What Is EDI Integration?
Electronic data interchange (EDI) is a computer-based communications technology that allows companies to exchange business documents. EDI systems convert business records from one organization to universal standards, send them to other partners, and map them into useful business documents in their technological systems and tools.
EDI is a critical business-to-business (B2B) communications solution that handles everything from automated purchase orders and invoicing to health insurance codes and shipments.
What Is EDI Integration, Exactly?
The process of establishing a comprehensive EDI workflow between trade partners is known as EDI integration. It covers a number of important topics, including:
- Trading partners - this may seem obvious, but it's crucial: with whom are you exchanging business papers via EDI?
- Endpoints - which IT systems, such as your ERP, sales system, logistics system, and so on, are required to send, receive, and process EDI data.
- Which communications, or documents, do you need to exchange with your business partners using EDI documents and transactions?
- Which EDI formats do your communications need to follow in terms of EDI standards?
- Which technology will you employ to send your messages using EDI protocols?
To build up an EDI process, first specify all of these parts, then set up a system utilizing the appropriate EDI software or technology for your workflow. This set-up can take a variety of forms.
- EDI software converts, transmits, and maps EDI data to and from your and your partners' IT systems.
- You employ an EDI intermediate provider to handle the actual transactions.
You have two options for tackling this project:
- With an EDI team on staff
- With the help of a systems integration partner that is knowledgeable in EDI software and integration
And, based on the circumstances of each trade partnership, you may mix and match the various approaches. We debunk the EDI integration process and break down these important phases in this guide to help you get started and make educated decisions.
Set EDI Goals With Your Business Partner
The goal of EDI is to communicate with your trading partners in a sensible, systematic manner. The first step is to speak with your partners and properly identify the important features of your EDI interactions, which should include:
- EDI Requirements
- Documents and Transactions in EDI
- Protocols for EDI
Let's take a look at each of these components individually.
It's critical to know at least the endpoints you'll be employing with EDI data when it comes to your technological configuration. If you use EDI to exchange buy orders and invoices with your trade partners, for example, you'll need to either send products to fulfill an order or execute a financial transaction to pay an invoice. This entails integrating EDI with a logistics system, accounting software, a project management tool, or an ERP system.
You'll need to lay out the transactions and procedures surrounding EDI for successful EDI integration. Furthermore, greater data integration across your enterprises is a logical extension of EDI integration, ensuring that all of your data is in sync.
You'll employ one or more EDI standards to communicate with your trade partners, which provide a set of specified EDI transactions in a standard format. Various sectors utilize their own standards, ranging from healthcare and pharmaceuticals to manufacturing, retail, aviation, and automotive. You may need to set up an EDI system that complies with many EDI standards depending on your sector, the transactions you need, and your partners. The following are a few of the most common:
- EANCOM (European Association of National Commerce) - retail
- EDIFACT - EDIFACT - EDIFACT - EDIFACT
- HIPAA - Health Insurance Portability and Accountability Act of 1996
- HL7 is a worldwide healthcare organization.
- Aviation IATA-CARGO XML
- ROSETTANET is a network of high-tech enterprises.
- Global commerce, banking, automobiles, and more are all covered by X12
Documents & Transactions In EDI
This goes to the heart of what you're trying to do using EDI. There are hundreds of distinct transactions, each of which is designed to deliver certain sorts of data in an organized manner. Begin by determining which types of documents or transactions you'll send, receive, validate, and automate using EDI. You may just obtain a list of needed EDI transactions if you're a vendor to a large organization (or multiple large companies); start with that list.
Here are a few examples of EDI documents and transactions:
- Orders for goods
- Notifications of shipment
- Information about the patient
- Pricing and Product Information
- Adjustments to the stock
- Itineraries for Waybills flights
And there are tens of thousands of EDI transactions to choose from. To see a detailed analysis of each EDI transaction, go to:
Protocols For EDI
You may drive, take the train, ride the bus, cycle, or even fly if you're on a business trip, to get from home to work. The same is true when EDI data is sent from one location to another.
The forms of technologies needed to physically *transmit *messages from trade partners are known as EDI protocols. EDI is a heritage and current technology that dates back to the 1960s. EDI began with the file transfer protocol (FTP), but as the technology has progressed, other ways of delivering data have arisen.
There are now over a dozen various methods for sending and receiving EDI messages, including EDI-specific technologies like AS2, online EDI technologies (HTTPS and web forms), and EDI application programming interfaces (APIs) like AS4.
To successfully integrate EDI, make sure your program and your partner's software can both use the same mode of transmission.
VANs vs. Direct EDI
When building any EDI configuration with any protocol, you must decide whether to use direct EDI with each trade partner or to use a Value Added Network, or VAN.
EDI (Electronic Data Interchange)
You create a particular connection with each business partner using an agreed-upon protocol, such as AS2, in direct EDI, also known as point-to-point EDI.
Networks With An Added Value (VANs)
VANs serve as intermediaries, translating EDI messages between protocols and partners while allowing you to use a single protocol regardless of your partners' protocols.
VANs were formerly the only way to send EDI messages securely, but as online EDI technology advanced and EDI software became more widely available, more companies began to use direct EDI. Why? The most important factor is financial.
VANs often save money on initial setup, but they charge a fee for each document, or even line item*, that they process. Direct EDI can save you money over time depending on how frequently you trade with a certain partner or utilize a specific protocol.
However, after the initial setup of an EDI business, continual administration and maintenance are required. This maintenance may be costly for certain firms, and it necessitates a certain amount of EDI experience, either in-house or through a partner. Control over your setup, needs from your individual EDI partners, adjustments you may need for greater connectivity with your IT solutions, and more are all factors to consider.
Transferring Files In Control (MFT)
B2B managed file transfer (MFT) software assists businesses in setting up, using, maintaining, and processing continuous EDI transactions. MFT software can be powerful enough to handle numerous protocols and translation. We have MFT capabilities at ArcESB that can aid with this problem.
In-House vs. Outsourced EDI Integration With Systems Integrators & Managed Services
EDI outsourcing (also known as B2B managed services or B2B outsourcing) is a rapidly expanding alternative in which you hire outside experts to manage your EDI environment on a daily basis.
It makes sense, in particular, for businesses that:
- If you don't have an in-house EDI specialist, or if you have, but they're overworked,
- You don't want to deal with software management and maintenance on your own.
- Require specialized integrations that necessitate a level of EDI expertise that is above and beyond the ordinary.
- Need to integrate their other back-office systems, like as ERPs, sales tools, logistics systems, and more.
Any firm faces challenges when it comes to implementing and operating an EDI platform. It necessitates the acquisition of a diverse set of skills as well as capital expenditures in hardware and software. Many businesses either don't have or don't want to devote internal resources to EDI integration and upkeep.
Outsourcing an EDI program to a third-party supplier is managed services, which is supplied by a B2B systems integrator. Outsourcing is most commonly done to save money on EDI infrastructure and to gain access to the relevant, specialized talents. However, there are additional advantages:
Businesses that provide managed services must have constant access to the newest technologies.
The supplier can assist you in connecting with other systems in an effective manner, making it easy to add new partners around the world.
Improved business agility by allowing you to enter new markets and territory more rapidly.
Increased productivity by providing new levels of data on the operation of your systems, supply chain, and business partners.
Managed services host, run, and administer EDI software in their own data centers, allowing you to get the most out of EDI without having to spend time setting it up and maintaining it.
Onboard new business partners, such as customers, suppliers, banks, logistics firms, insurers, and others, by mapping data from native enterprise application formats, such as SAP and Oracle, to EDI and XML. They keep track of transactions between business partners in order to spot anomalies and give technical assistance. They also keep up with the latest versions of AS2, FTP, EDI, and XML in order to keep you up to date.
Many of the world's largest corporations now adopt a managed services model, delegating integration initiatives to outsourced B2B integration specialists.