Collaboration brings value to VAN clouds

VANs are fast transforming into a forefront for offering integration and collaboration in the cloud

Maybe Gartner Vice President of Research Benoit Lheureux can't say, "I've seen the best minds of my generation destroyed by madness, starving hysterical naked," but he did sound a bit like the poet Allen Ginsberg when -- speaking about VAN (value-added network) service providers -- he said, "I saw these guys sink into the morass of the IT hell hole, and they were bleeding revenue."

That was back in the late '90s and early 2000s when all VANs did was run an EDI mailbox application on a mainframe bolted to a whole bunch of racks of modems and communications servers. As a result, C-level execs began bolting.

"It was a train wreck," Lheureux said.

VANs can do more than pedestrian EDI transfer

Since then there has been a fundamental change.

VANs have modernized their services, hardened their datacenters, and added a lot more functionality to the stack.

Although, as Lheureux says, "there is still money to be made doing pedestrian EDI transfer," five years ago VANs never saw it as their job to correlate b-to-b transaction documents such as POs, ASNs (advance shipment notices), and invoices. But increasingly, savvy customers -- aware of the unused potential sitting inside VAN technology -- are asking VANs to do just that. The result is that companies that are alert to the changes taking place in this segment of the industry now use VAN services to give all members of the community a shared view of the state of the process.

Five years ago, Lheureux says, everyone in the community argued the facts about what happened. Now they no longer have to argue. Instead, if there is a problem, the interested parties can discuss how to solve it.

This shift to resolving problems through collaboration is something Phil Smith, vice president of global network product lines at VAN service provider Sterling Commerce, sees as well.

"People are coming to us who say they want us to support them and their vendors so things occur the way they are supposed to occur," Smith says.

The retailer or the manufacturer can say to the supplier, "You were supposed to send me an ASN, and you didn't. Let's fix the problem."

As VANs morph, we are now witnessing traditional VAN vendors such as E2open, GSX, Hubspan, Inovis, and Sterling Commerce providing visibility on top of the flow of transactions. And this is what is hot right now, creating a new, collaborative community.

Integration in the cloud

Back in 2004, Lheureux saw the transition and dubbed it "integration as a service."

"They were taking integration functionality and throwing it in the cloud."

The business impact can be dramatic.

Last November, Inovis took a giant step in this direction when it acquired BetweenMarkets, which modeled the process against the flow of EDI transactions and then applied business rules and analytics to that flow.

For example, without an accurate ASN, a company can't implement "cross-docking."

Cross-docking at a distribution center or warehouse allows the vendor to unload a shipment at one docking station and have another truck waiting to reload the shipment, without the goods ever spending time in the warehouse. There is less warehousing and less inventory management, and it gets to the consumer more quickly.

Using the technology from BetweenMarkets, Inovis is now working with a large, national retailer to analyze its ASNs from shippers, which will help them implement cross-docking and eventually lead to major cost savings through a more efficient business process.

By giving all of its partners a shared view of the supply chain and analyzing the ASNs, which are notoriously inaccurate, the retailer will be able to find out where problems reside, improve ASN accuracy, forego fights with partners over inaccuracies, and greatly facilitate its cross-docking goal.

VANs are well-positioned for improving business processes through collaboration

Sterling Commerce's Smith may be a bit biased, but there is still merit in why he believes VANs are poised to lead the charge toward b-to-b collaboration through shared views of data and metrics.

"The network is already in place," Smith says. "The relationship is in place, and the cost of these cloud networks are far less expensive than engineering a whole new interface over the Internet."

Finally, the network can be used for all sorts of messages and files, be it XML or EDI, all with guaranteed delivery, according to Smith.

Lheureux stops short of calling it a revolution, but he does say it is a "big evolution."

These days, it is obvious that companies are looking for collaborative business environments from which everybody can review the same state of the process. VANs are certainly worth looking at.

When I called Lheureux, I asked whether he thought a column on how VANs are changing would give my readers new, useful information, or whether it was the same old song and dance. This time he sounded a bit more like Charles Bukowski than Ginsberg.

"Some readers still think of these guys as the flea-bitten dogs of transport," Lheureux said.

If you are in that camp, I hope this column changes your mind.