Toward a Better Exchange

Dec. 1, 2001
You?ve seen the acronyms ? EDI and XML. Which will be the one to truly establish electronic business communications? Right now, the answer is both.

Toward a Better Exchange

You’ve seen the acronyms — EDI and XML. Which will be the one to truly establish electronic business communications? Right now, the answer is both.

by Leslie Langnau, senior technical editor

Establishing the free flow of information between businesses is turning out to be more complicated than most people thought. Electronic data interchange (EDI) was supposed to eliminate many communication and trading obstacles. But it has proven to be expensive and difficult to implement. The result is that it’s a tool used mostly by large companies.

It’s also become a protocol with many custom versions, ones that users often try to “set in stone.”

“The result,” says Sally Fuger, product manager, Automotive Industry Action Group (AIAG), “is that users are trying to shoehorn information into their EDI transactions that doesn’t belong there.”

Then the Internet came along, offering a lower cost and faster way of transmitting business and conducting transactions. The features and possibilities of the Internet helped birth the Extensible Markup Language, or XML. Now, mid-size and small companies can enter the game.

But neither EDI nor XML alone solves all communication and transaction problems. Both have pros and cons, and chances are very good you will use both. Thus, you won’t have to eliminate current EDI processes. And you won’t have to spend another fortune to implement XML. You will, however, have to choose which protocol is best used where.

The continuing communication evolution

Despite investor skepticism regarding the profitable business uses of the Internet, it’s still having a major impact on business. One of its larger effects is how dynamic it has made business communication. Forms and the type of data companies need to exchange are changing — often.

EDI inherently won’t be able to keep up. It is a rather inflexible system and not easy to use when formats require frequent change. Despite its wealth of standards, there are a lot of proprietary versions operating, compromising true interoperability.

On top of that, it is slow, sending data at about 1200 baud. “Because of this rate and limited bandwidth, you’re limited in how much data you can send. This makes EDI the ‘Morse code’ of electronic data exchange,” says Eddie Capel, vice president, Infolink, Manhattan Associates.

Capel illustrated this limitation with a common occurrence in material handling. Suppliers are often physically close to the customer. However, because of the slow and batch-based nature of EDI, trucks delivering items often arrive at the customer before the advanced shipping notice (ASN). The result is usually a temporarily messed up warehouse management system and delays in productivity.

But EDI is established. The infrastructure is solid. The largest value-added networks (VANs) for it are run by IBM and GE, and they get a cut of every transaction that goes through. Plus, the VANs offer an audit trail of transmissions. “Before XML or any other protocol gains dominance, there are business process changes that must take place,” adds Capel.

A better way?

XML, on the other hand, is attractive. Lowe’s, for example, is asking its suppliers to comply with it, splitting the costs savings, which are reported to be in the millions of dollars a year.

Says Jessie Alderson, senior consultant, Alderson & Associates, at a seminar given at Auto Tech 2001, “There’s a lot of XML going on behind closed doors, even at Tier 1 suppliers that Tier 2 need to be aware of.”

Fugel agrees, noting that many in the automotive industry are looking into it if not “already dipping their toes.” “Committees are being formed now to determine what the approach should be,” she adds.

“It has tremendous capability for people who have to look at screens to reconcile invoices,” continues Alderson. “The railroad industry, for example, has embraced it at just about every station you go into. Organizations that have a lot of screen-reading needs have embraced XML big time. Healthcare is using it at a faster rate than anyone else. With XML you can generate a form, fill in the screen and send that to your insurance provider, which can tell you how much you’ll pay before you get out of the doctor’s office. The aircraft industry is parallel in many ways to automotive, except it supplies many parts for assembly work. XML is used by lift truck operators at shipping and receiving docks. They can see what the data are because they are represented in a more readable, simple way.”

“Most of our customers, who happen to be retailers, are embarking on XML strategies,” adds John Seaner, vice president of product marketing, QRS Corporation. “But they are treating EDI and XML differently. EDI is always going to be the cornerstone for further collaborative efforts.”

A closer look

XML was designed to take advantage of the freedoms offered by the Internet. It is a highly flexible, function-rich document formatting and transmission protocol, suited to the specific capabilities and needs of Internet-based data transmission.

It is not a program that a network executes, like a computer running an operating system or application program. Developed by the World Wide Web Consortium (W3C), it’s a set of guidelines. These guidelines give you great flexibility in formatting business data for transmission through Internet-based networks.

It’s an important protocol because many Information Technology users and watchers believe it will be the dominant language of browsers on the World Wide Web.

XML is a smaller version of the Standard Generalized Markup Language (SGML), or the “mother tongue” of languages. However, it is too unwieldy for most business applications. Thus, XML omits certain SGML functions and options not needed by business applications. This helps make the protocol easy to use.

HTML is a version of SGML, too, and thus related to XML. Both are considered formatting languages. HTML is used to design Web pages, too, like XML, but it’s a bit too fixed in its format for many business requirements.

XML offers much more format flexibility. It lets you design your own mark-up style language for your documents. The goal of XML is to make it easy to automatically format business data for transmission between computers. Plus, its description and linking functions are easy to use.

One of the bigger benefits is that XML files are text files. This format was chosen because it’s easier for programmers to debug and for users to read. But the files are still just data. Another program is required if you want to do something with that data. That program can be a Web browser to display data. Or it can be a program that does some work with the data, such as an MRP, warehousing or process control program. Or it can be a program that changes the data.

XML is a public language. No company owns it and it is hardware independent. Ideally, all XML documents will be compatible with other companies’ XML implementations. Reality is a bit different, though. Currently, there are more than 250 versions available, as companies compete to make their version the top dog. Few companies use the same style of tag names, or data descriptors, for example.

The best of both

Data exchange, however, is not a matter of either-or. “XML will be used to augment EDI,” says Capel. “We all demand more information more frequently, so there’s not a huge growth path for EDI because of its inherent limitations. XML is much more verbose. You can embed digital images, sound bites and video clips, which you won’t be able to do with EDI.”

XML can be used as a way to reduce the work involved in formatting documents for EDI. It can be set up to automatically put data into compatible formats.

But caution is advised. It’s not a simple matter of taking EDI transactions and mapping them into XML formats. “The trouble with that,” says Seaner, “is that you may end up repeating the same bad mistakes made with EDI; the same unreadable documents with multiple formats that require intense expertise to translate and map. EDI may be cumbersome, but most invoices, purchase orders, advance ship notices and purchase order acknowledgments are still going to use it. XML most likely will be used for collaborative forecasting and replenishment applications. You need a higher, more real-time process for collaboration that EDI won’t be able to handle.

“We’re seeing companies integrate both,” adds Seaner, “perhaps having 80 percent of their top partners using one, and the remaining 20 percent using the other protocol. I do think you’ll see more EDI over the Internet, and that may be the first step into the realm of XML. But EDI will have a place.”

There will likely always be a hybrid approach to data translation. Whether EDI or XML, document mapping and application integration tools will be necessary. “Until a YAML, or yet another mark-up language comes along,” says Fugel.

Becoming compliant with either of these protocols is not as expensive as it once was. There are many third-party suppliers that will take your data and transform it into the format you need and send it. Fees for such services range from $100 per month to several thousand per month, depending on what you want done. An advantage of this method is that you don’t have to worry about staying current with continually changing and evolving standards and requirements.

Do watch the quotes you receive. Advises Fugel, XML software providers may exaggerate the true cost of EDI, using the worst cases as the basis for their quotes. They’ll use the most expensive VANs and the largest files in their estimates. “All the numbers I’ve seen so far have been grossly exaggerated for EDI,” she says. Be sure to do a thorough cost-benefit analysis.

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