Column: Making EDI safe, and sound

Source: Technology Digital

Date :8/31/2007 3:43:42 PM

The growing adoption of EDI for supply chain services has companies wanting 100 percent connectivity, with foolproof security

By Tycho Howle

A recent trend in eBusiness technology adoption shows that companies are placing a growing emphasis on both adding additional electronically-enabled trading partners, and on taking steps to ensure those connections are secure.

Companies on both the supply side and the demand side of the chain have relied on electronic data interchange (EDI) technologies since the 1980s to achieve a cost-effective, paperless method for exchanging important information. Today, the goal for most companies is 100 percent connectivity with foolproof security.

Increase

To illustrate the escalating demand for secure data transfer, one EDI vendor reports sales of Applicability Statement 2 (AS2) software — which is inherently secure — rose 31 percent from 2004 to 2005, and 63 percent from 2005 to 2006.

The rise in AS2 software sales from 2004 to 2006 indicates a level of comfort in AS2’s Secure / Multipurpose Internet Mail Extensions (S/MIME) encryption over Pretty Good Privacy (PGP) or Secure Shell (SSH) encryption, the optional security layers to File Transfer Protocol (FTP) software.

For comparison, this vendor saw its sales of SSH encryption software rise 70 percent from 2004 to 2005 but only saw a 40 percent increase from 2005 to 2006, while sales of PGP encryption software rose 43 percent from 2004 to 2005, but declined by 10 percent from 2005 to 2006.

Over the past two decades, EDI Value-Added Networks (VANs), AS2 software and other EDI technologies have contributed to more efficient, secure and cost-effective trading.

Yet, many CIOs still face a major challenge: how to get all of their company’s trading partners to adopt their EDI and AS2 programs securely and efficiently — even those who are not yet EDI-enabled. Some companies have been striving for this for nearly 20 years.

Fortunately, there are straightforward, practical and easy to implement answers emerging.

A hybrid strategy

In most supply chains, the 80/20 rule applies. In general, 20 percent of trading partners generate 80 percent of a company’s revenue.

If a company trades with 500 suppliers — for example — 100 of those would be responsible for 80 percent of its business. The cost of establishing and maintaining the other 400 connections could be high with little return.

Under a hybrid strategy, this demand-side company would manage its top 20 percent business partners using AS2 or VANs, and would outsource the managing of the other 80 percent of its trading partners to a third-party provider. The company maintains a direct link to its most important trading partners, and saves money by partnering with a third-party vendor to manage the multitude of smaller trading partners via a portal.

Today, there exist several secure options for conducting electronic data exchange: EDI VAN, EDI Over the Internet (EDI-Int) such as AS1, AS2 and AS3, Hypertext Transfer Protocol (HTTP) and Secure FTP...

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