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EDI (electronic data interchange) software is a tool that helps businesses exchange data and information with their trading partners in a standardised, structured, and paperless format. The data is in the form of documents such as purchase orders, request for quotes (RFQs), proposals, bills and invoices. Each document type has a standardised layout and content that clearly displays the information and is easily understandable by all the involved parties.
The benefits of EDI software
EDI software connects businesses in the task of automatically transmitting structured data between each other, without any manual intervention. Here are some of the top benefits of using the software:
- Streamlines your process: EDI software automates the process of exchanging documents between key stakeholders, leading to faster delivery and information processing. This saves a lot of time that would otherwise have been wasted on manually auditing and sharing documents.
- Improves the information flow: Sending and receiving data in a structured format eliminates manual data entry, chances of inaccurate data, and document loss/damage. Flow of accurate information helps businesses smoothly execute their processes and gets the work done in time.
- Saves cost: All transactions on the software are electronic, which eliminates the costs of printing, archiving, reproduction, storage, filing, and postage. EDI software can save businesses from the hefty penalties that are imposed if they lose a vital paper document. It also prevents any disputes that may rise among partners due to illegible handwriting.
Typical features of EDI software
- AS2 capability: Transport data between two servers over the internet using digital certificates and encryption techniques to secure the data.
- Data format translation: Translate the coded EDI formats into workable formats that users can edit.
- Multiple messaging formats: Communicate messages in multiple formats, including industry-specific standards such as EDIFACT, HL7, and X12.
- Alerts/Notifications: Set alerts for key milestones and activities and get instantly notified via email or text message.
- Database support: Support data transfer and extraction in various databases such as MySQL and Oracle.
- Document archiving: Compress and store rarely used documents in a repository for future reference.
- Exception management: Create rule-based workflows to handle non-compliant EDI transactions.
- Third party integration: Connect the application with existing third-party tools to improve data exchange.
Considerations when purchasing EDI software
- In-house versus outsourced EDI: EDI software can be expensive for some small and medium-sized businesses as it requires dedicated IT staff to operate efficiently. Outsourced or managed EDI is a new and emerging concept in this space. A managed EDI service provider demands a basic initial fee and then charges a nominal price based on the number of documents to be shared. This model suits small businesses that share just a few documents each day. We recommend evaluating your current and future EDI demand before deciding whether or not to outsource it to a third party.
- Level of integration: EDI software needs to interact with other software to import/export data. Check with the vendor to ensure that the solution integrates with your company's and your business partners' systems. The solution should also be flexible enough to integrate with any future applications you plan to use.
- Data security standards: EDI software is widely used to transfer sensitive documents among businesses. Therefore, it's vital to evaluate the vendor's security standards. Ensure that the software adheres to the latest security standards and encrypts data during transit and while at rest.
Relevant EDI software trends
- Healthcare, logistics to lead EDI implementation: Wayne Marshall, VP of Professional Services and ISO, EDI Staffing, thinks that EDI isn't going anywhere soon. He noted that EDI continues to grow even after 40 years of its launch, and will be prevalent in the healthcare and logistics sectors. We believe that the EDI market will continue to grow in the coming years.
- Demand for EDI to grow among small businesses: Until a few years ago, small businesses were burdened to implement costly EDI tools to meet the requirements of their enterprise partners. But with SaaS-based EDI software, small and medium-sized businesses can fulfil the data exchange requirements at a budget. This software isn't just cheap, it offers various benefits such as lower infrastructure investment and 24x7 data backup. In fact, businesses report improved quality and reliability in data exchange as well as lower cost after migrating their in-house EDI solution to the SaaS model.