Electronic data interchange (EDI) is a mature (some would say ancient) technology. The format is straight out of the mainframe era, consisting of flat files and text tags. To the uninitiated, the content of even the least complex EDI document can seem like an unintelligible ASCII string. But that’s the easy part. The difficulties lie in the way this standardized data format is modified by every trading partner to meet the needs and preferences of the way it does business.
It’s a standing joke that the EDI standard is a customized one, and that the only commonality between one company's EDI purchase order and another's is the spelling of “EDI.” That’s a bit of a stretch, but it is fair to say that every trading partner's document needs to be translated, or mapped, before it can be used by another trading partner. And the mapping of EDI documents is the domain of the specialist responsible for managing the day-to-day operations in the EDI department.
Without that person's expertise, the likelihood of being able to transact business via EDI with a supplier’s customers is slim. That’s because customers — the trading partners that define the documents — often change details within their versions of the documents. And those changes need to be incorporated into the receiving company's EDI maps to translate the documents and fill the orders.
The ongoing maintenance of an EDI system requires the specific skills of someone intimately familiar with both the internal EDI documents and the translator software being used to transform incoming and outgoing messages. And every time a large customer changes its format requirements, its suppliers need to implement the change in their translators. Large buying organizations can have hundreds or even thousands of suppliers making the same changes.
The sad truth is that these changes don’t always happen immediately or even successfully. And those delays and failures cause errors in the supply chain, eventually costing time and money.
The advantage of software-as-a-service (SaaS) based translators is that when a buying organization changes its format, that change is implemented into the translation software maintained by the SaaS provider. All the trading partners that use the SaaS provider to connect to that buyer automatically get the benefit of the updates made in the centralized and shared application. At a minimum, the connection between the buyer and its suppliers continues without error or interruption. But in the bigger picture, the expense of updating a single supplier’s translator application vanishes. Spread those savings across hundreds or thousands of suppliers, and the benefits expand throughout the supply chain.
Of course, letting a centralized staff of experts maintain and monitor a SaaS trading system delivers other benefits based on economies of scale. The staff and the system they support are dedicated to processing the customers' transactions — it is their primary responsibility. This is a significant difference from the role of most corporate EDI managers, who are tasked with several jobs, meaning the EDI system is likely not their prime focus.
All SaaS EDI providers are not equal in their capabilities, the features they offer, or their track records. But when it's time to make the choice between updating a translator or moving EDI services outside the firewall, a SaaS system is likely to be a compelling avenue.