognizing that doing direct point to point integration with their trading partners not only avoids VAN processing fees, but also enables businesses to exchange data more real time,” says Ed Macosky, Manager, Client Services at Boomi. “This is allowing our customers to keep up with the speed of delivery that end consumers expect through the supply chain today.”

Batch gets the boot
“As mentioned above, there is a large focus on ‘instant’ delivery of information,” says Macosky. “While tradional EDI formats are still being used to keep data size down, point to point connections between businesses enable quicker delivery of that information.”

“Batching data is becoming less and less acceptable as businesses across the supply chain try to get their products faster to the end consumer,” he added.

Cloud and Earth Collide
Without a doubt, EDI is following the overall IT trend of moving to the cloud in a concerted effort to washout line item costs – from data center hardware to facility energy bills.

“Software-as-a-service (SaaS) EDI offerings are dramatically reducing costs for companies entering into EDI for the first time,” says Rosas-Guyon.

SaaS does not eradicate all costs, however, and occasionally it adds a few.

“It’s still important to find a reliable IT company to integrate EDI into your existing data systems,” says Rosas-Guyon.

Integration and migration make good financial sense, however you go about achieving that.

“While it may take enterprises time to change their core business applications to SaaS, it is allowing them to connect their legacy systems with their trading partner SaaS applications and prove their flexibility in the market,” says Macosky.

All major vendors are reporting a strong shift to hosted and cloud EDI implementations. But there is a trend within a trend in this shift.

“We are seeing a strong shift toward hosted applications for much of the supply chain when directly dealing with EDI transactions, visibility into transactions and business intelligence around EDI transactions,” says Westerkamp, Director of Product Management for EasyLink Services International Corporation.

“Social and hosted solutions are also being used more and more for the purpose of tying together supply chain networks,” he adds. “For instance, hosted tools are often employed when migrating large EDI communities.”

“We see SaaS applications being adopted, but much less so, for core functions like ERP, Transportation and Warehouse Management,” concludes Westerkamp. “These applications are often so closely tied to physical resources that it is more difficult to shift to the Cloud.”

Preparing for ‘what comes next’

Enterprise users are not the only ones scrambling to adapt and adopt these new trends. Vendors, too, are having to rethink how they approach the EDI equation. Tracking their movement may give you a heads up on what to expect next.

Take SAP, for example. What is SAP doing to ramp up for a cloudy future that may show a glimpse of what is to come in EDI’s future?

Ken Tsai, director of Enterprise Solution Marketing for SAP NetWeaver says the business trends that are driving SAP’s thinking to better support the next-generation of EDI or any other B2B communication requirement are:

• · Increased influence of business in infrastructure purchasing decisions, “instantly consumable”
• · Trend towards end-to-end business processes (one integrated A2A and B2B business process)
• · Near real-time, actionable insights (closing the gap between insights and action)
• · Focus on TCO and life-cycle management

“And here are the technology and product directions to support the above business trends,” he says.

• · The need to support both on-premise and on-demand EDI communication – instantly consumable
• · The need to reduce the EDI message mapping difficulties and TCO, through both online collaboration (web 2.0) and self-learning, heuristic features to enable a semi-automated solution
• · End-to-end message tracking, alert, and action based on business rules, business best-practices, and/or government regulations

Other vendors echoed Tsai’s futuristic call. This means enterprise users can look for (and thus plan for) near-future EDI products and services to be a hybrid (part cloud, part on-premise) with a holistic (end to end and fully integrated) approach to process, and real-time or near real-time data exchange.