Last month we discussed some of the history of EDI and the associated universe. Here, we move to the present and begin a discussion of the current market and players.
EDI today is part of a fabric of communications called EDI+ (some use the term little edi and big EDI, and others just B2B communications). But fundamentally, companies have a greater imperative and motivation to communicate in more ways, with more media/data types than ever before. There are many modes of communication based on your purpose, but that just enhances the need for compliance methods, i.e. standards. Whether sending photos of your kid’s birthday party or a secure purchase order or payment, you need to be sure that the recipient can open and read the file and when appropriate, move the data into another system. Selecting the technology appropriate to the purpose can be challenging, since the buzz words and banner ads don’t always allow you to really understand what the technology does and what you can do with the technology.
We will begin to outline the market,1 but first, here are some of the definitions we will use.
EDI—is both a set of standards and a technology solution. Technology providers do:
Mapping—converting a document or transaction from one format (ERP, supply chain, payment, spreadsheet or other system) into the EDI format
Translating—standardization and prep for sending or receiving. For example, your customer’s file format differs from yours. The translator makes adjustments so that your customer can accept your file.
Some EDI providers have been building or acquiring other communication methods, so they might have VANs or MFT, as well. SEEBURGER and Axway are such examples. In addition, the big integration players may provide these services through partners or have acquired companies that provide these capabilities. TIBCO and Informatica are examples.
EDI VAN (Value Added Network)—is a method of transporting standard transmissions between trading partners. IBM/Sterling and GSX are examples.
MFT (Managed File Transfer)—is a method of transporting a variety of standards-based transmissions and documents. MFT providers have succeeded in creating a higher level of automation for their users, leveraging increased security methods and nonrepudiation. Leaders here are CLEO Communications and Ipswitch.
Secure FTP (File Transfer Protocol)—these providers have taken the manual approach to FTP and automated it. In addition, there are many nifty capabilities like plug-ins for Outlook so users can leverage email which gives them the ability to send the file directly from an email rather than access a separate software module to upload the files. JSCAPE is an example of this type of provider. Many of these providers have some of the required protocols. Also, many MFT players have simpler and less expensive options. For example, CLEO and Ipswitch have multiple product and price points for simpler requirements and/or smaller companies as compared to the requirements for multiple protocols or automating hundreds or thousands of transmissions. Some of these solution providers also have consumer-oriented product lines for low cost or ad hoc file transfers. GlobalSCAPE is an example.
Cloud—many people have asked us, "Aren’t MFT and VANs in the cloud?” Yes, MFT, de facto, is a cloud service, since it is an internet-based transport method. The techniques that providers use to leverage the internet and how they charge for services can differ. However, Cloud EDI service providers offer more services for the end-user. For example, many small companies may not buy translators. Their cloud provider will take their files, translate them, and then manage their transmissions for them. DiCentral, RedTail and eZCom are examples. So for many, this becomes a managed service, as well.
Managed Service—providing all the services needed to create, deliver, and monitor all the elements associated with the business transaction.
Developer Solutions—Here are technology solution builders who build their own platforms and need to create their own VANs or EDI capabilities. Or a very large enterprise that has a private hub for its trading partners might also want to develop its own solution. Loren Data is an example here.
The service providers are positioned in Figure 1:
Source: ChainLink Research
Figure 1: Market segments for EDI and MFT
Interestingly, this is a highly fluid environment these days. New companies (not just the freeware crowd) are coming along with new methods. And established cloud players are providing these abilities, since it is a requirement to provide standard B2B communications as well as move data from the cloud to the enterprise and back. (More of this in subsequent articles.)
The consumer influence in this market is not to be overlooked. Although the YouSendIT and Dropbox providers do have an MFT, they cannot be used for protocol-based business communications. However, these firms securely manage document sending and sharing a common space, and business people are joining the ranks of consumers in adopting these easy ad hoc methods. Their presence has also caused business solution providers to develop ad hoc services for their customers, so this is an exploding sector.
Consumers are not used to paying for much, so the jury is out on what this will mean going forward. However, consumers do pay for backup and other types of remote apps to service their technology. So over time these companies may be able provide services to monetize their freeware. We’ll see.