While the technology industry may be buzzing about XML and business-to-business marketplaces, the old tried-and-true data interchange initiatives still rule within large corporations.
Users attending the recent Data Interchange Standards Association conference in Boston said that not only is EDI alive and well within their companies, its usage actually continues to grow. That’s because they are either expanding their number of EDI trading partners, increasing the ANSI X.12 transaction types they use, or bringing smaller suppliers into the fold through Web-based forms that are cheaper to use.
“I think EDI is here to stay,” says Michael Goodwin, lead EDI analyst at the Bank of America Corp.’s commercial finance division in Tucker, Georgia. He notes that his group has seen electronic invoices soar from 66 to 94 per cent of the total during the past two years, as more trading partners ramp up.
Power-generating companies such as Allegheny Energy Inc. have no choice but to increase their EDI partnerships in their new deregulated world.
“Each state is requiring that EDI be the medium to support the data,” says George Bialon, an e-commerce analyst at Allegheny Energy in Greensburg, Pennsylvania. He claims that his department has had to double its EDI staff in response.
Similar mandates due to take effect in the health care industry are also driving companies’ increased EDI usage, industry analysts note.
Even some software vendors that promote the XML content-tagging language have seen recent EDI benefits. IBM, for example, claims to have slashed paper invoices by 90 per cent after linking up with more than 12,000 smaller suppliers using Web-based EDI. Small companies have typically resisted traditional EDI because of the expense involved in setting up a system. Now, they simply require a PC, a Web browser and an Internet connection to access and fill out forms that are translated into IBM’s EDI system.
While EDI volume may not be increasing at a rate of 30 per cent per year as it did in the early 1990s, it is rising at a “healthy” 15 per cent clip, says Daniel Ferguson, a vice president at Faulkner & Gray’s Electronic Commerce Research Group in Chicago. Each year, his company surveys 1,500 to 2,000 customers of large EDI vendors to give the vendors an indication of the market potential.
“Volume is growing despite all the hype that Internet people put out, and it will continue to grow robustly over the next three to seven years because companies are still saving tremendous amounts of money using EDI,” Ferguson says.
The Cambridge, Mass.-based Giga Information Group Inc. predicts that the value of EDI transactions will soar to US$4 trillion in 2003, up from about US$3 trillion at the end of last year.
“EDI is a lot more extensive than people have realized,” says Giga analyst Ken Vollmer. “There’s a definite dichotomy between popular press and what’s going on in the real world. If it’s not new and sexy, no one wants to talk about it. But for people in the [EDI] trenches, I don’t think we’re going to be able to pry them away from it.”
CHANGES HAPPEN
That’s not to say that EDI hasn’t undergone several transformations. For instance, many companies have shifted the transport mechanism from more expensive private networks to the Internet, analysts note. But at the back end, the story remains the same. Companies that have gone to great trouble to make sure EDI data flows into their applications aren’t in any hurry to change the system.
“Until there’s an off-the-shelf solution that self-integrates with any application, it’s going to be hard to just dump EDI,” says Dave Oppenheim, director of e-commerce at Cessna Aircraft Co. in Wichita, Kansas. Oppenheim noted that his company is getting “much deeper” into EDI, adding a shipment and billing notice, remittance advice and electronic fund transfers to its transaction roster.
While XML holds promise with its more flexible, humanly readable data format, many EDI users say they’re content to wait until XML standards are nailed down before implementing any changes. Right now, many are just exploring the new options.
“XML sounds simple, but the fact remains that someone has to do the mapping and integration work,” Oppenheim says.
“Why jump?” agrees Carol Farrar, an EDI analyst at Smurfit-Stone Container Corp. in Alton, Illinois. “It’s too costly for a large company to do that. We’ll wait for the standards to come out. We’re not going to be the beta.”
Text box: The Giga Information Group Inc. predicts that the value of EDI transactions will soar to US$4 trillion in 2003, up from about US$3 trillion at the end of 1999.
Cutline: “EDI is a lot more extensive than people have realized,” says Ken Vollmer an analyst with the Massachusetts-based Giga Information group.