This is the age of digital transformation. Organizations are investing in upgrading their systems and business environments to cope with the challenges of an explosion of data—coming from streaming devices, new application technology, and other means—by turning to next-generation innovative solutions around IoT, enterprise data catalog, artificial intelligence (AI), and more. But the form of communication for the supply-chain industry is still the good old electronic data interchange (EDI) standard, which has been with us since the ’70s and is tightly integrated into business processes. However, that doesn’t mean you should continue to handle data exchange through EDI in the traditional way.
Organizations should take an innovative approach, wrapping EDI in modern solutions that keep it agile and scalable so they can benefit from new technologies and address their growing and evolving business needs. In this post, we’ll explain how to take EDI into the digital age.
What Is Electronic Data Interchange (EDI)?
EDI is a set of electronic documents in a standard electronic format that provides a technical basis for automated commercial "conversations" between two trading partners. EDI trading partners to exchange in an electronic and automated way the information that was traditionally exchanged through human handling on paper through postal mail or by fax or e-mail.
In supply chain, EDI documents are used for the order-to-cash and procure-to-pay workflows (X12, EDIFACT, TRADACOMS). However, EDI is not confined to just business data related to trade; it covers additional verticals such as healthcare (HIPAA, HL7), transport (IATA Cargo-IMP), engineering, construction, and so on.
Moving from a paper-based, manual exchange to electronic interchange introduces major benefits to organizations—such as cost reduction, accuracy assurance, and speedier data processing—and through those benefits, can improve relationships with business partners.
What Is EDI Gateway Software?
EDI gateway software enables businesses to conduct the “conversation” with their trading partners in an electronic way, using the EDI standard. It provides the interface between internal systems and the EDI format sent/received.
EDI gateway software usually covers the following functions:
- Trading partner management
- Connectivity and communication with trading partners
- Data mapping and processing to/from your backend systems
- EDI message support (different standards, flavors, versions, etc.), including validation and parsing
- Audit, tracking, and monitoring of files exchanged with your trading partners and SLA tracking
The more innovative gateways will add automation and self-service practices to simplify and expedite the handling of complex EDI messages.
The History of EDI
The evolution of EDI goes hand-in-hand with the evolution of communication protocols for file transfer and the evolution of EDI software.
The Evolution of EDI
From its start as a complex standard used in military logistics, traditional EDI has evolved and improved significantly over the years (mainly via the X12 formatting). It has come a long way, transforming into a common standard for B2B data transmission for large organizations, as well as small-to-medium-size businesses.
EDI software solutions introduced technology innovation to the EDI world and addressed aspects such as security, scalability, automation, and validations, leveraging new file transfer technologies such as secure internet connections via AS2 or SFPT.
Traditionally, the B2B market kept EDI on-premises inside the firewall, using some homegrown, legacy applications for EDI handling.
With the growth of data volumes and the greater understanding of the importance of data came the need for improved data scalability, flexibility, accuracy, and availability. EDI software became mission-critical to businesses, handling the entire B2B transmission and forming an integral part of an organization’s integration platform.
Digital transformation calls for modernization. As organizations move their integration backbone to web-based and cloud-base solutions, they look for EDI solutions that can grow and evolve with the organization and can capitalize on the use of disruptive technologies.
The globalization of trade introduced the need for flexible EDI software and EDI gateways that support multiple EDI formats and versions. X12 is mainly used in North America, while EDIFACT is commonly used in EMEA and other regions.
The Future of EDI Software
It’s safe to say that EDI is here to stay. Modern EDI software wraps the traditional, legacy EDI standard with advanced communication protocols and innovative technologies to ensure EDI can make the journey to modernization with the business.
Modern EDI gateways make it simpler and more cost-effective to implement EDI, which continues to be the standard in B2B transmission. Disruptive technologies such as AI are now being brought into the EDI world, helping to automate EDI validations, parsing, and mapping and taking EDI to the next level.
Modernize EDI Handling
In this era of digital transformation, managing your supply chain partners and EDI exchange “the old way”—using value-added networks (VANs), a hosted solution where you have limited control over partner on-boarding and management, or on-premises, outdated 15-year old technology—is no longer an option. Modernizing your B2B integration and changing the way you interact with your partner community are necessary to stay relevant in today’s market.
EDI gateways control the entire data exchange with your trading partners and, as such, they are a mission-critical component for your business. Replacing and upgrading an EDI gateway requires a significant effort and investment. Therefore, when looking for a next-generation solution, one should look for a “future proof” solution that will grow and evolve as the EDI standard, technology, and business requirements evolve.
What To Look for in a Modern EDI Solution
A leading EDI solution will include a large list of features. However, there are some areas that can significantly impact your B2B business:
- Embrace Cloud for B2B
In addition to the traditional benefits of cloud (lower cost of ownership, recurring automated upgrades, flexibility, elasticity, and more), embracing the cloud will make it possible for you to capitalize on the use of disruptive technologies that will take your B2B solution to the next level.
- Connectivity and Protocols
Are you still using an expensive VAN to ensure secure file transfer? A leading EDI solution will include an integrated, secure file transfer mechanism that supports the commonly used communication protocols to securely exchange files with your partners (e.g., AS2, SFTP, FTPS. HTTPS) and allow you to move away from VANs.
Are you exchanging X12 messages with your business partners? EDIFACT messages? Excel files? CSV files? A modern EDI gateway solution will support the exchange of any file type with your partners and will provide the tools to simplify and automate the process. It will enable integration into your organization’s applications by providing connectors and adaptors to the commonly used enterprise applications on-premises and across multi-cloud environments.
Open your gateway to your partners. Collaborate with your partners through a portal, where they can track and monitor the status of file exchanges, as well as send and receive files.
A leading EDI solution should demonstrate innovation and disruptive technologies. Incorporating and leveraging AI in the B2B processes will drive automation and simplification and will expedite the on-boarding of new partners and reduce maintenance overhead.
Informatica Can Simplify the Journey Toward a Next-Generation EDI Gateway
With more than 20 years’ experience in data integration, B2B, and EDI technology, Informatica offers cutting-edge solutions for you to modernize your EDI software. Our solutions provide:
- Flexible deployment options—cloud, on-premises web-based, and hybrid
- Support for multiple EDI types
- Connectivity to a wide list of sources and targets
- Embedded file transfer with advanced protocols (AS2, SFTP, HTTPS, etc.)
- Out-of-the-box EDI mapping
- Embedded AI to simplify and expedite the handling of EDI and custom, non-EDI files
- Simplified and expedited partner onboarding and management
- Comprehensive tracking and monitoring
- A B2B Partners Portal, enabling you to collaborate with and empower your trading partners
Customer Success Stories
Here are just a few ways that Informatica is helping businesses modernize data integration, supply chain, and EDI handling. Data-protection company Carbonite uses Informatica Cloud B2B Gateway to onboard business partners quickly and effectively. Interfor, a British Columbia-based timber-products organization, was able to reduce the time it takes to set up a new connection with a customer to three weeks using Cloud B2B Gateway.
And National Instruments is using Informatica technology to make it easier for customers and suppliers to do business. “The improved service experience helps us increase satisfaction and loyalty, and is paving the way for deeper, more strategic relationships,” says James Humphrey, Principal Software Architect for the maker of automated test and automated measurement systems.