Since the 1970s, Electronic Data Interchange (EDI) has driven business innovation in the areas of supply chains and the exchange of electronic business documents. EDI technology has enabled highly-efficient supply chains to significantly raise our standard of living. EDI electronic document exchange technology has helped countless businesses drive costs and inefficiencies out of their supply chains. EDI has also enabled businesses to exchange low-cost electronic business documents outside the supply chain to include interfaces with insurance companies, service providers, and banks. EDI has helped many busineses eliminate paper documents and phone calls for many business functions such as in the areas of purchase orders and invoices. Though EDI technology has served us well, there are some emerging Business-To-Business (B2B) integration shortcomings that will require EDI technology to evolve or in some cases be replaced.
The Three Future Challenges of EDI Technology
EDI technology cannot rest on its laurels. Business and technology continue to evolve and there are several factors that are challenging traditional EDI technology. The business world is changing in the following areas:
- 1. Supply Chain Networks Versus Supply Chains. Many supply chains have transformed into supply chain networks that resemble more of an ecosystem where business customers, suppliers, and 3rd party providers are added, removed, grow, shrink, and evolve. With these complex supply chain networks, companies are having to connect to more varieties of trading partners. Businesses are now having to support multiple standards to include ANSI X12, EDIFACT, XML, proprietary, HTTPS, AS2, Secure FTP, SAP connectors, and so on. On the other hand, EDI works best where trading partners do not change often and everyone uses the same EDI standards in the area of data format, communications protocols, and security protocols.
- 2. Elimination of Information Cycles. Information cycles are shortening or even being eliminated. See posting, The End of Information Latency. The daily cycles of mainframes are disappearing and being replaced by real-time and near-real-time information processing. Data warehouses are becoming less relevant and being supplemented or replaced by high-performing operations systems and the use of real-time mashups. On the other hand, data exchange using EDI was designed to send electronic data from one system to another in batch mode.
- 3. Evolution of Multi-Enterprise Business Processes. Now businesses have more complex information requirements that transcend their internal business operations. More and more businesses are using third-party providers, sharing real-time information, and using Business Process Outsourcing (BPO). In these scenarios, time-delayed, batched EDI transactions will not work. EDI standards and procedures were designed for the exchange of electronic documents between two businesses. That’s it: two businesses and one connection.
EDI is Not Dead, But Needs to Evolve. Many times people have declared EDI technology and VANs as dinosaurs that would soon become extinct. This has not happened yet because EDI does well with supporting traditional electronic document exchange. Because of the three EDI technology challenges mentioned above, EDI and VANs will need to expand their capabilities or risk extinction. Today, most traditional VANs are beginning to offer more than EDI translation and data transport services. Some of their new offerings are addressing some of the three challenges above. This includes services such as data synchronization to match invoices with purchase orders, and other Software as a Service (SaaS) offerings. EDI software and 3rd party provider services will need to continue to evolve to meet the future challenges of EDI technology.
