Industry Updates

Interconnects Are the Market

Written by Ken Kinlock
Published on Wednesday, 27 November 2013

thumb interconnects chartIt's fair to say that VANs were responsible for bringing EDI to current volume levels of transactions. It is also fair to say that interconnects between VANs were the path to their success. Traditional VANs and their interconnects built the market, now they are the market for newer technology (VAN2).



Yes, it's possible that users could all migrate away from the use of VANs....someday. In April 2012, we wrote about “Do We Need VANs”. Many EDI specialists have done everything they could to eliminate the use of VANS. By doing so they saved tens of thousands of dollars in charges by moving to FTP and AS2 connections. But there were a few customers that required the use a VAN, and so they could not completely get rid of them.

In June 2013, we studied the subject of who regulates VAN interconnects: “EDI VANS are Undefined At Best”. The answer is... NOBODY.

Below is a chart showing how properly connected interconnects work.  Note that many Spokes are on different VANs than is their Hub. When there is a breakdown (political, technical or financial), those Spokes cannot conduct electronic business through their Hub.

 

Note that Hub Z has a Spoke that is connected to it directly, which is a great opportunity to use an option like AS2. If AS2 is good enough for Walmart, it should be good enough for Spoke 4.

 

interconnects chart

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The interconnects allows VANs to easily exchange EDI transactions on behalf of their clients with other VANs. This enables customers to choose the VAN that best fits their needs. It also ensures that VANs compete to keep down the cost of EDI. In other words, the marketplace itself acts as the “policeman” of the VAN Interconnects. (Interconnects are represented in the above chart by the RED lines connecting the VANs)

However, looking at what can go wrong with this delicate interconnect structure (see the yellow boxes on the chart above), isn't it time to move to a newer VAN2 approach that depends on the Internet (just like every other digital connection does today)?

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