The Case For Internet
Data Interchange (IDI)
BY PETER J. WEYMAN
"Put it in writing and send it to me." When
businesses were simpler and smaller than they are
today and when most traded only locally, the written
word helped assure certainty and accuracy in business
interactions. However, with time, many once-small
businesses have evolved into large corporations
trading products and services around the globe, with
multiple functional organizations and elaborate
cross-functional business processes. In today's
fast-paced global business environment, certainty and
accuracy are every bit as important, yet the
convention of organizing information into documents
and sending them to other involved parties has not
kept pace with corporate change.
Can the business promise of a ubiquitous Internet --
seamless integration and perfect, instant document
transmission -- be realized? Or is modern business,
for all its investment in information technology,
doomed to deal with the inaccuracies and vagaries of
business documents forever? How long will companies
have to live with missing and incorrectly written or
read data, human error and transportation delays and
Companies that rely on Internet Data Interchange (IDI)
are able to bypass the historical problems associated
with document exchange. To understand IDI and its
benefits, however, it is important to look back at the
factors that prompted its evolution.
The Road To Paper Hell
The role of documents in business has always been that
of organizing information relevant to a transaction in
a permanent, unambiguous and irrefutable manner.
Documents capture information that companies either
store for later retrieval or transmit to other
external or internal parties such as trading partners
or other corporate departments.
Organized information is generally stored in a form
suitable for storage and retrieval or transmission,
usually a printed-paper document. Companies of varying
sizes may use different methods to create documents,
and the amount and type of information to be stored or
transmitted also varies widely by industry. (Some
industries are subject to government regulations that
require specific documentation practices, for
example.) The amount and type of information to be
stored may also depend on the value or complexity of
the transaction being documented.
The Human Factor
Manual intervention and human processing deal with
differences between companies. At a chemical company,
for instance, an order entry clerk or salesperson
might convert a purchase order line item for 30
kilograms of "NaCl, rgnt." into a sales order line
item for 66 pounds of reagent grade sodium chloride.
While processing this order, a shipping clerk might
ship and create a line item on a freight waybill for
one 50-pound container of the chemical (the company's
standard product). In a separate action, a 16-pound
special order container is created and shipped. The
company's accounts receivable department then sends
two invoices to the ordering company referencing the
original purchase order.
On the receiving end, the clerk at the loading dock
receives two shipments, neither of which matches the
original purchase order paperwork, and the accounts
payable department receives invoices which do not
Granted, not all of the events in this composite
example are likely to occur in the processing of a
single order. We can all relate, however, to examples
where a customer's order doesn't exactly match the
product inventory, or a vendor's shipment doesn't
line up with exactly what is on the purchasing
documents, or a back order means that more than one
invoice will need to be processed.
Conveying The Information
When businesses are small, with a limited trading
range and a limited number of trading partners,
information related to a transaction is generally
conveyed personally. When that is not feasible,
companies can rely on their postal services to extend
their reach, although they can also expect a
corresponding delay in message delivery.
The need for quicker transactions helped bring
about overnight courier and package delivery services
that promised to substantially reduce this delay, for
a price. In some cases, such as those in which an
original document must be transmitted, the cost is
The fax machine helped companies once again realize
quick delivery of information without the high costs
associated with overnight delivery or the delays of
postal services. Once fax machines became widely used,
companies found a facsimile of the document would
suffice for most transactions, and no longer sent
confirming copies by mail or courier.
Processing The Information
Along with the evolution of communication, the
evolution of computing is important. Computers entered
the mainstream business scene in the late 1950s and
early 1960s, automating information processing. The
role of business documents evolved in response to
this, and they became input to and output from
computer automated processing steps. However, manual
intervention and human processing are still required.
For example, a data entry clerk enters information
from invoices, purchase orders and shipping documents
into an accounts payable system, which outputs a paper
check -- yet another document to be transmitted.
The intermingling of human and automated document
processing is error prone and inefficient, because
documents are transmitted far more slowly than they
can be processed. Eliminating paper and human
processing of documents means connecting computers
together directly. First attempts to connect computers
directly involved highly customized and expensive
computer software ("middleware") and dedicated
communication equipment. These were practical for only
the largest companies and required the same solution
to be used by the two companies.
While accuracy, speed and efficiency improves, this
limits the trading range to only the largest customers
and suppliers of only the largest companies, and
requires companies to maintain two processes -- an
automated process for dealing with a few companies,
and a paper-centric process for all others. Further,
the expense and complexity of the system limits the
ability on both sides to change or adapt processes.
These systems, in effect, become governors of the
relationship between the two companies.
Electronic Data Interchange (EDI) systems provided
standardization, which expanded the trading range.
However, the expense and level of technical
sophistication required to implement EDI limits its
use to high-volume customers and suppliers.
Companies that implement EDI must still implement
parallel paper systems to deal with customers and
suppliers who cannot or will not implement EDI. To
realize optimum cost savings and ROI from an EDI
implementation, it must be adopted by all of a company's
business trading partners. Because EDI systems are
expensive and difficult to implement, however, this
has not happened. EDI systems are also notoriously
difficult to update or change once implemented.
The Role Of The Web
In the past few years, the Internet and World Wide Web
as means to deliver electronic mail document content
have become pervasive, although the document delivery
technology has been designed for delivery and
presentation to a human user.
The business promise of a ubiquitous Internet -- seamless integration and perfect, instantaneous
document transmission between the computer-automated
business process systems of trading partners -- remains largely unfulfilled.
In order for this to occur, the industry as a whole
must evolve from presentation-oriented content
representation and delivery to integration-oriented
content representation and delivery. Ubiquity is not
the only consideration, however.
The Importance Of Security
Security is another important concern, with a variety
of key factors to ensure a viable and safe business
communication mechanism as follows:
- Authentication -- proof that an entity is who
it claims to be.
- Authorization -- proof that an entity has
permission to communicate.
- Non-repudiation -- tying an entity and its
- Privacy -- ensuring that documents are not
- Integrity -- ensuring that documents are not
altered in transit.
A final consideration is that information must be
accompanied by a description of what the data
represent, which permits automation of interpretation,
data entry and delivery processes that formerly
required manual intervention or expensive "data
The Case For IDI
IDI is the solution to faster, more cost-effective,
accurate and secure communications between and among
companies. In the past five years, the Internet has
become a pervasive communications mechanism, and every
company has Internet connectivity and e-mail, and most
have a Web site that conveys information to customers,
suppliers and shareholders or prospective investors.
As the Internet becomes pervasive, an industry has
sprung up, and this industry has made a tremendous
investment, on a global scale, to put into place a
highly capable infrastructure to transmit documents
between a company's Web site and an individual using
a Web browser. In addition to supporting the Web, this
infrastructure is available to implement effective IDI.
The presentation-oriented HTML document description
language has evolved to become the
integration-oriented XML document description language
that describes data in transit. This means that
companies do not need to agree in advance on the
format and content of each transmission. Applications
that receive electronic documents represented in XML
are able to automatically extract relevant data. For
example, information that leaves one company's
purchasing system in the form of line items on a
purchase order can automatically become line items on
another company's sales order or invoice.
Recently, digital certificate technology has
matured, and it is now possible to integrate digital
signatures with transmitted documents. Today's
generation of Internet browsers and e-mail include
digital certificate/digital signature features, and
applications and Web sites are able to nonrefutably
identify themselves with digital certificate
technology. A side benefit of using this technology is
that documents are encrypted while being transmitted,
so unauthorized parties cannot intercept them, and the
contents of the document are verified for accuracy on
the receiving side, eliminating the possibility of
error during document transmission.
IDI systems eliminate the barriers of cost and
complexity that have hampered adoption of EDI systems
by using existing Internet infrastructure to which
every company has access. This means that the
likelihood that customers and suppliers can adopt and
use an IDI system is greater, and this, in turn, means
the eventual elimination of dual processes for
automatic and manual document processing.
Peter J. Weyman is an independent consultant. He
has 23 years of general and engineering management
experience in the computer software and hardware
industry. He is particularly well-versed in the latest
developments in e-commerce, e-procurement, supply
chain management and Internet information interchange.
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