When people talk about electronic data interchange (EDI) software, what do they really mean? If you’re not familiar with EDI, you might have a couple of preconceptions.
First, you might think that EDI software means a single program, when it’s actually one component of an end-to-end EDI solution. Second, you might see EDI as just another cost of doing business that should be minimized. In fact, EDI is best viewed as a strategic investment that will help you grow your business and pay for itself quickly and many times over. As such, your choice of an EDI software provider should be based on criteria beyond upfront cost and a checklist of basic features.
What is EDI?
EDI is a set of standards that provide agreed-upon rules for sending and receiving business documents electronically. In other words, EDI is a “common language” that enables organizations with different businesses systems and processes to communicate with each other.
Without EDI, trading partners need to use manual-based systems that involve some exchange of information by email, fax or mail about transactions. In this scenario, a company enters data into a business or accounting application (e.g., QuickBooks or NetSuite), prints or exports a form that contains the data (e.g., a purchase order or invoice) and uses email, surface mail or fax to send the document to a trading partner. The trading partner, upon receiving the document, must then rekey the data into its accounting system.
This “old school” process is inefficient because of the time delays involved, as well as the time spent processing and verifying the data—plus the time and cost of dealing with the inevitable errors and resulting problems.
Key components of EDI
To successfully implement EDI, you need four key components, some of which are software modules:
- EDI translation software, which converts the raw EDI data into a human-readable document or other meaningful format.
- EDI mapping software, which enables you to properly format EDI transactions being sent to your trading partner(s), as well as seamlessly import and export data from EDI transactions to and from your accounting or ERP system.
- Secure connectivity with your trading partners to transmit and optionally encrypt EDI transactions, either via the Internet or over a proprietary data network or transaction gateway (called a Value Added Network or VAN). This network should support whatever connectivity protocols you need, such as AS2 software, HTTPS, FTP and/or VAN interconnects.
- Customer and technical support to keep your business-critical EDI platform running smoothly 24x7.
Users in your workplace will generally interact with the EDI translation software component. The EDI mapping software and VAN function are “behind the scenes.” Quick access to expert support becomes important when you need to add new trading partners, make customizations to your data mappings, upgrade your accounting or ERP software, etc.
EDI software comparison
What is the best EDI platform for your company? It’s important to look beyond initial cost and a checklist of basic features to really evaluate the integration with your business system, the TCO, the quality of the support, and the reputation of the vendor.
Does the vendor have a track record of successful integrations with your ERP? What is their long-term relationship with your ERP vendor? Will the solution scale up cost-effectively to handle the number of EDI orders and trading partners you might have in the future? Does it have the flexibility to handle an omni-channel supply chain with web storefronts, drop-shipping, tighter shipping timeframes, 3PL relationships and other possibilities?
In short, base your comparison on value and benefits. Be suspicious of highest- and lowest-cost options. Keep in mind, too, that you don’t have to go with whatever EDI software provider does the testing for a new trading partner—you have a choice.
Features to look for
To maximize the strategic value and ROI of your EDI software investment, you need a solution that maximizes automation, minimizes manual intervention and can smoothly and cost-effectively meet your changing business needs. That makes the following features paramount:
- Robust, proven integration with your business system. EDI is among the highest-value integrations in your accounting systems environment because this eliminates time-consuming, error-prone manual effort that would otherwise be necessary to get orders, invoices and other EDI data in and out of the accounting system. Integrating EDI with a business system streamlines your order processing workflow for improved productivity and responsiveness to customers, while saving time and money. The more trading partners you have, the more operational costs you’ll save through EDI and ERP integration. Conversely, an EDI system that does not integrate becomes a cost of doing business that offers little value-add.
- A simple, seamless user experience. Business users in departments like customer service and shipping need to process EDI transactions efficiently and accurately, without having to become EDI experts. You should be able to manage EDI “by exception” so that transactions are automated unless exceptions occur. You should also be able to automatically schedule everyday tasks like importing and exporting EDI documents to and from your accounting system. More automation means faster processing and less errors—which, for suppliers and distributors, means happier customers and fewer chargebacks.
- Scalability and configurability for your specific needs. Look for an EDI software provider that allows you to implement only the features you need now, with the option to add more capabilities (e.g., support for remote warehouse/3PL documents) on-demand in the future. Configurability to your specific accounting/ERP environment and business processes without customizations that could complicate your upgrades is also crucial. You want a proven, turnkey implementation and upgrade path that minimizes risk as your accounting and ERP environment changes.
- Lowest total cost of ownership. A low initial cost doesn’t mean that TCO will be low also. Monthly network charges can vary widely, for example. Likewise, many providers charge for updating trading partner mapping specifications, which change all the time. What about monthly maintenance fees? These costs can add up fast as a business grows. Are these included in the support contract or are they extra?
- Easy onboarding of new trading partners. Growing companies need to onboard new EDI trading partners quickly and smoothly. Make sure an EDI provider offers prebuilt templates and rules to make onboarding and compliance with major retailers and other partners quick and painless. Make sure also that it’s easy to create partner-specific business rules.
- Single-vendor product support
You want an EDI software solution that is developed, maintained and supported end-to-end by the same vendor. In particular, many EDI companies own only the EDI translator software and rely on systems integrators for their ERP integrations. A third party might also support the VAN you’re using. This can result in support problems and an increased risk of product obsolescence.
- Web-based and managed services options
EDI for small businesses, and even large companies, is more and more commonly web-based. Choosing EDI “in the cloud” compounds the advantages of a web-based accounting/ERP system, like faster time-to-value, reduced IT complexity, ubiquitous access to data and fewer firewall, security and connectivity worries.
TrueCommerce offers an EDI platform that is affordable, easy to set up and use, and scales seamlessly as your needs grow. TrueCommerce makes EDI painless by providing everything a business needs for EDI compliance under one roof; including unsurpassed customer support, free software updates and no annual maintenance fees.
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