Amid the forest of fledgling business-to-business e-commerce technologies, a very old tree is growing faster than ever: EDI.

That's the message of a new report from Giga Information Group challenging the popular notion that traditional EDI transactions will be widely replaced by emerging Web alternatives.

"EDI is much more widely used than anybody thought," said Giga analyst Ken Vollmer. "And from the looks of things, [EDI usage] is not going to slow down anytime soon."

The report estimates that the value of EDI transactions in the United States was about $2.7 billion in 1997 and projects that figure will grow to $3.8 billion by 2002. Previous industry estimates, including federal government numbers, had put the U.S. EDI figure as low as $250 million.

Giga estimates take into account all computer-to-computer transactions, not just the business done over traditional value-added networks (VANs) such as those operated by GE Information Services or Sterling Commerce, Vollmer said.

"The VANs are handling less EDI traffic, because there are other methods to handle the traffic now," Vollmer said.

VANs carried about 95 percent of all EDI volume in 1997, but will carry less than 50 percent by 2002, Vollmer predicted. Technologies that let companies send purchase orders, invoices and other business documents over managed IP networks--or even secure Internet links--will supplant the VAN as the primary transport for EDI, he said.

"Managed IP network services will be a crucial part of this, because companies need some way to guarantee the delivery of EDI transactions, and you can't do that over the broad Internet," Vollmer said.

As Web technologies evolve for b-to-b transactions, companies will have to rethink EDI, Vollmer said. Traditional EDI transactions are made up of short transmissions of independent documents such as purchase orders, but the addition of business-process integration standards such as RosettaNet will allow companies to view order, shipping and payment information as a single transaction.

XML, which enables companies to build a wide variety of documents and processes that can be executed over the Web, will expand the ways that companies can use the Web to transact business, but it will not replace EDI standards such as ANSI X12 or EDIFACT in the near term, Vollmer said.

"There are a number of companies that would like [IT managers] to think that EDI is dead, so that they can sell [them] something completely new and different," Vollmer said. "Don't believe it."

One reason why companies are looking toward Internet EDI is the swift rise of small businesses in the supply chain, according to Vollmer.

"Larger companies are relying more heavily on small companies, but small businesses typically don't have the resources to deploy EDI software and VAN services," he said. "With the Web, small companies can do business electronically at a very low cost and without needing a lot of technical knowledge."

Large companies, on the other hand, will come to rely more heavily on XML for linking their applications to those of their suppliers. "If I were managing EDI at a large company right now, the first thing I would do is get plenty of XML experts on board," Vollmer said.