The Changing World of EDI, B2B and Extended Supply Chains

The world of business, and as a result EDI, is rapidly changing today. Solutions and methods that worked 5 years ago may not support the new reality of the market. Companies are seeking greater consolidation, standardization, efficiencies and cost reductions. Management is evaluating every service to identify if it is a core service that is required to be provided internally, or is a candidate for outsourcing. The following changes in the market are impacting EDI and B2B operations:

1. The rapid adoption of multi-enterprise supply chains add huge numbers of mappings, integrations and communications to a traditional trading partner community.
2. These emerging requirements will require significant increases in the size and expense of the EDI/B2B department.
3. Mergers and acquisitions are to be expected as the norm – IT staff and infrastructures must be preparted for many integrations and systems consolidation projects.
4. Supply chains, logistics, customers, vendors, government regulation, markets and product lines are changing weekly and IT must be flexible enough to effectively support these changes.
5. The traditional methods of on-boarding or rolling out new EDI and B2B trading partners are far too slow and labor intensive to keep up with the demand.
6. EDI/B2B departments must recreate themselves to meet the NEW demands of this NEW reality.
7. A NEW scalable, fast, flexible and available on-demand EDI/B2B paradigm needs to be adopted.
8. Standardized integration methodologies and technologies must be implemented to enable rapid on-boarding of EDI and B2B trading partners.
9. Data and system harmonization must be accomplished. The semantics and syntax of data must be harmonized and normalized across the enterprise to enable rapid and accurate data integration projects.

Here is an example of changing government regulations:

• In May 2009 the Mexican government will change the way companies can send paper invoices to customers. The new regulations require that companies using paper invoicing will now be required to obtain pre-printed invoice forms certified by the Servicio de Administracion Tributaria (SAT) or adopt a solution to send digitally signed invoices electronically to domestic and international customers.

The two excerpts below describe some of the many changes in the world of EDI and B2B:

• Brown Forman had a steadily increasing backlog of EDI project requests, with each transaction requiring multiple weeks of internal effort, and increasing complexity associated with integrating trading partners in locations around the world. “Hiring new employees or training existing ones to include new global EDI requirements would have been cost-prohibitive for us because it would have been so resource-intensive,” said Kathy Pramik, Brown Forman’s AVP & Director of Enterprise Systems.
• Due to recent acquisitions of various businesses, Nemak’s operations around the world have more than doubled. As a result of this rapid expansion, the complexity and volume of EDI and B2B transactions has also increased. The company had various ERP solutions in place and multiple EDI and B2B platforms, teams and locations to support, with no centralization of EDI or B2B integration management.

Traditional EDI is hard work and takes a lot of time, focus and effort. Today companies are often choosing between doing the EDI/B2B work internally with their own resources or using an on-demand EDI and B2B managed services provider. Some of these on-demand services have tens of thousands of companies already on the service and can easily add thousands of new EDI trading partners efficiently on behalf of their subscribers. It is an interesting debate. Companies need to considers the past performances and cost of their internal EDI teams and systems against the efficiencies and low relative costs of using the large scale EDI service providers. Has their internal EDI team been able to quickly and efficiently on-board the majority of their trading partner community, or did they get stuck at only 10-15% of them.

Is EDI a core service that needs to be operated internally, or is it suited to being subscribed to like a phone or electrical utility? Only the management of the company can make that call, but more and more companies are asking those questions today.

SAP is listening to this debate and has taken steps to address the changing market for EDI and B2B. They are standardizing integration methodologies around Netweaver PI, Enterprise Services Repositories, Global Data Types, eSOA and an investment in a SAP Netweaver PI based managed B2B and EDI services company.