Top 8 EDI Myths Explained

Although Electronic Data Interchange or EDI has been simplifying document exchange since the 1960s, there have been several myths surrounding the technology. This is probably the reason why a lot of organizations are yet to adopt EDI for document exchange.

At To-Increase, we have been developing solutions for Microsoft-based ERPs for over 17 years and have our very own EDI solution used by 500+ customers. As an EDI solution provider, we often get a lot of questions about document exchange and some of them do fall in the EDI myths category.

Therefore, in this blog, we will uncover some of the most common myths we have come across in customer conversations. We hope this endeavor will diffuse any apprehensions you might have about EDI technology and help you distinguish facts from myths. If there are still some apprehensions holding you back that we have probably not touched upon in this blog, please free feel to reach out to us.

Top EDI Myths

Below we clarify the top 8 EDI myths and distinguish facts from preconceived notions.

1. EDI is more expensive than traditional document exchange

Yes, we agree that EDI is expensive. EDI and especially EDI via VAN is considered costly as VANs charge per transaction. However, currently, EDI can be delivered by setting up connections on your end but that needs specialist resources to set up, manage, and maintain those connections. Also, as you scale, maintaining these connections at your end will not be sustainable.

And if you think managing document exchange manually is more cost-effective and less expensive, consider the losses due to manual errors, and the time and resources involved in every transaction. Therefore, it is important to consider these expenses and in comparison, implementing and integrating EDI with your ERP actually works out more cost-effective.

2. Too complex therefore expert skills are needed in-house

While it is great to have an in-house specialist to manage all your transactions with VANs and Brokers managing all your partner trading connections, EDI format translations, and even non-EDI, you do not exclusively need an EDI expert to manage your EDI software. In fact, To-Increase’s EDI Studio has been designed keeping business users in mind and is easy to configure using the in-built tutorials and support from our teams.

You can also completely outsource your EDI process if you do not want to manage it in-house. However, that also means you will lose control and there might be delays when there are errors when the EDI process is outsourced.

3. I can use my (Dynamics 365) ERP system as a B2B integration platform

ERP systems help you streamline several processes; however, document exchange is not one of those. An ERP system cannot replace an EDI solution. However, an EDI solution that can integrate seamlessly with your ERP and harness the power of the ERP system can help you streamline and simplify business communication with your trading partners.

An integrated EDI software will help you reap several benefits such as quicker order processing and reduced delivery times besides added accuracy and efficiency and streamlined processes.

4. Managing several transactions and data is difficult with EDI

Transacting with several trading partners translates to large amounts of data and document exchange and this grows as you scale and add more partners. If you invest in a scalable solution, then it should be able to handle large data volume exchanges.

EDI has evolved over the decades and the technology has been upgraded to serve the demands of organizations in the current day. Additionally, EDI standards and guidelines are designed to maintain consistency and for the purpose of streamlining document exchange worldwide. EDI solutions such as To-Increase’s EDI Studio for Microsoft Dynamics 365 Finance & Supply Chain Management are built and improved based on industry requirements and provide improved interoperability, flexibility, and are user-friendly.

5. APIs are better suited than EDI for small to medium enterprises (SMEs)

Some people believe that EDI caters only to bigger organizations that need to exchange large amounts of data and that API is better suited for small and medium-sized businesses. Although API can help you exchange messages using real-time synchronous communications, they are not capable of handling asynchronous communications and the exchange of large amounts of data.

EDI is not used just by large organizations but also adopted by startups and medium-sized companies world over. Additionally, the technology can scale as you grow.

6. EDI is obsolete

Although EDI has been around since the 1960s, the technology has evolved and with the advent of several types of large EDI providers, there have been several advancements in the field of EDI.

For example, besides the adoption of more recent standards there have also been advancements in protocols used to transmit EDI messages such as AS2, HTTPs (HyperText Transfer Protocol Secure), and several more protocols that add a layer of security to the EDI process. Currently, you also have several new connectors and ways to exchange not just synchronous but asynchronous messages too.

7. EDI is not safe

EDI transmission is done between systems either directly or via a VAN or broker. For the transmission of the messages, there are several secure protocols available. The message is usually transferred from an internal system to a VAN partner or a broker that translates the file in the required format and standard based on set guidelines. This file is then transmitted to the trading partner and the information is processed at their end.

This process ensures security as it involves several procedures to maintain control and security of data. For example, user identification numbers and passwords are necessary at certain checkpoints. EDI solutions available today ensure flagging for error messages and validation. Therefore, the data sent and received is accurate and validated this way. EDI protocols give users the option to request acknowledgment receipts from their trading partners besides secure transmission. EDI is a safe, quick, and accurate way of document exchange and leagues ahead of traditional manual document exchange.

8. All EDI vendors provide the same service

As you learn more about EDI, you will understand the difference between the several EDI service providers. While some solution providers such as To-Increase will develop the software and continue to upgrade and improve it based on customer feedback, there are other vendors that offer just the gateway and partner connections such as a VAN provider. Then some Brokers provide a VAN network, set up the connections for your trading partners, a partner portal, non-EDI messaging, and translation services. Some EDI Brokers even offer an end-to-end EDI solution.

Our solution, EDI Studio for Microsoft Dynamics 365 F&SCM can help business users conduct EDI transactions, set up EDI vendors, handle exceptions and errors, and view reports and history inside Microsoft Dynamics 365 Finance & Supply Chain Management. 

If you were to use EDI Studio in partnership with a Broker/VAN/ translator, they would be like the traffic cops and will be based outside F&SCM. It is crucial that you evaluate an EDI provider/s and solution that is a good fit for you based on the best EDI scenario suited to your business requirements.

Why do we think EDI is here to stay?

The fact of the matter is that EDI technology is here to stay and is growing steadily with an adoption of $1.70billion in 2021 globally and is projected to grow to $4.04 billion by 2029 according to this report. Once you surpass the myths, adopting EDI has a long list of benefits. Our customers confidently claim to have experienced added efficiency, lesser errors, and improved processing speed among several other benefits. 

If you are keen to move from manual traditional processes and take advantage of EDI and the benefits that come with moving to a more automated and streamlined process, we recommend continuing your learning journey with us. Download our EDI Toolkit which covers the complex nuances of electronic data interchange. Learn more about the implementation challenges and benefits of implementing an integrated EDI solution, among many other topics that will help you evaluate whether EDI is a technology worth adopting for your organization.