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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 to implement 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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