Electronic Data Interchange (EDI) Software

Advantages of EDI

There are various advantages for companies resulting from the use of EDI compared to the paper-based exchange of documents. These include, first and foremost, faster transmission times and reduced turnaround times, as well as shortened processes overall. At the same time, the accuracy of the information increases, as transmission errors are significantly reduced. Thanks to electronic transmission, the information is not only available more quickly, but also in a more structured form, which simplifies the processing and also the evaluation of the business data. In addition to cost savings and increased efficiency, the use of EDI generally ensures a general optimization of company processes.

How EDI works

A document is generated for the electronic data exchange. This can be, for example, the delivery bill or the invoice. The document is usually generated from enterprise resource planning. Depending on the software used, the document standard can be a proprietary format such as iDoc from SAP or a standard format such as UN/EDIFACT. An EDI interface is required to transfer the data to other systems. This is usually available as an EDI module for merchandise management or ERP.

The recipient of the document may use a different document standard than the sender uses. An EDI converter is used for this purpose. By using the EDI converter, the constant adaptation of the EDI interface of the company's own ERP or merchandise management system is bypassed. When the document reaches the recipient, it is usually adapted to the data structure of the recipient's software and processed further.

Graphic: EDI procedure

EDI communication protocols

NBesides the standards and message formats, the EDI communication protocol plays an important role in the EDI process. These transmission protocols determine the way in which the EDI documents are to be exchanged.

Common EDI protocols include:

• AS1, AS2, AS3, AS4
• OFTP, OFTP2
• FTP, SFTP, FTPS
• HTTP, HTTPS
• X.400 (E-mail protocol)

Transmission protocols are only about how the document gets from the sender to the recipient.

AS2 (Applicability Statement 2) is a secure transmission method in which an envelope is created, so to speak, for the actual message, which is then transmitted securely over the Internet. The message is digitally signed and encrypted. The sender receives a digital confirmation of receipt (Message Disposition Notification MDN) and can thus prove timely delivery if required.

AS4 (Applicability Statement 4) is based on web services. In addition to the possibilities of AS2, AS4 also includes pull support in addition to the push function. This means that it is not only possible for the sender to send messages and receive a digital acknowledgement of receipt, but also for the addressee to actively pick up messages. The AS4 server is permanently available for this purpose. AS4 recipients can return or forward messages. EDI messages cannot be modified during transmission. Confidentiality can be ensured by means of modern crypto procedures. AS4 also enables an automated duplicate check.

The AS4 protocol is used, among other things, for communication in the energy sector (ENTSOG), in the area of international award procedures (PEPPOL).

Tips and question suggestions

More tips and question suggestions for evaluating EDI business processing software

• Check which communication standards are mapped! Are the standards relevant for your industry (e.g. AS4 for market communication in the electricity sector) supported?
• Ask which interfaces the EDI software includes. The software must be able to exchange data with third-party software such as ERP, inventory management or e-commerce applications.
• Pay attention to the security standards of the EDI software or the EDI provider. The software should reflect the current security standards and ensure security in the transmission of EDI messages. The messages should also be stored encrypted in the memory.
• Consider whether you want to use on-premises EDI software or outsource EDI and choose an EDI service provider. Outsourcing is particularly suitable if you only exchange a few EDI messages per day.
• Find out how the transaction activity is presented! For example, is there a dashboard or monitor that gives you an overview of transactions? Can messages be displayed as PDFs via this monitor, sent via e-mail, or downloaded directly?
• Does the software offer audit-proof archiving? Ask the provider whether all relevant data (EDI message, communication log, corresponding ERP file) is stored in an archive. Are there special archive workflows that can be set up?
• Ask the EDI software provider if you will be notified if errors occur in the supply chain. Notifications are important so that you can react quickly when errors occur.