Value Added Network (VAN)

A value-added network is a private network provider (sometimes called a turnkey communications line) that is hired by a company to facilitate electronic data interchange (EDI) or provide other network services. Before the World Wide Web, some companies hired VANs to move data to other companies. With the arrival of the World Wide Web, many companies found it less expensive to move their data over the Internet instead of paying the monthly fees and per-transaction charges found in typical VAN contracts. In response, contemporary value-added network providers now focus on added services, such as EDI translation, encryption, secure e-mail, and management reporting. The primary benefits of a VAN include a secure, reliable, and traceable means to exchange data between partners.

However, VANs are expensive to set up and use. The high cost may be an obstacle to a business trying to maintain competitiveness by lowering operating expenses. And the high cost may make it impractical or impossible for smaller partners to participate. Finally, VANs exist outside the enterprise, making businesses rely on a third party for the management and transmission of mission critical data.

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