If you would have asked a B2B practitioner in 1999 whether EDI would still be in use ten years from now, chances are high that he or she would have predicted no.  With the emergence of the Internet and new XML technologies, EDI was sure to be replaced by “newer, better, more powerful” e-commerce standards.  Yet, as we approach the half way point in 2009, EDI continues to be the dominant standard in B2B globally.

If you would have asked a B2B practitioner in 1999 whether EDI would still be in use ten years from now, chances are high that he or she would have predicted no.  With the emergence of the Internet and new XML technologies, EDI was sure to be replaced by “newer, better, more powerful” e-commerce standards.  Yet, as we approach the half way point in 2009, EDI continues to be the dominant standard in B2B globally.  Not only does EDI remain popular, but its use is growing more accepted, not less.  For example, Microsoft recently added an EDI adaptor to its BizTalk Server 2006 R2 product to make its integration platform more competitive in the B2B segment.

Forrester Research published a study recently titled B2B Integration Trends: Message Formats in which they estimated that out of all B2B transaction volumes, 85-90% is based upon EDI.  This is consistent with transaction reporting GXS conducts on its Trading Grid as well.  The “newer, better, more powerful” XML standards are growing quickly but remain, at best, 15% of transaction volumes.

EDI’s dominance is a subject that mystifies many outside the industry.  How does a technology dinosaur such as EDI manage to remain so popular and prevalent through an era that has witnessed the birth of unprecedented levels of disruptive technology?  If Charles Darwin were alive today he might enjoy studying the characteristics that have led to EDI’s survival despite the introduction of genetically-superior species to its ecosystem.

Six Survival Characteristics of EDI

There are six factors, in my opinion, that lead to the continued prevalence of EDI as the world’s dominant e-commerce standard:

1. EDI is mature.  It has been in use for over 20 years resulting in a proven, reliable, business critical reputation amongst its widespread users.  If you are selecting a technology to run your business on – would you select a new, emerging framework or a proven, mature standard?
2. EDI is working.  Why fix what isn’t broken?  EDI is successfully supporting the value chains for many of the world’s largest companies today.  Corporations need a compelling business benefit to migrate to XML.  The business plan must justify the expense to perform a migration, risk of possible business disruption and opportunity cost compared to alternative investments.
3. EDI is cheap.  The costs of EDI were often cited as its top barrier to adoption throughout the 1990s.  However, the barriers to entry for EDI based technologies have declined significantly in recent years.  As the de facto standard almost all B2B integration software packages and SaaS-based services include out-of-the-box EDI functionality.  XML often requires customization, especially for low end packages.
4. EDI is ubiquitous.  EDI had the advantage of being the only standard for e-commerce for over a decade.  During that time, EDI became pervasive in a number of industries such as health care, automotive, banking and retail.  As a result, businesses that choose to utilize EDI have a high level of confidence that their trading partners will be able to receive their documents.  By contrast, businesses that try to standardize on XML face significant challenges as their entire trading partner community must become XML-enabled.
5. EDI is not industry specific.  EDI’s lack of industry-specific data fields and process models is often listed as a shortcoming.   However, one of the keys to EDI’s ubiquity has been is applicability across multiple industries and geographic regions.  Very few industries in today’s world are truly vertical leading to challenges when partners transact commerce across industries.  For example, some of the fastest growing channels for high tech manufacturers are the aerospace, retail, medical and automotive sectors, none of which use the high tech XML standard - RosettaNet.
6. EDI is network protocol independent.  It works across value added networks.  It works with legacy dial-up protocols.  It works with newer Internet standards such as AS2.