B2B Integration : A Practical Guide to Collaborative E-commerce

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Buyer Purchasing Accounts Payable a t 1 0 ft S u i t e Purchase Order VAN or Direct Connection Invoice Extensible Markup Language (XML) 155 Remittance Advice Supplier Ordering Billing Accounts Receivable Figure 6.1. EDI-based communication between trading partners they use the services of VAN whereby each trading partner connects to the VAN (see Figure 6.1). The service provider of VAN manages the connections to all trading partners. 6.2.2. Limitations of traditional EDI The setup procedure for traditional EDI is expensive, complex and time consuming. The inherent nature of EDI communication requires the trading partners to synchronize their internal systems and business processes with those of their partners. The different applications used by the trading partners use different schemas and data exchange protocols. The format and data content of the files generated by these systems also vary widely. The transfer of files containing data between trading partners, from one computer system to another using EDI, is also a potentially complex process. The EDI-based file exchange mechanism will work correctly only if programs running at both ends (sender and receiver of file) are part of the same package written at the
156 B2B Integration — A Practical Guide to Collaborative E-commerce same time. Thus, there is a complete dependence by everyone in a business relationship on the adoption of a specific implementation. This unwanted feature makes continued changes, improvements and enhancements, either at the individual enterprise or trading group level, very expensive. The software, hardware and network connectivity of an EDI network is expensive and specialized. Out of millions of companies that conduct business with each other, only 300,000 companies worldwide have adopted EDI, due to its complexity and expense. The dominant partner model that drives EDI is too limiting and centralized in the Internet world. EDI relationships are usually hub-andspoke type, where the big corporation is the hub and all other small companies doing business with it are the spokes. The big corporation tends to dictate business and technical standards in its interactions with the smaller companies. This type of business model is not suitable for B2B e-commerce, as the latter is based on the emergence of many new and often short-lived business relationships and many kinds of payment arrangements. To summarize: • EDI is primarily a one-to-one technology, while a typical B2Bi over the Internet requires many-to-many connectivity. • Adding trading partners under traditional EDI requires customized mapping of each new partner's document formats. • Most EDI traffic flows over VANs, which can be expensive. Typical VANs charge $1 to $20 for each message. • As usage of VAN is expensive, EDI messages are compressed using algorithms. This makes the messages only machine readable and extremely difficult to debug. Just a small mistake in message formation can lead to hours of programming effort in detecting the problem. • EDI requires the installation and maintenance of dedicated servers that cost upwards of $100,000. But, wait. That's not all. The operational costs associated with EDI are also significantly high, as companies can spend $250,000 per month just in preserving the connection to the EDI network and keeping the servers up and running. This is too steep a cost for small and medium size industries and thus they refrain from adopting EDI.
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Chapter 2 Components, Benefits, Cha
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Chapter 4 Enterprise Application In
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Chapter Q Integration Brokers The f
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Chapter "] 2 Wireless Technologies
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Company Brience Everypath GadgetSpa
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Chapter "] 5 E-Marketplaces and Col
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B2B Integration : A Practical Guide to Collaborative E-commerce

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