EDI Modernization 101: Everything You Need to Know to Upgrade Your EDI System

Jul 12, 2024

Enterprise Integration | 6 min READ

Over the last few decades, the reputation of Electronic Data Interchange (EDI) technology has gone through a rollercoaster. In the 1970s, EDI was seen as a revolutionary technology that promised to eliminate paper and faxes from B2B commerce transactions.

Over time, EDI got better. It sped up buying and selling and became an invisible piece of tech that businesses couldn’t do without – much like the WiFi is to us in the age of the internet. This solidified its position as the backbone of global B2B commerce by the 2000s.

Nitin Gajale

Global Practice Director

Enterprise Integration

Birlasoft

Rishu Sharma

Practice Director, Digital Evangelist and Storyteller

Digital

Birlasoft

During the 2000s, however, business processes grew complex. EDI’s limitations became apparent in the dynamic and diverse supply chain ecosystems of the 2010s. Businesses with EDI deployments found it difficult to adapt to the requirements of their new partners. Moreover, the technology’s P2P topology and batch-processing architecture emerged as cumbersome bottlenecks.

And yet, here we are today in a world where EDI continues to power 75% of B2B commerce. Clearly, EDI has stood the test of time. Some of its advantages cannot be achieved with newer alternatives, which nonetheless, help businesses overcome the shortcomings of legacy EDI deployments.

This is what makes EDI modernization a lucrative undertaking. EDI modernization can help organizations turn the technology into fast, flexible, and adaptive communication railroads that B2B commerce requires in today’s digital economy.

Not convinced yet? See why EDI modernization is essential for modern B2B organizations today, how to do it successfully, and the key advantages you can expect through such an initiative.

Legacy EDI: where it falls short

Older EDI tools typically pose technical and functional challenges that hinder the desired business outcomes. Here are some of the key areas in which legacy EDI solutions fall short:

Birlasoft Enterprise Integration Services

Seamless Integration. Unifying Possibilities

Download Brochure

1. Lengthy onboarding processes: AMS provides continuous monitoring to identify and resolve issues to ensure high availability and optimal performance. AMS providers employ advanced tools and techniques to track key performance indicators, system logs, and user behavior patterns, enabling early detection of anomalies, bottlenecks, or potential vulnerabilities.

2. Rising cost of on-prem systems: Legacy EDI systems are typically deployed as on-prem solutions which require dedicated server and network infrastructure. Maintaining these deployments requires mandatory upgrades and maintenance, which incurs additional costs without any significant value-back. This raises the TCO of the solution.

3. Technical shortcomings: Older EDI solutions do not support modern technologies like APIs and Managed File Transfer (MFT). These are often critical to implementing real-time data interchange, which is essential to modern, dynamic trade networks.

4. Integration challenges: Integrating legacy EDI systems with modern solutions like ERPs can prove challenging, requiring custom connectors and increasing maintenance overheads. In some cases, businesses resort to swivel-chair manual data entry, which increases the risk of data inconsistency, reduces operational efficiency, and creates data silos.

5. Lack of visibility: Lastly, legacy EDI solutions do not offer transaction-level visibility. This makes it difficult to monitor and troubleshoot supply chain issues and track the status of transactions. Ultimately, these gaps manifest as long resolution times, delayed orders, and suboptimal experience for trade partners and supply chain teams.

Despite these shortcomings of legacy EDI systems, the technology remains a crucial enabler of B2B commerce across global trade networks. Why is this the case?

Digging deeper into EDI’s persistence

EDI’s relevance in today’s digital-first business ecosystems stems from its longstanding history of reliability and wide adoption of EDI standards like EDIFACT and ANSI X12. In other words, EDI remains an interoperable solution across key trade networks.

Moreover, EDI is also mandated by authorities in highly regulated industries like healthcare, automotive, and retail, for data security, privacy, and reporting requirements. In a fragmented technology landscape where legacy systems coexist with newer ones, EDI serves as a bridge between these systems. Moreover, EDI is cost-effective, scalable, and works well in supply chains with high transaction volumes.

As a result, EDI has remained the central technology for data exchange in B2B trade. However, newer technologies like APIs and blockchain now extend the functionality of EDI, while facilitating better cross-system integration.

This new perspective informs modern EDI platforms and is a key rationale for modernizing legacy EDI deployments.

EDI modernization: key elements

EDI solutions have now evolved to support modern data exchange requirements of B2B commerce. However, picking the right product only scratches the surface when it comes to the elements of successful EDI modernization. Integration of EDI solutions with enterprise technology systems and monitoring dashboards are equally important to make EDI modernization a success. Here are the four key elements of EDI modernization.

#1. Picking the right EDI product

Lack of flexibility is one of the foremost challenges of on-premises EDI deployments. This is exactly what cloud-native EDI platforms bring to the table. These solutions can accommodate fluctuating transaction volumes, and ensure optimal performance by dynamically scaling the underlying infrastructure up and down. This eliminates the need to support the on-prem infrastructure that hosts legacy EDI solutions and promotes efficient resource usage. Moreover, cloud-native EDI platforms offer built-in security and automation features and compliance controls, ensuring adherence to industry standards.

Stay Ahead

Visit our Digital Transformation page

LEARN MORE

#2. Facilitating monitoring with dashboards

Modern EDI solutions typically offer intuitive and user-friendly monitoring interfaces that are free of technical jargon. This means that business teams can monitor transactions using dashboards and resolve potential issues, which reduces the burden on EDI teams. Business users can independently conduct issue diagnosis, and bolster security measures without relying on IT. Such dashboards also offer a comprehensive and unified view of all transactions, which contributes to deep and granular visibility into operations.

#3. Integrating EDI with the ERP environment

Integration of your EDI platform with the ERP system is one of the key determinants of the success of an EDI modernization initiative. An integrated EDI solution eliminates the need for manual data entry and automates a major chunk of effort that goes into orchestrating trade operations.

The complexity of EDI-ERP integration depends on the EDI platform. If the EDI platform offers pre-built connectors and standardized data formats that map to your ERP product, the integration is simple and straightforward. Custom connectors typically incur ongoing maintenance overheads, and require developers to oversee them. That’s why, it’s prudent to look for EDI platforms that offer built-in integrations to popular ERP platforms like Oracle, SAP, and NetSuite.

Once integrated with the ERP environment, EDI platforms accelerate transaction velocity and enable organizations to easily meet the requirements of their trade partners.

#4. Enhancing operational efficiency with EDI onboarding portals

Onboarding trade partners to the EDI platforms takes a significant amount of time. Modern EDI platforms can be augmented with self-service onboarding portals for your trade partners. These portals offer concise documentation and self-service capabilities that enable trade partners to onboard themselves at their own pace. This not only lowers the burden on EDI teams but also ensures errorless onboarding through automated validation checks. Such portals also standardize the onboarding workflows, which eliminates delays, and accelerates the realization of trade partnerships.

Key benefits to expect with EDI modernization

EDI modernization addresses data exchange issues that plague the core of B2B commerce operations. As a result, it brings significant efficiencies and strategic upsides to trade operations. Here are some of the key benefits of EDI modernization:

Modern EDI platforms keep trade operations up and running by promising zero downtime and best-in-class SLAs.
New EDI systems support cross-organization exchange (B2B), cross-application messaging (A2A), and other possible scenarios.
With cloud-native EDI platforms, businesses can achieve boundless scalability at a lower cost of ownership.
Compared to on-prem and alternative solutions, modern EDI platforms offer a low-risk, high-reliability B2B integration experience.
Modern EDI platforms also offer real-time data management capabilities by extending EDI functionality with APIs.

These technical improvements translate to more efficient, responsive, and faster transactions, which ultimately accelerates business operations. With EDI modernization, businesses can realize revenues faster, and deliver enhanced value to their customers. This makes EDI modernization a lucrative undertaking that remains underutilized in the business strategy playbook.

Was this article helpful?

Encouraging

Good

Insightful