What is EDI? What are the main EDI integration challenges?

Electronic data interchange (EDI) is the official language of businesses worldwide. The role of EDI is crucial to businesses and forms the base for B2B integration. To start with, let’s look at a more formal EDI definition.

“Electronic Data Interchange (EDI) is the process of exchanging information electronically in a standard format between two organizations for business purposes.”

It is a modern approach to the traditional paper-based exchange of business information as it standardizes the information which makes the whole exchange process quicker, more streamlined, cost-effective and error-free. The EDI standards are issued by institutes and societies such as EDIFACT, HIPAA, ANSI X12, etc. each having a specific application for industry and are exchanged by enterprises (also known as trading partners) for business transactions.

EDI have been around for a long time now. Numerous processes are linked to EDI integration such as file transfer and translation, parsing of EDI documents and finally integration with back-end applications, such as an ERP, CRM application, etc. All these processes face the following challenges –

1. Inconsistencies in the Format – Though EDI has a standardized version, sometimes enterprises have their customized versions of these documents each having unique attributes, structure, and schema. Every trading partner has their own set of business rules and regulations for individual data fields and elements which may or may not be the same for the other partner. This gap creates inconsistency when it comes to integration and creates fields mismatch or wrong data entries. There are cases when EDI transactions are rejected due to data fields that were marked as ‘optional’ but turned out to be ‘mandatory’.

2. Growing Trading Partners – As an enterprise embarks on a growth journey, it onboards new trading partners. Every new partner will require new configurations for receiving and sending information which will lead to creating new processes/rules as per the partner’s transformation logic and business rules. This requires multiple rounds of conversations with the partner to reach consensus on terms and conditions which makes the partner onboarding process cumbersome and elongated, which is one of the main bottlenecks of any B2B/EDI Integration project. Enterprises need a robust integration platform that can simplify the onboarding process.

3. Increasing Volumes of Data – Ever increasing data and data sources sometimes require upgrading the existing infrastructure, software and hardware. This means changing or upgrading the deployed enterprise resource planning (ERP) programs, customer relationship management (CRM) software, accounting tools, etc. The change in underlying software disrupts the EDI connections and makes the upgrading of the partner ecosystem mandatory. This comes at an additional cost and at times hinders the organization to spend more than what was planned or refrain from innovating to maintain the status quo of system infrastructure hence jeopardizing the relationship with the trading partner and hindering the integration process.

4. Multiple Communication Protocols – An enterprise generally has dozens of applications running on its systems and as a result multiple communication protocols dealing with these applications. To integrate all these applications is a mammoth task as the flow between these applications needs to be automated after translating them to the common schema which can be understood by partner systems and internal ERPs

5. Security is an Issue – As the whole concept of EDI is to communicate with the business trading partners, issues such as security of data being shared, breach of trust, platform security and legal problems are always hovering around. An enterprise needs to make sure the data shared with the trading partners are securely transferred without any threat and change in its semantics to enhance business continuity without any hindrance due to the external or internal security threats.

So, an EDI integration is full of challenges, some of them can be controlled by an enterprise and for the rest of the complex integration scenarios, an enterprise needs to deploy an external integration solution/platform to get control over their data and govern the way data is transformed and transmitted. Here are the few ways through which an EDI integration solution can help an enterprise –

• The EDI solution will help in managing multiple partners and their different applications/systems. It will help in connecting with partners ecosystem seamlessly whether it is hosted on the cloud or on-premises

• The EDI solution will make use of a robust data mapping tool to correctly map the data fields from one format to another. Along with that, the business transformation rules can be applied to the process orchestration. This is the reason why a robust data mapping tool is required to support the enterprise’s complex transformation logic

• The EDI solution should be cloud-native which is easily scalable and can handle large volume of data thus providing a long-term feasible solution. The cloud-native solution will provide real-time EDI integration and requires no hardware or software investments. The changes or updates in the business requirements can be easily deployed on such a solution as it harnesses the power of the cloud to deliver seamless integration

Conclusion –

As enterprises worldwide looking to grow, business process automation and real-time information sharing remain their desired end state. EDI integration role is important in preparing the enterprise to be scalable and agile and most importantly to have total control over their data. It ensures business continuity with a seamless flow of information between trading partners and greatly minimizes the man hours by automating the ordering process thus saving businesses’ precious time and money.


To know how DXchange can help in your EDI integration, contact us!

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