Web weaves its way into business

25 Sep 2003

Since its birth in the early Eighties, EDI (electronic data interchange) has more than a fair claim to being the first major form of electronic commerce. It was always a heavyweight solution, involving leased lines or in latter years ISDN, and its traditional computing structures were the antithesis of free-form email and the free-spirited internet. EDI was designed for secure computer-to-computer communication and so the rules and formats and so on were set rigidly. It was traditionally perceived as a big boys club, as indeed it effectively was for many years: EDI began, after all, before most small to medium-sized enterprises had computerised at all.

EDI falls under the aegis of EAN Ireland (European Article Numbering), set up in 1980 and now affiliated to IBEC. It gives the useful definition of EDI as: “the transfer of structured data, by agreed message standards, from one computer application to another by electronic means and with a minimum of human intervention”. The structuring of data by agreed message standards means that the information is recognisable in content, meaning and format by a computer application so it can be processed automatically and unambiguously.

Although there may be a number of entities in the supply chain, each pair of companies deciding to implement EDI has to agree on the type of information or data they will exchange and how the data will be presented. Specific sub-sets of EDI have been developed for major industry sectors or trading communities. Many companies in Ireland customarily exchange standard business data by EDI, including items such as purchase orders, invoices, bills of lading with their trading partners, their forwarders and their banks or customs agents.

EDI is current practice for many of the retailers, wholesalers, transport companies and financial institutions in Ireland. The supermarket supply chains with major manufacturers have been leading users for many years. EDI is an international process and the main standard UN/EDIFACT is the one that most trading communities are using globally.

Obviously the internet and the vast range of e-commerce opportunities it opened up have changed the landscape. In business-to-consumer (B2C) transactions we are all familiar with the typical credit card model. But in business to business (B2B) nothing quite as universal has yet emerged. But smaller companies especially some service providers now offer their customers internet-based EDI that incorporates the same EANCOM/HEDI messages used for EDI. The principal difference is the medium of communication. In addition using the internet has also opened up the opportunity for service providers to provide additional services hosted on their servers and with their guarantees of security.

There have been occasional commentators eager to hail the imminent demise of EDI with the arrival of internet e-commerce. But far from drafting an epitaph for this technology — now mature and in its mid-twenties — we have to hail its doughty survival as a seriously heavyweight solution that has not yet been bettered by any of the lightweight contenders on the web side. The whole XML (extensible markup language) and now ebXML (for e-business) range of developing applications has a long way to go to match the proven performance of EDI.

“Internationally and here in Ireland, EDI usage is growing by about 10-15pc annually,” says Jim Bracken, director of EAN Ireland. “We seriously believe that EDI is going to be around for quite some time to come. There is no direct rivalry between EDI and ebXML and in fact they can work alongside and even complement each other. For example, in a supply chain ebXML is potentially very useful for different types of information handling such as planning and forecasting.”

He emphasises that EDI has shown itself over the years to be robust. It may require a high degree of effort in the beginning to set up but then repays that effort by performing reliably for years without alteration. He refrains from suggesting that there may be few other examples of computer-based business activity of which the same could be said. IT consultants have often expressed sentiments along the lines of ‘EDI is a pain to set up but you can’t break it.’

There are currently more than 600 companies on full traditional EDI in Ireland, with an estimated further 300 or so using web EDI services from Eircom and Celerity. Originally set up in 1990 to deal with increasing automation in customs clearance by shipping companies (and EDI has a long history with the Customs Service), Celerity offers its Online Trader product to enable companies to use web-based EDI solutions and also to add automated workflow elements to traditional EDI messages.

It all works over the internet using encrypted virtual private network technology. “We have 220 clients that between them account for an estimated two million EDI transactions annually,” says Ken Halpin, managing director of Celerity. “A high proportion is relatively smaller suppliers whom we looked after as part of a Superquinn project to help them deal with the company and its new systems through EDI.”

He explains that some of the new Celerity software that enables traditional EDI messages to trigger automated workflow processes, such as reconciliation of a supplier’s statement with a buyer’s creditors ledger, have proven of interest to major corporations such as Coca-Cola and Unilever. “We have succeeded in developing unique web-based components that can add value to pure EDI links,” he adds.

This vision of the web complementing EDI is shared also by the EAN community. XML has been embraced as the solution for future B2B applications but there is still a great deal of work to be done to develop solutions that will meet not just individual business needs but sector needs also. Organisations such as the Global Commerce Initiative, UN/CEFACT and UCC.EAN have started to model business processes using unified modelling language (UML). Using these models ebXML transactions are being developed to support business needs and the first schemas released cover ‘Simple E-Business’ and ‘Collaborative Planning Forecasting and Replenishment’. “What is in effect happening is that the ebXML solutions are building on and leveraging the work already done in EDI for different business sectors or communities,” says Bracken. “The basic structure has been in place so in that sense migration to the XML world is facilitated.”

By Leslie Faughnan