EDI: A New Look at an Established Technology


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Electronic data interchange still offers significant benefits and opportunities to vendors and enterprises alike. Pressure from new Internet-based entrants is, in fact, only making EDI more competitive.

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Electronic data interchange (EDI) is often dismissed as a legacy technology that will inevitably be replaced by Internet-based communications, especially those based on XML. The reality is quite different, however. EDI has served many enterprises' business-to-business (B2B) transaction communication needs very well for decades, and it remains a mission-critical backbone across many important industry verticals. Moreover, few enterprises are anxious to abandon their investments in EDI — investments that continue to deliver significant return on investment (see "EDI: Mature, Conservative — and Valuable," COM-15-7616 ).

Despite the emergence of IP-based trading networks, EDI is still used for the majority of application integration projects involving fully digital B2B collaboration among trading partners. Just as important, EDI — despite being an established, mature technology — continues to evolve significantly in response to new enterprise requirements and competitive pressures. For a look at one critical and rapidly evolving area of EDI technology, see "EDI Translators: New Offerings Present New Opportunities," COM-15-9499 .

Competition from XML, IP-based EDI value-added networks (VANs) and emerging transaction delivery networks (TDNs) has increased. However, these competitive entrants have not replaced EDI — at least not altogether — simply because VANs continue to offer enterprises the key benefit their name implies: adding value to network-based transactions (see "Value-Added Networks: An Updated Overview," COM-15-9442 ). Although the new competitive entrants have put pressure on VAN pricing, the traditional VANs continue to offer a viable solution for enterprises that conduct extensive B2B transactions. VANs have established very high expectations among their enterprise clients. Some emerging IP-based solutions offer useful new functionality and competitive pricing, but few can match the depth and breadth of VAN solutions.

One of the key reasons for the enduring success of EDI is a high degree of standardization. Emerging XML-based standards organizations, such as RosettaNet, continue to struggle to expand their scope beyond niche deployments. (RosettaNet's use, for example, is largely confined to one industry vertical: high-technology and electronic component manufacturing.) By contrast, the leading EDI standards — Accredited Standards Committee (ASC) X12 and United Nations Electronic Data Interchange for Administration, Commerce and Transport (UN/EDIFACT) — continue to evolve to meet the changing and expanding needs of more than a dozen industries (see "EDI Standard Selection: Critical to Implementation Success," COM-15-7777 ).

As a result of these many benefits — both established and potential — EDI continues to present significant opportunities to vendors and enterprises.

  • EDI Opportunities for Vendors. Despite the long-established position of EDI in the marketplace, it continues to offer growth potential to vendors of a broad range of EDI-related products. Providers of EDI translation tools, for example, are developing application integration strategies that leverage the powerful translation engines at the heart of comprehensive integration broker suites. Their strong installed client bases enable them not only to derive new revenue streams, but also to compete for application integration opportunities — which historically have gone to pure-play integration broker suite and application server suite vendors — by offering complete B2B/application integration solutions. Application integration vendors — for example, webMethods, Tibco Software and SeeBeyond — have also recognize the value of enhancing their EDI capabilities. These vendors have seen that EDI is not a transformation to be taken lightly. Like the EDI vendors, application integration vendors sometimes offer strong EDI transformation capabilities, including native support for heavily used EDI document formats.

  • EDI Opportunities for Enterprises. A broad range of old and new EDI alternatives — including traditional value-added EDI networks (EDI VANs), Internet-based EDI VANs and "do it yourself" proprietary solutions — is now making it possible for enterprises to extend their transactional reach in highly cost-effective ways. Enterprises across many industry verticals can realize substantial cost and resource savings by leveraging or implementing EDI technologies.

Bottom Line: EDI continues to evolve to meet changing enterprise requirements and deliver significant benefits to enterprises — and vendors — across a broad range of industries. Competitive pressure from new market entrants, far from signaling the end of EDI, has only made EDI more attractive in functionality and pricing. Enterprise IT decision makers cannot afford to ignore the enduring importance of EDI.


"EDI: Mature, Conservative — and Valuable" ( COM-15-7616 ). Electronic data interchange, which has been facilitating business-to-business collaboration since the 1960s, remains a valuable technology today. By Frank Kenney

"EDI Translators: New Offerings Present New Opportunities" ( COM-15-9499 ). Through industry convergence and new product offerings, enterprises have new opportunities to benefit from EDI and EDI translation. By Frank Kenney and Benoit Lheureux

"Value-Added Networks: An Updated Overview" ( COM-15-9442 ). Although value-added networks are a mature and stable communication solution, enterprises must carefully sort through and compare offered services. By Frank Kenney

"EDI Standard Selection: Critical to Implementation Success" ( COM-15-7777 ). To maintain a competitive advantage, enterprises must choose the EDI standards that best suit their enterprise-, industry- and region-specific needs. By Frank Kenney

© 2002 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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