There are many unusual facts about Electronic Data Interchange (EDI). The first is that its roots began when there weren’t really any computers to speak of. Another is that this 50-year-old technology is now more relevant today than it’s ever been. So where is EDI today and how did we get here?
Army Master Sergeant Ed Guilbert had a problem. The year was 1948 and he had half of Berlin to feed. The logistics surrounding the famous Berlin Airlift were enormous. Over the next 12 months, Guilbert and the rest of the US Army logistics team would drop 2.3 million tons of goods into West Berlin. And, it was thanks in part to the structured shipping manifests that Guilbert developed.
The idea behind EDI was born. Of course, it would take Guilbert another 20 years to turn this paper-based approach to standardized business documents into the electronic messages that would later develop into EDI. The next breakthrough came with the formation of the Transportation Data Coordination Committee (TDCC) in 1968 – 50 years ago – that began to develop electronic standards for the transportation industry. Since then, EDI has become a foundational technology in many industries including automotive, manufacturing, healthcare and retail.
EDI. A vital part of business
Today, so many industries rely on EDI for the fast and efficient exchange of business documents that it is almost inconceivable that it will not remain at the heart of many key business processes. The evidence is that, even after 50 years, the technology is in greater demand now than ever. Looking at the healthcare industry alone, the most recent estimates suggest the EDI market will be worth $5.9 billion by 2025 – an annual growth rate of 9.4%. Not too bad for an old timer!
Here is a mature technology for the fast and efficient transfer of data that just works – look out for my telephone metaphor coming shortly – and, as we move into the world of Big Data, EDI is a reliable and secure platform to facilitate the exchange of more and more information between trading partners.
But EDI hasn’t always been regarded as a technology with a future of promise. On several occasions over the last 50 years, experts have predicted the end of EDI. For example, when the XML protocol and AS2 standards were first introduced. XML was human-readable and seemed a better alternative than the more complex EDI, and AS2 was quickly adopted by retail giant, Wal-Mart. But instead of replacing EDI, the additional protocols and standards added to the variety and complexity of digital trade.
Why variety is the spice of life
One issue that has always surrounded EDI is its complexity. Sergeant Guilbert may have thought of one standard for electronic trading but we quickly reached a stage by 1990 that there were 100 different standards for X12 alone. X12 was only one of a number of key standards including EDIFACT and GS1. In addition, many different industries developed their own flavor of EDI to suit their specific needs – such as ODETTE in automotive, RosettaNet in High Tech and Tradacoms in retail.
The result has been that, for an organization with a large number of trading partners, EDI involves using multiple standards to exchange information with all partners.
However, there are two opposing things to consider. The first is that, although there are many standards, the major standards are incredibly robust. There hasn’t been a major upgrade to any of the main standards in well over a decade. The second is that new standards are still appearing – such as PEPPOL in the public sector – to fill very specific requirements.
We now have a situation where virtually any message type in virtually any format can be exchanged between trading partners using EDI as long as they are properly connected. This is why we have seen the growth of third party providers that can deliver a platform – as well as document mapping and data translation – that enables trading partners to quickly connect and exchange documents.
While the first EDI connection were dedicated point-to-point connections, the EDI platforms – such as OpenText™ Trading Grid Messaging Service – allow for one-to-many connections to join a complete supply chain or trading partner community.
That telephone metaphor
I heard someone say that companies now treat their EDI platform providers (VANs) like a telephone service. It’s a commodity item that just works and that they’ll change when they can get a better price. This got me thinking that maybe they were right. EDI was like the telephone but not for the reasons they gave.
Remember when your phone was something you simply used to make phone calls? I bet there are some people reading this who don’t and for whom the word ‘landline’ sounds like the name of a train service. The telephone has evolved and adapted over the years. It has become more intelligent. It is able to offer services that would have blown the mind of its inventor. It’s an entertainment center, a guidance system and a self-regulating health monitor, to name only a few of its capabilities.
Exactly the same is true of EDI. The humble exchange of a business document electronically has become a tool to drive business productivity, to optimize supply chain visibility and performance, and improve new product development to name just a few of its capabilities.
From simple Electronic Data Interchange, we’ve begun to talk of B2B integration. The simple exchange of digital documents is no longer enough for businesses. All organizations have to work in a seamless, open and collaborative way with their customers, suppliers and other trading partners. B2B integration defines integration at two levels: data and people (here’s a good blog with a little more explanation).
The core of EDI technology has been built upon to deliver additional capabilities, such as B2B transaction visibility. Take a look at this short video below and stay tuned for a soon-to-be-released update of advanced analytics capabilities – it’s this evolution in capabilities that has kept EDI relevant to business needs today and into the future.
What’s next for EDI?
The answer to this question doesn’t really require a crystal ball. The Internet of Things is changing every aspect of our society while adding huge amounts of data every second. That data has to be effectively managed, shared and utilized.
How are we going to do it? If only we had a tried and tested technology that has been specifically designed for the fast and secure exchange of data in a vast array of standards and formats over a vast array of communications protocols! All it takes is for the development of new message types designed to standardize the way that IoT data is transmitted between systems.
Yet another reason that EDI hasn’t just survived for 50 years, it has thrived – and is set to stay firmly at the heart of B2B communications for the next five decades.
Learn more about EDI, the newest capabilities of OpenText Trading Grid Messaging Service, or if you’d like to learn how these solutions may be customized to benefit your individual business needs, please complete the contact form beside this blog.