EDI Communication market up in the air, up for grabs, consolidation notwithstanding

My analytical writings for lawyers and regulators have covered the dynamics of interconnections between networks in general and VANs in particular. To say, “The VAN industry was built upon collegial and permissive interconnection policies, in order to create and sustain its nascent sector”, is an ex-post facto spin. The facts are more raw.

I believe that this industry sector called “EDI Value Added Networks”, is in potential jeopardy unless it regains a unity of purpose. That is the sum total of the client satisfaction surveys aggregated from 3 major investment banks, plus my own focused telephone survey of GXS hub class clients, over 800 in total. All of the normalized results point to a damaged and deflating sector. Meanwhile, the transactional volume climbs, which is an indicator  the health  of the underlying technologies – however, there is ample room for improvement even in the tech space of EDI systems.

The EDI Comms industry, writ large, is the beneficiary of a vision, but finds itself running on reflexes, reactions, which will not allow the market to continue forward. If my colleagues do not consider the outlook quite so black, it makes the situation worse – as an institutional blindness may be setting in amongst analysts, and it’s our job to watch things closely from afar, to point out missing elements, while taking the temperature of the customers. With that all said, I don’t like what I see, and if GXS’ track record is being swallowed whole by savvy Opentext, this is just more fodder for negative speculation. Additionally, the endemic weakness of SPS Commerce in its back-end services infrastructure, counterpoised against its stock price and market cap, seem disconnected from the standpoint of critical reality….this baffles me, but at least SPS has created efficiencies in the market for the SME suppliers. I can’t see one good thing arising out of the GXS PE funded rollups. I can say there are many ex-Inovis customers that were thrown onto the GXS heap, and they are a very unhappy user population. Take that one to the bank with the previous generation of ex-IBM IE customers. Never has a 100% functional and robust VAN property been intentionally broken by its new owner, like IE was by GXS. Awful bloody awful, it was.   Continue reading

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