Wal-Mart Chooses Internet Protocol for Data Exchange

Says supplier costs will drop with AS2

Wal-Mart Stores Inc. announced last week that it has chosen an Internet-based protocol for electronic data exchange with thousands of its national and global suppliers.

Wal-Mart said that the use of the new Electronic Data Interchange-Internet Integration Applicability Statement 2 (EDIINT AS2) protocol is expected to lower costs for the company and its suppliers, although one analyst said that might not be the case.

Bentonville, Ark.-based Wal-Mart picked the Commerce Suite developed by Dallas-based iSoft Corp. The software supports the AS2 protocol, which was approved by the Internet Engineering Task Force last year. Wal-Mart said its choice of AS2 means that suppliers won't need to resort to deploying value-added networks (VAN).

Under the agreement, iSoft will install server software at Wal-Mart's headquarters and offer client software to Wal-Mart suppliers for only a $300 annual maintenance fee, iSoft CEO Christian Putnam said.

Suppliers aren't required to purchase the iSoft client and can use AS2 software from one of several other vendors, Putnam said. He added that the AS2 approach will replace Wal-Mart's reliance on dial-up modems for ordering goods.

"It's a huge step in performance," Putnam said.

Ken Vollmer, an analyst at Giga Information Group Inc. in Cambridge, Mass., said that if a supplier has just a few data connections or links to only Wal-Mart, the AS2 client would make sense. But a large number of connections would be better handled by a VAN, he said.

AS2 and several other EDIINT protocols haven't caught on as expected and account for less than 10% of total EDI traffic, far below the 40% level projected three years ago for 2002, Vollmer said. The vast majority of EDI traffic is still handled by VANs, partly because EDIINT doesn't scale well enough, he added.

Copyright © 2002 IDG Communications, Inc.

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