Electronic data interchange can make your business more efficient, save you money and free up your employees' hours and effort -- but the varying features among the many choices available mean that not all platforms are the right fit for all users. In the sections below, we outline how to pick out the best EDI features to suit your business needs.
There are a few top EDI software features to seek out. The best EDI software will be highly secure, allow you to quickly and seamlessly exchange documentation with trading partners, help organize your business data and automate key project-management processes. Let's examine some of the other must-have EDI software features.
Compatible With EDI Standards
EDI uses several standardized formats to let business partners transmit data to each other accurately and in real time. Like a language between computers, EDI allows computer systems to comprehend one another and the data in each line of a sent or received document. Without this common means of communication, each business might use its own document style, causing confusion, errors and delays along the value chain.
In order to do business with partners, you'll need to ensure that your EDI solution is compatible with all the standards -- and their variations -- those partners use. Some of the most common EDI standards utilized today are ASC X12, UN/EDIFACT, ODETTE and TRADACOMS
The main standard used in North America is ASC X12. It was developed by the American National Standards Institute in the late 1970s with the aim of developing a universal format for EDI that would ease trading between partners. The ANSI revises X12 every three to five years and gives the latest version an updated name that includes the new version and release numbers.
HIPAA
HIPAA is the Health Insurance Portability and Accountability Act EDI document standard. A U.S.-based standard, it was created in 1996 after the passage of HIPAA legislation to smooth and speed health-care-related EDI transactions.
UN/EDIFACT
Several years after the ANSI introduced X12, the United Nations created a European standard for EDI transactions: the UN/EDIFACT. Used primarily by countries in Europe, American companies with international business partners generally support UN/EDIFACT standards as well.
EANCOM
EANCOM, Electronic Data Interchange For Administration, Commerce and Transport, is a subgroup of UN/EDIFACT. Though it was originally developed for the European retail industry, it has since been embraced by the health-care and construction sectors, too.
ODETTE
Another European standard, the Organization for Data Exchange by Tele Transmission in Europe (ODETTE) was made for the European auto industry. ODETTE formats include OFTP and OFTP2.
TRADACOMS
TRAding DAA COMmunicationS, generally referred to as the shortened TRADACOMS, is the main EDI standard for U.K. logistics transactions. First developed in the 1980s, it was a forerunner to UN/EDIFACT that was maintained by what is now known as GS1 UK (then the UK Article Numbering Association) following the release of UN/EDIFACT.
Support For Different EDI Documents
Though EDI was originally made to help with invoicing and payments, its use has grown over the years. Now EDI document formats (or "transactions") have expanded to include transactions used by multiple sectors.
Support all EDI Protocols
EDI protocols are the software that enables communication between computers. For two or more computer systems to exchange information, all involved must use the same protocol. That's why when choosing an EDI platform, it is critical to find one compatible with any protocol. The most common EDI protocols are as follows:
HTTP
First released more than three decades ago, hypertext transfer protocol, or HTTP, is among best-known file transfer protocols. HTTP, which has been updated multiple times since its introduction, requires only an internet browser to use -- so it is unmatched in ease of use among EDI protocols. That simplicity is a double-edged sword, though, as it also means HTTP lacks the security of other protocols and fails to meet various regulatory standards. Companies that use it are urged to do so in combination with transport layer security, or TLS.
FTP and FTP WITH VPN
File Transfer Protocol, or FTP, works by means of a client/server system. This means that in each transaction between trading partners, one acts as the FTP client and the other acts as an FTP server. The former connects to the latter with a username and password.
FTP on its own is no longer considered secure enough for business-to-business exchanges, so many firms now pair it with virtual private networks, or VPNs. A VPN lets a server verify the source of transmissions so it knows whether they can be trusted.
SFTP AND FTPS
Secure file transfer protocol (SFTP) and file transfer protocol secure (FTPS) work in ways similar to FTP. The main difference is that both SFTP and FTPS have added security to encrypt EDI data when documents are being sent and decrypt it when documents are being received. Encryption type is where SFTP and FTPS differ. FTP is often used with a value-added network, or VAN, to help validate authenticity.
AS2
Created in the early 2000s as a solution to some of the limitations of FTP, Applicability Standard 2 (AS2) uses encryption keys to verify the senders of EDI transmissions, giving EDI transactions an added layer of security. AS2 also utilizes message disposition notification so that both senders and recipients are informed of successful transmissions. AS2 requires all trading partners to be online at all times, to both send and receive documents.
Its high level of security and constant availability has led to AS2's exclusive use by many major corporations, including Target and Walmart.
APIs
Application Programme Interfaces, or APIs, are a mix of rules and features that determine how two endpoints in a system can share information. APIs allow for one partner to gain access to critical data without the need for the other partner to be present or interactive in any way. Once set up, APIs can be accessed anytime. For security purposes, however, users are able to restrict access.
There is very little standardization of API creation or use, so utilizing the protocol for numerous trading partners requires significant work. Other, traditional EDI protocols, such as X12 and EDIFACT, use well-known and accepted document standards, but APIs do not.
EDI Translation and Mapping
A top-of-the-line EDI platform can translate data to and from various formats, helping create automated data flows between businesses. EDI mapping is a type of conversion in which EDI gets translated into a different format, such as an enterprise resource planning (ERP) system. ERP is a type of software companies use to manage everyday business functions, such as accounting and procurement processes.
In typical EDI-to-ERP mapping, data structures are translated from standard EDI formats (ANSI X12, for example) to a file that integrates easily into a recipient's back-end system. The software lets EDI platforms create bidirectional maps, meaning that the mapping can originate from either an ERP or a trading partner's system.
Why map?
There are three major benefits to EDI mapping. These are:
- Accuracy: EDI mapping means there is no need for human intervention, which greatly reduces the risk of errors. It also means only correct EDI data gets imported into the back ends of company systems.
- Automation: By automatically sending external data to critical in-house systems, EDI mapping makes an easily repeatable process.
- Connection: EDI mapping lets users create various formats that can be quickly and easily used to convey EDI data to trading partners.
Easy Onboarding Process
The smaller your business, the sooner you will want to onboard trading partners so that you can grow. If your EDI is clunky and onerous, it will only slow your expansion. Ideally, EDI onboarding of a new partner proceeds as follows:
- Contract award: Once a new partner is approved, they receive their contract.
- Kickoff meeting: Next, a kickoff meeting is held so the parties can exchange information and review EDI requirements. The new partner provides a test catalog used to generate test transactions.
- Testing: Test transactions must be successfully sent, received, acknowledged and processed, confirming that the two new partners can communicate with each other in universally recognized, mandated transaction formats.
- Validation: The test transactions must be validated and approved.
- Deployment: The last step of the onboarding process is deployment, in which the parties move from the testing environment to production. At this stage reporting, monitoring, and analysis should all be functioning correctly and there should be full visibility into every transaction. Following this step, onboarding is complete.
The majority of IT decision-makers say EDI onboarding of new partners takes too long, according to a recent survey -- so improving on this process will greatly improve a business' standing among both partners and prospective partners. Because each one will have different onboarding needs, some may need their documents sent within a certain time frame or in specific increments, and failure to meet those requirements could mean a loss of sales and revenue.
On the other hand, a fast and efficient EDI onboarding process will set your company apart, reinforcing your brand and contribute to your growth. What's more, it will shorten time to revenue.
Integration With Third-Party Tools
One of the best EDI features to look for is a platform's ability to manage and integrate with numerous trading partners and applications. The software should ably blend supply chain management, accounts, ERPs and warehouse management systems (WMS) in one user-friendly dashboard. Investment in EDI that incorporates all apps across all digital devices is an investment worth making.
EDI integration is particularly important with tools that help you handle back-end processes. This is because the right EDI will automate these once-manual tasks letting you and your employees spend more time on more important work. Before you choose an EDI platform, consider the entirety of your business' integration needs and be sure the product you have in mind will function well with existing workflows.
Conclusion
You have many choices for EDI software but finding the right one for your business needs takes time and research. The top EDI features to seek out include standards compatibility, protocol support, third-party tool integration and ease of use. Finding a platform that includes these capabilities will set you up for EDI success.
