Why EDI when you can XML?

Rumour has it XML (Extensible Markup Language) will profoundly alter the way we surf and deal in cyberspace. But what is being touted as a powerful elixir for solving integration difficulties and making Web transactions simpler may in fact be a potential hornet’s nest brimming with its own set of problems.

It used to be, if a company wanted to do large-scale business-to-business e-commerce transactions, electronic data interchange (EDI) was considered the only way to go. “EDI or die” was a common phrase heard across the industry. EDI offered a set of standard processes to transmit business data from one computer to another within a virtual private network, without the need to re-key the information. This saved time, paperwork and administration costs.

However, setting up traditional EDI is an expensive and time-consuming process. What are supposed to be standards are not standard across the board, and different industries have developed their own flavours based upon their specific needs.

Now, with Web-based transactions becoming popular, smaller companies want to become part of the game. Many of these companies cannot afford EDI or cope with its technical demands, but there are already signs that format-dependent EDI will be upstaged by format-neutral XML, which promises to provide greater ease in data collection and on-line catalogue searches.

Supposedly built on specific standards, EDI might as well stand for “Everyone’s Different Implementation,” said Alan Manning, director of sales and marketing for Tantalus Communications Inc., an e-commerce consulting firm in Vancouver. His company is currently using XML to improve his clients’ communication links between existing EDI gateways.

“This has allowed our clients to spend less to talk to their suppliers by reducing the expense of setting up a special EDI solution for each vendor, and to get the data into the appropriate systems in real time,” Manning explained.

“XML will definitely make the Web more accessible. Unlike any other Internet data format, XML includes a set of rules for error and exception handling. This ensures that application builders, who can create XML software using relatively simple data-handling modules, can expect that most of the time the data will be well-formed, and that when errors occur the correct fallback procedures are known throughout the industry,” he said.

Most government-regulated organizations currently have some form of EDI system in place.

Buffalo, N.Y.-based National Fuel is no exception, but the utility is also examining XML. That’s because the language could add more detail to current Web-based transactions in the form of an extra layer of company- or industry-specific information.

According to Gary Stonish, a systems analyst for National Fuel, although EDI allows for easier transactions between discrete systems, many users find it too cumbersome and restrictive when dealing with proprietary codes representing specific details – such as an appointment record or a purchase order. Different companies within the same industry often use the same codes to represent dissimilar data fields, making it difficult to communicate information across the supply chain.

“Part of the problem is not just the standardization on (data) fields but the values within the fields. Across the industry there are certain codes, so we have had to standardize all those codes as well as the fields,” he said.

And there is some industry disagreement about what information is essential or what code values to use as the standard, he added.

Murray Maloney, proprietor of Pickering, Ont.-based consulting firm Muzmo Communications Inc., concurs that using EDI alone can be very limiting.

“If you were going to buy into an EDI system, you were probably hooked up to one or two big companies that you were doing business with. And you had to do it their way.” This also made it very awkward to form new partnerships, he said.

He said XML will allow companies to build another layer of detail onto current messages generated in EDI. “And we can build upon them in a way that it is not necessary for an entire industry to come to an agreement. If two parties want to agree on something, they can.”

By harnessing the descriptive capabilities of Standard Generalized Markup Language (SGML, the grandfather of markup languages), XML enhances standard HTML by using custom tags to more accurately describe the contents of on-line documents.

Some believe that the true power of XML, however, will be the liberation of terabytes of SGML-based legacy documents, all of which will need only minor modifications to become available and searchable.

Many “virtual corporations,” multi-division corporations and companies conducting electronic business-to-business commerce would benefit from an XML-based application server, according to Hurwitz Group, a consultancy in Framingham, Mass. A company’s need to pass electronic documents over the Internet typically involves exchanging purchase orders, invoices and other business forms. When these forms are structured with XML, the receiving system can quickly and accurately process them, without need for human intervention.

Don Thompson, partner responsible for customer dynamics in Canada at Deloitte Consulting in Toronto, said he has noticed many of his company’s clients have shifted away from EDI towards XML.

“It’s not that they are getting rid of EDI so much as they are not asking new participants in their supply chain to get onto it. Instead, they are looking more towards the Web to provide access to the new suppliers,” he explained.

But he is not convinced that XML is even needed to get started with Web-based transactions.

“In fact, some client bases are very happily using FTP across secure connections. It’s really a matter of the security of the connection end-to-end, how you actually exchange the data, and how automated that is. XML is going to offer capabilities that we don’t have in HTML, certainly. But I’m not sure the process has to wait for XML saturation before it happens.”

E-commerce companies with business-to-consumer focus also must take care they are not “pushing a string uphill” by implementing XML exclusively before that market is ready, he said. In this case, they would end up having to backtrack and support an older version of their interface for a period of time, until consumers become up to speed with the latest XML-enabled browsers.

Caution seems to be the best approach to XML right now, analyst and users agree. Although National Fuel is anxious to start building applications with XML, the utility isn’t approaching XML with blinders on, Stonish said.

“People right now are holding back a little bit because it’s not all settled yet. XML at this point doesn’t officially have data-type support – it’s all character values,” he explained.

EDI allowed businesses to link together electronically, but did it in a top-heavy kind of approach. XML brings this functionality to the rest of the world but loses the construct of EDI, said Tim Sloane, an analyst at Boston-based Aberdeen Group.

With EDI, specific businesses “all had a purpose and a need to integrate their data types. Now you take XML and apply it to the Internet. Well, all of a sudden, everybody’s defining data types. And we are finding ourselves back in the confusion that existed before EDI,” he said.

“Now we’ve lost the structure. It’s like the pendulum swings and we seem to have missed something in between.”

But there has been an explosion of new document type definitions (DTDs), which act as “templates” for defined standards being implemented by various companies and industries. But the lack of an anchoring body or organization to maintain the appropriate set of DTDs could be a problem, according to Sloane.

“We have gone from a few large companies getting together to do data normalization, to now everybody on the Internet who can participate and throw out their own version of standards,” he explained.

“If every company continues to define its own concepts of data, instead of adhering to data formats that have already been accepted, then whether it’s automated or not it becomes so fragmented that data normalization becomes impossible to achieve.”

However, Joshua Walker, an analyst in the software strategies division of Forrester Research Group in Cambridge, Mass., believes companies that have a demand for business-to-business transactions will most likely be quick to iron out any variations in the XML standards.

“The different partners will overcome those barriers. But this will be a real sticking point between the different technology vendors who are getting their noses into this because they have products to sell,” he said.