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EDI Basics

EDI Enters its 4th Age: the Managed Services Age — Part 1

by Daniel Ford

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Electronic Data Interchange (EDI) is now over 50 years old and it has become the predominate international mechanism for how companies formally convey business and financial information among customers and suppliers. The standards and technologies used to implement EDI have evolved during this time and there have been three distinct Ages in the evolution of inter-enterprise communications:  

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The Pioneer Age is defined as the period prior to 1985 which lasted about 25 years. It was filled with pioneers predominately in vertical industries using early communications protocols, such as Async and Bisync, and low-speed modems. Document definitions, such as ANSI X12 and EDIFACT, were created during this period, as well as early work on Internet-related protocols that were not yet in mass use. 

Dialing data batches...slowly

During the Pioneer Age, the users of EDI would historically “dial” each other using modems and connect point-to-point with very limited or no security. Computer communications during the era were very primitive. Infrastructure to support multiple simultaneous users was limited or non-existent and almost all the data transmitting was done in batch. Because transmission speeds were slow, large files could take several minutes to transmit.  

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The Value-Added Network (VAN) Age started in the early 1980s and built significant momentum for a period of about 20 years. The VAN Age was a material improvement over the Pioneer Age; it offered clients lower costs to implement the technology and improved methods of connectivity.

The VAN Age saw the expansion of EDI into international markets and new vertical markets. Third-party VANs sprung up regionally and internationally. Countries that traditionally fostered telecom monopolies moved to deregulate the industry, which helped fuel the explosion of new companies that could assist clients with their domestic and international inter-enterprise communications needs.

The VAN Age offered clients lower costs to implement the technology and improved methods of connectivity.

The personal computer was born and desktop computing became available to small companies that could now afford to automate, install enterprise software and also participate in EDI. Purchasing mavericks seized the opportunity and mandated the usage of EDI as a condition of doing business. Large Fortune 500 companies, such as IBM and General Electric, jumped into the EDI business.

Traditional incumbent phone carriers, historically dominant companies in any given geography, also got into the EDI VAN business, such as British Telecom, AT&T, and Deutsche Telekom. During this period, usage of the Internet by government and research institutions was expanding rapidly, yet usage by the commercial sector was just starting. 

VANs provide meaningful advancements

During the VAN Age the users of EDI had a variety of communication options, including different speeds in which to transmit data, different protocols that they could adopt, and added layers of security.

The EDI VANs offered other services, such as the ability to buffer and hold data until the trading partner was ready to receive the information, the archiving of data transmitted and the ability to split the payments for data that was exchanged. The existence of VANs allowed users to more readily access their trading partners on both a domestic and international basis.  

Read part 2 of this series, "The EDI Managed Service Age".

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