Act Now in Defense of the EDI Communications Market

Take Action Now to Preserve Fair Competition in the B2B IT Communications Sector.

Influential GXS Customers:

1) Demand in unambiguous terms, that your suppliers retain their unencumbered right to select the EDI VAN, B2B SAAS provider, or supply chain service provider of their choice. Insist that your EDI network messaging provider respect your supplier’s choice of EDI network. Period. Tell GXS that you stand behind your supplier’s selection of EDI network  provider. Leveraging any supplier’s access to a GXS resident Hub via interconnect pathways, called ‘route arbitrage abuse’, is sufficient cause for terminating a contract. Any entity that acts to impede the contractual relationships between buyers and their supply chain members needs to be put on high notice that these actions are unacceptable.

A prestigious corporation using GXS-TGMS for supplier communications should not tolerate these factitious, manipulating actions by GXS. IT Directors and CIOs would never accept any such  action by a telecoms provider, ISP, data center, or 3PL;  and it is similarly unacceptable for an EDI Messaging provider to dictate terms to your supplier community – especially if the terms are sure to increase costs to your suppliers.  Retailers,  Manufacturers, and Consumer Brands – if you are a wise GXS’ TGMS VAN customer, please take action and contact me, or the DOJ,  FTC, or FCC, they must hear directly from as many GXS clients as possible. Let us work together to eliminate all such market limiting actions that are perpetrated against your supplier community.

2) The Most influential Actors in the EDI communications sector are the Retail, Manufacturing, and Logistics Hubs; your trading partners ability to comply with  complex EDI requirements are impacted by having as diverse a range of EDI Services and providers, solutions , software, as possible. The EDI market is impacted by the adherence to transparent and ‘value free’ message routing across all major VANs and service providers. As I am concentrating on VANs first, please understand that eventually, all systems, even AS2, will have access to transparent message routing. However, this will never happen if GXS has their way…..for the way of GXS is to herd, yes herd, all  end-users onto TGMS, and to eliminate VAN interconnects totally, the Sherman act be damned.  I want to personally thank the DOJ for conducting such a smart and savvy HSR review of the GXS Inovis merger – NOT! The DOJ essentially franchised the monopolization of the EDI VAN sector by giving the green light to an avowed toxic monopolist who had shown in their past actions to abuse the power of EDI network traffic exchange agreements…shame on you DOJ. And, shame on the FCC for although being fully briefed on the impact of GXSs actions, has not taken one step or action to protect just the interconnections of this vital communications sector. Feh. 

Hey DOJ, Joe Wayland, Antitrust Crusader and new Division chief  – WTF! WTF! WTF!

Hey! FCC. Your agency is the Nation’s Communication’s watchdog! WTF!WTF! !!!

Professionals in the B2B IT market simply understand that ensuring the availability of cost-effective and diverse EDI services for all suppliers, large and small alike, starts with solid, standardized, ubiquitous communications services – the more diverse and innovative the better. The unprecedented abuse of established and settled interVAN routing policies, leveraging the consolidation of the VANs GXS acquired  (IBM IE, Inovis, and GEIS), is tantamount to admitting that the behemoth is simply unable to synthesize a credible way of competing with a brilliant Mr. Gould, whose ability to innovate as fast as he can type into Visual Studio – is uncanny.  GXS could only wish…..

The B2B communications sector has very few such prolific innovators – Todd created the one and only VAN built from the ground up for big traffic movers, like SPS Commerce, other Supplier enabling service providers, and the new breed of Virtual VANs.

Finding common cause between the Hubs, their suppliers, and Loren Data Corp is my singular quest ; GXS client’s should understand that they can make a difference, the big hubs can get involved and stay with GXS for all I care , as long as you all get involved. It will be worth it, and we will have a better market with stable prices for B2B Comms services, and better accessibility for your suppliers, at prices they can afford. 

The converse also applies: If GXS kills off Loren Data Corp, and then moves on to suck the blood from all other VAN interconnects….oh you don’t think they are stopping with Loren Data, do you? Please, open your eyes.

And I am not even saying that GXS should not be  in the market – after all the company has consumed 500 million in equity and has access to over 400M in credit facilities. GXS as a company of human capital alone has a scale that is simply unapproachable by most other companies.  Loren Data could take on the comms of a few GXS customers that only require messaging services, but for massive armies of engineers and B2B system techs? GXS, IBM Sterling, and one other…..maybe.

In regards to the issues of ‘what is right, what is reasonable, and what will work for the large hubs and their suppliers….. at least one does care:—gxs-to-terminate-loren-data-interconnects from the President’s Blog:

and the deluge of comments continue on Yahoo Groups EDI-L, the oldest listerve on the EDI universe. Here is also a growing collection of comments across many blogs and groups:

Bravo and Bravo for you, Mr. Michael Kotoyan, for this industry is being held captive. Marquee EDI Commercial purchasing hubs (retailers, manufacturers, etc.),  are unaware that their loyal suppliers (who depend on EDI service providers) are being mowed over by the actions of GXS;  very few know the facts of the Loren Data v. GXS disputation. A good majority of EDI Senior Managers  as well as the CIO’s   are unaware that the messaging networks powering their supply chains are being reconstituted into an AT&T style monopoly reminiscent of the 1960’s. At least AT&T gave us Bell Labs. 

How else can one interpret the actions of a PE-created corporation obviously unable to compete on the technical merits and price alone. Loren Data Corp’s President, Todd Gould (who wrote the code that runs his VAN, ECGrid), knows that he can compete against GXS on technical features alone, and on pricing…..well, GXS can take a loss, as they have been shrinking their messaging services balance sheet almost every quarter.  Therefore, many of those in the know are puzzled – why is GXS taking such draconian measures against tiny Loren Data Corp?   

Large, Brand-Name GXS accounts, retailers, manufacturers, and mega brand suppliers as well, are witness to GXS’ leadership resorting to internetwork shenanigans in order to squelch a scrappy, independent VAN a fraction of their size.  It is an  insult to all who are network market idealists (endnote, ‘entrepreneurs are true believers’)  .  My colleagues actually seem wroth with other analyst’s coverage of GXS; the mainstream bureaus charge a pile of dough for ‘Astroturf coverage in high-praise of GXS’. Even those in the top-flight B2B IT integration specialty practices are recoiling over the traffic leveraging antics used by GXS. It’s just so un-market-like. These practices  were dealt with in the telecoms sectors over 20 years ago – but along came the mixed blessings of deregulation via the Telecoms Reform Act of 1996 – wherein FCC administrators took the language of legislation, and distilled the corresponding CFRs….

Implementing the 1996  Reform Act was a gargantuan job, which would span years of administrative law hearings before the panel.  In the process of making the sausage, the EDI communications services provided by VANs and service providers, not to mention other critical business related message payloads, were booted from the sanity of the laws of Common Carriage, wherein obligations of ‘bailment’ attach,  and…were subsequently jiggered  as Enhanced  Data services, which are not subject to the Statutes of Common Carriage.

Small and medium supply chain participants had finally gained access to EDI applications and comms services, at a cost they could fathom via the entrepreneurial spirit of the on-demand EDI service providers, like SPS Commerce. The  artificial mediating of access to the  VAN mailboxes of GXS resident top retailers and manufacturers is akin to exploiting the name and branding of the Corporate EDI hubs, to effect a “de-peering” of the VAN Interconnect System.

Analysts bide their time as the best financed VAN in the sector’s history continues to struggle. ….and there is yet worse: GXS has sullied the good names of their clients exploiting their “must have destination” status. The control of message traffic flowing between suppliers and buyers is assisted to no end by the service provides, and…..Loren Data Corp ECGrid was built for the needs of service providers……a free revelation for those that hate to dig too deep: 
Loren Data is a Proxy for GXS who is simply unhappy with the entire  SPS style Service providers, particularly SPS itself, for no other reason than GXS and their financiers do fancy that those spokes (suppliers) belong to GXS!  

GXS refuses to exchange reciprocal message traffic with Loren Data, or in other words, allow fair routing of EDI message traffic. Loren Data is not some startup, not an unknown VAN – ECGrid was lit up in 2001, and serves SPS Commerce and a slew of service providers as the “messaging utility of choice” for Utilities, energy companies, specialized Virtual VANs, and many manufacturers.

This is a very bad thing for free enterprise. The DOJ knows all about it…..the FCC knows all about it and may determine that the EDI message traffic is a common carriage market. We Shall see.

So far…..silence emboldens GXS, and they are but a few minutes by automobile from the offices  of our nation’s Antitrust and Communications Watchdogs….well, they might as well be on the moon without a treaty for extradition.  The FCC and DOJ are not doing much right now. But I did I briefed the agencies.

“I briefed them, yes, Senator, I briefed all of the agencies for the past three years plus”.  

ECGrid is the VAN for entrepreneurs, for roll-up your sleeve lone coders, and for big consulting and outsourcing companies, and many of them would gladly throw in with Todd and Company, if not for the GXS actions….because its has been scary and concerning even for the boosters of Loren Data Corp, when the company holding the border gateway keys to 75% or more of the EDI VAN market is attempting to cut off your lifeline. If GXS has not been F—ing with Loren Data Corp, ECGrid would be a 30-50 million a year VAN. FTC where are you. Where is the FCC, as that agency has been briefed by myself personally and only their regulatory eyebrows have twitched…..Ajit Pai, the “tech savvy Commissioner”, where are you in all this?

 GXS does not like Loren Data. They resort to outright lies to imply that Loren Data hands off data to “others” using the ersatz term,  ‘daisy chaining’…..which everyone knows Is a lie. 

Actually, as EDI message traffic is layer 7, and IP traffic is layer 3 (or 4 if using the new model), the EDI messages that GXS drops into a VAN mailbox of  a Major Retailer…is probably relayed by the fetching system……all over the world. That’s how networks and the Internet works! That’s how WANS work. That’s how VANs work. GXS lies created by liars.

I am a freelance product analyst and industry relations advocate….and I love buzz words. However, I hate what GXS is doing. They are a 500M$ /yr megalith with no founders, and no owners equity. Loren Data was founded via the bootstraps of Todd Gould, who wrote all of the software that runs ECGrid, a system with 11 total  hours of downtime since  going live in 2001. GXS major system errors….according to a survey underwritten by an investment bank……..have the worst track record in the market. Now, GXS has given public notice to of non-renewal of the Inovis transit contract, ending message reciprocity between GXS and Loren Data Corp.   Todd has been carried this antitrust legal fight against GXS since 2010, yet his first request to interconnect to GEIS was in 2002 !

Get out there and fight for your industry. The globally interconnected EDI network mesh has made paying for a VAN network address  a very viable way to communicate. and all things being equal (nothing is close to equal now) a better value than running As2 in-house  – with caveats.

…..a VAN QID or GLN means a company can send and receive EDI traffic almost anywhere, without the end-user running expensive and difficult to support self-managed comms systems.   GXS having its way means that Corporations and most service providers will have to swallow a GXS contract. As for the remaining VANs,  they will see that inaction has accrued to their detriment, whereas if concerted action had been taken in 2011, 2012.

Francisco Partners, the financiers of GXS? Gentlemen: Your fund was an otherwise stellar example of investments in networked markets and network-effect products and services – – so, what the F— is up guys? Are you letting your little boyzzzz in Gaithersburg snow you over??              

Genuine networked markets present unique opportunities for entrepreneurs to get in the game,, to code, create and compete….to get out there and do something big ……

So….tell the Justice Department tell the FCC Common Carrier Bureau, tell the FTC – it was the FTC that originally dropped the ball on the GXS / Inovis merger investigation.

Take concerted actions:

Executives and CIO’s of the largest EDI departments and their many trading partners  – GXS is hampering YOU, the brand name Retailers, the largest hubs, because your suppliers are being forced via proxy to leave ECGrid, pushed against their will to GXS – – !! EDI service costs are rising, institutional investors, Mortal PE Funds, angels, and VCs that are already gun-shy over GXS actions of the past and present, will come back to increase funding for ever more innovative startups when they see the largest customers and the entire EDI using supplier community speak up for what is right. This entire issue transcends Loren Data Corp, although the loss of Loren Data Corp would be a huge negative event for the B2B supply chain community and the service providers.

But it’s not just the money. It’s the fact that we are letting it happen on our watch. Retailers and CIO of the BIG ONES – is EDI traffic important to your supply chain automation efforts? Is cost-effective access for your smaller suppliers important?  If YES, then write to me and Todd and I will help you take proper actions that will really work. 412-353-9269 or

Are you a BIG GXS Client? They are hurting thousands of your suppliers, the 10,000 suppliers serviced by Loren Data ECGrid, which routes and processes EDI Messages for SPS Commerce and many other specialized EDI service providers, Virtual VANs (NetEDI), and the list goes on. Loren Data’s powerful, API driven networked messaging system has helped keep costs stable for small and medium businesses by making the KC rates flatter and fairer –

Is this what the DOJ envisioned as an end-result of the GXS  / Inovis HSR review ? I think NOT. NOT!!!

The FCC has let down the business in the integrated supply chain communications and automation sector. Worse is yet to come.

Call or email me for DOJ antitrust division contacts, also the FCC common carrier bureau, FTC etc.

call or write me here is a link