Enterprises are always looking – or being pushed – to be more efficient. They want to streamline their trading information processes and flows within their organizations and with other businesses. Paper-based exchanges are too slow and wasteful. Electronic data interchange or EDI can be a great way forward if you pick the right software solution. Selecting the best EDI software provider for your situation is a critical, sometimes confusing process. This article will help you find the right EDI solution for your needs.
EDI and the software that drives it are more than just bits and bytes. Any product selection must start with the needs of the business. EDI can help improve order processing, supplier deliveries, customer shipping, and other supply chain activities, through:
- Faster, more efficient information communication and processing
- Higher quality and reduced costs, thanks to fewer errors
- Increased profitability through better inventory and business visibility
- Access to new business with other companies already using EDI.
It is important to know which of these benefits (perhaps all of them) are expected by your enterprise and to keep them in mind as you go through the rest of the selection criteria below. If your enterprise is moving to EDI at the insistence of your suppliers or customers, use the list above to turn an operational obligation into a business advantage!
Bear in mind that EDI can boost the performance of many business processes. This in turn means interfacing with numerous applications and growing numbers of suppliers, partners, and customers. Efficient integration with other software and facilities for rapid on-boarding of other entities are therefore also priorities.
Trading Partners Should Use the Same Standards and Protocols for B2B Communication
EDI is all about standardization of formats and communications. EDI standards may be widely used such as ANSI X.12 in the US, or apply to narrower sectors, such as VDA for the European automotive industry. IT systems using the same standard can then automatically pick out and use the information in a meaningful way. EDI protocols like AS2 and HTTP must also be agreed on by both parties in any EDI transaction to successfully exchange EDI documents.
You will therefore need to know which EDI standards and protocols apply for your enterprise. As EDI has been around for some time and many enterprises already use it, you are unlikely to be in a greenfield situation. Instead, the best EDI software will probably need to be compatible with EDI choices already made by your business partners at a minimum.
For the more generally used EDI standards, this may not be an issue. Many EDI software solutions build in support for them. On the other hand, business partners in your industry may be specializing their use of EDI. For example, if you supply to four automotive companies Ford, GM, VW, and Toyota, you can expect to use four different flavors of the automotive EDI standards and you’ll need software that is flexible enough to accommodate them all. A solid Trading Partner Management solution is the key to managing the variability across trading partners.
Two Types of EDI Software
Basically, there are two types of EDI software solutions:
- The first type runs on an IT system that you own, usually on your premises (on-premise EDI software). You typically buy a license for this kind of EDI software. EDI documents can then be exchanged directly (‘point to point’) with the EDI system of your business partner. US retailer Walmart, for instance, favors this configuration.
- The second type is hosted by a third-party provider, often as a multitenant (serves several separate customers) cloud solution that you access over the internet by paying a subscription. A cloud EDI solution from an independent provider may suit smaller businesses or a group of enterprises looking for a ‘politically neutral’ solution.
A third solution is to outsource EDI activities to a service bureau. In this case however, any EDI software being used is invisible to users of the service, so we only mention it for completeness. Another variation involves the management tools hosted in the cloud and the ESB run on premise.
On-Premise EDI Software
This EDI solution makes control a priority. It lets you apply your corporate IT security policies, for example by restricting access and privileges to those who need it to do their job and keeping the system running the EDI software behind your enterprise firewall. Opportunities for integration with your other enterprise systems (ERP, materials management, accounting, for example) may be greater here. Consequently, it also requires more technical knowledge to deploy and effort to maintain.
Cloud EDI Software
This solution is easier to use. The EDI cloud computing provider looks after the software installation, maintenance, and upgrades. Initial investment may be small and running costs charged on a pay-per usage basis, following the standard cloud computing model. Your EDI data security is limited to the level offered by the provider. Other levels of control and possibilities of integrating with other systems on your premises will also depend on the cloud solution concerned.
EDI Software Integration and Functionality
Besides support for different EDI standards and protocols, the best EDI software must support the actionable EDI documents that your enterprise wants to use. Orders, invoices, shipping instructions, and acknowledgements are basic examples. Others include requests for quotation, remittance notification, and financial statements, and there may be hundreds more.
The software must also enable translation and mapping of EDI documents and data to extend the flow of an EDI transaction into your back-end systems. If you have an ERP system for example, it may not use the same formats or information structure as ANSI X.12 or EDIFACT. Your EDI software should map specific data fields from EDI to your internal format, and vice versa. It should also translate the EDI data into information that your systems can understand (and vice versa).
While most EDI software for handling trading and supply chain data will offer these capabilities out of the box, there is another class of ‘EDI’ software that is more designed to be a base for mapping any kind of form or exchanging any kind of file. Using these solutions in the specific context of trading and supply chain data may mean extra work in defining the specific formats that you need. Therefore, always check that any EDI label on a product refers to the kind of EDI (for example, specifically for trading, supply chain) that you want.
EDI Hybrid Cloud Solutions
Cloud-based EDI software may pose additional problems if you want to use it with on-premises supply chain systems. In this ‘hybrid cloud’ configuration, communication delays or latency may mean that local and remote systems do not work together properly. Sometimes, only a trial or pilot project will show whether such a mixed configuration is workable.
By comparison, ‘born digital’ enterprises such as online retailers may already be using the cloud for their other IT requirements such as inventory and shipping management. More advanced cloud EDI platforms can also facilitate integration. Application programming interfaces (APIs) can make it easy for the other cloud systems to access EDI communications automatically and as necessary to accomplish their supply chain tasks.
EDI Software Performance and Scalability
EDI transaction volumes can vary greatly between enterprises, from a few per week for small businesses to millions daily for larger organizations. Whereas PC-based or browser-based EDI software maybe enough for the former, the latter may require increasingly powerful IT servers to keep up with the intense activity.
EDI Cloud solutions typically have an advantage in terms of scalability. With a cloud architecture designed to support many different organizations, they can increase or decrease the resources for a given customer, on demand. In practical terms, you will never reach a limit in terms of the power available. You just increase your subscription to access additional resources.
The Best EDI Software Includes Extra Functionality
While you need to be wary of trying to find a problem to fit a solution, different EDI software products can offer functionality beyond the basic mapping, translating, and communication functionality described above. Examples include
- Secure archiving and time-stamping of EDI messages for audits and resolution of litigation.
- Direct integration with popular ERP, accounting or other business software such Microsoft Dynamics, QuickBooks, and Salesforce.
- Analytics to see trends in margins, rates of sales, and inventory levels. EDI is digital and that facilitates slicing and dicing EDI event information and logs many ways for business insights.
- Business logic for EDI to not only comply with standards, but also act in accordance with logistics and operational rules to manage transactions at a more strategic as well as a transactional level.
- Flexibility to create integrations to existing systems.
EDI Software Vendors
There are many EDI software products and services available. The following are simply examples organized (approximately) by increasing enterprise size/levels of EDI activity:
- PortX. Cloud-native B2B automation platform enabling rapid, efficient, cost-effective EDI, B2B, and partner automation for both large and small customers.
- Everyday EDI. Web-based solution built for small and mid-sized businesses, automatically fills in EDI documents from purchase orders.
- Liaison Alloy Platform. Cloud solution, range of EDI standards supported, library of active trading partners to facilitate EDI onboarding.
- DiWeb. Hosted solution with web browser access, no upfront investment, email notification of orders, direct shipping label printing.
- Babelway. Cloud solution for EDI operations, integrates other trading partner data sources and applications, secure EDI archiving.
- Amosoft EDI Services. Integration with any ERP system, validation of EDI documents, assistance with translation/maps for new EDI partners.
- EDI/HQ. Integration with most back-end systems, dashboards for EDI transaction management, designed to be intuitive and customizable.
- EDI Engine. Works in standalone and integrated modes, leverages existing documents to make new ones, has business logic for enhanced EDI.
- GenTran. EDI software with secure file transfer between trading partners, also runs on IBM mainframes with z/OS.
Next Step in Finding the Best EDI Software
Remember to first set down clearly what your enterprise needs before diving into the product or service datasheets. Once you have made a short list of solutions that might suit your enterprise and its needs, consider a trial project. For cloud providers, this should be relatively simple. EDI software providers often make their products available on a free limited trial basis. Define your trial project to have a clearly defined goal or definition of success, preferably a result that will be useful to your enterprise in any case. Then start your trials, award points according to individual solution merit, make a final choice, and get ready to become part of the EDI world!