EDI-RIP?
For years large businesses have used EDI (Electronic Data Interchange) for on-line business-to-business transactions because it saves time and is highly efficient. But, EDI in its present monolithic design can be expensive and is clearly unable to react on the fly to many emerging business opportunities. So, in this day of the Internet and Intranets, Web Sites and Internet Commerce, we are left to wonder if EDI is likely to be the next roadkill on the information superhighway.
How does EDI work?
EDI allows two different computers in separate companies to exchange data and perform transactions using standard formats. Faithful EDI users are pleased because errors are limited while time is saved. But, like anything else, EDI also has problems. It is difficult to link software to EDI, transfers can be delayed, and it can be very expensive to operate. It is estimated that about 100,000 U.S. companies currently use some form of EDI and while that number is daunting, that is just a tiny percentage of the 2 million companies who could use it.
Replaced by the Internet?
The question isn't, "Can the Internet replace EDI?" but, "Should it?" according to William L. Schrader, CEO, and founder of PSINet, one of the largest Internet service providers. Mr. Schrader believes, "EDI is dead in 24 months," due to the ability of the Internet to be a more universal delivery method. People of like minds choose to let their customers pass through their internal security (called firewalls) and obtain access to the company's internal computer networks (called Intranets). Even though there is the chance of a breach in security, this method is preferred by some because transactions can be "real time."
While others agree that EDI has limitations, they stop short of issuing a death sentence. The reasons are obvious-companies spent a lot of money to get EDI going and they are not going to rip it out once a shiny new product like the Internet comes along with promises of making business-to-business transactions far less expensive and trouble free. Both technologies offer benefits. Most people find the Internet easier to use since it was designed to enable PCs and humans alike to read data. But, as far as confidentiality is concerned, EDI certainly offers far more security than the Internet will ever be able to muster.
So, again I ask, will EDI be replaced by the Internet?
While some think the Internet will eliminate EDI, the two technologies actually give businesses a choice. EDI users can now send their same EDI communications over the Internet, faster and cheaper. But, of course, no solution is perfect. Transactions sent over the Internet raise concerns about security and confidentiality.
Possible solutions
Since simply taking an EDI transaction and sending it over the Internet really gains nothing, vendors are finding ways to combine EDI and Web commerce to create the best solution. Some suggest using services which combine EDI formats and Web based software. For example, a Web site could be used to attract prospects and take orders, then EDI could be used to process the order.
It will be interesting to see what happens. One thing is clear, smart companies will not abandon EDI and put all their eggs in the Internet basket. As in most technology, the market will sort itself out and EDI will not win, the Internet will not win. Businesses will win when the two technologies combine to provide the most efficient service at the best price.
f you would like to learn more about EDI contact Bankers EDI Council at (703) 742-9190 or Data Interchange Association, Inc. (DISA) at (703) 548-7005.
