What Is EDI?
Learn everything you need to know about EDI. What does EDI mean and how does it work? What software do you need for EDI and how do you choose the right EDI set-up? Discover what a typical EDI project looks like and how you can implement an EDI solution in your company. Finally, our FAQs at the end answer the most frequently asked questions about EDI.
EDI stands for Electronic Data Interchange and means the electronic interchange of business documents such as orders, delivery notes and invoices. These documents are exchanged between business partners in the form of structured data with no human intervention.
EDI is not a specific technology, but a combination of electronic processes, exchange protocols (communication protocols) and established, internationally valid business document standards. For simplicity and security, structured data exchange must use established business document standards regardless of the specific formats or ERP (Enterprise Resource Planning) system used by the business partners involved.
- Automating your business processes with EDI makes them faster, more efficient and less prone to errors, leading to reduced lead times through faster data transmission
- Reduced unnecessary task repetition and data entry errors through less manual workIncreased information accuracy and less costs through automation
- Reduced warehousing costs as EDI enables just-in-time or just-in-sequence logistics
EDI also has a host of advantages for management, since business-relevant information is available faster and in a more structured way. You also have a constantly available, up-to-date stream of data readily available. Running this through business analytics tools gives you huge scope to improve process control.
For planning, decision making and control, EDI means:
- Up-to-date statistical findings through simpler target/actual comparisons and deviation analysis
- Improved information availability through simulations and new forecasting techniques
- Improved cash management and a better stock overview through productivity analyses
Messages are exchanged between companies using established business document standards (known as EDI message standards), which companies in a specific industry have agreed upon among themselves. For example, the European chemical industry generally uses the EDI standard EDIFACT, including the subset CEFIC (French: Conseil Européen des Fédérations de l'Industrie Chimique), which has been specifically defined for the chemical industry. Since ERP systems are generally not capable of these message standards, the structured data needs to be converted from its initial format into the defined message standard before it is sent via the agreed communication protocol. This involves three steps:
1. Connect to ERP and receive messages in internal format from the SAP System.
2. Convert and transfer messages from the internal format to the message standard.
3. Communicate and technically dispatch data via the agreed communication protocol.
The receiver carries out these steps in reverse order starting with confirming the message has been received over the agreed communication protocol, then converting the message to the format they need and then sending the message to the receiving ERP system.
The SEEBURGER BIS B2B/EDI solution supports you in the comprehensive integration and management of all B2B partners through the B2B gateway and various portal/cloud applications.
The SEEBURGER BIS B2B gateway connects the most important business partners, handling the routing and processing of B2B/EDI messages according to industry standards.
The gateway is complemented by portal applications for efficient management of numerous business partners, such as the Community Management Application or the BIS WebEDI Supplier Portal.
If business partners want to exchange business data electronically, they need to have a clear agreement to ensure they can understand each other's messages. In practice, however, it’s the dominant business partner initiating the EDI process (known as the hub) who usually dictates the standards used by all subsequent partners (the spokes). These are existing industry standards.
The following scenarios illustrate the advantage of these EDI message standards: If several people of different languages try to communicate with each other, they would need an unmanageable number of interpreters.
2 people, speaking two different languages -> 1 interpreter
3 people, speaking three different languages -> 3 interpreters
4 people, speaking 4 different languages -> 6 interpreters
n people, speaking n different languages -> n(n-1)/2 interpreters
If, on the other hand, they decided to use an international standard language, each person would need just one interpreter from their own language to and from English:
2 people, speaking 2 different languages -> 2 interpreters
3 people, speaking 3 different languages -> 3 interpreters
4 people, speaking 4 different languages -> 4 interpreters
n people, speaking n different languages -> n interpreters
The first scenario is an example of direct communication. The sender transmits each message to each recipient. This type of point-to-point connection is particularly suitable for transferring large amounts of data.
The scenario using one international standard illustrates indirect communication. Here, the message is sent just once, to a VAN (Value Added Network) provider, which manages distribution to the individual receivers. The advantage of this type of mailbox system is that senders can communicate independently of their partner – they just need to connect to their own mailbox.
The EDI software essentially consists of three components:
The ERP connector integrates your company’s ERP system, allowing you to you send and receive messages in your ERP system’s native format.
The converter transforms in-house message formats to the industry standard needed by your partners.
The communication adapter sends EDI messages through the communication protocols your partners require.
Many companies rely on an ERP system to manage their in-house business processes. To enable electronic data exchange with external business partners, this ERP system needs connected connection, i.e. integration, to the EDI system.
An ERP connector links the EDI software with the ERP software, and then automatically transfers messages between the ERP system and the EDI software.
We have EDI connectors for these widely used ERP systems, and more:
- Microsoft Dynamics AX/NAV
- Oracle E-Business Suite
- JD Edwards
SEEBURGER can also build connectors to link up other ERP systems to EDI. Contact us for further details.
An EDI converter transforms data (messages) from the ERP system into standardized EDI messages – essentially, into the language needed to communicate. In order for business partners to be able to exchange data electronically, both need to decide on a specific standard. Various organizations such as the United Nations (UN), the American National Standards Institute (ANSI), the Deutsches Institut für Normung (DIN) or the German Verband der Automobilindustrie (VDA) define those standards.
- During EDI conversion, the information from the source structure is transferred to the target structure using an individually created mapping.
Business partners, who exchange messages via EDI, use uniform EDI message standards.
Some international EDI message formats are:
- EDIFACT (global)
- XML (global)
- ANSI X.12 (regional)
- EIAJ (regional)
- TRADACOMS (regional)
- VDA (regional)
- AECMA (industry-specific)
- HL7 (industry-specific)
- SWIFT (industry-specific)
The SEEBURGER EDI converters let you work with a multitude of data formats.
A communication adapter establishes a connection between sender and receiver. Once both sides are connected, it securely transmits the pre-converted message.
The EDI software essentially has two transfer options. You can exchange data via either a mailbox system or a point-to-point connection based on the TCP/IP internet protocol.
The sender sends the data to a mailbox where the recipient will pick it up. The protocol mainly used for this purpose is X.400.
With a mailbox system,companies do not have to be constantly able to receive and send data. This allows them to communicate regardless of when their business partners’ systems are online, as they just need to connect to their own mailbox.
Providers of X.400 mailboxes are VAN providers such as Deutsche Telekom, IBM or British Telecom. The data remains in the box until actively collected.
The sender establishes a direct connection to the recipient for the duration of the data transfer. The senders’ and receivers’ systems must therefore be permanently accessible. The automotive industry mainly uses point-to-point connections, and many other industries are following this trend. It is particularly suitable for transmitting large amounts of data.
Which is the best way to exchange EDI messages depends on the frequency and data volume.In addition to common transfer protocols such as email and FTP, there are numerous national, product- and industry-specific transfer protocols for communication in the EDI environment.
Common transfer protocols for EDI messages include:
- Value Added Network (VAN)
Atlas, AT&T, EXITE, IBM, KPN, OpenText GXS, Telebox X.400, Tradanet
- A direct connection
OFTP(2),AS2, AS4, (S)FTP, http(s)
Amodern EDI solution can also support many other communication protocols.
Our EDI software is available as a stress-free, fully managed, cloud-based service, as an on-premises package that you can install in the public cloud of your choice or in your own private cloud, or in-house hardware.
Would you like to keep some aspects in house while outsourcing others? Our Integration Platform as a Service (iPaaS) lets you choose what to manage in-house, and what to outsource to SEEBURGER.
We even offer WebEDI for connecting trading partners new to EDI.
Get the benefits of EDI without the stress. SEEBURGER deals with everything – from set-up, over onboarding and maintenance tosecurity and compliance.
This not only frees up in-house resources, there is a significantly lower initial outlay and TCO than for on-premises software, and the monthly costs are easier to accommodate in your annual budget.
The SEEBURGER BIS Platform isthe engine behind the SEEBURGER EDI cloud services.
EDI as a cloud service is particularly suitable for:
- companies who may not have the resources for 24/7 operation of an on-premises EDI solution
- companies unable or not wanting to recruit dedicated staff members experienced in EDI
- companies wanting to offload time-consuming maintenance and security updates to let their people focus on other tasks
Cloud services give easy access to IT resources, with more flexibility and short time-to-market. Even traditional organizations are empowered to operate with agility through them, and they are increasingly demonstrating themselves to be the core of novel and innovative business models.
Find out more about SEEBURGER B2B/EDI services and in the whitepaper "Move your Business into the Cloud".
An on-premises solution means that the company acquires the EDI software package and runs it from a public cloud of its choice such as AWS, Azure or Google, its own private cloud, or on its own hardware.
The company is usually responsible for operating and supporting their on-premises software, however, they may outsource this to a hosting partner.
An on-premises EDI solution offers the benefit of enabling a company to implement the required EDI system without having to coordinate with an external partner. In certain cases, company regulations dictate that specific data must remain within the company's premises. If you choose to utilize an on-premises solution, it is essential to have staff members who possess proficient EDI skills and expertise.
By adopting EDI in our iPaaS model, you can actively engage in mapping and overseeing your data streams, while delegating less exciting tasks to SEEBURGER. Embrace the independence that comes with an on-premises model and the time-saving advantages inherent in a cloud-based model.
For smaller organizations seeking to exchange data with larger corporations, WebEDI provides an excellent solution. With WebEDI, you can conveniently receive, generate and transmit EDI-based messages to your business partners using electronic forms in a web browser, making the process semi-automated and accessible over the internet.Utilizing WebEDI for a majority of your customers would be highly beneficial. This strategic decision would result in the moderate investment paying off significantly, generating multiple returns on investment.Read more about EDI for small and medium-sized enterprises in our brochures SEEBURGER for small and medium sized enterprises and SEEBURGER express for EDI/B2B.
Three factors are decisive for successful implementing EDI in a company: Full managerial support, professional project management and clearly defined objectives.
A positive attitude from management significantly influences employees’ acceptance of a new system
The most important success factor for adopting EDI is managerial support. A shared comprehension of the reasons behind the company's adoption of EDI is essential for management at all levels, along with their active support for all relevant departments.Good change management is part of successfully managing a project.
To showcase the significance of your EDI project to your staff, implementing tracking measures and ensuring project progress can be effective. Additionally, communicating progress to different stakeholders within your company in a focused manner is crucial.Clearly defined reporting paths and named decision-makers make it easier for everyone involved to understand the new processes and find the right person for their queries.
Stringent project planning and control, clear task assignment, strong leadership and close cooperation with the EDI solution provider are essential to making your project run smoothly.
Make sure that your EDI project is adequately staffed with the necessary skilled labor throughout each stage, starting from the initial preparation phase until the system is ultimately approved and launched.Don’t forget that once released, your staff need to be able to use the new system – the quality of staff IT training can make or break a project.
This all goes hand in hand with empowering the project participants to make necessary decisions. Speedy decision processes, sufficient time and staffing buffers can help create a schedule that is easy to adhere to and avoids deadline pressure.
Project objectives must clearly communicate the desired project outcome in full, and be verifiable.
In the early stages of any project, it is essential to define clear aims and objectives. This provides a framework for monitoring the progress of the project and allows for appropriate adjustments to be made if necessary.
Clearly-defined objectives play a crucial role in supporting the success of your project. They facilitate clear planning and establish a foundation for the project manager to take action. Furthermore, they provide a secure basis for project planning and enable the establishment of specific timelines for deliverables.A precise goal definition encompasses realism, comprehensiveness and attainability, making it imperative to be measurable. It is crucial to clearly and unambiguously define the goal to eliminate any room for interpretation. Importantly, the goal should not rely on preconceived notions and must be thoroughly documented.
Questions to help to define the objectives
- Why are we introducing an EDI solution? (Cost savings, transparency, compliance, etc.)
- What do we want to achieve with this EDI project? (e.g. increase supplier satisfaction, speed up a process by 10%, improve company’s image in the market)
- How deep should we integrate? How much should we automate?
- Where do we need the EDI solution? Which locations and countries?
Find out more in our guide to EDI projects or in our EDI FAQs.
The Preliminary Study
The objective of a preliminary study is to efficiently assess the potential benefits of implementing EDI and determine the required resources involved.What should the preliminary study define?
- Project size
- Product strategy
- Resources required for detailed analyses
- Planning the implementation and realization stages
- Potential of the EDI project
- Interests and needs of current stakeholders
The preliminary study incorporates an evaluation of the existing systems utilized in each department and highlights the potential enhancements that EDI implementation could bring. It serves as the foundation for making the final decision regarding the EDI project, assessing the immediate benefits for the organization, and determining the optimal utilization of the new technology. The resulting report should have a financial focus, offering management a solid groundwork for informed decision-making.
Defining your EDI requirements
After formulating the concept for your desired EDI solution, the next step involves delving deeper and generating a comprehensive list of specific requirements. These requirements will serve as the foundation for developing detailed specifications at a later stage.Alongside technical requirements, you also need to decide whether to choose an on-premises installation or a SaaS solution.
When contemplating your desired EDI solution, several factors need to be taken into consideration, including the following:
- The implementation cost associated with your desired EDI solution.
- Additional expenses related to software and hardware required to operate the EDI solution.
- Ongoing costs for administration, maintenance, and transaction volume.
Availability of internal personnel resources to support the EDI implementation.
Prior to the actual installation of your EDI solution, it is beneficial to conduct a proof of concept. This entails testing the parameters in a realistic environment using standard EDI settings.The proof of concept phase involves:
- installing the EDI solution on a test server,
- doing a basic installation and parameterization of the EDI solution,
- checking and, if necessary, cleaning up the master data and transaction data,
- potentially adapting processes and interfaces,
- deciding upon and documenting the ultimate EDI installation,
- deciding when to go live with the EDI solution,
- creating test scenarios and test plans with corresponding reference data.
During the EDI proof of concept phase, you gain the opportunity to delve into the software and services' functionalities at an early stage. This enables them to develop a comprehensive understanding of the EDI solution's workings and the technical capabilities it offers to their organization.
In the EDI proof of concept phase, test plans and reference data were established. The subsequent EDI test phase provides an opportunity to conduct thorough testing of these elements with your connected trading partners.During this phase, an iterative approach is employed to assess whether any adjustments are required for either the process or the EDI solution. These test runs subsequently lead to modifications in the definition and documentation of the overall system. This process concludes upon the system's commissioning.
After the successful completion of the test phase, the EDI system transitions from a testing environment to a productive environment.Project experience has shown that after two months of live operation, it makes sense to conduct additional downstream training for key users, administrators and end users in order to solve any remaining questions and possible application problems.
Secure replacement of outdated B2B integration platforms
More and more frequently, rising business requirements are pushing the limits of an unchanged B2B infrastructure that has remained the same for years. Forward-thinking companies are taking on this challenge by replacing outdated B2B solutions in a timely manner with a fully digital, secure, reliable, and scalable integration platform. The migration tools of the SEEBURGER BIS platform ensure a secure transition.
Frequently asked questions about implementing EDI
You have decided to implement an EDI solution to automate processes between your business partners and your company. However, how do you start? Answers to the most pressing questions about getting started in the world of EDI: