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Who in a Company Uses EDI? Why Don’t I Know?

I remember the shock when I learned that our company had 4 different EDI/B2B systems. Why was I shocked? I was the IT department’s EDI Manager, and up to that point I only knew of 1 system. How could I, the EDI Manager, not know we had three other EDI systems in the company? Let me tell you why.

  1. The Government Sales team had a desktop EDI system to receive and submit RFPs.
  2. The Accounting department had a system to pay payroll taxes via B2B file exchange
  3. The supply chain management team had a system to send XML and flat files for product orders
  4. Then there was the “official” EDI system that my IT team managed

I was quite frustrated to learn that different business units would have the nerve to implement EDI/B2B without my blessing. Later I learned the world revolved around the sun, not me. I was young and inexperienced. Different business units have their own reasons for not using the EDI department. I have heard the following:

  1. The EDI team has an 18 month backlog – I need EDI today
  2. There are not enough IT resources to deliver my project
  3. The EDI department has time, but there are no available software developers to integrate the files into SAP
  4. IT projects have a lengthy review and priority process to complete before anything can be done – I can’t wait
  5. I did not know it was EDI – it’s just an RFP software application
  6. The EDI team said my project was not a priority
  7. No one in the EDI department would answer my emails
  8. I can outsource the EDI cheaper and faster than implementing it internally

Whatever the reasons, business units will find a way to achieve their objectives. If the EDI/B2B team can not quickly and satisfactorily respond to a need, then other means will be found.

I am working on a number of projects now that involve the Accounts Payable department using a managed EDI/B2B service to send Purchase Orders and receive supplier Invoices without the EDI/B2B department getting involved. Sometimes the EDI department does not even know about it. For some of the reasons listed above, the AP department chose to get things automated on their own without using internal EDI resources.

I have also seen a recent trend where large companies are outsourcing their AP processes. They contract with a company that specializes in AP optimization. These services often include the following:

  • scanning of all incoming paper invoices
  • manually reviewing and correcting the digitized document
  • Add the digitized invoice to an approval workflow with integration into SAP or other ERP
  • Convert as many paper invoices to electronic invoices as possible to reduce processing costs. Electronic invoices generally involve a conversion from paper to EDI/B2B.

It is easy to understand why the AP department’s choice of using a managed services provider for optimizing their AP processes and reducing costs, often includes a managed EDI services component. Electronic invoices are simply cheaper and faster to process. The managed services provider can reduce costs and increase profits using EDI/B2B.

Now here is an interesting point to ponder – Why wasn’t this already done by the company if the results are a reduction in costs and faster invoice processing? Why does it take an outside managed services company to introduce EDI/B2B into the vendor invoice process?

I predict that outsourcing EDI/B2B services will become increasingly popular as IT departments and EDI departments are downsized or outsourced. SAP is also developing a number of Netweaver PI based strategies that will make EDI easier to implement and/or to outsource to EDI managed services companies. EDI is being developed into an on-demand service that is a part of SAP’s Enterprise Services Repository strategy. The data required for many business processes will already be identified and made available for use by either internal EDI departments or increasingly by EDI managed services companies. Going forward, if the internal EDI department is unable to quickly and efficiently support a new project, there will be an SAP designed method for implementing EDI directly from Netweaver through an SAP certified managed EDI services provider. EDI managed service providers will be able to connect Netweaver-to-Netweaver and quickly and cost effectively ramp-up and support your EDI requirements without adding headcount or additional EDI software licenses.

Prior to SAP’s active involvement in the EDI solutions arena, they would define IDocs, which are published APIs that can be used by third party EDI software vendors to import and export business data. This was nearly a hands-off approach by SAP. It appears now that SAP believes there is a significant benefit to their active involvement in defining simpler and more efficient means of implementing EDI/B2B.

SAP’s slogan of “Business Beyond Boundaries” seems to identify a new emphasis on helping their customers to more effectively and efficiently communicate business data with their business networks. An SAP system is dependent on receiving accurate and timely data from supply chains, logistics providers, vendors and customers. If existing EDI/B2B systems, implementation strategies and methodologies are in fact an obstacle to a successful SAP implementation, then you can understand their motivations for getting involved now.

I look forward to learning more about SAP’s aggressive 2009 EDI/B2B strategy at Sapphire this year.

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