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Listen to the Computerworld TechCast: Value-Added Networks.

Value-added networks got their first real foothold in the business world in the area of electronic data interchange (EDI). VANs were deployed to help trading and supply chain partners automate many business-to-business communications and thereby reduce the number of paper transfers needed, cut costs and speed up a wide range of tasks and processes, from inventory and order management to payment.

In today's world, e-commerce is increasingly based on XML, though EDI remains an important part of business and still relies on value-added networks. But other types of VANs have begun to appear, including Web services networks and transaction delivery networks.

A VAN is created when a network provider leases communications lines from a common carrier (such as a telephone company), enhances them by adding services and improvements that facilitate business-to-business application integration, and then resells the network connection and services to others for a fee. Value, then, refers to what the supplier provides beyond the basic network connection and becomes the critical element differentiating one network offering from another.

VANs and EDI

In the 1980s, VANs emerged as a way to connect supply chain participants. They offered store-and-forward mailboxes that provided protocol conversion, security and guaranteed delivery.

However, EDI VANs proved to be too costly for most businesses. Only the largest of supply chain participants could afford the expensive setup fees associated with EDI software, not to mention the sometimes exorbitant per-transaction fees. This meant that many small and midsize firms couldn't afford to join electronic, automated supply chains. And since the smaller companies couldn't join in, the larger ones that continued to do business with them still couldn't eliminate a lot of their traditional, paper-based processes. When the Internet and the World Wide Web entered the picture, along with standards like ebXML, some observers felt that VANs might simply disappear.

While traditional EDI is in many ways inferior to newer approaches, it still offers a compelling business model. In fact, the continuing presence of EDI is not a result of its fundamental technology but instead can be attributed to its underlying communications structure, the VAN, which can guarantee and secure B2B interaction over a network.

Web Services Networks

In its reincarnation, the EDI VAN model has become the Web services network (WSN, or sometimes WSVAN), which has to meet many of the same requirements and features that EDI users depend on.

WSNs are characterized by loosely coupled, asynchronous service-oriented architectures (read the SOA QuickStudy ) supporting standards such as XML, the Simple Object Access Protocol , the Web Services Description Language and UDDI . This helps individual Web services providers keep their offerings simple in design and frees them from having to separately implement network housekeeping functions.