For years, enterprises have relied on traditional electronic data interchange (EDI) to simplify and speed up their transactions with customers, suppliers, and other partners. Now, along comes the document- tagging language, XML, with the potential to reach new markets, simplify access, populate Web pages, and serve as an Esperanto format for transactions of all kinds. Should companies stay with EDI? Should they move to XML? Should they try to get EDI and XML to interoperate? Many are finding that they can do all of the above -- if they use the right tools in the right ways.

Many enterprises embracing both EDI and XML started out in the EDI arena years or decades ago. For instance, St. Louis-based Transentric, which began life as the technology arm of the Union Pacific Corp. rail conglomerate, has been using EDI for more than 20 years. It currently handles more than a million transactions per day with some 8,000 partners on its value-added network (VAN).

Aircast Inc. in Summit, N.J., is another example. The maker of orthopedic braces and other medical products began establishing EDI connections with very large distributors of its products when it was unusual for small businesses to get involved with EDI. Aircast's motivation was simple: To expand the market for its products, it had to adopt the preferred connection method of the larger companies, namely EDI. That investment paid off: Approximately 40% of Aircast's business moves over EDI.

Why XML?
Enterprises have a variety of motivations for wanting to get involved with XML. Many are desperate to get involved in e-commerce but have no idea how to get started, given their current technology. In industries that already have online marketplaces and portals springing into existence, XML is often the required admission ticket. Many firms view the advent of XML as the golden opportunity to automate processes from beginning to end, with the XML format as the central touchstone.

"We have a goal to eliminate manual processes entirely," says Susan McKay, vice president of customer and information systems at Aircast.

For EDI companies, the motivations emerge from some of the drawbacks to EDI itself. Most EDI traffic flows over VANs, which can be expensive. The open and free Internet beckons, and while EDI over the Internet is possible, it's not fun. In contrast, XML is a child of the Internet and seems a more natural format to use. EDI is also primarily a one-to-one technology, while Web-based marketplaces allow many-to-one connectivity. "One goal for exploring XML is to broaden our group of trading partners to include those who -- for whatever reason -- don't use EDI," says Ken Olsen, assistant vice president of marketing at Transentric. In addition, Transentric aims to use its combined EDI and XML prowess to give such increased access to partners as part of its value-added message-management offering.

As with the original adoption of EDI, one draw of XML is the fact that your potential business partners may be using it. "Many of our large clients -- including automotive and chemical vertical industries -- are moving into the growing XML user community," says Randy Morin, director of e-business solutions at Transentric.

Another reason to master EDI/XML interoperability is so you can offer that connection as a service to others. For example, SupplySolution Inc. in Santa Barbara, Calif., aims to calm supply chain nightmares for clients with its i-Supply service. Many of these clients are struggling with EDI's limitations due to such things as a lack of real-time information and EDI's point-to-point nature. SupplySolution says it doesn't see either EDI or XML as complete answers, but as parts of a package it can offer clients.

Next Week: What to Look For