Novannet, LLC LogoThe 10-10-EDISM of B2B Transport

VANS AND CLEARINGHOUSES

Traditional Value-Added Networks, and even Healthcare Clearinghouses (PDF: 227k), operate as intermediary conduits on the store-and-forward model. They were designed to smooth out the kinks within the supply chain, including protocol and temporal discontinuities.

A protocol discontinuity exists when the two partners wishing to exchange an EDI message operate with different machine platforms, character sets or telecommunication protocols. For example, if Bob's Trucking uses 3780 Bisync and his customer, Mega Retailer, can only support FTP, there's no way the two are going to be able to “talk” to each other directly. The VAN serves hundreds or thousands of such enterprises, and has the capability and wherewithal to support not only 3780 Bisync and FTP, but all sorts of additional protocols like Kermit, Xmodem, frame relay, EDIINT and so on. As long as the VAN is equipped to communicate with any one of its subscribers, it should have no problem serving as the central “switchboard” or Hub between any two of them, including Bob's Trucking and Mega Retailer.

Except that Bob's Trucking and Mega Retailer probably won't be ready to exchange data at exactly the same moment. If Bob's Trucking sends Mega Retailer an ANSI ASC X12 214 Transportation Carrier Shipment Status Message (PDF: 11k) at 2:00 in the afternoon, but Mega isn't checking for it until 5:00pm, what happens to the message in the meantime? There's a temporal discontinuity, which the VAN solves with mailboxing: Bob's message is placed into Mega's mailbox at 2:00pm, and Mega picks it up at 5:00pm.

...provoking the most ire among users -- and the greatest misgivings among potential users -- have been the monthly mailbox and per transaction charges associated with the traditional value-added networks.

EDI is Dead! Long Live EDI!, By David Drickhamer, IndustryWeek.com.

Naturally, this explains why VANs often charge by the kilo-character, because they have to recoup their expenses of maintaining stuff in mailboxes, which are somewhat proportional to the size of the messages. Also, since the VAN has to support a plethora of telecommunication protocols, there's great expense in maintaining diverse software packages and equipment for the capability of communicating with just about any subscriber who uses a weird protocol.

With the advent of the Internet, there are a number of VANs specializing in just TCP/IP communications on the assumption that all subscribers support this ubiquitous protocol. This greatly simplifies the VAN's environment, and does account somewhat for the success of Internet VANs such as ICC.net who can moderate their telecommunication bills, passing the savings on to their subscribers. But even these VANs still must accommodate temporal discontinuities, so they must still support traditional mailboxing just like any other VAN, incurring the same expenses for hardware that must be passed on to the subscriber.

Captain Kidd's Treasure, Howard Pyle, The Book of Pirates, 1923

All this really isn't enough to explain the whole picture behind your exorbitant VAN bills, though. Telecommunication hook-ups, computers and banks of disk drives are getting cheaper and more capable by the day. But VAN bills don't seem to be dropping proportionately. There is a limit to how far downward price pressure induced by the Internet will moderate VAN bills, because the VANs have a captive audience. If most of your trading partners subscribe to a particular VAN, the costs involved in moving off that VAN have to take into account the more expensive VAN interconnect fees you will incur when moving to another VAN.

There is no universal directory that VANs use to locate all enterprises, as a VAN treats its own trading partner directory as its family jewels. VAN interconnect is a very manual and unreliable process, requiring you to coordinate the link-up, as your new VAN would rely on you to tell them at which VAN your trading partners can be found. And sometimes other problems get in the way. With their monopoly on their subscriber lists, VANs don't just hold their own subscribers hostage - but sometimes even other VANs!

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