EDI Implementation

Step 3 - EDI system solution development

After the EDI steering committee has selected and approved the appropriate EDI solution, the project then moves into development. During this stage, the five primary pieces of the EDI system are important and play a role in its launch: 

  1. telecommunications medium
  2. telecommunications software
  3. EDI translator
  4. EDI interface
  5. EDI application software
  1. telecommunications medium
    This first piece of EDI is most commonly a Value Added Network (VAN), or even more common recently, the Internet.
  2. telecommunications software
    This piece is not specific to the EDI system, however, plays an important role in the execution of an EDI solution. Usually, the functionality of this software mimics MS Windows dial-up networking.
  3. EDI translator
    The primary function of the EDI translator is to convert the data sent via EDI from the X12 format into a format that is more compatible with in-house systems and applications.
  4. EDI interface
    The EDI interface completes the final translation and reformatting of the transferred data. When the EDI translator completes the conversion of the data, the interface reformats the data into a format that can be easily used by the in-house EDI application software.
  5. EDI application software
    The EDI application software selection is a very important aspect to the success of the EDI project. Choosing the right software package is crucial.

Choosing an EDI Network

EDI network communications exist in two primary methods. First are Point-to-Point Communications and Value Added Networks (VANs).

  • Point-to-Point Communications take place when lines are established using standard communication protocols between trading partners. The connection can be set up as a leased line, which is paid for on a monthly basis and is readily available for electronic data interchange, or as a dial-up line where the communication or information transfer is established in a way similar to a telephone call. A dial-up link allows senders to batch transactions and make connections to send at certain points. A dial-up link is a more cost-effective approach when the amount of transmitted data is low.
  • VANs are the most widely used method of EDI. Where point-to-point lines can present scheduling problems among trading communities, a VAN is a convenient option that utilizes a mailbox service so business can continue. In this method of communication, EDI transactions are delivered to the recipient's mailbox where they are stored until accessed. It is important, however, that when using a VAN for EDI, all trading partners must agree on the same EDI standard format.

Deciding what type of EDI network depends on a variety of variables. The following considerations must be made when choosing the network type for your EDI system:

  1. In-house data processing operations - this aspect to business operations can be a more significant factor in choosing an EDI network service (VAN) than how modern the technology is which the vendor is utilizing. When using a VAN, trading partners are free to connect with the network, transmit or receive data, and then disconnect as the data is not actually sent to the trading partner, but to the server that routes the data into the correct mailbox.
  2. Number of partners in the EDI trading community - the reach of the network is also an important consideration that ultimately needs to be address based on the company's needs and which vendor addresses those requirements. A good tip is to list the members of the trading community and the EDI networks they use before speaking with an EDI outsourcing vendor.

Choosing an EDI Vendor

First, it's important at this stage to determine how much a VAN can and is expected to do and determine how you want to begin using an EDI solution. Some turnkey programs simply turn the system on during different stages of the implementation process, where larger companies looking to add smaller suppliers to their trading community will include training and education to the process to ensure all systems are working properly for all partners. Should your company require this level of service during EDI implementation, it is important that you discuss this with vendors to ensure availability and cost.

Second, pricing is also an important consideration to make when choosing an EDI vendor as structures can vary greatly. Depending on frequency, size, volume or even time of day, pricing can be greatly varied. Prior to contacting a vendor, it is important to establish transmission patterns so that the vendor can build out a pricing structure based on this information.  It is also important to be aware that hidden charges may exist and any limitations or ceilings on the number of transmissions need to be discussed at this stage.

Third, it is equally important to consider the vendor's lineup of added services. These additional offerings, including consulting and community liaison services, add value to the system and can benefit your EDI system.

Finally, before you hire a vendor for EDI services, it is important to evaluate their involvement and consideration for EDI standards. Participation in such groups is an indication that they are concerned with providing quality EDI services. Along these same lines, your company will find it useful to evaluate the vendor's reputation and credibility in the industry and if they have strong financial backing which may indicate longevity in the industry.

Public Network EDI Vendors

Working with a public network EDI vendor is an option for your company; however, there are a few things you need to consider before making this decision. First of all, a majority of these companies are new to the EDI industry and have been traditionally regarded as data movers and have experience operating large packet switched networks. In addition, although these companies do not offer many extras such as EDI translation software, they do have a list of EDI software packages they have found work well with their networks.

While it may seem that these newcomers do not have the expertise to properly run your company's EDI system, their entrance into the EDI outsourcing industry is not by accident. Many of them matriculate from network providers or hardware vendors and have impressive resumes in this field. Between their network expertise, financial resources, and alliances with established EDI software and service providers, these companies are often a strong and cost-effective choice for EDI services.

Legal Requirements for EDI

EDI implementation can change more than just the way a business conducts daily processes and communications. Through the integration of an EDI system, a company will also likely experience changes in the organizational policies. For example, EDI integration may change the way documents are stored, how they are archived and how they are recovered, and auditors must understand and endorse these new procedures.

Moreover, EDI changes the way legal considerations are carried out as well. Instead of each document containing the terms and conditions of an agreement, these same legal conditions are addressed with EDI documents which outline and establish that these terms are in effect throughout the EDI transmissions. It is important for the legal counsel to draft, review and approve these terms.

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