Can Blockchain Replace EDI in The Supply Chain? – Part 2

Some see electronic data interchange (EDI) as a likely target as blockchain finds its place in the B2B world. Few technologies have ever given rise to the same hype as blockchain. But under the ginned-up excitement, interest in distributed ledger technology is genuine and goes far beyond the best-known realm of cryptocurrencies in blockchain to a multitude of practical uses across a wide range of industries.

Cost Considerations

Another point in favour of blockchain might be the ability to establish connections and move quickly. B2B integration today requires two parties to establish a relationship before implementing EDI, but a pre-existing relationship is not required by blockchain. “Blockchain adds more agility to B2B integration. B2B integration today requires both parties to know each other, at least on a technical level, in order to provide ways to resolve issues such as non-repudiation and acknowledgement,”writes Henry Peyret, Principal Analyst of Forrester Researchin “The Future of B2B Integration”.”Forrester expects blockchain technologies to be used in the next three to five years to provide additional agility in the construction of dynamic ecosystems.”

Although EDI has built a 20-year reliability track record, its cost is the main weak point of the venerable technology. “If there’s going to be a substitute rationale, blockchain might just be cheaper,” says Fearnley. But not everyone is saying that the transition from EDI to blockchain is a successful deal. “There have been many contenders over the years to overthrow EDI, and none of them have succeeded because EDI does what it does pretty well,” says IDC Program Vice President Simon Ellis. However, he adds, “If you can make things safer and faster, it will benefit everyone.”

For its part, SAP Ariba implemented a blockchain strategy in 2016 to extend blockchain capabilities to its Ariba Network through a partnership with Everledger, a London-based financial technology company. However, Vollmer says the Ariba Network is capable of superseding EDI even without blockchain technology because it provides the advantage of having to register once, after which you can reach millions of business partners.

This is similar to an eBay-like B2C platform where you can register once and then buy and sell on the platform to anyone else. He adds that this is the next evolutionary step in connecting businesses to transact, but more importantly, by searching, finding and teaming up with business partners, you can also collaborate and generate new opportunities on business networks. “Before blockchain, EDI may get disrupted. Business networks will play a very powerful role as you have secure transactions already”says Vollmer.

Even if blockchain technologies do not displace EDI, they may be threatening to drive EDI technology to improve functionality as well as become more economical. According to Forrester’s Peyret, “EDI will not disappear, but it will have to evolve to bring more agility while continuing to reduce licensing and/or operating costs as a result of continuous volume growth.”