Advantages & Disadvantages of Using a Value-Added Network for Electronic Commerce Communication

Electronic Data Interchange (EDI) Value-Added Networks, more commonly known as VANs, date back to the 1980s and those now almost unimaginable years before the Internet. Originally consisting of secure phone lines used to transfer important or confidential data, VANs have since evolved to incorporate Internet functionality, but continue to provide similar services, including data transfer, storage, encryption and format conversion. Depending on the nature of your e-commerce business, a VAN may be a good choice for you.

As a system specifically designed for secure data transfer, the information architecture behind most VANs, including everything from encryption methods to safe data transfer protocols, tends to be far more sophisticated than your average firewall or network security set-up. Naturally, such a level of security is probably unnecessary for most data, but may be a critical advantage for an e-commerce business that handles confidential data like credit card information, bank account details or proprietary design information for manufacturers. VANs also tend to be more reliable than secure e-mail servers or other systems that experience periodic outages.

As VANs have entered the Internet age and struggled to keep up with online security solutions like XML coding, VAN providers have introduced a number of new services that can be very useful for e-commerce businesses. Transaction Delivery Networks (TDNs), for example, are a new variety of Internet-based VAN that guarantees secure data transactions from one point to another, with added features like enhanced encryption, guaranteed server availability and delivery success notifications. Many modern VANs can also be programmed to automatically generate certain types of data transfers, like factory orders or customer notifications. These can save an e-commerce business money and improve relationships with suppliers and clients.

The added features available on a VAN are not free. In fact, many of the most sophisticated VANs can be quite expensive, charging subscription costs or data-transfer rates. Setting up a VAN in your e-commerce business can also be rather complex and costly, often requiring new equipment or employee training as data management processes change. These added costs can be worthwhile for some businesses that are particularly concerned with data security, yet are not for every e-commerce operation.

Given the added cost of contracting the service, VAN systems are most often found in larger corporations and e-commerce sites. A small business with a VAN, therefore, may be able to streamline communication and transactions with the bigger players in the field, a considerable advantage in some sectors, such as e-commerce resellers. Having a VAN, however, can also make communication more complicated with small players that rely on simpler data-transfer methods. Small businesses are often forced to keep their old systems running after contracting a VAN in order to communicate with some of their smaller partners and affiliates.