SAP Customer Kellogg Meets Brazilian Nota Fiscal Eletronica (NF-e) Compliance Mandates

I have written several articles about Brazil's new and changing regulatory compliance laws for electronic invoicing over the past few months.  Brazil's requirements are some of the most complex in the world and SAP customer's have been contemplating how to support them and meet the compliance deadlines.

Recently the Kellogg Company, which is the world’s leading producer of cereal, had to meet a tight timeline for compliance with the Ministry of Finance (SEFAZ) in Brazil.  They needed to find a managed B2B/e-Invoicing solution quickly for sending and receiving the XML formats required by the new regulations, and they wanted to implement the solution with as little impact as possible on their existing SAP/IT infrastructure.  The new SEFAZ regulations require companies to prepare outgoing invoices in an XML format and have them authorized in real time before shipments can be delivered.

The Kellogg Company has a consolidated global SAP landscape but with only six weeks until the new mandates went into effect, they didn’t have time for a lot of SAP customization and configuration.  They asked Crossgate, a company co-owned by SAP, to provide the managed e-Invoicing and bill of lading service.  Crossgate's global e-Invoicing services are fully integrated with SAP and provided on a cloud computing platform that utilizes SAP's NetWeaver and offers real-time integration with SEFAZ.

"Our experience with Crossgate was extremely positive as a solution partner to implement the Nota Fiscal Eletronica in Brazil,” said Eduardo Zendejas, EDI IT analyst for Kellogg.  “The solution was deployed with minor impact to our current operations and SAP ERP.”

In the managed service that Kellogg implemented, each nota fiscal e-Invoice (NF-e) is converted to the government-required XML format, validated, and transmitted to SEFAZ for comparison to their master data.  If the address information doesn’t match, the NF-e is not approved and the master data must be corrected manually before the invoice can be reissued. Kellogg hadn’t cleansed their master data for customers in several months, but the managed service included an automated solution that was able to clean their master data quickly so that it would be ready when the new mandates went into effect.

Kellogg realized an immediate ROI from using the managed service because it eliminated expensive internal application augmentations and fully complied with the Nota Fiscal Eletronica initiatives.  Another important benefit for Kellogg was that the service is managed with a local office staffed by people who speak the local language.

The implementation project was completed within six weeks and did not cause any significant business disruptions.

Related Articles:

• Brazil's Complex Nota Fiscal Eletronica (NF-e) Requirements
• More on Brazil's NF-e (electronic bill of lading) Requirements
• SAP/Crossgate Support for Brazilian e-Invoicing - Nota Fiscal Electronica (NF-e)

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Author: Kevin Benedict
SAP Mentor, Principal Consultant/Founder Netcentric Strategies LLC
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
www.linkedin.com/in/kevinbenedict
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Electronic Invoicing and ERP Processes, Part 3

This article is Part 3 in a series on Electronic Invoicing and ERP Processes and focuses on the challenges that third party, ERP agnostic, electronic invoicing service providers face delivering global solutions.

First let's recognize that there are at least two different kinds of electronic invoicing service providers:

1. Independent, third party, ERP agnostic, e-invoicing service provider.
2. Electronic invoicing service providers tightly integrated with one ERP solution and vendor.

Service providers like OB10 promote their any-to-any data formatting and e-invoicing expertise.  They are a third party service provider unaffiliated with an ERP solution.  In contrast, an e-invoicing service provider like SAP's co-owned Crossgate is dedicated solely to supporting the global e-invoicing needs of SAP.

As discussed in Part 1 and Part 2 of this series the biggest challenges with supporting global e-invoicing requirements are often in the ERP processes themselves, and because of that fact, the closer and more tightly an e-invoicing service provider is aligned with the ERP vendor the better.  Service providers like Crossgate that are co-owned and deeply integrated with the ERP vendor (SAP in this case) find it much easier to coordinate changes to the ERP that are required to support global e-invoicing requirements.  Service providers like OB10, which are unaffiliated with an ERP, must simply wait for the dozens of ERPs used by their customers to figure out how to be compliant.  They have much less influence and control over when and how the ERP vendor supports a country's mandates and requirements.

For SAP users engaged in electronic invoicing, EDI and other B2B message exchanges, it is worth a long and hard look at what SAP is doing with Crossgate and the increasing value that the SAP/Crossgate services are offering SAP users. As the SAP/Crossgate business ready network swells with more and more SAP users, the value increases exponentially for the SAP community.

See related articles:

• Electronic Invoicing and ERP Processes, Part 1
• Electronic Invoicing and ERP Processes, Part 2

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Author: Kevin Benedict
Principal Consultant/Founder Netcentric Strategies LLC
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant www.linkedin.com/in/kevinbenedict
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Electronic Invoicing and ERP Processes, Part 2

In Part 1 of this series we discussed the challenges third party, and ERP agnostic, electronic invoicing service providers experience trying to be compliant with government and tax authority mandates due to the need for ERP's to support specific and unique business processes.  The bottom line is that ERPs must be set-up and configured by ERP experts to support many e-invoicing requirements.

I worked on a project where an American equipment rental company needed to be compliant with Mexico's e-Invoicing requirements (Servicio de Administracion Tributaria (SAT).  They were required to use the Firma Electronica Avanzada (FIEL), an advanced electronic signature authorized by the SAT.  The biggest problem we had on this project was not in supporting the required data formats (something most electronic invoicing service providers like OB10 could do), but getting the rental company's ERP to support the required processes.  The key point is that the challenges were not in the messaging and formatting but in the internal ERP processes.

Electronic invoicing service providers, that are ERP agnostic, must simply throw their hands up in the air and step back when there is an ERP process issue.  That means they are increasingly throwing their hands up, because more and more countries are mandating major changes to the way the business processes, including the invoice, transportation, data warehousing, and bills of lading processes must be completed.

In the case of the Mexico e-Invoicing requirements, companies must archive digital signatures and unique invoicing numbers issued by SAT on the physical premises of the business location in Mexico.  This in itself is a new process not included in ERPs without some new configuration and design.

The bottom line - third party, ERP agnostic, electronic service providers cannot in themselves support electronic invoicing globally.  The ERP vendor must be involved as the processes in the ERP must be configured to support each country's unique requirements.

See related articles:

• Electronic Invoicing and ERP Processes, Part 1
• Electronic Invoicing and ERP Processes, Part 3

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Author: Kevin Benedict Principal
Consultant/Founder Netcentric Strategies, LLC
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant www.linkedin.com/in/kevinbenedict
 ***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Electronic Invoicing and ERP Processes, Part 1

The world is a finite place.  Companies have finite resources.  We all have a finite amount of time on this earth.  How can a third party electronic invoicing service hub be all-things-to-all-people?  The answer is, it can't.  The complexities that are mandated by the various country initiatives and tax authorities impact the way the business is run which is outside the expertise of third party e-invoicing service providers.

Let's first discuss independent and ERP agnostic, third party service providers like OB10, GXS, and Sterling Commerce.  These service providers often promote their any-to-any data formatting capabilities that enable their clients to send or receive invoices without having to agree on formats, file specifications, or communication methods.  That is a good feature, but it does not ensure compliance with electronic invoicing requirements.  The biggest challenges in supporting the electronic invoicing requirements of many countries around the globe are business process driven issues in the ERP which companies like OB10 cannot address.  Why?  Without knowing the intimate details of the customer's ERP they can't possibly manage compliance.

Let's take a quick look at Brazilian Nota Fiscal Eletronica (NF-e) requirements.   Under the new regulations, companies must prepare an outgoing invoice in an XML format mandated by the Ministry of Finance (SEFAZ) and have it authorized before a shipment can be delivered. The SEFAZ issues an electronic authorization key that must be transformed into a barcode and printed on the bill of lading (DANF-e) accompanying the shipment. Police or Customs Officials may stop the delivery truck and scan the DANF-e to ensure that the products on the truck match the authorization on file in the SEFAZ database. If there is any discrepancy, the company may face severe penalties or fines.

Notice that the SEFAZ requirement is for the XML formatted invoice to be authorized "before shipment."  Yikes!  This impacts all kinds of processes!  How does this new step in the process get added to your SAP ERP and transportation and logistics processes?  The key point to understand is that many of the business processes that are required to support electronic invoices happen inside the ERP, not in a third party ERP agnostic service provider's SaaS or hosted environment.  ERP experts must be involved in order to support many of these e-invoicing requirements.

See related articles:

• Electronic Invoicing and ERP Processes, Part 2
• Electronic Invoicing and ERP Processes, Part 3

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict
 ***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Interesting EDI, e-Invoicing and Business Process Trends Reported

I read an interesting survey report from Fundtech Ltd. today about EDI, remittance, and electronic invoice presentment with the following results:

• 60% of bank respondents think that combining data, including remittance data, EDI data and electronic invoice presentment, with payment processing is an important trend and a value-added service they should offer to their business clients.
• Only 47% indicate their banks are already pursuing this strategy.

From this report it appears there is growing demand for these types of integrated and connected services.  I can attest from personal experience that e-Invoicing is a rapidly growing area, especially in Latin America and Europe.  I have personally worked on a number of e-Invoicing projects with Crossgate, a company that SAP co-owns.  Crossgate provides e-Invoicing services globally in a SaaS model that is operated in a cloud computing environment.

I spoke with the president of Crossgate, Scott Lewin, a few days ago about why e-Invoicing is a fast growing area, and he told me that companies are simply not able or willing to learn all the details of every country's electronic invoicing requirements.  Many countries in Europe and in Latin America (e.g. Brazil and Mexico) have very detailed business processes and tax authority mandated data formats that are hard to learn and support.  He said many multi-national companies have operations in dozens of countries, and it would take an army of staff to try to support all of the requirements for every country.  As a result, this seems to be a good area for BPO (business process outsourcing) services.

Nowadays companies like Crossgate are developing global e-Invoicing and other electronic business processing services for their clients in their central EDI/B2B exchange.  They have developed best practices for implementations and have global experts on staff to support e-Invoicing around the world.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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EDI Competition in the SAP Ecosystem

For those of us who have been in the EDI and SAP ecosystem for many years, it is interesting to ponder how it has changed.  EDI vendors used to see supporting SAP and SAP IDocs as a sign of maturity, and SAP welcomed all EDI vendors into the SAP ecosystem.  Today, however, most of the legacy EDI vendors are competing directly against SAP which changes the dynamics of these relationships.

Take a moment to review the following list of application categories that legacy EDI vendors are now offering:

• Supply Chain Management
• Transportation Management/Logistics Management
• Global Trade
• Order Management
• Product and Price Management
• Catalog Management
• Supplier Web Portals
• Inventory Management
• Finance
• Master Data Management
• Enterprise Application Integration solutions

With these product offerings, traditional EDI vendors have chosen to compete against SAP in nearly every category.  It is not hard to understand why SAP has recently chosen to offer its own managed EDI service called the SAP Information Interchange.  SAP would rather displace the traditional EDI vendors from their customer base as they are considered direct competitors nowadays that have limited interest in supporting SAP's strategies, architectures, and future product roadmaps.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict  

***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Business Network Transformation, Mobility and SAP Information Interchange

I have been watching the evolution in the SAP mobility ecosystem with keen interest and pondering what it means to the EDI/B2B industry.  The mobility space is changing rapidly and dramatically as online mobile application stores take over much of the responsibility for connecting buyers and sellers of mobile applications.  Many of the traditional ways buyers and sellers connect and work together are being standardized in pre-defined business processes on these sites.  This is a great example of "business network transformation."  There are lessons here for those involved in EDI as well.

In the past, mobile application vendors each set up their own proprietary processes to upload software and/or update their customers' devices.  They all had different ways of marketing and selling their enterprise mobile applications and employed their own unique ways of developing applications and synchronizing data between mobile devices and backend databases.

Today in the enterprise mobility world there is a great deal of standardizing going on.  Apple and RIM have now defined many of the ways mobile applications work and move data.  What are the lessons for the EDI/B2B industry? 

Companies like SAP are now developing and launching their own EDI/B2B hubs with solutions like the SAP Information Interchange.  These are exchanges that define standardized ways for buyers and sellers and other trading partners to connect and share data.  This process is equally as interesting to watch evolve as it is in the mobile application industry.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict 

***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Brazil's Complex Nota Fiscal Eletronica (NF-e) Requirements

I spent many years in the EDI world.  Most of my challenges were from trying to understand the various standards to be used and the data semantics and syntax requirements of my trading partners.  Today, with the rapidly increasing number of e-invoice and other e-form requirements by various governments the biggest challenges are supporting the processes. 

I could handle learning one or two countries' requirements, but what happens when you need to support the data and formatting requirements of 30 different countries, plus each of their complex process requirements?  I have worked with many EDI departments tasked with supporting the global requirements of their multi-national corporation.  One of the biggest challenges is just trying to ensure compliance with all the different legal requirements of every country.

The botton line is that it is not the role of an EDI department to also be the legal compliance team.  It makes far more sense to outsource the global compliance of e-invoicing to a specialist in global e-invoicing that can manage all of the international requirements on your behalf.

Read the press release below to understand the complex business processes that must be supported in order to be compliant with just Brazil's new Nota Fiscal Eletronica compliance requirements.

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Atlanta, Georgia, April 6, 2010, Crossgate Inc., the global expert in business-to-business integration (B2B), has announced the successful go-live of a turnkey e-Invoicing service for seven SAP customers in Latin America to help them meet governmental mandates.

Brazilian regulatory compliance laws are changing, with the hard-copy nota fiscal (invoice) that companies have traditionally used being replaced by its electronic counterpart—the Nota Fiscal Eletronica (NF-e). Under the new regulations, companies must prepare an outgoing invoice in an XML format mandated by the Ministry of Finance (SEFAZ) and have it authorized before a shipment can be delivered. The SEFAZ issues an electronic authorization key that must be transformed into a barcode and printed on the bill of lading (DANF-e) accompanying the shipment.  Police or Customs Officials may stop the delivery truck and scan the DANF-e to ensure that the products on the truck match the authorization on file in the SEFAZ database. If there is any discrepancy, the company may face severe penalties or fines.

“The regulatory compliance processes in Brazil are among the most complex and unique eInvoice requirements in the world, and many companies do not have the required infrastructure to support the real-time interactions between a company’s IT systems and SEFAZ,” said Scott Lewin, President, Crossgate, Inc. “With compliance deadlines approaching quickly and new requirements coming in 2011, companies need to find a managed B2B service that can send and receive the required XML formats and adhere to the mandates defined by SEFAZ, while leveraging their existing IT infrastructure investments.” For another seven SAP customers in Brazil, that solution is Crossgate’s B2B 360 Services and e-Invoicing Network.

Crossgate’s turnkey NF-e Service is fully integrated with SAP and offers real-time integration with SEFAZ. When a customer creates a nota fiscal in SAP, Crossgate converts it from IDOC format to the SEFAZ-compliant XML format and sends it to the Crossgate e-Invoicing Network. There it is logged, digitally signed, validated for compliance, and transmitted in real time to SEFAZ servers for approval. After it is approved, the message is archived in the Crossgate e-Invoicing Platform before being routed to the customer for printing and updating to SAP. The approved XML file is converted into a DANF-e for shipping, and a copy of the NF-e is transmitted to the receiver in advance of the shipment. Throughout the entire lifecycle of the nota fiscal, status messages are monitored using Crossgate’s Nota Fiscal Cockpit within SAP.

If a nota fiscal is rejected by SEFAZ because it does not match their master data, the steps required for reprocessing it can be time-consuming and cumbersome if they have to be done manually. The customer must cancel all of the billing documents, correct the master data in their system, and then reissue the documents to start the process all over again. But with the Crossgate solution, the customer can simply correct the master data and click one button. Crossgate creates a new IDOC, sends it out again, and it is automatically approved.

Crossgate’s solution also supports complete SEFAZ integration for receiving and validating electronic invoices. Because the Crossgate solution is completely integrated with SAP, companies can integrate their eInvoice process with MIGO and MIRO receiving processes. One-click MIGO and one-click MIRO, based upon inbound NF-e data, gives financial managers tremendous power in further streamlining their receiving processes.

Crossgate’s turnkey enablement is fully integrated with SAP, supports full sending and receiving processes, allows business to continue even when connectivity to SEFAZ is interrupted, integrates with the MIGO and MIRO receiving processes, and fully complies with the Nota Fiscal Eletronica initiatives. “The Crossgate solution provides integrated monitoring and validation in real-time, to help SAP customers meet compliance regulations much more quickly and efficiently,” says Lewin. “And we manage everything as a service, with a local office staffed by people who speak the local language. We know the processes, and we can help companies avoid potential non-compliance fines and implementation delays.” Regulatory compliance efforts can be time-consuming and difficult, but Crossgate’s B2B 360 Services and e-Invoicing Network make compliance easy for companies in more than 38 countries.

About Crossgate, Inc.

Crossgate offers the world's first Business-Ready Network, guaranteeing 100% integration of business partners, clients and suppliers. A single connection to the Network means electronic data exchange with any business partner regardless of their technical capability. In addition, Crossgate's B2B-360° Services powered by SAP provide clients direct access to all integrated business partners in the B2B transaction network via their SAP systems. With its legally compliant e-Invoicing Services, Crossgate also provides an innovative and 100% secure solution to cover the entire process of incoming and outgoing invoices, including signatures, global compliance monitoring, and secure automated long-term archiving.  More than 40,000 business partners, representing over 10 industries, currently exchange documents and data via the Business-Ready Network.

Crossgate is represented at four sites in Germany, with operations in Atlanta, London, Milan, Paris, and AsiaPac.  For more information, visit http://www.crossgate.com/.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict

***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Why Does SAP have an EDI Hub Now in 2010?

SAP recently announced the availability of their new managed EDI service called SAP Information Interchange (SII), which is an EDI/B2B hub.  This was not totally unexpected as SAP was already a significant owner in Crossgate, but it does invite the question of why now in 2010?

I believe the answer lies in these numbers, "SAP currently serves the largest network of businesses in the world. Over 89,000 organizations utilize SAP technology to run their businesses.  Upwards of 70% of the world’s economy is executed by organizations running SAP Applications."

I believe the key statistic above is - 70% of the world's economy.  That is a massive number.  That means 70% of the economy is in known systems. That means systems where the source and destination of the data is a known variable - SAP.  The ability and strategy for integrating with this system is known (IDocs, tRFC, web services, NetWeaver-to-NetWeaver, etc.).

SAP, with their efforts around MDM (master data management) and GDT (global data types), also have a relatively good idea of what the data means when it comes from an SAP system and goes into an SAP system.

When so many of these EDI/B2B and data semantic variables are known, the opportunities for standardizing and reusing processes increases.

SII is an EDI/B2B hub for SAP customers.  It is designed to be a centralized B2B exchange where all SAP users can register their EDI and B2B formats and then simply connect with all other SAP and non-SAP users in a subscription model.  Under this model SII is a simple utility service run in a cloud computing environment, in the same manner as your electrical or water utility.  When you need it you simply subscribe and connect.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict

***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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Operational Goals, EDI and SAP Information Interchange

This economic recovery looks to be a slow grind that will test management's capacity to increase production without adding significantly to headcount.  This will force companies to seek greater efficiencies in order to increase production.  Reducing paper processing and administration costs is one way to reduce costs.   Expanding EDI and B2B data exchanges with trading partners is an effective way to reduce costs, but not if it requires an increased headcount of expensive EDI professionals and consultants or more software and hardware.

Management today is wary of adding FTEs when the economy is still relatively unstable.  It is difficult to predict the speed and size of the recovery.  As a result, many recent studies have shown that business process outsourcing and hiring temporary workers seems to be the preferred first steps to increasing production.  Today, expanding EDI and B2B data exchanges can also fit into this category.

The SAP Information Interchange (SII) is a managed EDI service for SAP customers.  It is an EDI service sold and supported by SAP.  If a company determines that expanding EDI and B2B data exchanges with trading partners will enable greater efficiencies and cost reductions, then subscribing to the SII service for EDI/B2B is a very low risk and cost effective step.

SII requires a simple one time set-up for each SAP business process and then a low monthly subscription fee.  There is no requirement for more EDI consultants, staff, software or hardware.  All integration, implementation, operation and support is provided in the SII service.

Forrester's recent report stated that 85% of all companies (that participated in the survey) already use some sort of managed EDI services.  I believe that the number of companies using managed EDI services will rapidly increase for the following reasons:

• Companies must keep operational costs down but increase production now.
• The strongest survivors are now looking to gain through acquisitions of the weakerwhich will require more system consolidations.
• Companies are wary of hiring new FTEs (full time equivalents) until they are more comfortable with their sales forecasts and the state of the economy.
• Companies are adjusting to new economic models and views that they must be more flexible and be prepared to respond more quickly to changes around them.
• Companies must standardize more systems and processes to reduce complexity which causes higher TCO (total cost of ownership).
• Companies must shed non-core operations to reduce costs and increase staffing flexibility.
• Companies must focus their brightest minds on core value and competitive advantage processes and projects.  With fewer FTEs brain power must be focused on what will enable the company to survive and prosper, not on mundane and routine, non-core operational issues.
• Companies must focus on improving cash management - reducing DSO, recognizing early payment discounts from suppliers, reducing inventory, reducing transportation costs through better management visibility, etc.

SAP sales teams can answer your specific questions on how SII works with your current environment.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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EDI Problems and SAP Upgrades

I read two interesting numbers from AMR research today on EDI and EDI projects.

1. AMR research confirms that 84% of manufacturers experience a delay in ERP projects due to B2B integration issues. These ERP project delays can cost multi-billion dollar companies an average of $50,000 per day.
2. A recent AMR study confirms that over one-third of all data in ERP applications originates from external trading partners: customers, suppliers, third-party logistics providers and financial institutions.

Both of these numbers simply point to the importance of electronic data exchanges. Since one-third of the data coming into an ERP is commonly coming in via electronic data exchanges from trading partners, then any break in this system can cause massive problems. One common break point is an ERP upgrade.

SAP upgrades often break the legacy customized integration scripts that have been programmed over the past few decades. If the time to rebuild these integration scripts was not factored into the project plan, you are bound to suffer delays.

One of the solutions now available is using the SAP Information Interchange (SII) to process all of your EDI and B2B needs. The SII (a hosted EDI/B2B exchange) is SAP's solution for processing all EDI/B2B needs for the SAP user community. One of the benefits is that integration between the SII hub and the SAP ERP is simply a standardized one time set-up for each business process. Not dozens of different custom integration scripts for all the various formats of a purchase order or other B2B message. Since the SII hub also uses NetWeaver, many SAP users can simply plug-in using a NetWeaver-to-NetWeaver integration scenario. For those not using NetWeaver, simple IDoc or tRFC connections are easily implemented.

The bottom line is that you can abstract the EDI system from the ERP and integrate them with standardized integrations that are pre-defined and painless. As a result, any future upgrades to your ERP will not break thousands of custom integration scripts. The process would simply involve testing one standardized integration per business process. Since this is a quick and simple process no delays in future upgrades are anticipated as a result of your EDI/B2B environment.

If you are interested in the subject of SAP EDI/B2B and SAP's new SAP Information Interchange, then please consider joining the Linkedin Group called SAP EDI and SAP Information Interchange.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.netcentric-strategies.com
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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More on Brazil's NF-e (electronic bill of lading) Requirements

Under Brazilian law, the NF-e is replacing the conventional, hard-copy nota fiscals (bill of lading)with an electronic counterpart which must be digitally signed and shaped into a particular government specified XML format. For many organizations this switch must be accomplished by April 1, 2010.

Brazil has put in place a different and far more involved electronic bill of lading requirement than other countries. The implementation of NF-e requires real-time reporting to the Ministry of Finance (SEFAZ), which then issues an electronic authorization (along with a bar code) that must be included on the printed paper Bill of Lading which accompanies the product delivery. This is in contrast to the requirements of most countries (see Mexico e-Invoicing) that only require reporting at the end of certain date ranges like months or quarters. Let's discuss this point in more detail.

Under these new requirements a company receives an order from a customer and must prepare a bill of lading in the SEFAZ designated XML format, submit to SEFAZ and receive an electronic authorization which must be added to the bill of lading and then printed before the product is shipped and sent with the product delivery. The term "before shipped" is important. There must be a real time electronic exchange of data that goes to SEFAZ, and an electronic authorization returned before it leaves the warehouse.

If the delivery truck is stopped by the police, the bill of lading can be scanned with a police bar code scanner which queries SAFAZ electronic authorization database and identifies the products associated with it. This must match or you are in big trouble.

Think about the IT infrastructure that must be in place to support these real-time interactions between ERPs and SEFAZ! These processes are new, different and unique and are not supported in traditional ERPs. Most companies will be searching for a managed B2B service that can perform these functions (send and receive the appropriate XML and follow the designated rules and processes defined by SEFAZ) and integrate with their existing IT infrastructures.

SAP and Crossgate (Crossgate is co-owned by SAP) have this service already in place and in production for SAP users. For more information and webinar schedules click here.

A related article:

• SAP Support for Brazilian e-Invoicing - Nota Fiscal Electronica (NF-e)
• Mexico e-Invoicing, Beyond the Basics
• Implementing e-Invoicing
• Electronic Invoicing in Mexico
• e-Invoicing Requirements for Mexico

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.
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New Report Data Supports Need for SAP Information Interchange

According to a recently published Forrester study, as little as 19 percent of enterprises (with more than $1 billion per year in revenue) conduct EDI or other B2B e-commerce with more than 80 percent of their communities. My apologies in advance for being mathematically challenged, but I think these numbers mean the following:

• 81 percent of companies with $1 billion and more in revenue do not use EDI or B2B e-commerce with 20 percent or more of their trading partners...is that right? Or another way of saying it - less than 20% of large companies can implement EDI/B2B with 80% or more of their trading partners. My guess is that companies with less than $1 billion have an even smaller percentage of trading partners exchanging data via EDI.

Forrester also reports that nearly 85 percent of respondents (300 companies) currently use some form of B2B e-commerce services, versus software, in their B2B environments. That is an interesting number to me. I thought there would be more of a battle between the internal EDI department and outsourced EDI managed services - it appears companies are widely accepting outsourced EDI managed services.

Forty-six percent of respondents, according to Forrester, plan on putting more focus on services-based transport for B2B in the next three years. This number bodes well for solutions like the SAP Information Interchange that offers EDI as a managed service to the SAP community.

Why are companies moving toward EDI and B2B managed services? Forrester says companies are looking to reduce costs, convert more paper to electronic document exchanges and improve visibility into the business.

In summary, large amounts of expensive paper documents continue to be mailed and manually processed even within large enterprises with legacy EDI systems and infrastructures. There is a huge need for more EDI and B2B implementations and companies are increasingly turning to EDI/B2B managed services to solve this problem.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.netcentric-strategies.com
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP Information Interchange for Existing EDI Users

Many companies have been operating legacy EDI environments for decades and have long ago captured their expected ROIs. What value then would SAP's new SAP Information Interchange (SII) for EDI/B2B managed services offer them?

In my opinion, if you have hundreds and thousands of connected EDI trading partners running efficiently on a well managed EDI system today, then there is not a great deal of motivation to change. However, if any of the following exist, then it may be a good time to re-think your approach to EDI:

• Mergers and Acquisitions - If an IT department must absorb, consolidate, downsize or transfer IT responsibilities, it would be a good time to look at new and more efficient ways of supporting these activities.
• Annual support and maintenance renewals are required by your legacy EDI vendor - and the high cost forces you to reconsider your current EDI processes.
• High upgrade costs are required by your legacy EDI vendor in order to support new processes.
• There is a corporate mandate to reduce third party software applications and standardize on SAP whenever possible. Utilizing the SAP Information Interchange would enable the IT department to eliminate third party legacy EDI software systems and IT infrastructures and simply plug-in to the SII for EDI managed services.
• Shared services centers are embraced by your company and EDI is an ideal shared service. It can be shared not just with internal departments, but with the entire SAP community to reduce costs and share trading partner connections.
• Large trading partner implementation projects are being planned. EDI implementations are hard work that often involve multi-year efforts. This may not be the best use of internal IT resources. See the articles listed below for more details on EDI implementations.
• SAP upgrades often disable existing EDI integration scripts. This often requires significant IT development efforts to rebuild and reconnect legacy EDI systems. This is a good time to ponder your costs and approach to EDI.

Staffing Resources Required to Implement EDI

The Process of Implementing EDI and B2B

EDI Message Implementation Information for SAP Users

EDI & B2B Relationship Management for SAP Users

The Impact SAP Upgrades Have on EDI and B2B Operations

Challenges to EDI, B2B, Business Network Transformation and Supply Chain Collaborations

SAP's field sales and pre-sales teams can answer additional questions.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
www.netcentric-strategies.com
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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Cloud Computing, EDI and SAP Information Interchange

The SAP Information Interchange (SII) is a big step forward into the cloud computing arena for SAP. All of the components of this service including managed services, EDI infrastructure, servers, connectivity, data mappings, standards support and helpdesk reside in the cloud. As a hub this makes perfect sense. Unlike legacy EDI systems that are located inside the IT infrastructure of one just one specific SAP customer, this solution operates in the cloud for the entire community of SAP users.

Let's consider five SAP customers. In a traditional EDI model, each of the five SAP customers would need to fund and implement their own legacy EDI system, purchase servers, plus hire EDI experts to start long multi-year trading partner implementation projects. Today with SII none of the SAP customers would need to invest in EDI infrastructure, servers or hire additional resources.

When electricity first became important to manufacturing, all factories purchased and installed their own electrical generating power plants. However, once this utility was available on the street out front, they simply connected to the service as it was an ideal "shared service" and the costs of building, operating and maintaining the infrastructure could be shared by the community. I see the SAP Information Interchange in much the same way today.

Cloud computing is perfect in a B2B scenario. It is the SAP community's SSC (shared service center) for EDI/B2B. Costs are lowered, reusability across the community is emphasized, and the support systems are set up to provide services to the entire community for less than companies could operate and support it internally.

All trading partners are registered and their unique maps and data formats are set-up once and loaded into a repository for reuse by other members of the SII hub. Integration with SAP can be standardized as far as possible, and custom integrations can be documented and stored for reuse by other hub members.

SII is a good example of the value of a solution in a cloud computing environment. Everyone in EDI agrees it is a good idea to reuse maps and integration scripts when possible. Everyone agrees it is good to capture efficiencies and lower costs. Everyone agrees that utilizing standards in as many areas as possible increases efficiencies. Everyone agrees that making EDI implementations faster is a good thing. SII is a good start in this direction.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
http://www.netcentric-strategies.com/
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP Support for Brazilian e-Invoicing - Nota Fiscal Electronica (NF-e)

April 1, 2010, is the deadline for many Brazilian companies to support the tough new requirements for e-Invoicing called Nota Fiscal Electronica. SAP's co-owned e-Invoicing and EDI exchange, Crossgate provides support for these requirements for all SAP customers. Here are the details:

SaaS-based, Brazil Nota Fiscal Eletronica service allows companies to meet April 1st, 2010 Mandates

Atlanta, Georgia, Crossgate Inc., the global expert in EDI and business-to-business integration (B2B), has extended the coverage of its on demand B2B services to help customers meet upcoming April 1st 2010 mandates by providing a turn-key Nota Fiscal Eletronica (NF-e) service.

[Remember, SAP co-owns Crossgate and has recently announced that SAP will resell Crossgate's global EDI managed services under the name SAP Information Interchange by Crossgate through the SAP sales organization...read more here]

Under Brazilian law, the NF-e is replacing the conventional, hard-copy nota fiscals with an electronic counterpart which must be digitally signed and shaped into a particular government specified XML format. For many organizations this switch must be accomplished by April, 2010. Crossgate’s on demand NF-e solution is the fastest and most reliable way to meet these quickly approaching deadlines.

Since most organizations are not equipped to comply with such extensive regulation, there is a huge need for companies operating in Brazil to find extensions to their IT systems to handle these requirements. In order to avoid potential non-compliance fines and potential implementation delays, many companies find it best to leverage a service provider to manage the traffic flow as an outsourced service. With the assistance of Crossgate, organizations now have a partner that handles the responsibility for converting, signing, archiving and monitoring the integration with the SEFAZ. Crossgate’s On Demand NF-e Service includes:

· Fully complies with the Nota Fiscal Eletronica initiatives
· Real-Time integration with SEFAZ
· Fully integrated with SAP® R/3
· Eliminates expensive ERP Augmentations
· Turn-key enablement, investment protection, meet the April 1, 2010, mandate
· One on-demand service that supports over 38 countries in the EU and Latin America

According to Scott Lewin, President, Crossgate, Inc., “Brazil has certainly the most stringent set of requirements in global e-Invoicing today and the upcoming April 1, 2010, mandate is only adding to the complexity. Regulatory compliance efforts such as Nota Fiscal are often seen as being time-consuming and difficult, but Crossgate’s B2B 360 services and market leading e-Invoicing Network make it easy for organizations to comply with local Tax Authority mandates in over 38 countries.”

Crossgate also supports the Mexico e-Invoicing requirements for SAP customers.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
http://www.netcentric-strategies.com/
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP EDI, Cloud Computing and Business Networks

SAP currently serves the largest network of businesses in the world. Over 89,000 organizations utilize SAP technology to run their businesses. Upwards of 70% of the world’s economy is executed by organizations running SAP Applications. I am impressed.

IDC's Research Director of Enterprise Applications, Albert Pang stated, "We have reached a stage where a number of tech vendors, including SAP, have amassed enough of a base of customers and business partners that could really reshape how companies are going to be implementing the next generation of business applications.

SAP II (SAP Information Interchange by Crossgate) is a very intriguing concept. It is a centralized EDI and B2B hub that all SAP users worldwide can connect with to exchange EDI and other electronic business documents.

SII has similarities to Linkedin. Individuals do not need to understand the technology underneath the covers, rather they simply invite other people to connect with them. That is the vision and reality of SII. Companies can simply subscribe to the service and invite their trading partner communities to connect via SII to exchange EDI and other electronic data files.

The power of a connected business network is immense. Each time a new company connects a business process to SII it adds to the global repository. These connections are saved, published and made available to the rest of the SAP community. This, of course, removes the decades old problem that has plagued EDI. That is the problem of no reusability of maps or connections.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
http://www.netcentric-strategies.com/
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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Gartner on SAP EDI - SAP Information Interchange

Gartner just issued their opinion on the new SAP Information Interchange (managed EDI services solution) announcement. First, here is how Gartner explains it, "SAP Information Interchange by Crossgate is a B2B gateway that allows companies to exchange purchase orders, forecasts, invoices, delivery notes and other documents electronically via their SAP applications."

For SAP customers with a specific strategy of standardizing on SAP solutions and simplifying their IT environments this will be appealing. SAP field sales teams will now be directly selling this EDI and e-Invoicing solution on SAP paper. This SII (SAP Information Interchange) solution will now be a check box item on new SAP proposals and RFIs, RFQs and RFPs that require EDI and B2B functionality. SAP pre-sales and sales teams will be trained on SII features going forward.

Because this is a managed SAP EDI services solution operating in a cloud computing environment, no hardware, software or EDI specialists will be required to operate EDI in an SAP environment going forward. It will involve a one time set-up and then just a monthly subscription.

"SAP's direct role as an investor in Crossgate and its direct reselling of the Crossgate solution is SAP's strongest ever commitment to a B2B services solution....SAP Information Interchange by Crossgate seems to be the B2B offering that SAP will strategically bring forward for B2B. " ~ Gartner

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
http://www.netcentric-strategies.com/
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP® Information Interchange - SAP's New EDI Solution

The SAP Information Interchange is SAP's new EDI and B2B managed service. It is a managed EDI/B2B exchange service that is operated in a cloud computing environment. It utilizes SAP's NetWeaver platform as a foundation for the service which makes integrating with SAP users that have NetWeaver very simple - almost plug and play. Even those without NetWeaver can activate the service using IDocs or tRFC.

In an article from last week, I made the following statement, "SAP is making a bold move now to eliminate the need for third party EDI and B2B service providers in favor of a simplified SAP supported environment." What does that mean?

Historically, companies would need to purchase an expensive EDI system from some third party specialized EDI vendor. It was a completely different technology platform unrelated to SAP, required in-depth training, specialized EDI knowledge, integration projects, servers, security and 24/7 helpdesk support (related article on EDI costs). This is just to get started. Once the EDI system and resources were in place, long, hard and expensive multi-year trading partner implementation projects would be initiated. For more information read the article, The Process of Implementing EDI and B2B here.

Today this scenario has completely changed. SAP customers can now simply activate the SAP Information Interchange and pay a small set-up fee and then subscribe to the monthly EDI/B2B service from SAP. There is no longer the requirement for servers, specialized training, helpdesk, EDI systems, multi-year implementation projects, etc. For companies wanting to simplify their IT environment, reduce third party applications whenever possible and standardize on SAP this is a big step in that direction. Simplifying IT environments and reducing non-SAP applications is a growing trend. Even in the emerging mobile computing categories companies are choosing vendors like Sky Technologies because they have embedded SAP mobility solutions rather than external third party middleware.

This new methodology for supporting EDI requirements is similar to connecting to the electrical grid that is run by your local electric utility. You do not need to operate the electric power generation plant, the utility manages and operates it. You just need to activate your account with the electrical utility. SAP now has this service available and it is sold through their field sales teams.

You can get more details and pricing by contacting your SAP sales team.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI, Mobile Enterprise Computing and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
http://www.netcentric-strategies.com/
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP Makes Decisive Move in EDI

It is not every day that BIG news comes out of the world of EDI and B2B. I think GXS acquiring Inovis was BIG and Tibco acquiring Foresight was interesting, but today SAP and Crossgate announced that SAP will be reselling and private labeling Crossgate's EDI, B2B and e-Invoicing services. In the world of SAP this is huge!

Some of you may know that SAP is already a co-owner of Crossgate, and that Crossgate's EDI/B2B exchange is tightly integrated with SAP, but it was always sold as a separate service on Crossgate's paper. Now SAP's field sales teams can sell it directly from SAP's price list.

I have a lot of experience working with SAP's sales teams and can tell you that making it to the SAP price list makes a BIG difference. The solution will be called the SAP Information Interchange.

This appears to be a definitive move by SAP to compete directly against GXS, Sterling Commerce and WebMethods. Why would SAP want to compete with these companies? Because each of these legacy EDI vendors has chosen to enter direct competition with SAP. They have been adding more and more business processes to their cloud computing services and threatening to take business away from SAP. SAP is making a bold move now to eliminate the need for third party EDI and B2B service providers in favor of a simplified SAP supported environment.

That is not all the BIG news - In my research I came across a recent report from German daily business magazine Handelsbatt that stated the following, "SAP has filed for approval with the German Cartel office to buy an additional stake in Crossgate."

The announcement of SAP private labeling Crossgate's EDI/B2B Exchange and services, plus this report from the German Cartel's office seems to suggest that SAP has finalized their strategy for EDI and B2B processes now and in the future. These developments do not bode well for Seeburger or other legacy EDI vendors hoping to partner with SAP.

Crossgate Announces Global Reseller Agreement with SAP; Relationship Encompasses Next-generation B2B Strategy

Companies Establish Foundation to Enable Global Business-Ready Network

ATLANTA, Georgia – February 23, 2010 – Crossgate Inc., the global expert in business-to-business integration (B2B), has announced a global reseller agreement with SAP AG, through which SAP will resell Crossgate’s B2B engine and associated partner profiles under the name SAP® Information Interchange application by Crossgate. The solution, available today, allows customers to streamline business-to-business (B2B) processes and enables a business-ready network, and also demonstrates SAP’s continued commitment to delivering additional choice and flexibility to customers through collaboration with partners.

“We estimate that upwards of 50 percent of an organization’s revenue and spend is coordinated with other enterprises utilizing SAP applications,” said Stefan Tittel, CEO, Crossgate. “By utilizing enterprise services and SAP Information Interchange by Crossgate, thousands of SAP customers will be turned into one network and enabled for business-to-business information exchange, transaction execution, and collaboration with each other and with the outside world.”

SAP Information Interchange allows companies to exchange electronic purchase orders, forecasts, invoices, delivery notes and other documents directly from their SAP applications, eliminating the need for legacy B2B translators and electronic data interchange (EDI) mapping tools. SAP customers will now be able to purchase a trading-partner-specific profile rather than building, deploying and adapting one-to-one mappings every time a new business-partner requirement surfaces.

The initial interfaces of SAP Information Interchange will be based on standard intermediate document (IDOC) technology and extended to support enterprise services as defined in a joint solution roadmap. Through the use of enterprise services, all users of SAP solutions will be turned into one network and enabled for “out-of-the-box” information exchange, transaction execution, and collaboration with each other. The resulting business-ready network will help make SAP customers semantically compatible with each other and with the outside world, reduce today’s B2B costs, and make internal ERP processes independent from ever-changing B2B requirements of trading partners.

“In today’s global economy, companies need to meet the challenges of an ever-expanding network of customers and partners,” said Lori Mitchell-Keller, senior vice president, SAP Business Suite Solution Management, SAP AG. “SAP Information Interchange by Crossgate expands our commitment to help our customers integrate business partners around the world, while leveraging the investments they have already made. Enterprise services form the foundation of our applications, and through our cooperation with vendors such as Crossgate, we will be extending that expertise to transform their business networks.”

The official North American market launch of SAP Information Interchange by Crossgate is scheduled to take place at the SAP Insider Logistics and Supply Chain Management conference, Feb. 23-26, in Orlando, Fla. The European launch is planned for the SAP World Tour conference, March 2-5, which will be held parallel to CeBIT 2010 in Hannover, Germany.

About Crossgate, Inc.

Crossgate offers the world's first Business-Ready Network, guaranteeing 100% integration of business partners, clients and suppliers. A single connection to the Network means electronic data exchange with any business partner regardless of their technical capability. In addition, Crossgate's B2B-360° Services provide clients direct access to all integrated business partners in the B2B transaction network via their SAP systems. With its legally compliant e-Invoicing Services, Crossgate also provides an innovative and 100% secure solution to cover the entire process of incoming and outgoing invoices, including signatures, global compliance monitoring, and secure automated long-term archiving. More than 40,000 business partners, representing over 10 industries, currently exchange documents and data via the Business-Ready Network.

Crossgate is represented at four sites in Germany, with operations in Atlanta, London, Milan, Paris, and AsiaPac. For more information, visit http://www.crossgate.com

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Author Kevin Benedict
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP Discusses 5 Year Plan - Social Networking, EDI, Cloud Computing and More

SAP executives at their annual Influencer Summit in Boston on Tuesday laid out a broad outline of the company's five-year product and technology vision. They emphasized integrated business analytics, software packages, and on-demand, cloud-based extensions to applications, to enable customers to avoid difficult upgrades while tapping new capabilities.

For those involved in EDI and B2B integrations and data exchanges this is interesting information. It pulls back the veil on their investment into Crossgate, the cloud computing based EDI exchange, last year. SAP does not want EDI and B2B data communications to be a hindrance to solution roll-outs. They want an on-demand model that can simply be switched on.

EAIs (enterprise application integration) solutions grew out of the need to have a more "orderly" and standardized methodology for connecting multiple applications together and for sharing data across the enterprise's IT ecosystem. This exact same requirement is needed externally among large trading partner communities. They need a method for quickly sharing real-time business data across multi-member and extended supply chains. This is best achieved by using a centralized EDI/B2B exchange that manages the data formats of all participating members and creates a repository of partners and formats that can be switched on - in an on-demand model.

An on-demand, cloud computing model for EDI/B2B, removes the limitations of IT budgets, IT staffing, EDI expertise and EDI systems from the equation. It is a pay-as-you-need-it model. It abstracts the system from the business and makes it a simple choice to connect, not an IT project.

SAP users want to be able to use social networking sites such as Facebook to collaborate, said SAP executive board member Jim Hagemann Snabe. "Companies want to take advantage of these technologies without disrupting business," he said. Much of SAP's innovation focus will revolve around flexible extensions to core applications and processes, which can be developed and deployed quickly, via an on-demand or on-premise model, said Hegemann Snabe.

This is a very intriguing concept. The buzz word Enterprise 2.0 is often being used to describe social networking for businesses. I believe this is what Mr. Hegemann Snabe is describing. It is also the model that EDI and B2B Exchanges are rapidly adopting.

Rob Guerriere writes that the EDI industry is investing a lot of time and money addressing SOCIAL supply chain issues right now. He also states that he believes this is the battleground that will determine the winners and losers over the next 5 years.

Social supply chain issues has to do with being able to find, connect and collaborate with your business partners, vendors and customers in an efficient means and often referred to as Web 2.0 (or Enterprise 2.0 in the business context). At a recent GXS conference (GXS is a leading EDI company that recently announced they are merging with Inovis) they announced the launch of two new tools that addresses social supply chain networks. The functionality includes user groups, threaded discussions with support personal and other customers, as well as the ability to chat and post support tickets.

Social Business Networks (SBNs) is one of the hottest areas, and major corporations and government agency CIOs are looking into today. One of the first and best places for organizations to implement this strategy is in the EDI and B2B integration space. It is the purpose of EDI and B2B systems to connect an enterprise with their network, or community of trading partners. The ability to quickly find customers, suppliers, banks and other trading partners and easily connect with them is a perfect use case. I still believe SAP's investment last year in Linkedin and Crossgate (the EDI exchange) reflects some behind the scenes Enterprise 2.0 strategies.

This week IT research and advisory firm Gartner announced their latest 2009 report “Magic Quadrant for Integration Service Providers”. The EDI exchange that SAP co-owns is now positioned in the Leaders Quadrant. This EDI exchange runs in a cloud computing environment using a SaaS or IaaS (integration as a service) model. Gartner's positioning of this EDI exchange highlights the importance of its global repository of re-usable B2B mappings. Customers can connect once to this EDI exchange and access more than 40,000 pre-integrated business partner profiles, regardless of transaction type or volume. Instead of providing only generic data standards and toolsets, this exchange includes partner-specific mappings, communications, and processes aligned with ERP application installations and upgrades. This is an Enterprise 2.0 model or social networking for businesses.

I invite your thoughts and comments.

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Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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Wal-Mart and Supply Chain Financing Require EDI

In Saturday's Edition of the Wall Street Journal (November 14, 2009) there was an article called Wal-Mart Program Will Aid Suppliers by Vanessa O'Connell. The article described how Wal-Mart, in partnership with Wells Fargo & Co and Citigroup, have created a new Supplier Alliance Program designed to provide supply chain financing to their suppliers.

I have been involved with similar supply chain financing programs in my role as an SAP EDI consultant. These programs most often require EDI and B2B connectivity to work well. Why? Let me first explain the process. It is all about the supplier getting paid faster. That means instead of waiting 60-120 days for payment from the retailer, the supplier delivers the products and then factors the invoice amount through a participating bank and receives payment within 10-15 days. In this case the interest rate and fees charged by the banks are less because of Wal-Marts participation.

The key to getting paid faster is being able to navigate the retailer's invoice and approval processes faster. EDI and B2B connectivity removes the postal service delay, data entry delay and paper processing components of the process. With EDI the electronic invoice is directly integrated with the retailers' automated accounts payable workflow process.

EDI between the supplier and retailer makes the invoice process go faster. EDI between the retailer, supplier and the bank make the factoring process faster. In order for supply chain financing to work well, it requires a good EDI integration between all parties.

If EDI is not possible with a segment of suppliers, then there are companies like BancTec that retailers can contract with that provide outsourced or insourced services to scan/OCR all inbound paper invoices and to process them so they are entered into the SAP or other ERP system quickly.

SAP users can work with SAP Partners OpenText and Crossgate (SAP co-owns this EDI exchange) to automate and optimize their accounts payable processes nicely. Crossgate provides the EDI/B2B integration and OpenText through their Vendor Invoice Management system can automate the invoice approval processes.

If you would like to discuss these in more detail email me.

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Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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EDI, SOA, SAP NetWeaver and Cloud Computing

If you are using custom integration scripts to move data back and forth from your EDI system to your ERP or other database applications, then you are in trouble. The clock is ticking. Business and IT environments change much too quickly these days for any company to be using custom integration scripts.

When I was the EDI Manager of a computer manufacturer I remember studying the spider web of custom integration scripts to see how EDI data got from point A to point B. I remember asking for documentation on the scripts and hearing nothing but laughter. I remember asking what systems would be impacted if a business process was moved from one application to another vendor's application and no one could answer the question.

Custom integration scripts will ultimately damage the business. Why? They are way too expensive to maintain, edit and support. They can not be easily changed and over the years companies can accumulate thousands of them (for a related article click here). Businesses must be able to rapidly change, add and support integrations today.

SOA (Service Oriented Architectures) models for integrating EDI with SAP and other database applications must be implemented. SAP NetWeaver PI is a good platform to implement the eSOA approach to EDI integration. Integrations between the SAP ERP and your EDI system can become services that are stored in the Enterprise Services Repository and available for reuse and editing.

This approach avoids many of the problems caused by most custom integration scripts for EDI. It gives the enterprise the ability to quickly find, edit and use pre-existing services.

Starting in late 2008 SAP has been developing and promoting a new concept for EDI. A network-centric approach to EDI that calls for the use of an EDI Exchange that utilizes SAP NetWeaver in a cloud computing model. All SAP users can subscribe to it and access it using a NetWeaver-to-NetWeaver connection. New Enhancement Packages (SAP updates) will come with pre-developed EDI integration services in the Enterprise Services Repository. It is a very interesting concept that is pointing us to the future.

Here is the biggest problem. Management does not want to hear about fixing something they think works. They don't want to reserve budget to fix what works today even if it is a ticking time bomb. Good Luck!

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Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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Who Wants Cloud Computing Other Than SAP for EDI?

In this article by Gartner's Thomas Bittman, he answers the question on which industries are most interested in cloud computing. He answers the question by listing the industries that have asked Gartner the most questions about cloud computing.

I am interested in this question as well since SAP has been strongly pushing their co-owned EDI exchange called Crossgate that operates in a cloud computing model.

Here is the list from Mr. Bittman:

1. Financial services (12%)
2. Manufacturing (10%)
3. Business and management services (10%)
4. Telecommunications and equipment (9%)
5. Government (7%)
6. Insurance (6%)
7. Oil, gas and electric (5%)
8. Professional/specialized services (5%)
9. Schools and education services (4%)
10. Food (4%)
11. Retail (4%)
12. Healthcare (4%)
13. Media (3%)
14. Chemical and pharmaceutical (3%)
15. Military and National Security (3%)
16. Freight services (2%)
17. Energy management (2%)
18. Membership organizations (2%)
19. Commercial physical research (1%)
20. Other (4%)

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Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP EDI, Inovis and Cloud Computing

SAP and Crossgate (the EDI Exchange that SAP co-owns), are not the only companies talking about EDI in a cloud computing environment. Inovis' chief technology officer was recently quoted saying the following, "Our customers are dealing with a perfect storm of rising partner transactions, governance mandates and reduced staff and budgets. Our B2B cloud integration platform has gotten great feedback as a flexible way to solve these challenges, both for today and tomorrow," said Erik Huddleston, Inovis chief technology officer.


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Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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Crossgate Rises to the Top Category of EDI Service Providers

In this blog article by Rob Guerriere on the recent Forrester report called B2B Service Providers 2009 he talks about the fact that several German EDI companies have quickly risen to the top. Crossgate, a company co-owned by SAP, is one of them listed.

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Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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SAP EDI is a Community Effort

EDI is all about communicating with a community of business partners, service providers and customers. It is not about internal operations and IT infrastructure, but external. It is about your ability to externally communicate business information in the easiest and most cost effective manner to conduct more efficient business.

Traditionally, SAP EDI in large companies with many customers, service providers and suppliers required many internal IT resources, computer servers, security processes, EDI consultants, EDI software systems and hundreds of internal meetings to set-up. This was all before any EDI data was being transmitted. Once all of the internal EDI infrastructure was installed and ready, long and expensive multi-year trading partners implementations could begin.

The challenge with the traditional methodology is that business processes and trading partners change faster than you can implement EDI transactions with them. Just when you finish getting your largest suppliers connected, you acquire a new company and must start over with a new implementation effort. It is very rare that a company can implement EDI with more than 20% of their trading partners. That means 80% of trading partners continue to conduct business using slow paper based processes.

If each SAP customer continues to attempt to implement all of their EDI themselves, it will never succeed at replacing paper systems. Business changes faster than EDI transactions can be implemented.

What is the answer? The community of SAP users must all work together. Like farmers joining together to gather a harvest before the rains.

If each SAP customer could benefit from the EDI implementations that other SAP users have already completed, then the community could provide huge benefits. What would this look like?

1. There would need to be a central hub or exchange where all of the connections from trading partners to SAP customers could be registered and stored.
2. This list of registered trading partners, business processes and supported data formats would need to be available for querying by all members.
3. The registered connections would need to be reusable by other SAP users. This requires that all trading partners' supported data formats and standards be translated into a canonical data model.
4. SAP users would be able to create 1 connection per business process into the hub and then take advantage of the canonical data model to send and receive data from all of the SAP communities' trading partners.
5. To reduce costs, EDI experts at the hub could manage all of the IT infrastructure, operations and support.
6. SAP users would simply connect into this SAP community hub in a cloud computing environment using IDocs, NetWeaver PI, tRFC or web services once per business process.

If 1,000 SAP users registered and connected 10 trading partners per month on the SAP Community hub, you would have 10,000 connected trading partners in 4 weeks, and 120,000 in one year. This phenomena is called the network effect. It is a network-centric approach to EDI and the one that has the best chance of maximizing the value of EDI and B2B data exchanges and reducing the largest amount of paper from the system. It is the green method and the lowest cost method.

In the network-centric method of supporting EDI, SAP customers could eliminate internal EDI infrastructure, hardware, software and headcount. Simple NetWeaver PI connections to the community hub is all that is required for conduct EDI and B2B.

This evolution of EDI from internal departments and expensive infrastructure to low cost external services is similar to the evolution of electricity. In the early days of manufacturing when electricity was first used, each company needed to invest in and operate their own private power generation plant to supply electricity. This investment and effort stopped once communities formed electrical co-ops and utilities that could supply services to the entire community. EDI has reached this mile post.

Last year, SAP began this move by investing in an EDI Exchange for SAP users.

For a related article see: SAP and the Big Switch

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Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant
www.linkedin.com/in/kevinbenedict
http://b2b-bpo.blogspot.com/
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
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