With VAN Consolidation rampant, are B2B message routing exchanges the answer to total reciprocity and delivery assurance?

Author’s note:

The most fecund source of utter baloney can be found at many places on the GXS website, that basically states, “a one vendor network is the only way to insure EDI messaging reliability”. Bull-oney. I think we have all learned an indelible lesson that multi-vendor, multi-provider markets (including messaging networks) which includes routing networks (like the internet) are the best architectural model to arise in the universe of IT, from both a reliability and economic perspective. I’m sure that the old GXS would like nothing better than to have its customers get everything from its network based services – messaging, translation, applications, maybe your medical insurance too. Maybe GXS would like to arrange marriages?

This article is about an access and routing model that was born in the early Internet years, when setting up routing gateways was a black art – and telcos late to the Internet game started to get hungry again, formed a land rush, buying up many of the first mover IP backbone providers; this is when MCI bagged UUNET, leading to another  antitrust case.

Now, we have a tremendous amount of VAN consolidation with the OpenText deal, and this could be a good time to talk about the CIX, or Commercial Internet Exchange Model. CIX was formed as a shared peering exchange point, a membership organization, that allowed companies to get their foot in the Internet’s door – while the FCC was struggling to come to terms with the Telecom Reform Act of 1996. Ok, that ends my intro – on to the EDI Messaging Exchange Model:

Commercial Internet traffic exchanges, (CIX and the thousands that came after) addressed the same access mediation problems that presently threaten the EDI messaging sector. CIX centralized the brokering of BGP services for companies that were unable to afford carrier-class peering infrastructure, and for those unable to  acquire cost-effective bandwidth needed to service multiple peering points. CIX was the first effort, among others, that flattened out the access issues for early competitive ISPs.

Prior to the 1996 Telecom reform act, the largest Internet backbone services companies struggled with their pricing and business models, while the FCC simultaneously burned, blessed, and struggled to have these companies understand that regulatory reform was not equivalent to having  carte blanche to run smaller competitors out of business.  The Internet, being layer 4 services, however, had the established protocols that allowed route brokering and replication.

Layer seven (A2A) service markets, such as VANs, (and to a certain extent SMTP), have their own unique problems, and markedly different technical challenges. As they are operated today,VANs use communications, facilities provided by Internet transport services providers. A VANs physical infrastructure is concerned with supporting applications, storage, managed services, etc.

The creation of an EDI message exchange point  is a far-seeing initiative, addressing  the most vexing issues plaguing the EDI communication sector:

  1. Settlements

  2. Reciprocity

  3. Route Validation,

  4. ID Portability

  5. Migration Errors

  6. Metered Traffic accounting,

The author is aware that messaging exchanges are a challenging concept for companies deriving a large percentages of revenues from B2B communications. The concept of modeling a CIX-like traffic exchange at layer 7 could be a difficult concept to digest.

Before any conclusions are drawn, the industry stakeholders should examine the problems that exchanges can address in the current market. There are many ways to envision a post-exchange EDI sector – especially in regards to regulatory risk avoidance. EDI messaging services are, in fact, heirs to Telex and TWX , formerly well-regulated and tariffed wireline services. The reform act did not negate the laws of common carriage.

Through the eyes of a VAN operator and its customers, some revenues from messaging services might be reduced, while support labor costs could potentially plummet. Layer 7 exchanges can be operated with corporate sponsorships, or memberships with paid enhancements, etc. Executives and BODs running the show should gain their appointments via a consensus vote.  

Exchanges may be operated  in a non-bearer (or optional bearer) model, where transit of messages may be assigned to any communications channel or provider, while IDs are assigned, stored, and managed by the exchange. A directory services-only exchange, with enhanced Web Services to read and write directory entries would be very useful to manage AS2 ID, Certificates, and partner metadata. Non-bearer exchanges could facilitate a new model of B2B communications, where the As2 software OEMs all agree to standardize on non-centralized, replicating directory services, making any AS2 system its own VAN, so to speak.

Such routing exchange systems will emerge if competitors with legacy interconnects show tolerance for liberalized attachment models. If the industry intends to grow, it must accept more and varied  types of specialized E 2.0 B2B SAAS ventures that service verticals and non-repeatable manufacturing processes – and many of these companies are SME and new market entrants. The EDI market, meaning automated supply chain systems generally, must grow its end-points, and end-points are born from naught but the needs of the suppliers.

After all, the Retailer and large manufacturing Hubs are pretty much a saturated market. No? The EDI supplier enabling services sector is flattening its growth, and that is due to the Retail and manufacturing starting to saturate. Therefore it is well past the time that the models that have compromised expansion into the mid-market, have to be reexamined.

The mindset of any organization either operates according to  models of scarcity, or that of innovation based on the  expansiveness of what innovation might be accomplished. Messaging exchanges are but one model to gain a flatter network model that will foster expansion and innovation.