Europe’s firms must reassess their EDI plans in view of new eBusiness network requirements, according to a recent Report by Forrester Research B.V. (Nasdaq: FORR). Forrester predicts that market leaders will migrate first to the open Internet by driving industry-specific XML development and eMarketplaces, but warns laggards to seek external help to speed their migration and build their Net DNA.

Forrester expects EDI trade in Europe to peak at
€1.5 trillion in 2002, then steadily decline as firms in sectors like computing, travel, and logistics migrate €400 billion of EDI trade to the Net — using both eMarketplaces and extranets — by 2005.

“Unlike their peers in the US, Europe’s managers are hoping that hybrid Web-EDI solutions will bring them the best of both closed EDI and the open Web,” commented Andrew Parker, senior analyst at Forrester’s European Headquarters in Amsterdam. “But hybrid systems won’t fare better than closed EDI. Both limited solutions simply won’t compete with eBusiness networks based on open Net standards and business models.

“Net business trade will move beyond EDI’s static, limited messages to support dynamic, complex business rules. New technologies such as ebXML and xCBL will support flexible transactions in eBusiness networks to deliver multistep trading in real-time processes like auctions, dynamic pricing, and automated substitution selling. Partners in eBusiness networks will replace the limited document exchange of traditional and hybrid EDI with open collaboration based on sharing not only data but also business rules.”

Significantly, a large group of European firms face high EDI migration market pressure with low response capability, and unless they can rush to find help to build Net DNA, these companies — in sectors like logistics, retail, and
electronics — will collect only the scraps left behind by more aggressive competitors. Another group — midsize firms, with a strong specialization that deflects market pressure — will continue the status quo for lack of pressure and lack of alternatives.

But these firms will increasingly be isolated and ultimately outcast when, for example, organizations from related markets propose substitution services on the open Net.

“Aggressive migrators will force less migration-capable companies to raise their game. By 2005, threatened companies and those in slow-moving sectors like heavy engineering will conduct only 1% of trade in eMarkets,” Parker concluded. “Both groups must look to emerging external technology (exT) providers to advance their migration progress ahead of this slow-moving trend, and to get on track, they must seek a strategy infusion from consulting groups. Firms with low Net DNA must get external help from eCommerce integrators and ASPs to map out their means of moving forward.”

To investigate the future role of EDI, Forrester spoke with 40 managers handling EDI activity at large European businesses.