I agree with you Dave. Especially for Western manufacturers, EDI are associated to legacy (for instance invoice, administration, account). The only doubt, actually is how is feeling from companies in migration towards new platforms or services (as SaaS) due permanent status of financial crisis.
EDI should almost be synonymous with ROI, particularly if you have a system that's been written for the needs at hand as well as for the needs to come. I've worked with an EDI provider and they stress the point that a good system is one that can grow as the transactional volume grows.
It’s just a matter of time.Many companies utilizing EDI are also running their systems on legacy mainframes, probably still using the original COBOL or RPG applications.Eventually they will modernize as the expense to maintain these legacy systems and transactions will become too costly.Give it 5-7 years.
It's catching on in some verticals, but my guess is that most larger enterprises like Arrow have existing internal EDI systems and entrenched constituents. SaaS essentially outsources 80% of those internal functions. So unless there is some reason to change (acquisition, internal structure) there is little incentive for existing staff to recommend change.
Barbara - Yes... I do understand the differences in transaction details. However that is precisely one of the advantages of a SaaS based service. As an example:
Arrow has only 1 set of transaction details that all their suppliers must adopt. Avnet uses the same EDI documents but has different details. Their suppliers (many are the same as Arrow's) must now have 2 sets of transaction maps - one for each customer. And so on, so that the more customers the supplier has, the more document maps they need to support.
Imagine that Arrow and Avnet both use a SaaS based service (not necessarily the same service) that understands their document maps. They keep them updated and any suppliers can use that SaaS EDI service to map their own transactions to their customers. That means the suppliers only have their own document maps to deal with, and those are translated to/from their customers by the SaaS service.
In addition, changes that Arrow makes to their maps are incorporated one time by the SaaS provider, meaning the supplier does not need to know or manage their customers' changes.
That is the economy of scale that I'm talking about.
Hi Scott--amazing you could read through the typos of the last comment :-) From what I understand, at least in electronics distribution, just about every EDI link (supplier to distributor, distributor to customer) is unique. Therefore, a significant investment is required for each link. Distributors such as Arrow and Avnet, which have hundreds of suppliers and hundreds of thousands of customers, therefore spend a lot of money on EDI. While it's true that they can leverage economies of scale, and many of these costs are NREs, it's still a significant outlay. Distributors consider it cost of doing business, so I guess the ROI could be measured. I'll ask them about it for a future post.
For small companies, on the customer and supplier side, the cost can be prohibitive. That's why e-commerce has been examined as an alternative, but lack of a standard continues to hinder that. RosettaNet had a limited adoption but is still used, I think.
Barbara - I'm pretty sure that EDI is (and will be) the low cost solution, simply because it is so pervasive. The economies to be gained are by using advanced facilities like (as you point out) cloud or SaaS platforms. These bring economies of scale and reduced internal costs by moving the capital and maintenance costs of supporting locally installed EDI processing applications to multi-tenent platforms.
It's my belief that costs and efforts required to replace EDI would be extreme and not achieve any real cost reductions - even if they were ever to be enacted. The costs of EDI don't lie in the format, but in the old-school transport and support systems.
This is a really interesting question. In electroncis distrbution, it generally isn't even posed. If a supplier, distrbutor and custoemr want to be linked, it's EDI or nothing. The industry has been looking for a less expensive laternative to EDI for decades and hasn't found on yet. The cloud is promising, but still a ways away. Maabe if mroe copaneis ran this litmus test better ways would be found.
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