Tag Archives: VAN

Thank you for sticking with me and Loren Data through the biggest crises our industry has ever seen.

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See a great message from Todd Gould at Loren Data

Since I entered in the EDI industry in 1996, I have not seen a more promising time to be in this market. The GXS era was an unfortunate disruption to the natural growth of a networked market; however, under the new management of OpenText opportunity is back.

Now that we avoided the apocalypse, it is time for us, the leaders of the industry, to deliver the next generation of B2B automation.

In the coming months Loren Data will begin rolling out the next evolution of the EDI VAN, one that is more user and developer friendly, more extensible and a better fit for the third decade of Internet possibilities. Stay tuned for many announcements…you will be amazed.

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Where Will EDI Users Go -If VANs No Longer Connect?

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Recently we wrote about Interconnects Are the Market . We showed a very simplified view of how VANS Work, and what happens when they do not work. We pointed out that the whole VAN industry was based on the assumption that no connection would be refused by any of the parties. But there is no law or policy that makes this assumption enforceable.The upcoming disconnection between GXS and Loren Data could turn out to be like a huge traffic jam (about as catastrophic as the recent snow-related one in Atlanta). Yes there are usually ways to get around a traffic jam, but you end up losing time and are inconvenienced in the process.

Givers/Takers – Winners/Losers

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Ever hear about how people are described as givers or takers? Givers give without strings. Esteem for givers rises over time. Takers expect more than they give. Eventually, times catches up to the takers. The same applies to businesses. The world of EDI is plagued with a taker.

In the book, Give and Take: A revolutionary Approach to Success by Adam Grant, Grant points out that while the Good Guy finishes last has its truth, it also turns out that the Good Guy also finishes first. Takers might show short term wins, but end up middle of the road in the end.

Steve Scala, Senior Vice President of Corporate Development, for GXS recently sent a letter to an unknown number of customers, addressing a communication from SPS Commerce regarding the termination of the GXS-Loren Data interconnect. SPS aparently believes that the problem is real, and is contacting trading partners to create a real solution. In his letter, Scala attempts to assure GXS customers that they will be taken care of, and to disregard SPS.

Improved AS2

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Like VANs, AS2 gets complex if there are more than a couple of nodes involved. It is an excellent protocol with strong encryption and digital signatures, positive sender identification and proof of receipt. It is the implementation that can be weak, not the application.

AS2 (Applicability Statement 2) is a specification for Electronic Data Interchange (EDI) between businesses using the Internet’s Web page protocol, the Hypertext Transfer Protocol (HTTP). The AS2 standard provides Secure Multi-Purpose Internet Mail Extensions (S/MIME) and uses HTTP or its more secure version, HTTPS, to transmit data over the Internet. Security, authentication, message integrity, and privacy are assured by the use of encryption and digital signatures.

Another important feature, nonrepudiation, makes it impossible for the intended recipient of a message to deny having received it. A Web server, an EDI transfer engine, and digital certificates are all that are required for data exchange using AS2.

All this sounds very well developed, but AS2 has no “directory” function. What would e-mail be like if it had no directory function? E-Mail has its DNS & MX records which automatically make the rounds of other e-mail systems.

Much of the management of AS2 is still manual. That means it is time to automate! URLs and Public Certificates change. Most every AS2 package allows you to generate and sign your own certificate. The process will generate both a private and public key for a length of time selected by you. The private key will automatically be securely stored where the AS2 software can access it, and the public certificate will be placed in a location where you can send copies to your trading partners.

Stabilizing The Supply Chain

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A comment to us from a large supply chain “hub”: “The GXS mess shows how fragile everything is in the supply chain. Stakeholders (suppliers, manufacturers, distributors) do not control their own destiny if they are using an EDI Provider”.

There is an imbalance of power: end users should have control over the supply chain. Is it time for them to move to their own inside system which they control? What can stakeholders do? They don’t want to support everything (re-invent the Internet or something counter-productive like that). Yes, they have an alternative to run everything over an AS2 setup. They just don’t want outsourcers making the rules.

One view of the current state of affairs is that interconnects are too “black box,” and that VANs “grudgingly cooperate” instead of proactively advancing the science.

Some of the possible steps to correct this mess include:

All about Electronic Commerce Service Providers

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Ecommerce Service Providers (ECSP) are a “hybrid” with high turnover rate, deal with all implementation guides, and amount to a “Hub of Spokes”). An ECSP is what we previously called VAS (value added services) such as SPS Commerce. Can be referred to as a “VAN2” if it moves EDI messages over the Internet.
Let’s characterize the three types of EDI customers: Hubs; Spokes; Ecommerce Service Providers (ECSP). A “Super Hub” accommodates all three types of customers.

Let’s take a typical ECSP and describe their service offerings by reviewing their respective WebPages:

Interconnects Are The Market

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It’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.

Read more: http://ec-bp.com/index.php/articles/industry-updates/10222-interconnects-are-the-market#ixzz2lsPVd8lU

Open Text Buys GXS!!!

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OpenText Enters Into Agreement to Acquire GXS. Transaction Expected to Expand Information Exchange and Cloud Service Offerings.

Now for the rest of the story. If you have been following my series on David and Goliath, you know how giant GXS has been trying to bury Todd Gould’s Loren Data.

 Goliath is in a tight predicament. If he swings his might weapon at David, he risks falling off the cliff he is on. In other words, cutting Loren Data out of the fragile INTERCONNECT game COULD send the whole EDI World into a tailspin. It could spell the end of the 20+ year old “traditional” EDI VAN. Wonder if Open Text is aware of this? I sure would not want to buy a company that had this “baggage” hanging on their back.

Supply Chains depend on EDI. When they send a transaction to be routed to a supplier or customer, there is an “Expectation of Services” from all service providers involved. If a service provider intentionally blocks transactions for any reason, are they not are guilty of obstructing commerce (much of it is interstate commerce…..listen up Federal Courts).

GXS Same Same Penn Central ?

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This article was recently printed in “EC-BP Electronic Commerce Best Practices” and is reprinted with permission of the author, Ken Kinlock

Scott Koegler recently wrote an article on “What’s Next for GXS”. My immediate reaction was this sounds very much like the Penn Central Railroad / CONRAIL disaster that took 30 years to finally solve. Lots of common keywords: “essential services”, “greedy investors”.

A little background then lets go for it. I will try and assume the common ground of readers is “investors”. I will try and carefully explain terms in the VAN industry and railroad industry.

In 2002 General Electric decided to divest their VAN business. Francisco Partners LP invested on a ten-year term in what became known as GXS. 10th anniversary rolls around and it became clear to Francisco that the investment was not turning out the way it had intended. Funny, but nobody else wants to pick up their investment (and the debt attached to it). Even an IPO is not an option. Again, Scott has laid out where GXS is (or isn’t).

Now why do I bring up Penn Central? Substitute “stock merger” for “private placement”, but keep the word “debt”. You have a classic “history repeats itself”. Penn Central was created by the merger in 1968, of the Pennsylvania Railroad and the New York Central Railroad. They immediately became the “darling” of the stock market, but by 1970 the company had filed for bankruptcy.

Talking Points

GXS

Penn Central / CONRAIL

What does an EDI VAN have to do with a railroad?

A VAN is like the U.S. Freight rail system. Both take your product; pack it in their own container (envelopes/files; box cars); move it to the recipient by a network of rails or phone:data lines (both built by private companies); switch from one to the other (no single VAN or railroad covers the whole country….yet); and finally deliver to the recipient (rail siding or VAN mailbox).

I thought these companies were all “blue chip” folks

General Electric spunoff GXS because it no longer fit their strategy. It didn’t fit right on those charts with “cash cows”, “rising stars”, and dogs.

New York Central and Pennsylvania Railroad had been successful and paid high dividends since the mid 19th Century. Changing business conditions convinced everyone a merger would eliminate redundancy and make a combined company stronger.

What went awry with their business plans?

GXS’s “managed services” sector is growing, but other business, including VAN, is not. They have a huge debt service hitting them and are scrambling for revenue sources by considering charging subscription fees for every cross-connect. This might backfire by sending customers to look for other methods and avenues to transact electronic commerce.

  • Losses on commuter services

  • Mail and express business to air or truck

  • Management focus on amusement parks and other non-rail assets

  • Court decreed PC must include New Haven Railroad in their merger

Couldn’t a stronger company just buy them? Couldn’t they re-organize?

Francisco Partners carried out a market check with JPMorgan Chase on refinancing a subsequent IPO. The numbers were just not there! This is the same reason that nobody will buy them in total.

Other railroads had the same rate regulation problems corrected with passage of the Staggers Act in 1980 when many of these constraints were loosened, giving railroads more freedom to compete with trucks.

Could GXS sell off it’s VAN business and survive?

Yes. Scott’s article gave some ideas. Another idea would be a “neutral party” like a telecomm company who is good a rate setting and would charge all parties fairly (and still make a profit). Possibles are Verizon or Orange. Or forget the telcomm and go with pure Internet: VAN solution

CONRAIL took essential stuff. Long Distance Passenger Service to AMTRAK. Commuter service to New York’s Metropolitan Transportation Authority and others (where it really belonged). Non-rail assets stayed with Penn Central and either survived (real estate), failed, or were sold.

Both companies enjoy/enjoyed a degree of monopoly protection. Shouldn’t that mean they would “always” make a profit?

If your customer uses their services, then you are forced to use their service to reach your customer. With fair, equitable pricing, there should not be a problem …but there is.

The railroad side of a monoply is simple. If your customer is on their railroad, you have to use them to reach customer. Else go with trucks. Guess too many shippers did just that.

Both companies had financial reports that were (are) as “clear as mud”. Both sound like the fruit dealer who has rotting pears and worms in his apples but talks about his great cherries and super strawberries.

What is the difference between “managed services” and “messaging services”? What is “data synchronization”? If a transaction was book incorrectly, who would know?

Look at the history of their stock price. Nobody knew how bad the bleeding was. Sometimes a fine line between regulated (railroad) and unregulated (amusement parks, etc). Always a way to move $$ from one to the other.

What about government intervention to protect “essential services”?

Some countries (example: South Africa) view VAN services differently but U.S. Has historically ignored them and left to the private sector. But anything is possible.

Congress created CONRAIL in 1976 to acquire the rail assets of Penn Central (and some other “problem children”). CONRAIL was sold in 1997 to CSX and Norfolk Southern. The government realized a “profit”.

Find out more on the Penn Central Railroad

EDI VANs Are Undefined At Best

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VAN (Value Added Network) has history but no formal defining document. It isn’t part of the X12 and isn’t anywhere required. There is a lack of an existing generally accepted definition of what a VAN is. We will tie this in with the notion that they exist for the purpose of promoting and enabling transfer of data between trading partners, but that they are not a requirement of the process or infrastructure.
Earlier this year, I wrote on “What Is EDI? – A Definition and History“. I concentrated more on the standardization of DOCUMENTS, not how to exchange them. I covered how the Transportation Data Coordinating Committee (TDCC) morphed into the American National Standards Institute (ANSI) and became the ANSI X12 Committee and how on the other side of the ocean, standards for documents used in international trade, called Tradacoms , were developed. These bodies adequately took care of controls for individual documents and multiple documents (mailbags, etc.), but nary a word about actual delivery to the trading partner. It was left up to the user, but the vendors jumped into the drivers seat.