Wednesday, September 27, 2006

A brief EDI VAN History – Part II

As EDI use became more wide spread, each company followed EDI standards so that communication with their trading partners was facilitated. However, each company still had the flexibility to implement EDI transactions that fit its business requirements. Large companies had the ability to dictate to their suppliers exactly how a particular EDI transaction should be formatted.

During the 1980's, EDI became even more popular and proliferated with companies who could afford to employ a VAN and who had the technical expertise to implement EDI transactions that integrated with their back office systems. The first EDI software companies provided assistance with translating EDI transactions into and out of the format used by in-house applications so that custom EDI applications did not have to be built from scratch. EDI continued to grow in popularity as an expanding number of companies saw the benefits for themselves and their trading partners. Mainframe or mini-computers were used to run EDI systems.

PC based EDI software began to emerge in the early 1990's as an alternative and at a lower price point, although EDI was still a significant investment. Competition among VANs had reduced the cost of EDI communication somewhat, but it was still expensive.

Emergence of the internet in the 1990's provided the first real competition for VANs. The obvious question was "why use a VAN for communication when the internet was free"? And innovative companies did start to do point-to-point communication over the internet. Standards emerged for this communication and the most popular became AS/2 communication . Even though the transportation of the data was free, reliable and secure communication had to be maintained for each trading partner with whom EDI transactions were exchanged.

The demise of VANs was widely predicted because the internet was "free". However, in the late 1990's and the 2000's VANs reduced their pricing in order to stay competitive with the internet alternative. In fact, prices changed so much that it again became cheaper for many companies to outsource their point-to-point communication to a VAN rather than doing it themselves with AS/2. Many of their trading partners still used a VAN for the same reason. Some VANs began offering connections to trading partners that used AS/2 communication, while others resisted the trend. Today a competitive VAN offers their customers one point of communication regardless of their trading partners' communication preferences.


At 2:00 PM, Anonymous EDI Provider said...

I am looking for EDI news. I read your A brief EDI VAN History part-I. The information shared by you in this post is very impressive. Keep on posting!

At 10:40 AM, Anonymous Karuna said...

Thanks a lot for providing valuable information in VAN history and its usage. I would like to know how VANs interconnect with each other. Does it happen in a way just like how they would connect with any other trading partner? Or is there any technicalities involved in it?


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