Jaakko Elovaara 23.06.2020 10 min read

Replacing EDI VAN (value added network)

Would you buy a 1985 Volvo 240 today for your daily commute? Probably not.

Volvo 240

  • No offence, Volvo 240 is a Swedish icon, turned 45 years recently. It was a very nice car back in the days, but automotive technology has developed a lot, just like technology in all industries.

Word ‘Value’ in the terminology of VAN is not accurate anymore.

VAN networks are widely deployed since their inception, during the last decades of their history, but the technology and model is outdated. VANs are too expensive, limited in functionality and stiff in flexibility in the modern world. 

They yield unnecessary direct and indirect costs on the infrastructure level and restrict scaling and business growth. You do not have to use a VAN even though your supplier or customer uses an EDI VAN, and you probably shouldn’t start using one anymore, in 2020.

 

What is an EDI VAN?

An EDI VAN is a provider of data connectivity as a service over an outsourced network. VANs enable rather simple EDI setup, and the communication and exchange of standard-based EDI events and documents by decreasing the number of involved stakeholders.

In the last century, starting from the 1970’s, EDI VANs arose when direct data connectivity over the Internet was too expensive, unreliable, and not globally available. VANs are based on a concept of e-mailboxes that are polled regularly to check whether there are new messages. EDI VANs have interoperability agreements to transfer data between them so that companies relying on various VAN entry points can exchange data.

Some VANs assume EDI documents to be correctly formatted by default and hence their offering is purely transporting data (posting to e-mailboxes). Other VANs can also handle the mapping of EDI data and hence their offering also includes the data conversion in addition to transporting the data.

 

“Well, why replace if it ain’t broke?”

Back in the old days VANs had a stance in data connectivity between companies’ mainframes and enabling them to carry business practices between the parties. Since then (1980s or so), the Internet has made a massive breakthrough and the digital connectivity technologies have changed a lot. Supply chain and logistics data connectivity between vendors and customer organizations can now be provided way cheaper and better compared to the outdated VANs. EDI VANs will not go away any time soon, but investing and building your business on it today is not feasible.

 

Data connectivity with better cost efficiency and depth of services

Someone compared the VANs to old phone operator model. Would you consider still calling the operator to put you through for your call? I don’t think so, you just dial the number directly. This is comparable to using a VAN vs. a modern iPaaS (integration platform as a service); the VAN - “operator” takes its time to connect you and charges you per word – a long and expensive way for communicating. A modern iPaaS technology platform gives you the control and speeds up turnaround times. In addition, you can connect with anybody and any systems supporting any interfacing protocol, any message format and data event or document.  It enables the delivery of real added value to you, your vendors and customers.

 

Key problems with VANs are:

  • Manual implementation. Many VANs implement the partner connection deployment still manually because the old technology underlying will not stretch to anything else. Many of these services are provided from offshore locations, watch out for those.
  • Service maintenance and VAN service availability. Service outages are typical for VANs. Your business suffers when the data is not flowing as it should, without any alerts of possible problems (modern technologies are designed to alert, monitor silence, etc. in order to keep your business operational). VANs need also more maintenance services, just like the old cars.
  • “Black hole”. Visibility is limited to VAN services. It is very hard to investigate the problems or find audit trails of data connectivity. When using interconnected VAN networks, the situation is even worse. Today, you should have full reading rights to your data underlying your business operations.
  • Unpredictable costs and services. With high transaction volumes, the costs typically go through the roof. Being too complicated, fee structures are hard to interpret or simulate. Interoperability between VANs is not timely, your “Amazon-experience” won’t fly, customers and partners get frustrated. The SLAs are bad, and will not be better, because VANs won’t guarantee that your data will be integrated as it should.

What are the benefits of a managed iPaaS?

Quality, control and rapidity

  • Industry expertise within the managed service offering.
  • Onboarding partners is quick (hours or days, not weeks or months).
  • No forced upgrades, timely support with modern tools.

Total cost of ownership
  • Data connectivity costs are clearly less costly with high volume of transactions.
  • Pricing is predictable and easy to understand.

Modern technology
  • Modern platforms support all format and communication standards of protocols (including the VAN option). Platforms are being constantly further developed.
  • It is a connected world, and it will get even more connected. Supporting just EDI standard-based messaging is not enough for anyone. Industry 4.0 is a reality.
  • It’s too narrow to look at data connectivity with VAN-lenses on, it’s history and should not be accepted anymore.

Automation, scaling and flexibility
  • iPaaS can integrate with any backend systems: ERP, CRM, billing systems, AP/AR, accounting tools etc., whether on-premise or cloud-based.
  • Scaling is enabled through automation of manual processes, data enrichment, validation and flexible processing logic deployed in the iPaaS platform.

If you are currently dealing with a VAN service, you are most likely experiencing the challenges outlined above. Those can be resolved by modernizing the integrations. You don’t have to do all at once – a managed, phased approach is best. Start to deploy new integrations with modern technology and migrate the old, incumbent approach next. This will create a competitive advantage for your company without a doubt. See the recent story about Hub Logistics migrating away from a global VAN provider, due to the reasons above.

Would you like to learn more about the benefits of modern integration solutions over the outdated EDI VAN? Check out Youredi’s solutions for the most common data integration challenges!

Also, if you have any question, our experts are here to help you with your integration needs.

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Jaakko Elovaara

Chief Executive Officer, Youredi