E - COMMERCE - VALUE ADDED NETWORKSINTRODUCTION 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. Advantages: Safety and Reliability 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. 1 These transaction are sent via web using standard http protocol. largely due to cost considerations. retail and manufacturing. 2 . EDI usually takes the form of direct transactions between computers. BREAKING DOWN 'Value-Added Network (VAN)' VANs usually operate in a mailbox setting. In business this typically refers to a Electronic Data Interchange (EDI). secure email and management reporting. except that it is used for standardized structured data rather than unstructured text. which is a system used to communicate business and financial transactions between parties. databases and order systems. BREAKING DOWN 'Interchange' The development of the internet gave EDI a real shot in the arm. many EDI transactions use XML format instead of traditional EDI data formats such as X12 or EDIFACT. wherein a company sends a transaction to a VAN and the VAN places it in the receiver's mailbox. and then sends a transaction of its own. The system is similar to email. A transfer of information from one computer to another electronically. and by expanding the range of services they offer customers. Nevertheless. or by industry consortiums or telcos. Interchange can also refer to a web application server for e-commerce which is used to build customized e- commerce solutions.DEFINITION of 'Value-Added Network (VAN)' A private network provider hired by a company to facilitate electronic data interchange (EDI) and/or provide other network services such as message encryption. since it is much more cost-effective to move data over the internet than to pay the minimum monthly fees and per-character charges included in typical VAN contracts. A Value-Added Network (VAN) simplifies the communications process by reducing the number of parties with which a company needs to communicate. The ubiquity of the internet has lessened the attraction of VANs. VANs have countered the challenge from the internet by focusing on specific industry verticals such as healthcare. VANs may be operated by large companies for efficient supply chain management with their suppliers. The VAN accomplishes this by acting as an intermediary between business partners that share standards based or proprietary data. The receiver contacts the VAN and picks up the transaction. providing faster access to operating information. but their basic principle of providing dependable and secure communications across a network endures. which can lead to stronger business relationships. the network is “value-added” because it has various services and enhancements that improve the way business applications communicate with each other. Data may be modified as it passes through an error detection and correction process. its “value” comes in the form of audit information added to messages. Better Communications Compared to a manual processing system. and support of messages. such as network performance monitoring and directory management. The automated communications achieved through a VAN can help a business and its trading partners engage in more effective e-commerce transactions through the encryption. such as TCP and FTP. The benefits related to the use of a VAN benefit all the parties involved. a VAN reduces the costs associated with business communications. or VAN. It decreases the need for paper transfers. The use of a VAN provides communication channels among supply chain and trading partners by allowing the transmission of data and its translation between formats. involves the use of a common carrier’s phone lines to allow business-to-business network communication. Unlike a slower and paper-intensive manual system. It also supports Web technology standards. retransmission. and during conversion between communication protocols. Faster Transaction Processing In comparison to manual transaction processing. VANs have evolved to accommodate the latest e-commerce applications. but from a small business’s cost perspective. the implementation of a VAN can also be expensive and a resource-intensive endeavor.Value-Added and Non-Value-Added Activities in Managerial Accounting A value-added network. information moves instantly from point A to point B. By transmitting data electronically. 3 . such as XML. a VAN can improve the speed at which transactions are completed. a VAN’s efficient way of handling transactions and communications can improve your bottom line results. Today’s VAN provides a host of Web services. Though a VAN transports messages similar to a cable Internet connection. and allows tasks such as ordering inventory and processing payments to be completed more efficiently through electronic means. Disadvantages: Cost and Installation The added features available on a VAN are not free. In fact. Setting up a VAN in your e-commerce business can also be rather complex and costly. It’s important that knowledgeable personnel are involved in the conversion to a VAN. Your business may need to hire experienced staff to manage an in-house network. guaranteed server availability and delivery success notifications. Many modern VANs can also be programmed to automatically generate certain types of data transfers. many of the most sophisticated VANs can be quite expensive. Ongoing Network Support A VAN. your company will only benefit if the advantages derived from a VAN outweigh its disadvantages. Ultimately. 4 .Cost of Implementation Like many technology upgrades or implementations. often requiring new equipment or employee training as data management processes change. Transaction Delivery Networks (TDNs). Ongoing maintenance increases the cost of using the network and adds complexities to your operations that need to be managed appropriately. All of these considerations can carry a prohibitive price tag that may be out of reach for certain businesses. with added features like enhanced encryption. like most computer technologies. Another option is to obtain VAN services from a third party that specializes in these types of IT solutions. charging subscription costs or data-transfer rates. VAN providers have introduced a number of new services that can be very useful for e-commerce businesses. the addition of a VAN may not be cost effective for many small to medium-sized businesses. and these individuals should also provide training to your staff on the applications the network will support. or may need to utilize the services of an independent support provider for an outsourced network solution. for example. like factory orders or customer notifications. Advantages: New Internet-Age Features As VANs have entered the Internet age and struggled to keep up with online security solutions like XML coding. requires ongoing technical support and maintenance. are a new variety of Internet-based VAN that guarantees secure data transactions from one point to another. com/definition/value-added-network https://www. may be able to streamline communication and transactions with the bigger players in the field.com/blog/the-advantages-of-using-an-edi-value-added-network-van/ http://blog.chron. REFERENCES http://smallbusiness.techtarget. therefore.com/post/2015/05/20/what-is-a-value-added 5 .html http://searchnetworking. such as e-commerce resellers. can also make communication more complicated with small players that rely on simpler data-transfer methods. however.meetopal. Having a VAN.CONCLUSION Given the added cost of contracting the service.com/articles/advantages-disadvantages-of-using-a-value- added-network-for-electronic-commerce-communication https://boldvan. 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.techwalla. a considerable advantage in some sectors. VAN systems are most often found in larger corporations and e-commerce sites.com/advantages-disadvantages-using-valueadded-network- electronic-commerce-communication-47221. A small business with a VAN.