Wednesday, September 13, 2006

A Brief EDI VAN History - Part I

Today, a company that is new to EDI or a company that wants to reduce their expenses can arrange for cost effective service with an EDI VAN that will provide EDI communication with their trading partners regardless of whether the trading partner wants to use AS/2 communication or wants to use their own VAN. However, this has not always been the case.

EDI started in the 1960’s when a relatively few companies wanted to exchange data electronically in order to become more efficient. The focus of EDI since its inception has been on the replacement of paper-based business documents with carefully defined machine-processable electronic forms. In the 1960’s, companies had no choice at that point in time except to transmit their data directly with each other using point-to-point connections. However, they soon realized that maintaining point-to-point connections with a growing number of trading partners, all of whom had different computing platforms, was an expensive proposition.

In the early 1970’s, companies in several industries banded together to develop the first set of EDI standards and they decided that a for-profit company would be the best avenue for administering the communication among them. The first EDI value added network company, or VAN, then came into existence. The value added network provided one point of connection for each company and then managed the communication with other companies. Now a company could outsource the secure flow of EDI transactions to many other companies while maintaining just one point of communication. EDI had become much easier and less expensive.

EDI standards became more formalized throughout the 1970's, additional EDI VAN companies were formed and those VAN companies developed interconnections among themselves so that it did not matter which VAN a particular company chose. EDI communication with other companies was now possible regardless of which particular EDI VAN any one company used and EDI started to flourish.