Not only is EDI the dominant standard but it is use is growing more accepted, not less.  Microsoft recently added an EDI adaptor to its BizTalk Server 2006 product to make its integration platform more competitive in the B2B segment.  This may seem strange to those who view Microsoft as chief evangelist for XML and Web Services technologies.   

EDI adapted to the Internet  

Rewind the clock 10 years and you will recall that it was not just Microsoft, but countless marketplaces, exchanges and industry standards organizations each proclaiming themselves’ EDI killers.  Few technologies have the survived so many focused attacks as EDI has.  These attempts to replace EDI were not unreasonable theories.  The introduction of the new disruptive technologies that emerged during the Internet era would have been a natural transition period to migrate from EDI to XML.  But while the new XML messaging standards groups were busy plotting to exterminate their predecessor, EDI found a way to adapt to the changing ecosystem by evolving in two new directions:   

• ASX Models – Much of the negative sentiment around EDI in the late 1990s was actually unrelated to the standard itself, but instead focused on the expensive communications and transmissions processes for EDI documents.  With the Internet perceived to be “free,” many questioned why there was continued use of expensive, proprietary 3^rd party VAN networks.  From this vision the ASX (e.g. AS1, AS2, etc.) standards were borne and EDI’s lifespan was extended indefinitely.  EDI documents could be wrapped in a popular Internet protocol such as HTTP or SMTP then transmitted directly between trading partners avoiding the use of VANs.
• Web EDI –Another key limitation of EDI was its complexity.  Many small businesses struggled to find the budget or expertise to deploy a translator.  The user-friendly, universally deployed Internet browser was an obvious choice to simplify B2B e-commerce.  With just an Internet connection and no B2B software, an end-user could access web-based applications to send and receive electronic documents.  The web application converted the user inputs into an electronic document for exchange with business partners.  Of course, EDI, due to its ubiquity, was the default output format for these new web portals.  The result?  A further extension of EDI’s longevity. 

GXS TradeWeb - One of the first Web EDI Platforms

EDI is reborn in Emerging Markets  

Perhaps, XML advocates should try an alternative approach to adoption.  Instead of seeking to replace established EDI programs in Western markets, perhaps they should seek out green field opportunities in emerging markets to institutionalize XML.  While this is another logical theory, the global nature of commerce in today’s market preempts such an approach.  EDI has already embedded itself in the critical value chains of the developing BRIC (Brazil, Russia, India, China) countries.  Western automotive manufacturers such as Volkswagen, Daimler, Ford and GM imported EDI standards to China years ago along with the new plants they constructed.   Similarly, western retailers such as Metro, Kingfisher, Home Depot and Wal-Mart, each of which source billions in merchandise from emerging markets, have driven adoption of EDI amongst manufacturing communities in China, India, Southeast Asia and Eastern Europe.  As a result, every day hundreds of businesses in emerging markets are implementing new B2B platforms based on EDI, because it is the standard their customers wish to communicate with them in.   

Will EDI ever die? 

My guess is “no.”  However, I do think in the next decade we will see a gradual increase in XML-based standards to represent 40-50% of e-commerce transactions.  More thoughts on this in a future post…

Steve Keifer

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