Last updated: March 2, 2023
Still today, EDI is critical for businesses. B2B integrations add a layer of efficiency to operations by simplifying trading partner communications. While EDI is a well-established and widely used method for information exchange, the value of traditional EDI tools is debatable.
We wrote this blog to help you understand why traditional EDI solutions have started to become outdated, what their pitfalls are, and how cloud EDI could be beneficial for your organization in the future. Plus, we will explain the application of cloud-based integration platforms for EDI.
Table of contents:
- Problems with traditional EDI solutions
- EDI challenges
- EDI solution capabilities
- Cloud-based integration platform for EDI
- Benefits of cloud EDI
- EDI managed services
- Should you use cloud EDI?
Problems with Traditional EDI Solutions
Traditional EDI methods (e.g., on-premise hardware, EDI VAN, point-to-point connections) have limitations that make your business-to-business data exchange less efficient. Using EDI software slows down partner onboarding and time-to-deployment. Thus it can result in lost revenue, higher-than-expected gross margins, and slower data processing times. You may also experience difficulties in terms of managing the connections and making modifications to the solutions. Purchasing the software has high costs, and the maintenance of the solution, licensing fees, and training make it an expensive alternative for EDI transactions for many. You’ll have to have well-trained personnel that can develop and maintain your EDI solutions.
Many are still using EDI Value Added Network (VAN) to enable communication with partners, suppliers, manufacturers, and customers. It can transfer and translate data in a secure way. However, it lacks many capabilities that can be done when you are processing EDI transactions with a cloud-based integration platform.
Point-to-point integration is an alternative for EDI VAN. This refers to a single connection with a partner (or with a specific system). However, this can get way too complex once you need to connect with more than three systems or applications. It is especially difficult if you have to use different communication protocols (AS2, FTP, SFTP, etc.) and you have to deal with different messaging formats (even traditional, modern, and proprietary ones), as it gets very resource intensive and time-consuming. When your IT team needs to make modifications to the solution without good documentation it gets to be a difficult and risky task. In case of something goes wrong with the integrations, like one of the connectors stop working, the chances are big that it will influence your other connections too, and in this case, your solutions may not work until the error is fixed.
Point-to-point integrations are a burden for your IT team, they are not sustainable and scalable as your ecosystem is growing, and it is an extremely expensive solution for communicating with your business-to-business network.
Earlier, we have written an article about EDI challenges. Here, we just provide a short list of the roadblocks you may face when you use EDI software:
- Legacy EDI systems are widespread. Integrating legacy EDI systems with modern applications/interfaces is difficult.
- APIs are becoming a popular option for enabling connectivity. Nevertheless, connecting EDI solutions with API can be challenging.
- Onboarding new connections/endpoints/trading partners can be time-consuming.
- Data quality concerns are often unresolved. Data validation and data enrichment solutions are often not included in traditional EDI tools.
- In case you have a complex EDI network, traditional ways of dealing with EDI are not sufficient.
- Your message/transaction volumes can suddenly grow, and it would require modifications in the solution, and it can be challenging.
- Many need more transparency regarding EDI processes, and that can be difficult to achieve with legacy EDI solutions.
Regardless of all these problems, EDI is still extremely valuable for organizations. Nevertheless, adopting a modern EDI approach could be more beneficial. Exploiting the benefits of cloud EDI could help your organization to overcome some of the most common EDI challenges outlined above. We will get to the benefits in a bit.
EDI Solution Capabilities
Looking at the list of challenges above, you may be wondering what exactly you need to look for when you have a need to establish EDI integrations. And what should you expect from an EDI solution?
Regardless of the nature of the EDI solutions, the list will include elements that are essential for EDI. We wrote about it in our EDI Buyer’s Guide, but shortly, it needs to enable the following:
- Connectivity management to orchestrate communication between the different parties. Often, a variety of systems and applications need to be connected.
- Data mapping for when different message formats are exchanged.
- Data translation to ensure that a particular system or application always receives information in a format that it can understand.
- Tools for maintaining data integrity/data quality: e.g., data validation and data enrichment.
Cloud-based Integration Platform for EDI
Companies have been looking for alternatives to restrictive EDI tools. In the past years, cloud-based integration platforms have emerged as a suitable choice. Cloud EDI is an option for you regardless of the size of your organization.
You can manage connectivity with your partners, whether it is connecting legacy on-premise systems to on-premise systems or cloud applications. Using pre-built adapters, connectors, and integration templates, you can onboard your new partners a lot more rapidly than when you are using an EDI VAN or building point-to-point integrations from scratch.
Utilizing iPaaS (integration platform as a service ) for data exchange makes data governance easier. It won’t matter anymore what data formats your partners use as during the information exchange the solution can translate the data to your preferred format, as well as validate it according to your business rules, and send it back for correction if necessary.
Creating and maintaining business-to-business integrations in the cloud is secure, agile, and scalable. The solution is always completely tailored according to your needs.
The best about this solution is that you don’t have to pay for software or hardware or version upgrades, so you can start with a smaller project to see and measure the benefits (and the ROI) and continue expanding your cloud-based data integrations once it’s proven its worth.
Cloud EDI for Enterprises
Enterprises often have complex B2B integration challenges that they cannot tackle with traditional EDI tools. Often, they need to connect hundreds if not thousands of trading partners/data sources, and in that case, they need to deal with a wide variety of systems and applications. The onboarding time needs to be as short as possible. They will also need to tackle the different data formats – take care of the data mapping and translation. Some may require validation and enrichment solutions to ensure that they always have accurate data at their disposal.
One of the biggest challenges, in this case, is that they need to be able to connect with legacy systems that are often on-premise and possibly sit behind a firewall with modern cloud-based software and applications.
Cloud EDI for SMEs
In the case of SMEs, the challenge can be slightly different. It’s possible, though, that they also need to connect with many different stakeholders that have a variety of systems, the number of connections is a lot fewer in this case. The rest of the challenges still apply. In this case, EDI software could be a too expensive option, and it may not be sufficient for all the integration challenges that one may encounter. SMEs may also lack integration specialists that could develop the solutions, or those can be overloaded with the work.
Often, some of their enterprise trading partners (e.g., companies like Walmart or Amazon) require SMEs to communicate with them through EDI. In this case, cloud EDI can be a suitable solution instead of web-EDI. Cloud EDI can connect the SME’s API interface (e.g., a REST API) to even the most legacy EDI solutions. Thus, the two parties will be able to exchange messages with each other.
Benefits of Cloud EDI
Some benefits could be obvious already. Perhaps, the most significant advantage of switching to cloud EDI is that you do not need to purchase EDI software, and you don’t need to buy the upgrades, as well as train and manage integration talent.
Cloud EDI also comes with most of the benefits of cloud computing, whether it’s a large complex B2B integration project or a simple connection between trading partners for exchanging certain types of messages.
As your ecosystem is rapidly growing, you might need to be able to quickly onboard new trading partners, such as suppliers, manufacturers, or customers, to be able to share information with them in real time. So you will need to have a solution in place that enables you to connect with them quickly regardless of the communication protocols or the data formats that they are using.
Updating the method of communication with your business-to-business network can help you to overcome the lack of real-time information, inconsistent data, complex messaging flows and connectivity, manual and paper-based processes, and high administrative costs.
So, it will increase the efficiency of your operations, improve end-to-end visibility across your ecosystem, and helps to promote collaboration and relationship with your network.
Here is the list of the benefits you could see from using cloud EDI:
- A cloud-based integration platform (often referred to as iPaaS) is suitable for any integration needs, whether it’s B2B integrations, A2A (application-to-application) integration, or EDI integration with API.
- It accelerates data mappings for quicker onboarding.
- iPaaS has pre-built integration templates that can be reused to speed up the onboarding process so the parties can exchange information with each other faster.
- Constant monitoring of the solution to avoid errors.
- Scalability and flexibility of the cloud so that the solution can be re-adjusted as your volumes grow throughout the years.
- Cloud EDI supports any data standards and data formats.
- It enables communication through any data protocols.
- With cloud EDI, you can execute challenging integration scenarios, even large-scale integrations.
- You do not need to install anything on-premise.
- Create, receive, turn around, and manage electronic messages.
- Cloud EDI comes with the security of the cloud.
- The solution has close to zero downtime – the availability of the cloud is 99,98%.
- It helps to streamline processes for increased productivity.
- Cloud EDI solutions are cost-effective.
EDI Managed Services
Many vendors that provide cloud EDI offer it as managed EDI services. This means that you do not need to have the team and the skills to develop EDI integrations. The EDI vendor will handle everything on your behalf.
In this case, the provider utilizes the cloud-based integration platform and develops your solutions on top of it. They will take care of the deployment and maintenance of the solution as well. In case you are concerned about the security of the information you’re exchanging, the cloud is just a channel for delivering it from one system to another; hence data is not stored in it.
Should You Use Cloud EDI?
Cloud EDI can be a suitable solution for organizations of any size. As you do not need to make a significant investment to start experiencing the benefits of using an integration platform for cloud EDI, you could simply start with a small project, see how it’s working for you, and find more use cases after the solution is proven.
Editor’s note: This article was originally published in 2019. It was updated on March 2nd, 2023, to reflect the most current information. Andrei Radchenko contributed to this story.