My phone is ringing off the hook. People that I haven’t heard from in years are calling me every ten minutes regarding the above titled merger. I have covered the supply chain and VAN industry for about seven years as an analyst focusing on the sub-specialty of vertical industries automation. This is a significant story in an industry where headlines can be dry, and the merger of the two VANs consolidating 60% of EDI communications traffic means different things to different folks.
Within the context of the EDI communications industry, on this blog covering EDI communications via Web Services, I should put in my 2 ¢ and 2 ¢ worth of Todd Gould, Loren’s President and Chief Technical Architect – such a response only makes sense. But first, a few links to get you situated:
So, that will get you percolating. The VAN industry has a long history of divestiture and consolidation. I have covered this extensively in my previous writings. For those with time on their hands, you can read these reports, if for no other reason than to verify that these issues are not a foreign matter to me: Analyst Papers
Is this the game changer that every EDI related post is fulminating over?
It is never so black and white. Let’s call it a significant event and hope that the newly merged entity does not abuse its potential to mismanage interconnections and the routing of EDI traffic. I am somewhat optimistic that the new partnership might become better at B2B solutions, while becoming not much worse at running their networks. There have been some black spots here and there, without pointing a finger.
As a Pure-Play Provider of EDI Communications Services, what is Loren Data Corp’s take on the merger and the industry?
As a routing provider with a 3-5% share of North American EDI message traffic, Loren Data Corp has an interest in keeping EDI communications on a level playing field. In 2006 Todd Gould, Loren’s CTO, embarked upon the creation of an infrastructure for open EDI message routing and directory services. The company also started a modernization program for infrastructure, facilities, and Network Operations staff training.
Loren Data Corp also created, tested and delivered ECGridOS, a Web Services API for EDI communications. Smart people will immediately see the significance here:
- No matter what happens in the EDI business amid consolidation and divestitures, the business of providing interconnections should incline towards open routing and unrestricted interconnections.
- The industry is inexorably moving to a hosted services model, certainly at least in the small to medium enterprise where another 15-30 billion in untapped annual, post recession revenue awaits the innovators.
- The bedrock upon which the B2B Cloud will be built is interoperability, openness, and collegial relationships amongst the EDI communications industry players. In other words, innovators win business by distinguishing their technical product offerings, not by closing off network pathways
So, although there may be much vexation, and while no doubt two very powerful companies in the EDI communications racket are bound for consolidation, there are numerous opportunities for innovation and competition. The will always be a way to redress the downsides of a nascent industry quasi-monopoly.
And, look at the good things that are happening: SPS Commerce, a Marquee Client of Loren Data Corp, is offering common stock. That’s great. There is also tremendous growth in hosted commerce solutions, expanded API’s, and new world of Web 2.0 SAAS / PAAS / Commerce SOA, etc.
Nothing that happens in old-line EDI is immune from the effects that hosted systems, cloud computing, and a developing ecosystem of API’s will have upon the industry.
I would go as far to say that there will be more impact to the EDI industry stemming from the emergence of cloud computing and API services (like ECGridOS and others sure to come), and someday soon, the tumultuous merger of Inovis and GXS will seem like a small footnote in the storybook of electronic commerce.