What is EDI integration & how to make it work for you?
You may already be using EDI as a way of speeding up your business communication and automating your key processes, but did you know that by integrating your EDI solution, you can bring even more benefits to your company? Want to know how? Read on...
The age of time-consuming paperwork and manually retyping information is long gone. Digitalization is here to help us speed up the delivery of information, streamline business operations and reduce the risk of human error. Modern businesses now communicate directly via specialized systems called EDI (Electronic Data Interchange) and big companies expect smaller companies to adapt and adopt. Whether you are a seasoned EDI user or you have no idea what EDI really means, you can reap the benefits of digitalization.
In this blog, we are going to explain how EDI integration works in practice, based on our own experience with businesses from various industries. We will also provide answers to some of the common questions that people usually ask when it comes to EDI integration, such as: Do I have to convert all my docs to the same format, something like EDIFACT? What if my partner is using a completely different system? How am I going to make the transition? Is this going to cost a fortune?
Electronic Data Interchange is a way of exchanging business documents – such as orders, shipments and invoices – as electronic or digital documents instead of physical, paper documents between two business partners. These partners can be your suppliers, customers, government or financial institutions – really anybody you connect with. It is essentially a way of automating key business processes so you no longer need to enter data manually and you can then use that extra time to focus on other, more important things.
The technology itself is not new in concept, as it has been around for over 50 years. However, how this technology is applied today has evolved significantly. In the past, all EDI systems used to be in-house, on-premise, which meant they were pretty costly and you needed to have a specialized IT department to maintain and run the system. We will explain this in more detail in the section Types of EDI integration, below.
Fortunately, modern technology has since enabled us to move the whole process to the cloud, which means your EDI solution can be incredibly flexible, adaptable to your changing business needs, and much easier and more cost-effective to use than in the past.
EDI is no longer just for big companies who move large amounts of data daily – small and medium-sized businesses (SMBs) can experience tremendous benefits from a smart EDI integration, and with all the time and money your business will save after implementing EDI, you may end up joining the big guys. A great starting point on B2B integration and how it can help your business is our blog post which explains this topic in detail.
What is EDI integration?
So, what happens when you integrate your EDI, as opposed to remaining with a non-integrated EDI system?
The traditional approach to EDI would be to have separate point-to-point connections with different partners and for different needs. You would need to have separate applications, and this would predictably result in a lot of complexity over time as the number of connections grew ever larger. All of these would have to be managed by your IT team (who could, instead, be spending their time doing other useful things.)
An EDI integration, on the other hand, is a much better solution than stand-alone EDI, as it consolidates all these individual processes into one place. With an integrated EDI, you can truly streamline your business operations, quickly and easily exchanging all your important documents with various partners. And the best part is – you and your partners don’t need to use the same systems and document formats. You can keep using the ones you have or prefer, and your EDI integration software will convert and translate them so both sides can use them easily. EDI integration is suitable for many different industries, such as manufacturing, wholesale and distribution, food and beverage, transportation and logistics, to name just a few.
Types of EDI integration
Here we are going to identify the three types of EDI integration so you know which one to choose when you decide to implement EDI in your business.
Direct Traditional EDI integration
Direct integration is the point-to-point connection we already mentioned. It is an in-house, on-premise solution that connects your ERP (Enterprise Resource Planning) software and your business partners using a specific protocol.
It is a legacy of large corporations with thousands of transactions daily and with enough resources to cover the cost of system maintenance.
Indirect EDI integration
In indirect integration, the information exchange happens using a “middle man”, which can be a special kind of protected network called a VAN (value-added network) or it can be a platform, like we offer here at Omnizon. In this instance, you and your partners simply send your documents, the “middle-man” does the hard work of translating and converting the document and then exports it in the format you want and have defined.
Indirect EDI integration is best suited for small and medium-sized businesses who are looking for simplicity and hassle-free solutions.
Hybrid EDI integration
As the name says, this is a kind of integration that combines direct and indirect integration. You can keep some of your direct connections with certain clients – for example if you already have a direct EDI connection with a big client and you have established a standardized protocol that you don’t want to change – and move all other communications to the indirect solution which is more flexible.
This is best suited for businesses who want to keep some processes under their own direct control, but it also means you need to invest more time and money into your EDI solution.
EDI iPaaS vs EDI managed services
You may be one of the many businesses that prefer to manage your own IT operations. This is where EDI Integration Platform as a Service (iPaas) comes into play. Its main advantage is that it offers virtually endless possibilities for independent in-house development. This is a hybrid solution which is, from our experience, usually best suited for companies with a dedicated IT team. At Omnizon we have worked closely with many in-house teams and collected their most commonly recurring ‘wants and wishes’ and have included many of these in our own version of iPaaS, Extended EDI iPaaS, something that gives users a head start and which sets us apart from standard iPaaS providers.
EDI managed services is a fully managed integration, which would make it an indirect type of connection and your operations are managed by an experienced service provider.
If you are a business that exchanges documents with business partners, you can benefit from EDI integration. Any business can enjoy the universal advantages of EDI integration, such as:
reduced need for manual data entry
low chance of error (no accidentally added zeroes or missed dates)
real-time visibility into business processes
enhanced collaboration with partners
long-term time and money savings
enhanced business efficiency.
Now, let us look at some specific advantages for our clients who use Omnizon services, depending on the size of their company and the level of digitalization with their partners.
ERP users vs Non-ERP users
Many companies use an Enterprise Resource Planning (ERP) system to send documents like purchase orders, invoices and shipment confirmations to their partners. An integrated EDI solution will make your ERP system even more effective, provide additional benefits, and the good news is there is no direct customization needed to your existing ERP system. You do not need to change anything in your system because our solution adapts to you.
At Omnizon we offer Enterprise EDI as a base foundation, but on top of that we can provide access to an intuitive Web EDI Supplier Portal. This means that even if your partners don’t have an ERP system or it cannot be customized, they can still send you documents and piggyback on your EDI integration. They just need to go to the supplier portal, open the document in any browser and create any necessary documents to send back to you.
Some partners may express initial concerns when changing to a new way of doing business, but in practice, we witness that they quickly realize how much better and simpler it is to work with a reliable EDI integration system.
Enterprise vs SMB
As we have already mentioned, both big and small businesses can benefit from EDI integration. In the case of big companies, EDI integration enables much simpler communication with fewer direct connections, an organized and centralized location for better visibility of business processes, easier adaptation and higher flexibility, and less maintenance of existing EDI systems.
Small and medium-sized businesses with no prior EDI solution can significantly speed up everything from finding the best and most affordable supplier to receiving payments faster due to more rapid processing of invoices, which is, in itself, an immediate benefit. Less time wasted = more money earned. Also, it is very easy to include your partners in this process as it is completely free for them to do so using our Supplier portal. And no previous knowledge is needed – everything is completely intuitive and you can always reach out to us for help and guidance.
How EDI integration works?
In order to implement a successful integration, the first step is to organize your business processes, because you cannot automate something without defining these processes in detail. You should then communicate with your partners and explain the benefits for both sides. With your partners, you define the protocol and document format for import and export, and the platform makes the necessary adjustments.
EDI integration use case – easy partner onboarding
Let’s take a look at an example of a client who was already using EDI, but had difficulties onboarding new partners.
This client was using a legacy EDI system which was maintained and engineered by a professional IT team. This meant that whenever they wanted to connect with a new partner, they would need to have an IT professional create and add a new point-to-point connection to their existing local EDI system. This was a complicated process that cost money, required time to be implemented and was not especially user-friendly.
The client decided to migrate their EDI to the cloud to get greater scalability and reduce investment in IT infrastructure. Following EDI integration, they can now add new partners at no cost, compared to the previous scenario which required investment every time. Besides that, businesses like to cooperate with businesses who offer simple solutions, so EDI integration has also made this client more competitive and attractive.
Modern EDI integration is designed to evolve with you and adapt to your needs. It is undertaken with future developments in mind and it will not stop providing support when the system gets old or faulty, as is the case with an increasing number of legacy systems vendors. With EDI integration, you are future-proofed and you are able to be the reliable partner your partners need.
Help us to help you grow your business and position yourselves at the head of the pack. We are here to answer all your questions and concerns, to support you in your transition and to help you get the most out of your EDI integration.
Let’s work together
Together we’ll figure out which services can best boost your business.Indirect EDI integration is best suited for small and medium-sized businesses who are looking for simplicity and hassle-free solutions.
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