EDI continues to be the dominant standard in B2B e-commerce. If you don’t believe me, I would encourage you to take a look at the report titled B2B Integration Trends: Message Formats published last year by Ken Vollmer of Forrester Research. Forrester estimated that out of all B2B transaction volumes in 2007, 85-90% use EDI. XML and other file formats, while growing at nearly double the rate of EDI, remain, at best, 15% of transaction volume. EDI’s dominance is a subject that mystifies many outside the industry.
How does a technology dinosaur such as EDI
manage to remain so popular and prevalent through an era that has
witnessed the birth of unprecedented levels of disruptive technology?
If Charles Darwin were alive today he might enjoy studying the
characteristics that have led to EDI’s survival despite the
introduction of genetically-superior species to its ecosystem. Here
is my assessment.
Charles Darwin
Six Survival Characteristics of EDI
There are six factors, in my opinion, that lead to the continued prevalence of EDI as the world’s dominant e-commerce standard:
1. EDI is mature.
It has been in use for over 20 years resulting in a proven, reliable,
business critical reputation amongst its widespread users. If you are
selecting a technology to run your business on – would you select a
new, emerging framework or a proven, mature standard?
2. EDI is working.
Why fix what isn’t broken? EDI is successfully supporting the value
chains for many of the world’s largest companies today. Corporations
need a compelling business benefit to migrate to XML. The business
plan must justify the expense to perform a migration, risk of possible
business disruption and opportunity cost compared to alternative
investments.
3. EDI is cheap.
The costs of EDI were often cited as its top barrier to adoption
throughout the 1990s. However, the barriers to entry for EDI based
technologies have declined significantly in recent years. As the de
facto standard almost all B2B integration software packages and
SaaS-based services include out-of-the-box EDI functionality. XML
often requires customization, especially for low end packages.
4. EDI is ubiquitous.
EDI had the advantage of being the only standard for e-commerce for
over a decade. During that time, EDI became pervasive in a number of
industries such as health care, automotive, banking and retail. As a
result, businesses that choose to utilize EDI have a high level of
confidence that their trading partners will be able to receive their
documents. By contrast, businesses that try to standardize on XML face
significant headwinds as their entire trading partner community must
become XML-enabled.
5. EDI is not industry specific.
EDI’s lack of industry-specific data fields and process models is
often listed as a shortcoming. However, one of the keys to EDI’s
ubiquity has been is applicability across multiple industries and
geographic regions. Very few industries in today’s world are truly
vertical leading to challenges when partners transact commerce across
industries. For example, some of the fastest growing channels for high
tech manufacturers are the aerospace, retail, medical and automotive
sectors, none of which use the high tech XML standard – RosettaNet.
6. EDI is network protocol independent.
It works across value added networks. It works with legacy dial-up
protocols. It works with newer Internet standards such as AS2.
These six factors are the critical genetic and
environmental factors that have led to EDI’s longevity. In today’s
world of multiple, competing e-commerce frameworks, dominance will come
from survival of the fittest.
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