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XML: The future of EDI?

Can XML revive EDI and accelerate its adoption as the best option for data exchange in this age of the Web?

By Uche Ogbuji

February  1999
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IT managers have long complained about the complexity and expense of EDI. A vocal and growing group of professionals is advancing XML as the solution to these woes, and the key to the broader adoption of EDI. Is this just another car in the hype train, or does XML have a legitimate chance to revamp EDI? As in many areas where Internet technologies collide with traditional business, change is inevitable, but the results are rarely as clear as anticipated. (3,400 words)

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XML is looking like a magic elixir in a cloudy bottle these days: cheap data exchange, document structure, and a proven cure for warts.

Lately, many in the electronic data interchange (EDI) community have seized upon XML in a bid to increase the adoption of EDI, which traditionally has been expensive and complex to implement. This is a natural off-shoot of the recent interest in EDI over the Internet, which originally involved traditional EDI formats transferred using SMTP or FTP. But the idea of improving EDI with structured document approach isn't a new one; there have been several initiatives, such as the Joint EDI group, to motivate SGML-EDI, with no more than spotty practical application. XML, being a subset of SGML designed with a view to Internet communications, is a natural alternative.

While XML is much more than the "roll-your-own-tags" hype that often gets the most press, is it enough to replace the complex formats, industry experience, and careful standardization that have gone into traditional EDI? The answers to this question are still falling into place, as I will discuss, but the important thing for both XML enthusiasts and skeptics to remember is that the XML community hasn't advanced any radically new ideas in the area of data management. Rather, XML's powerful appeal lies in the fact that so many IT vendors are rallying around a unified, tractable format, which allows many desirable practices for data management and exchange to be applied more broadly, and at lower cost. XML is, in many ways, a lucky inheritor to the remarkable success of HTML, and brings with it many improvements. The hope of XML-EDI advocates is that XML will similarly drive broad adoption of EDI for business-to-business transactions.

Many small or medium enterprises (SMEs) are coming under pressure to support EDI. This pressure usually comes from larger suppliers, customers, or distributors (collectively known as trading partners) that have invested a great deal in EDI in order to cut their trading costs, and are looking to deploy such automation more widely.

Consider a small, Web-based retailer that stocks inventory from a major manufacturer. For years the company has been ordering merchandise from the manufacturer using a human-readable purchase order such as that in Listing 1, for 1000 fuzzy dice. Now the manufacturer is demanding that the retailer begin using EDI for transactions or else it will add a surcharge to every order to offset the cost of handling manual transactions. The small retailer can't find a more lenient supplier, so it has little choice.

Unfortunately, EDI compliance means the retailer will now have to transmit its purchase orders in a format specified in one of the several standard sets for EDI format, the most widely used being ANSI X12 and UN/EDIFACT. Listing 2 shows part of an ANSI X12 version of the purchase order in Listing 1. It's possible that the retailer's current accounting software supports EDI transactions, but not likely. It will probably have to either convert to software that does; purchase software that can make the translation (if available); or contract with a third party to convert the data on an ongoing basis.

So, would there be any advantage, for the retailer or the manufacturer, to using an XML format instead? Perhaps the retailer's accounting software is tailored to Internet commerce, and already uses XML formats. In this case, there are utilities for converting one data type definition (DTD) to another, and the conversion to EDI might be accomplished by a generic tool. The resulting transmission would certainly be more comprehensible to humans, and perhaps even feasible for an employee with a text editor or XML editor to generate. Of course, this would make sense only for occasional or special-case transactions, or for monitoring and auditing, but it's still a small advantage. An example of how our sample purchase order might look in an XML rendering of X12 is given in Listing 3. This example is loosely based on the work of the XML-EDI group (see Resources). I say "loosely" because its specification is a work in progress, not yet complete, nor even yet consistent.

But then again, not everyone has yet embraced XML, and many business systems use proprietary formats that wouldn't be much less expensive to convert to XML as to traditional EDI formats. Also, our retailer has to hope the manufacturer supports XML-based EDI or is willing to develop such support: a hard argument to put before a company that has already sunk millions of dollars into its traditional EDI infrastructure.

Indeed, for XML to have a significant effect on EDI, it must solve more fundamental shortcomings of traditional systems than just the high-entry barriers for SMEs. After all, many SMEs have no choice but to trade with Fortune 1000 companies that are heavy EDI users. The effort surrounding XML-EDI goes beyond conveniences of data format.


The Web network
Early EDI often involved trading partners' dialing into each other's BBSes to initiate transactions. This approach, of course, led to a chaotic and expensive tangle of connections in the supply chain, and value-added networks (VANs) emerged to move to a more manageable hub-and-spoke model. Trading partners would require access to the same VAN, but once this was set up, they had only the one point of connection to manage, and they could tailor their processes accordingly. VANs bloomed into one-stop EDI shops that could translate data to standard EDI formats, handle transmissions, and ensure security. Unfortunately, VAN service is expensive -- for instance, most VANs charge per bit transmitted -- which contributes to the reluctance of SMEs.

In the meantime, the Web has developed into a broad, flexible, and durable network already used by many businesses. Why not leverage this network to effectively commoditize EDI, allowing much wider usage, integration with a greater variety of systems, and cost savings? Indeed, even before XML-EDI, there have been efforts to standardize methods for EDI in traditional formats over SMTP and HTTP, using MIME and Web forms, and with various practices for guaranteed transmission and tight security. The advantages to this approach include reduced cost and broader service coverage (due to the enormous existing Internet infrastructure); distributed directory service (DNS and beyond) for commerce with arbitrary remote organizations; and the peer-to-peer structure of the Internet. Thus, all participating organizations stand to reap the same benefits from EDI.

But as Internet and intranet vendors of every stripe embrace XML for the increased structure it could give the Web, it becomes especially relevant to consider reformatting EDI to be more Web-friendly. XML-EDI would certainly make sense for integrating EDI into common components such as Web browsers and office suites. So, while it might be cumbersome to enter even an XML-based EDI transaction using a text editor, an employee might type up a purchase order on his or her favorite XML-compliant word processor and have it injected directly into the EDI process. Or the trading partner in question might have an extranet for such transactions, in which case, following authentication, the employee could enter a transaction directly into a Web form which would emit an XML transaction using a generic backend.

But perhaps more significantly, many major enterprise resource planning (ERP) vendors are building Web-based and often XML-based applications into their systems, and XML-EDI would fit naturally into this framework. Of course, most ERP packages already support traditional EDI, but if it's as inevitable that they support intranets and extranets as it is that they support EDI, there is an obvious reduction in cost and complexity if the data exchange standards are unified.

Another important consideration is that as the Web is designed to have seamless international links, Web-friendly technologies such as XML are built with internationalization in mind: character sets, data notations, etc. There are several traditional approaches to EDI internationalization, largely under the watchful eye of the ISO, but XML-EDI would automatically integrate EDI internationalization into ongoing efforts regarding data and document exchange.

EDI has adapted itself into a series of vertical markets (textile and rail, for example) through specialized interest groups attached to EDI standards groups, and also via independent efforts. Many of these dialects of EDI are different enough for similar transactions that they complicate the translation effort for any organization that doesn't fit squarely into a vertical grouping. Again, VANs often play a role in solving these tangles, but they are an expensive solution. Similar vertical-format efforts are well underway for XML, but in a more generalized sense: to encode data for internal management as well as for exchange processes. As such formats mature, it makes sense to apply the same technologies to the EDI processes as the internal data. Technologies from style sheets to XML-based schema languages could go a long way towards streamlining the process of moving data from repository to exchange formats.

The rigidity traditionally necessitated by EDI leads to some strange usage. For instance, to send a basic message to a trading partner, ANSI X12 defines the 864 transaction set: "Text Message." It's almost comical to see the rigid structure behind what is essentially an e-mail message, but streamlining VANs and format translations necessitates this with traditional EDI. This is one area where the document origins of XML actually prove a boon rather than an inhibitor. Between many transaction partners, such one-time messages using 864 format can be quite frequent. Of course, they could simply use Internet e-mail in such instances, but they may not want such exceptions to EDI because they want to track process flow, have seamless integration into transaction processing systems, or they require the legally binding proof of send-and-receipt that EDI infrastructure usually provides. Here XML-EDI has an advantage. It has enough structure to integrate into the traditional security and process-management of EDI, but such SGML/XML-based formats as Text-Encoding Initiative (TEI) or ISO 12083 would provide traditional document features, and even provide for additional seamless integration into office applications and document repositories.

But as much as traditional EDI and XML-EDI attempt to automate transactions, experience has shown that at some point in any real-life trading, an internal programmer or outside consultant must be put to the task of customizing the system for scenarios not handled by off-the-shelf tools From the point of view of such developers, the various standard APIs that have emerged around XML are an important advantage. Such specifications as the document object model (DOM), or the simple API for XML (SAX) standardize the task of dealing with basic XML allowing programmers to concentrate on higher-level semantics. (See Resources for links to further information on DOM and SAX.) This in turn improves code reuse and helps reduce development effort.

Perhaps more important than these advantages is the furious work being done on XML-based repositories. Again, this isn't new territory for EDI: The ISO's Basic Semantic Repository (BSR) project (see Resources), aims to create an official international register of "data concepts" (basically, schemata), which is actually amenable for use with XML as well as X12 and UN/EDIFACT, and is a powerful tool in the gentle migration from traditional EDI to XML-EDI. Unfortunately, politics and short funding have dogged the BSR effort. Pure XML initiatives such as XMI and UREP (see Resources) look to generalize data repositories, and with their broad industry support might be the future basis for managing business objects.

XML-EDI repositories would store, among other things, the data type definitions that describe various data sets for EDI transmissions. High-level and general repositories would be managed by standards organizations, industry-specific repositories by industry groups, and more specialized repositories could be maintained between small groups of partners, or within individual enterprises (for interdepartmental data). Relevant standards support a hierarchical structure so that these various levels of repositories can operate together seamlessly, and data definitions can be automatically retrieved from the appropriate repository depending on how general or specialized the domain.

XML-EDI repositories will probably also have to store information about the format of and constraints on data elements to be useful. Basic XML DTDs allow only limited control in this regard. XML notations provide only a partial solution. The storage of such schematic information in XML-based repositories is still emerging in the various standards. Until such issues are worked out, users of XML as well as traditional EDI should probably consider specialized EDI repositories such as ISO BSR.

You might find overall in the arguments for XML-EDI that XML is not magically solving any problems of traditional EDI; instead, the advantages tend to involve scope. For better or worse, XML has found very broad application in its brief life. Experts apply it as readily to document management as to database management, traditionally very divergent domains. EDI, on the other hand, has always focused on a narrow domain: standardized transactions between partners. XML gains its attraction from being the more general technique. Traditionally, enterprises have compiled data systems from a traditional DBMS, coupled with ERP-based business rules, application servers for intranet and Web publishing, and, of course, EDI for data exchange, all in different formats, using different mechanisms for management. XML attempts to unify the technologies behind these various applications. However, computer scientists have found that even though such generality allows wider application and quicker assembly of complex systems, it can lead to problems at the seams of the components that make up such systems.

But can XML hack it?
If XML's greatest asset is the enthusiasm with which it has received widespread application and development, this is also the foundation of its weakness with respect to EDI. XML 1.0 is barely an official standard, and certainly stands to be transformed by such developments as namespaces, and more sophisticated notations. At the same time, the data exchange folks are constantly tugging at the World Wide Web consortium (W3C) to strengthen XML's facilities for specifying schemata. The current facility of document-type definitions, as its name implies, is more suited to document exchange than data exchange. In fact, some features common in traditional EDI formats, such as segment loops, themselves require more expressive schema than XML currently provides. It would be perhaps premature to entrust such a solid and venerable system as EDI to a spec that might still be in flux.

There is the matter of the increased bandwidth taken up by XML, which might be a concern if transmitted by VAN, but is less of an issue over the Internet, or more specifically, virtual private networks. Compression also helps even the score. The XML-EDIFACT pilots undertaken by the CEN/ISSS in Europe (see Resources) found about a three-times increase in typical transmission sizes, and my example, based on the XML-X12 work of the XML/EDI Group, balloons about eight times from the X12 to the XML version.

Then there is the hype factor, where vendors follow industry pundits into reflex adoption of technology before it is stable or broadly proven. This fuels skepticism among experienced observers and can, in fact, impair the evaluation and adoption of promising technologies. Predictably, there has been some backlash by traditional EDI purists against the grand claims the computer press has made for XML. The reality is that XML and its attendant technologies have much to offer, but there also remains much work to be done before XML can help EDI into greater use. Indeed, the future of EDI is hardly a zero-sum contest between XML and traditional EDI formats such as ANSI X12 and UN/EDIFACT. Mainframes didn't go away when client-server buffs said they would, and with learned caution, not even the most ardent XML fans are predicting the disappearance of traditional EDI any time soon.

Sharp observers might note that this article focuses on e-commerce aspects of EDI. Some EDI traditionalists insist that what the XML-EDI folk are really pushing is XML-EC. But like it or not, all manner of business-to-business and even intramural transactions are taking on the character of e-commerce. XML-EDI has the potential of taking EDI from an arcane, if venerable technique to the rapidly developing center of enterprise information technology. On the other hand, XML-EDI poorly applied has the potential for wasting billions of dollars and a great deal of effort, and holding up traditional EDI development, for no more than a radically new format that runs immediately into the same old problems.

Other XML-based standards, like the Information and Content Exchange Protocol (see Resources), are being developed for business-to-business data exchange, but they don't have the significant advantage of building on all the effort and experience that has gone into EDI. XML-EDI takes a median position between reinventing the wheel entirely and merely ignoring the developments and standards that have emerged around the success of the Internet.

You might be surprised at how much current activity there is to develop XML-EDI. If you're interested in early evaluation or adoption, I've found some handy resources you might want to check out (all are listed in the Resources section of this article).

The success of XML-EDI depends on solid standards for XML and related technologies, the establishment of repositories, the continued support of software vendors across vertical and horizontal markets, and the support of traditional EDI implementors and VANs. All of these factors are receiving a good deal of attention, and once in place, our intrepid Internet retailer might be able to gain as much benefit from EDI as its larger trading partners.

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About the author
[Uche Ogbuji's photo]Uche Ogbuji is a consultant and cofounder of FourThought LLC, a consulting firm specializing in custom software development for enterprise applications, particularly Web-based integration platforms for small or medium-sized businesses. Reach Uche at

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Listing 1: Plain purchase order

P.O. Number: 003429
Date: 1 December 1998
Order Contact: Obi Anozie
Company: Internet Retailer Inc.
Address: 123 Via Way, Milwaukee WI, 53202

Qty Part No. Description Unit Price Total
100 CO633 Fuzzy Dice $1.23 $123.00

Listing 2: Fragment of ANSI X12 transaction set: 850 (PO) corresponding to Listing 1

N1*BY*Internet Retailer Inc.*91*RET8999
N1*ST*Internet Retailer Inc.
N3*123 Via Way
PER*OC*Obi Anozie

Listing 3: XML analog of X12 transaction set in Listing 2

<?XML version="1.0" encoding="UTF-8"?>
<PurchaseOrder Version="4010">
  <TransactionSetHeader X12.ID="850">
    <TransactionSetIDCode code="850"/>
    <PurposeTypeCode Code="00 Original"/>
    <OrderTypeCode Code="SA Stand-alone Order"/>
    <ContactFunctionCode Code="OC Order Contact"/>
    <ContactName>Obi Anozie</ContactName>
      <EntityIdentifierCode Code="BY Buying Party"/>
      <EntityName>Internet Retailer Inc.</EntityName>
      <IdentificationCodeQualifier Code="91 Assigned by Seller"/>
      <EntityIdentifierCode Code="ST Ship To"/>
      <EntityName>Internet Retailer Inc.</EntityName>
    <AddressInformation>123 Via Way</AddressInformation>
    <Unit Code="EA Each"/>
    <PriceBasis Code="WE Wholesale Price per Each"/>
    <ProductIDQualifier Code="MG Manufacturer Part Number"/>
    <ProductID Description="Fuzzy Dice">CO633</ProductID>

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