EDI Software: Finding the Best Fit
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. Secondly, you might see EDI as just another cost of doing business that should be minimised. 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., Sage or NetSuite), prints or exports a form that contains the data (e.g., a purchase order or invoice) and uses email, post 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.
EDI Software Implementation
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 customisations to your data mappings, upgrade your accounting or ERP software, etc.
EDI Software Cost
When considering EDI software costs, it is important to remember that not all EDI solutions and EDI providers are equal. There are low cost options in the market, but do they provide all the EDI components you need? If you are looking for a fully managed EDI service, be sure that this is what you will receive. It could be that you are simply signing up for an outsourced EDI solution and much of the work will still need to be managed internally.
Also what are your future EDI costs likely to be? Many providers charge an initial set-up fee followed by an annual fee, however it is important to understand what other costs there will be, if any. Are the costs fixed or are they variable according to the number of transactions you exchange?
