E-Procurement - Electronic Data Integration Comes of Age
30 October 2007 Ian Ford BSc(Hons)
Ian Ford of First B2B Ltd discusses how SaaS is improving integrated electronic trading.
For years the integration of electronic trading data between trading partners has promised more than it has delivered. The point of failure has typically been complexity in integrating back-office accounting and Enterprise Resource Planning (ERP) systems – different trading partner requirements for data format and transport systems have meant that companies have had to endure complex configurations of hardware and software, accompanied by manual mapping exercises often utilising far too much valuable staff time.
This is now changing with the advent of Software as a Service (SaaS) data integration incorporating sophisticated mapping tools. Data integration can now take place with no additional hardware or software and minimal user interaction with the systems.
THE BENEFITS OF ELECTRONIC DATA INTEGRATION
The business case for trading electronically is clear. By using Electronic Data Interchange (EDI), or other methods of integrated system-to-system exchanges, companies have made significant improvements, benefits and savings.
Customers in an integrated electronic trading community can typically expect to reduce manual work and administration, leading to lower process operating costs. Increased productivity means enterprises can expand while avoiding the usual associated costs whenever a company grows
When the timing of the invoice to goods delivery is shortened it improves the likelihood of trouble-free invoice approval. Data integrity can be secured across the supply chain because suppliers' information is automatically sent to customers' systems. Improved processing efficiency increases the opportunity to negotiate early settlement discounts, reducing the cost base for customers.
Just as there are benefits for customers there are also benefits for suppliers. Removing unnecessary process tasks benefits the whole supply chain, allowing improved performance and cost management.
With the business benefits so available, why do businesses still undertake so much manual keying of data into and out of back office systems and why do hard copy invoices, delivery notes, remittances still proliferate? The answer lies in the unsatisfactory experiences that companies have had in the past when trying to implement electronic trading.
Any benefits, savings and improvements rely on the business messages being integrated with the computer systems of the senders and recipients. Lack of automatic, integrated operations means manual intervention and increased costs.
But integration can be tricky. The varied file formats companies use to handle data add complexity to the task, while orders may end up being communicated between two different systems. Hundreds of suppliers lead to hundreds of potential bottlenecks and delays in implementation. The problems of integrating so many varieties of formats were supposed to be fixed by making EDI a common go-between that all trading partners could use.
Unfortunately EDI creates further difficulties that act as a barrier to successful integrated electronic trading. The supply chain struggles to accommodate not only the different formats and standards that have been devised for EDI (more than one 'standard' effectively means 'no standard') but now messages can be written in XML, they may be spreadsheets, fixed width files, comma separated variable files (CSV), SAP IDOC files and several other formats.
With options to send the message via EDI VAN, AS2, FTP, FTP(S), HTTP(S), email and various other transport methods along with the need to install EDI software every time a new trading partner demands electronic trading, the job becomes enormous and a constant drain on IT resources.
Many finance directors are scarred by past experiences and take a jaundiced view of electronic trading, but it is time to look again as new technology is overcoming the problems of the past and making electronic data integration a breeze.
Saas is now transforming many aspects of business IT. Electronic trading SaaS solutions work by providing a simple-to-use, comprehensive, standard communications link to a hosted integration solution for customers and suppliers alike.
The service converts the format output by in-house office systems to the formats required by the recipient trading partner. Companies subscribe for the number of trading relationships they wish to establish with their business partners. The SaaS takes care of the message mapping requirements, communications protocols and dialogue with the trading partners. All this is managed with no need for extra hardware or software. SaaS is 'multi-tenanted' so costs are spread over all users. Firms with small volumes of transactions can benefit without large capital outlay.
With SaaS, all business partners receive the benefits of trading electronically, using their chosen formats and their preferred communications methods. All trading partners gain the advantages traditionally reserved for the largest organisations, simply by paying a rent based on how much of the service they need. A robust, well defined Saas solution will turn multiple formats and transports methods from a disadvantage into an advantage that lowers the barrier to entry by enabling people to use the default file formats supported by their in-house system.
The service allows companies to add new trading relationships as and when required. Electronic Trading via SaaS has no capital cost and needs only a minimum of IT skills.
Organisations turning to SaaS hosted, integrated, electronic trading include:
- Customers who are keen to embrace effective data integration with their suppliers but do not want to impose unreasonable administration and cost.
- Small-scale customers who want to trade electronically with a wide range of large and small suppliers.
- Large suppliers who want to handle electronic trading with many customers, exchanging information in formats convenient to each customer.
- Smaller suppliers who want to meet customers’ electronic trading needs without unreasonable cost or inconvenience.
- ERP providers who see that providing a integrated SaaS electronic trading package, enabling trade in virtually any message format, provides significant added value for their clients.
SaaS data integration takes the agony out of complex, integrated electronic trading and ensures that managed rollouts succeed in providing business benefits for all involved. SaaS provides an easy solution for integrated electronic trading that leads to improved and strengthened supply chain relationships.
You really can have all the benefits, savings and improvements that integrated electronic trading offers. Integrated electronic data interchange is, and always was, a very good idea but too often proved out of financial and technical reach to work effectively.
SaaS removes barriers and makes integrated electronic trading a practical, proven reality while removing the need to deploy expensive human resource to an area that, whilst beneficial to profits, is 'non-core' to any business that is not an EDI solutions provider.