Internet interchange

Electronic commerce is a more popular buzzword than EDI, or electronic data interchange, these days, but that doesn’t mean EDI is on the way out. EDI is the exchange of documents such as orders and invoices in electronic form, typically over a private VAN (Value Added Network) provided by a specialist company.

Data for EDI messages can be keyed into a special data capture program, but it’s usually preferable to generate messages automatically from a computer application, to avoid extra work and keying errors. Similarly, orders or invoices received from customers and suppliers via EDI can be keyed manually into your system, but it makes more sense to feed them in directly as electronic data.

Given that many of the advantages of EDI come from integration with existing applications, it’s disturbing that research by the software industry trade association BASDA found that of 11,000 UK companies using EDI, 30% had not been able to integrate it with their other systems.

To address this problem, BASDA has joined forces with the Electronic Commerce Association and Tradernet User Group to develop a generalised EDI interface that can work with any software application to process orders and invoices. The interface, which meets all major international EDI data standards, should make it easy for vendors of accounting and other business packages to add EDI capability to their products. It’s also suitable for bespoke applications.

There have been suggestions that these efforts will soon be rendered obsolete by the Internet, but that is a misconception. The Internet does offer alternative ways of doing business electronically (see case study), but these complement rather than supersede EDI. And the Internet constitutes an alternative route for the transmission of EDI messages.

BASDA’s director, Dennis Keeling, said: ‘The rise of the Internet is opening up the opportunities for EDI. The BASDA Interface has been designed to allow data to be exchanged over the Internet, as well as over a VAN or on floppy disk.’

The point of EDI is not the transmission mechanism, but the fact that it provides unambiguous standards for the sharing of business information. No matter what computer system originates an order message, or how it is transmitted, the customer name, the order value and the item details will appear in the same place and format.

The main attraction of the Internet as a medium for EDI is cheapness – estimates suggest that using the Internet could reduce costs by between 50% and 90% compared with a VAN. And, because of that cheapness, using the Internet for EDI could make it more practicable to send the messages as soon as they are generated rather than batching them up as VAN users tend to do.

Currently, there are some reliability and security issues associated with EDI over the Internet, but Internet specialists are addressing both of those. Tools are also coming along to facilitate sending EDI messages over the Internet, some of them provided by companies hitherto associated with VANs.

GE Information Services, an electronic commerce specialist with its own VAN, has recently launched an Internet-based EDI service, called TradeWeb.

TradeWeb allows anyone with a Web browser to sign on to the site, take a ‘tutorial’ about EDI, and then to browse a list of people they can do business with. They can register on-line as a trading partner, and send an EDI message such as an order. Data is input by filling in a human-friendly form on-screen, but behind the scenes the message is in standard, computer-readable EDI format.

Colin Billinge, European manager for business productivity solutions with GE Information Services, said TradeWeb is designed to increase the number of organisations that can do business via EDI. He added: ‘With traditional EDI, you have to have a pre-existing commercial relationship before you start trading, and to agree terms of trade, what network you will use and so on. On the Internet, you don’t need to have this more formal relationship because there are de facto standards. Anyone who has a Web browser and hits this site can trade with you.’

Billinge made the point that, while this is a good way of putting a toe in the water of EDI, a user who wants to adopt it on a large scale will need to move on to the conventional style of EDI. He explained: ‘Once you want to integrate the communications back into your applications, you have to agree on formal infrastructures and service levels. There’s no point in having an informal relationship where you receive an order at 10am, but you actually needed it an hour earlier.’

Service levels become particularly critical when EDI is being used to implement Just-In-Time stock management. At present, a VAN would be the infrastructure of choice for anyone needing guaranteed EDI service levels, but in future Internet access providers expect that they will be able to provide a comparable service.

Richard Woods, corporate communications consultant with provider Uunet Pipex, said: ‘We will sell bandwidth any way customers want it. Some corporations may want to have very large bandwidth available at pre-specified times – that would be relevant to EDI where you want to move vast quantities of data at a particular moment in the day. We will also be able to provide virtual private networks between a group of companies.

‘Ultimately, EDI-type communication is likely to be the business that fills up most of the bandwidth on the Internet. That may be boring compared with the Web – but it’s the stuff business survives on.’

EDI can be expected to flourish alongside other forms of electronic commerce, and over a variety of network infrastructures, including the Internet. BASDA’s estimates suggest that 35,000 UK companies are planning to adopt EDI within the next 12 months. ‘It’s the biggest growth area in business systems,’ according to Dennis Keeling.

CASE STUDY: H&R JOHNSON TILES

Companies are finding that a Web site for electronic commerce can complement a conventional EDI system. An example which clearly demonstrates the virtues of both is H&R Johnson Tiles, which has been using traditional EDI in conjunction with its IBM AS/400 based financial systems for about four years. At that time, large DIY retailers were insisting that their partners adopt EDI. Although it had EDI somewhat thrust upon it, H&R Johnson itself has realised benefits in terms of reduction in clerical workload and improved data accuracy.

Recently, H&R Johnson has also set up a World Wide Web site, greatly increasing the range of partners it can do business with electronically.

This project was the result of R&D and prototyping work by software house ABS. H&R Johnson’s MIS executive, Ken Packwood, says: ‘Traditional EDI is right for computer-to-computer trading between large companies, but not really an option for the smaller companies we trade with. That’s where the Internet comes into its own.’

Anyone with a Web browser (standard piece of software for accessing the World Wide Web) can visit the Web site, whereas to do business via EDI involves agreeing what network you’re going to use and ensuring the right technology is present at both ends. Users of the Web site can place an order by filling in an electronic form on- or off-line, and can then follow the progress of the order as it passes through H&R Johnson’s order processing system. Orders are automatically acknowledged by fax although in future this may be done by email.

H&R Johnson has created a two-way interface to its AS/400 system, so not only is the Web stock information kept up to date, but orders placed at the Web site are fed directly into the order processing system.

The profile of business transacted on the Web site tends to be different from the EDI transactions. ‘If you think of one of our EDI partners, any of the DIY chains, we are likely to have 100-plus stores each sending us 100-line orders, all at once on a Tuesday morning. If you look at the Internet customers, they are likely to be sending a 200-line order once a week at the most, and all at different times.’ The EDI links are essentially batch links between two computers, whereas the Web site is for humans to interact in real-time with H&R Johnson’s computer.

Because of such differences, Packwood doesn’t see the Web style of electronic commerce superseding EDI, although he thinks that the two might converge to some extent, with EDI messages being transmitted from system to system over the Internet, for instance.

A Web site should be cheap and cheerful for your trading partners, but it won’t necessarily be cheap for you, he emphasises: ‘Maintaining a Web site can cost as much as traditional VAN-based EDI. You have to buy a PC, get the Web software, then pay your subscription to the access provider and the telephone charges, But once you have the site, you can put marketing information and catalogues on it at no extra cost.’