There are many enterprises unable to onboard trading partners efficiently or bring on new business. Why? Because they have yet to digitally transform their organization to support the revenue-driving B2B and EDI exchanges. Without the proper EDI software platform in place to meet evolving business needs, companies struggle to connect and integrate external and internal systems, cloud applications, and trading partners.
In this article, we'll cover:
- What is an EDI Service Provider?
- Types of EDI Service Providers
- 4 Reasons Your EDI VAN Provider is Not Working
- What to Look for in an EDI Provider
- Why Choose Cleo as Your EDI Provider
Here is everything you need to know about EDI providers, including software and services.
What is an EDI Service Provider?
Simply put, an EDI provider is an organization that offers EDI services and/or software to businesses, typically in a managed or self-service package. Though different providers may specialize in particular capabilities or market segments, they all allow companies to transfer standardized data between their trading partners, like suppliers, manufacturers, eCommerce sites, etc.
The best EDI providers prove that EDI services are more than just a data format. The right EDI provider will deliver agility, visibility, and transparency to enable governance, onboarding, management, and visibility processes for its clients, and demonstrate how EDI processes can be a key revenue-generation engine, and lead to understanding the importance of modern EDI services.
EDI services are how companies send, receive, and translate information from one business system to another in a digital, standardized format. This involves connecting to crucial business systems like an ERP, WMS, CMS, eCommerce solutions, accounting software, etc. Modern EDI services are proving to be more technologically convenient, integrating across the entirety of an organization into other workflows for wholesome processing, visibility, and business efficiency.
Whether you are submitting a purchase order to buy goods from a supplier to sell in your store or receiving an invoice from a vendor or partner for their services, standardized EDI documents help ensure the transmission and readability of critical information among your enterprise, trading partners, customers, and other members of your digital ecosystem. But there are many EDI vendors that an enterprise can choose to do business with and not all are created equal.
Types of EDI Service Providers
EDI providers ultimately fall into two categories AS2 or EDI VAN.
EDI AS2 Providers
With AS2 (applicability statement 2) providers, data such as EDI, XML, and others are sent and received via the internet using an HTTP protocol (TCP/IP) through a certified server. AS2 creates a securely encrypted process, without costly annual or transaction fees for unlimited data. In today's digital ecosystem, AS2 is considered the best way to integrate with trading partners and has been widely implemented across many industries.
AS2 can handle any type of file format and requires message disposition/delivery notifications (MNDs) to alert a trading partner when a document or data has been delivered or received. AS2 also can be deployed using in-house IT resources or outsourced through a cloud-based vendor.
AS2 provides a superior method for sending data securely and directly from one source to another.
EDI VAN Providers
In contrast, an EDI VAN (value-added network) delivers EDI transactions through a single connection. A hosted EDI VAN service enables the communication between a traditional VAN and a private network or internet-connected trading partner. Simply put, a VAN is a communication channel that moves and manages data from point A to point B – kind of like a post office. In a VAN, trading partners each possess a mailbox as data is delivered between each mailbox.
This streamlined method is meant to lower the document-by-document processing costs by way of a centralized system with real-time tracking, communication management, multiple connectivity options, local data integration, and rapid message delivery.
However, relying on a VAN has become an outdated way of doing business, especially with more modernized and cost-effective EDI interface options available that offer end-to-end connectivity and solutions to complex integration.
In the 1980s, VANs were appealing because they offered security and reliability. For companies that handle customers’ bank information and other financial records, VANs made a lot of sense. VANs have even evolved throughout the years to provide transformation, storage, and encryption services while maintaining the level of dependability that companies have come to expect.
4 Reasons Your EDI VAN Provider is Not Working
Despite the compelling reasons to use a VAN, there is another side to the coin. And that side features various reasons not to use a VAN. Here are four reasons why your VAN may be limiting your business’s ability to grow and why it might be time to migrate off the VAN:
Cost: To capitalize on a VAN’s benefits, you must pay monthly enrollment and installment fees in addition to per kilo-characters throughput pricing. If you’re a small business that plans on growing anytime soon, those prices can get pretty high pretty fast. And while security was a big draw for the earliest VANs, the fact remains that you’re only as secure as your VAN. Third-party VANs carry with them additional risk – as another access point – that you wouldn’t have if you were handling your data transfers.
Onboarding: Bringing on new partners and setting them up through a VAN can be a complex and time-consuming process. Rapid scaling is something companies need to thrive in today’s fast-moving business environment, and unfortunately with VANs, adding connections and configuring new trading partners can hinder your time to value.
Reliability: VAN outages are a reality, and when your business guarantees uptime and the VAN fails, it can lead to SLA fines, chargebacks, and loss of revenue. Meanwhile, your business is held hostage waiting for the VAN provider to get back online.
Control: Using a VAN limits the amount of control you would have if you employed more modern technology to manage your data. Companies want to be able to adjust and implement the right solutions. VANs, however, dictate the technology choices for you, removing your agency for how you implement EDI.
That’s not to say that VANs are going entirely the way of the dodo, but they certainly seem more like relics than innovation compared with some other technology options available today.
For those companies still on a VAN, rather than continuing to pay these rising costs, risk outages, and give up control, consider more dynamic MFT and B2B integration platforms that provide a central way of doing business. Modern organizations that migrate off the VAN can more easily connect and integrate complex digital topographies. Such technology helps close EDI visibility gaps, ensure 100 percent uptime, and regain control over your business-critical data.
Perhaps you consider your VAN to be something of a safety net. That’s fair, if that’s how you’ve always done business, right? But your competition surely isn’t sitting back and letting a VAN dictate its growth.
Not every EDI service provider can offer the integration tools required to flourish as a modern business. A lot of EDI VAN providers will try to tell you that you’re getting a premier solution or the best EDI software, but “doing EDI” also involves more than just moving documents around. It involves reliably and seamlessly integrating all its associated processes. EDI integration allows businesses to automate their day-to-day transactions in a way that provides business value, such as end-to-end data processing. For example, EDI integration can automate the movement and transformation of data from your front-end EDI system to your back-end ERP solution.
EDI technology itself has been around for many years, but companies are recognizing that they need to modernize their EDI systems to better serve their customers and evolve their businesses.
Modern integration solutions streamline not only your EDI communications and expedite partner onboarding but enable end-to-end connectivity for your entire business community, reducing your dependence on a third-party network and enabling you to migrate off the VAN on your terms.
What to Look for In an EDI Provider
When selecting a new EDI provider, there are many features that you should look for to ensure you are partnering with a company that has the right flexibility and tooling for your business's success.
1. Support for Any Standard or Format
It is so important that your EDI vendor can support any standards or formats that you need (or potentially need). This means complying with ANSI X12, EDIFACT, and Tradacoms standards but also supporting other non-EDI formats, including XML, CSV, and JSON files to serve your customers and partners in all the ways they want to communicate. Being able to transform and orchestrate any data, regardless of the format, is one of the key features of a modernized EDI platform.
2. Automated Business Processes
Do you have anyone on the payroll whose job revolves around manual data entry for incoming orders? Too many companies do, and scalability during peak seasons or as you grow becomes hiring more workers for manual data work. And that’s no way to scale. When organizations are relying on outdated, pieced-together, or legacy EDI technology, employees spend countless hours on manual tasks that prohibit them from focusing on core business objectives. Modern integration technology enables seamless B2B communication and EDI order processing that doesn’t require human intervention and that supports business process automation. Your EDI technology should be helping you accelerate the order-to-cash process using pre-configured EDI maps, not bogging it down.
3. End-to-End Visibility
Visibility around the execution of your EDI processes – and knowing when to act on errors and failed transfers – is extremely valuable. But it’s understanding the demand for your goods and services, including which trading partners are doing the most business and how and when they’re ordering, that helps you better understand your important ecosystem relationships. Custom-coded, one-off, and point-to-point B2B solutions create data silos that don’t offer comprehensive governance and transparency. EDI service providers must provide dashboards for business and technical users to gain customer insight and intelligence and make more informed business decisions.
4. Expedited Trading Partner Onboarding
One of the benefits of modernizing an EDI environment is that it helps make your business easy to do business with. Whether it’s a trading partner or a customer, the very first interactions you have must be well-executed to set the tone for the relationship. So, having the right technology will accelerate the EDI trading partner process because it quickens the configuration and data migration processes, and automates map generation workflows to get interact faster. The result is a better EDI experience, increased time to value, and added credibility as a true business partner.
5. Minimized SLA Fines, Penalties
Missed customer SLAs and mounting EDI compliance violations can lead to costly chargebacks and other financial penalties. The reliability of your B2B communications is critical to ensuring a healthy partnership with every member of your ecosystem. Perhaps the system routinely throws ASN errors or fails to send acknowledgment documents. Such missteps often require manual intervention and further hold up the process. A leading third-party EDI service provider eliminates these errors and will provide alerts and notifications for events and even non-events when an expected document hasn’t arrived. This reduces operational latency and other errors that lead to customer dissatisfaction and costly SLA penalties.
Why Choose Cleo as Your EDI Provider
EDI integration with Cleo Integration Cloud delivers a combination of technology and business process improvement that the modern enterprise demands. Cleo’s data transformation capabilities take advantage of an EDI translator that can accept and transform EDI and any other data format to quickly exchange data with other systems and applications. This helps automate and expedite the B2B communications critical to your bottom line.
But the real difference lies in how Cleo delivers its EDI services. Cleo offers a strategic blend of managed and self-service options, and customers can deploy their EDI tools on-premise, in a private cloud, or as hosted, managed services, whichever strategy your business requires.
For instance, if you’re dissatisfied with your current EDI provider’s response time or lack of support, it’s time to make a change.
And with Cleo, you won’t have to wait for your managed service provider to onboard a new trading partner; Cleo can do it, or you can do it, or there can be a blend of self-service and managed services – whatever works best for your business.
Or, if you’re tired of outsourcing your EDI altogether and are thinking of moving it back in-house, you should check with Cleo first, they can show you how the most cost-effective method based on your desired business outcomes.
There’s no replacement for an experienced EDI provider, and that know-how can yield significant cost savings, faster onboarding times for business partners, and more peace of mind for your entire organization.
The reason? Cleo delivers far greater visibility and control than alternative solutions do.
Traditional approaches to managed services for integration can be costly for a “black box” service, where enterprises have little visibility into and control over their B2B data flows. Additionally, many EDI VAN providers and services only offer partial solutions. Most simply cover EDI, whereas Cleo’s ecosystem integration approach solves comprehensive EDI, cloud, application, and data integration patterns.
You shouldn’t be penalized for expanding your ecosystem. Cleo helps support your business growth while removing EDI integration complexity and accelerating your time to market. Cleo’s vast expertise in flexibly delivering EDI for high-volume production environments ensures the B2B processes driving your business ecosystem are in capable hands.
There are numerous reasons to modernize your EDI platform, including process automation, error reduction, and improved data flow efficiency. Learn why Cleo should be your partner along the way.
Want to learn more about our EDI services?