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All About EDI: 11 Complete Answers about Electronic Data Interchange

This post was updated to reflect current trends and information.


We often get asked questions about EDI (Electronic Data Interchange), so we decided to write this article to answer the most common questions we get. We also provide you with useful links in case you’d like to explore further.

1. What is EDI? (Electronic Data Interchange)

Electronic Data Interchange (EDI) In simple words, EDI is the process of electronically exchanging business documents (in a pre-defined format) between trading partners. EDI replaces the faxing of paper and mailing documents.

Any standard business documents (e.g. a purchase order, invoice, shipping notice etc.) can be transferred by EDI, considering both parties have been setup to exchange with the appropriate EDI communication.

Useful Reading: EDI Document Library

2. Who uses EDI?

Electronic data interchange EDI Organizations of all types and sizes are able to utilize EDI. EDI communication is used in Government and various industries such as banking, healthcare, retail, automotive and others. Any company that buys, sells goods or services can potentially use EDI.

3. To be EDI capable or EDI compliant – what does it mean?

In simple words, EDI capable or EDI compliant is the ability to exchange business documents electronically in a specific format based according to an EDI standard.
Being EDI compliant, means your company has complied with the pre-agreed EDI standard which allows you to send and receive EDI documents to any business/trading partner located anywhere in the world.

4. What are the EDI standards?

All EDI transactions are determined according to EDI standards. Many industries have developed their own EDI standards to fit their requirements and business terms. EDI standards are built on the concept of making electronic business documents uniform, without regard to a country or place of origin. EDI standards regulate the correct order and location of the units of data in an EDI document. Below are some of the most commonly-used standards:

ANSI ASC x12 Uniform standard, developed by the American National Standards Institute, and Accredited Standards Committee X12 (ASC X12) to support companies across different industry sectors in North America.

EDIFACT Electronic Data Interchange for Administration, Commerce, and Transport (EDIFACT), developed by the United Nations. EDIFACT is the international standard but is widely used by multiple industries in Europe.

RosettaNet A standard widely used in the global semiconductor industry, but also in electronic components, consumer electronics, telecommunication, and logistics. RosettaNet is widely used in the USA, but it is also well accepted and even supported by governments in Asia.

Useful Reading: RosettaNet and B2B EDI Integration: All you need to know

PEPPOL (Pan-European Public Procurement Online) allows public organizations and their suppliers to exchange standard-based electronic documents over its network. PEPPOL simplify the trading process between private companies and government.

Useful Reading: B2G Integration: PEPPOL EDI Data Interchange

ODETTE A standard used by the automotive industries in Europe, developed by the Organization for Data Exchange by Tele Transmission in Europe.

SWIFT (Society of Worldwide Interbank Financial Telecommunication) The main goal is to exchange messages between financial institutions and banks. Financial and bank institutions from over 200 countries used SWIFT.

Tradacoms Standard mainly used in the UK retail sector.

5. What is EDI Mapping?

Mapping is the process of taking data from EDI format, to a company specific format and vice versa.

6. What does an EDI document, an EDI message or EDI transaction set, mean, is there a difference between them?

In the EDI environment each business document, such as an invoice or a purchase order, is called an EDI message or EDI transaction set or EDI document. Technically, there is no difference between them… The most commonly used EDI documents, especially in the retail and manufacturing industries, are as follows:

  • 810 Invoice
  • 846 Inventory Inquiry message
  • 850 Purchase Order
  • 855 Purchase Order Acknowledgment
  • 856 Ship Notice/manifest (ASN)
  • 997 Functional Acknowledgment

Useful reading: The most used EDI messages in the supply chain management

What is Advanced Ship Notice (ASN) 856 transaction set?

What is EDI 846 document?

Why EDI 846 is important to do business with big-box retailers

7. What are EDI Communication Protocols?

EDI protocols are the communication platform used for constant transmission of data between business partners.

Companies can either exchange documents directly to their Trading Partners (Point-to-Point) or through an EDI Network (VAN).

Direct

Direct EDI also known as Point-to-Point, allows companies to establish a single secure connection with their Trading Partner. Following are the most common communication protocols used to exchange EDI data in a point-to-point or direct connectivity:

  • FTP/SFTP – File Transfer Protocol/Secure File Transfer Protocol. These file transfer protocols allow businesses to connect with their partners via the Internet in order to exchange EDI documents.
  • AS2 A secure way to exchange documents over the Internet by using digital certificates and encryption of the EDI data. Communication protocols EDI AS2 FTP sFTP

VAN (Value Added Network)

VAN – is a private network provider, that only transmits EDI transactions in a secured manner between private networks. A VAN is a mediator who moves data from point A to point B. Until recently, this method of transferring data was considered the safest.

Useful reading: EDI Communication and VANs

EDI VAN connection

8. Which EDI Standard, Document(s) and Protocol should I use?

If you are just starting out, then you will most likely receive a list of requirements from your Trading Partner. It all depends which EDI standard they use, which documents they require from their Partners and how they expect these documents to be sent to them. Your trading partner is one that most of the times dictates the documents to exchange.

9. What are the Benefits of EDI?

There are multitudes advantages to use EDI (Electronic Data Interchange) both for small and mid-size companies as well as to big corporations. Below some impressive benefits from implementing EDI:

  • Improves Shipment Accuracy
  • Accelerates the movement of goods to customers
  • Improves customer/partner relationships
  • Improves cycle time reductions
  • Decision makers are able to quickly access order statuses
  • Improves document accuracy due to the elimination of manual labor.
  • Enhances the flow of information between 2 trading companies
  • Internal teams can now focus on core business tasks and

10. What is the difference between SaaS EDI & On-Premise EDI Software?

SaaS EDI

EDI2XML EDI SaaSUsing SaaS EDI model customers do not pay for ownership of the software, but for renting it (i.e. using it through a mobile application or Web interface). The main advantage of the SaaS model for the company is the absence of costs associated with the installation, update, and maintenance of the equipment and software that is being used by the company.

 

On-premises EDI

In on-premises deployment model, the company needs to maintain and manage the EDI software system itself. There is a whole control over all aspects of the EDI system including security, access and data integrity. EDI software is loaded onto the company’s owned PC or servers. If you choose the on-premises EDI model, keep in mind that you need the skills and expertise within your IT team. You also need the budget to maintain and upgrade EDI software and hardware when needed.

Useful reading: SaaS EDI or On-Premises EDI Translation Software: What you should know

11. What is EDI2XML?

EDI2XML is a SaaS EDI Solution, capable of converting EDI documents into XML/CSV/TXT format files and vice versa. EDI2XML is a Full Translation Service, which includes the translation of incoming and outgoing documents as well as communication with Trading Partners.

If you are still not finding the answer in our frequently asked questions post, please contact us.

Do you want to implement EDI at your company? Find out how to get started – request a live demo of EDI2XML.

Free EDI and System Integration consultation

EDI as a Service, a winning model in the digital transformation of your business

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This post was updated to reflect current trends and information.

 


One major advantage of the digital transformation and the massive adoption of the cloud, is the initiation of a serious discussion between business owners and executives from one side and their IT service providers from another side, for an outsourced IT services based on the best technology available today, at a reasonable price.

IT-outsourcing in the Digital Transformation era

Companies are more and more outsourcing their IT services to service providers. This process was motivated by customers’ desire to optimize their IT costs. There are different outsourcing models: hardware, software, data warehousing and storage, …

EDI2XML as a serviceFor many years we have seen the growing interest of the market towards a model called Software as a Service (SaaS). Although the term SaaS means only “software”, in fact, it is the most developed (to date) model of IT outsourcing, combining all the components listed above

What is Software as a Service?

Software as a service (SaaS) is one of the forms of cloud computing, a service model in which subscribers are provided with ready-made application software fully serviced by the provider. The vendor in this model manages the application, giving customers access to functions from client devices, usually through a mobile application or web browser.

The advantage of the SaaS model

The main advantage of the SaaS model for the consumer is the absence of costs associated with the installation, updating, and maintenance of the equipment and software that is being used by the company.

In the SaaS model:

  • The application is adapted for remote use
  • One application is used by several clients (the application is communal)
  • Payment is charged either in the form of a monthly subscription fee or on the basis of the volume of transactions
  • Technical support of the application is included in the payment
  • Updating and upgrading the application is quick and transparent for customers.

As with all forms of cloud computing, customers do not pay for ownership of the software, but for renting it (i.e. using it through a mobile application or Web interface).

Thus, as opposed to the classic software licensing scheme, the customer has relatively small recurring costs and does not need to invest heavily in the acquisition of the application program and the necessary Software and hardware for its deployment, and then maintain its performance, for the years to come.

EDI translation software in the Digital Transformation

Many entrepreneurs realize that using Electronic Data Interchange (EDI) is a necessary condition to do successful business. Even in some cases, there is no choice, it is mandatory to be EDI compliant in order to trade with big channels like Walmart, Costco, Canadian Tire or Target. Businesses are looking for the most profitable and cost effective EDI solution to implement.

Read: EDI X12, EDIFACT, CSV, XML – Why is a conversion necessary?

 

EDI benefits are obvious in business. One of the major advantages of EDI, is that it can quickly improve and develop an enterprise bottom line.

If the company is EDI compliant, it will be able to expand its turnover without a significant influx of new employees. Certainly, another advantage of EDI is that it reduces human errors, increases efficiency and the quality of information.

Read: EDI converter: Benefits of converting between EDI and XML

 

What are the advantages of using EDI as a Service?

EDI2XML as a Service is an ideal solution for companies of all sizes and from various industries who seek to implement an edi solution to comply with their trading partners and want to simplify the entire integration of their EDI in their Systems and processes.

With EDI2XML as a service, edi is converted to xml and from there, it can be transformed to any format that our client is capable of working with and integrate into his own CRM/ERP.

There is no need for our clients to install any software or hardware. We manage the entire workflow of integration, from setting up new partner, configuring and testing EDI documents and certification with the trading partner. We can even go farther by integrating directly into our clients’ ERP or CRNM systems using certified connectors from the Manufacturer (i.e. SAP, JDE, Microsoft AX…). As a result, our clients have a quick and painless fully integrated solution, and continuous streamlined EDI and data flow between all partners.

Choose to outsource your digital transformation projects

Whatever EDI converter you are looking for: edifact to xml, convert edi to xml online, convert x12 to xml online, etc. We have the best EDI Solution for your business. So, do you want to exchange electronic documents with customers, suppliers, and business partners, with a cost effective and optimal way? Then you have to check EDI2XML as a Services live.

Contact us today for more information and free EDI Consultation.

Free EDI consultation

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SaaS EDI or On-Premises EDI Translation Software: What you should know

This post was updated to reflect current trends and information.



Should we migrate our EDI integration and processing platform to a SaaS EDI platform or instead, adopt an EDI translation software on-premises?

The above question is asked by many business executives when involved in EDI integration projects, either when a contract or license with their current EDI provider or translation software comes to an end or before signing for a new EDI business relationship with a new partner. All of these reasons are valid and lately, this topic of discussion is being brought up much more, simply due to the popularity of “cloud” enhanced capabilities and security and Software as a Service (SaaS).

More and more enterprises are working to improve their supply chain management, which leads to companies adopting software applications (as a service). This allows them to increase efficiency, provide higher availability, reduce costs and increase profitability.

Today’s article will address the points every business owner should be evaluating when looking for an answer to the above question.

Enterprise IT Governance & Policy

The first thing to look at before making a decision on whether to go with SaaS EDI or to adopt an EDI translation software, is the company’s policy and IT governance, i.e. the rules and procedures that govern technological implementations and processes. What is the policy and general rule to implement software systems (including EDI)? What are the security measures and privacy rules?

Most companies of different sizes establish strict IT governance rules and procedures and follow these guidelines as much as possible. From my own observations, I have noticed that many enterprises, that have more than 20M of revenues per year and that use enterprise software such as JDE or SAP, have strict rules stating that they can only deploy software solutions on their own premises. However, today we are seeing more of these enterprises going for cloud and SaaS offerings, as it fits their needs much better.

EDI Volume

The second important point to look at is the volume of EDI data you wish to exchange with your business partner (or the current volume if you are already on EDI). This will give a good indication as to what direction your company should be leaning towards. In my professional opinion, the volume of EDI transactions is not the only factor when deciding to convert to SaaS EDI or to adopt translation software, but it is an important parameter.

Point-to-point EDI or VAN

The third point is to look at statistics about EDI connectivity with your current EDI partners, or forecast them if you are new to the EDI world. In today’s digital world, most EDI transactions are going point-to-point between business partners in a very secured manner using the Internet pipeline and secured protocols such as AS2, sFTP, FTP, etc. There are less transactions going through a VAN in comparison to a few years ago, as VANs charge additional expenses for EDI connectivity, which can add up and become quite costly.

Current IT Architecture & Team

A company’s IT architecture and team are extremely important when making decisions about EDI integration and implementation. If the company decides against the SaaS EDI model, does it have all the necessary hardware infrastructures, connectivity protocols and security to internally handle all kinds of EDI processing? Is the IT team equipped to handle such a project? Do they have the expertise and know-how to implement, manage and monitor EDI processes, transactions and translations? If the answers to the above questions are ‘no’, then the enterprise is better off with the SaaS EDI model.

EDI Translation Software Licensing

Don’t forget to evaluate the EDI translation software itself, from cost to functionalities to yearly maintenance and support to the ongoing development and programming during and after the implementation phase. It is also important to evaluate the capability of the IT team working with the EDI translation software.

Read: Take this QUIZ: Is your business cut out for on-premises EDI software?

SaaS EDI Service Provider

Whether using the services of a provider under the SaaS model or on-premises, it is crucial to select the right service provider for EDI. SaaS EDI providers should have a lot of experience in not only EDI but also in EDI and systems’ integration. In addition, the turnaround and customer service and support for that provider are key points for a decision. Keep in mind that some major SaaS EDI providers only see your business as an opportunity to increase revenue and stock value instead of focusing on giving a personalized and amazing customer service.

Conclusion: SaaS EDI or EDI Translation Software?

We are aware that the selection process and choice between SaaS EDI and EDI translation software is a challenging one. We believe that by having the right mechanism and people in place, enterprises of any size can make educated decisions based on what’s best for their business.

If you need more information or help in determining which model you should go with, please contact our EDI team for a free consultation.

Free EDI consultation

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