1EDI_BuyersGuide_v5.pdf

EDI BUYER’S GUIDE

Introduction

EDI 101

Selecting the Right Solution

Buying Process

2

3 - 5

6 - 11

12 - 13

TABLE OF CONTENTS

11EDISOURCE BUYER’S GUIDE

For more than 25 years, 1 EDI Source, Inc. has focused on solving our customers’ EDI challenges. Through this experience, we have had the privilege of working with thousands of customers as they evaluated their EDI solution options. Every company approaches the evaluation of their mission-critical EDI capability differently; ranging from thorough, in-depth evaluations of the candidate solutions to less detailed product feature assessments. Through our years of experience, our customers have taught us a great deal about how to identify, evaluate and ultimately select the right EDI solution. The purpose of this guide is to present the most impactful best practices that our customers have utilized in their approach to soundly invest in an EDI platform.

<34% of POs Are Electronically Transmitted> Perhaps the most important aspect to understand about buying an EDI solution is the potential impact to the organization. A study entitled “A Comparison of Supplier Enablement Around the World,” Aberdeen found that only 34 percent of purchase orders are transmitted electronically in North America. The average cost of those paper requisitions was $37.45. When requisitions were transmitted using EDI, the average cost was reduced to $23.83 for an average cost reduction of more than 35 percent. So the data is clear, there is a compelling case to automate B2B transactions and there remains a great deal of opportunity for more transactions to be automated.

In addition to the general business case for automation, organizations are driving towards greater visibility into the supply chain to support best-in-class supply chain management. Other organizations are motivated by the compliance with standards and regulations that some EDI solutions can provide. However, if you are curious as to the most popular reason our customers decide to move off paper based or less-automated solutions, it is because these manual processes constrain top-level revenue growth. EDI solutions help organizations grow.

The good news and bad news for an organization looking to buy an EDI solution is that there are a lot of options. There are very small vendors and there are large organizations that include EDI in their product suite. There are companies that have products built on legacy technology, and there are solutions based on the latest platforms. There are low-cost, web-form solutions that offer less automation and integration, and there are custom solutions. But, the good news is that this guide can help narrow down the list of options and get you to the right partner for your organization.

We wish you the best of luck in your search for the best EDI provider for your organization. We hope that you will find this guide helpful as you embark on your EDI solution evaluation process. Regardless of whom you ultimately choose, it is our hope that you find a partner that delivers the kind of business impact that we know is possible.

INTRODUCTION


SAVE 34% WITH EDI$23.83 EDI Cost

$37.45 Paper Requisition CostVS.

Optimize Allocation of Resources EDI systems can dramatically reduce the amount of manual data entry required to process key business transactions, allowing current staff to be reallocated to more value-added activities.

Error Reduction By automating the integration of EDI transactions with back office systems, data integrity of the transaction is maintained throughout the process; eliminating the risk of human error when manually processing business transactions.

EDI 101


Why EDILike any initiative to improve your operations, an upgrade to or implementation of EDI should be approached and evaluated as an investment in the business. Once the right EDI system is implemented, the rewards for your business are more than worth the time and investment.

We have observed that there are typically three reasons when a business decides to implement a new EDI system: • A valued customer requires EDI as their preferred communication method

• Antiquated systems and/or manual processes are constraining productivity and efficiency

• Compliance with standards and/or regulations requires EDI automation While customer demands and efficiency improvements might start the conversation about moving to a new EDI platform, there are other items to consider when deciding the potential return on your investment (ROI).

EDI Process Overview

EDI 101


Improve Customer RelationshipsYour EDI trading partners will also likely be your largest customers. When antiquated systems handle EDI poorly, the relationship with your customers can suffer; negatively affecting your ability to grow your business and impacting your cash flow.

Manage by Exception Legacy EDI systems can require excessive management to ensure that documents are processed correctly. Switching to a system that follows a “manage by exception” model allows you to spend less time managing your EDI transactions and more time managing your business. Your expectation should be that the system will reach out to you via email, text message or other alert only when you need to get involved, otherwise the system should manage itself.

Faster Trading Partner OnboardingQuick onboarding of a new trading partner could mean the difference between winning a new order and being left behind. Legacy EDI systems can take weeks to onboard a new trading partner, while modern EDI solutions can cut that time dramatically by automating much of the onboarding process. This allows you to react more quickly to growth opportunities.

Move off Vendor Portals New vendors are typically required by larger customers to use web portals to process business transactions. These portal systems enable your customers to realize the benefits of EDI while your business fails to feel the positive impacts of automation. While these portals are effective for small volumes, as both transaction volumes and the number of customers grows (and more portals), the process of logging into multiple portals each day quickly becomes an arduous and expensive endeavor. An integrated EDI solution can eliminate the need to use vendor portals and allows you to realize the benefits of EDI automation.

One System of Record As more of your business is conducted via EDI, your EDI solution will replace your old filing cabinets full of paper documents. In order to be effective when researching a particular transaction, you will need an easy, intuitive search capability to quickly find the business transactions for which you are looking. The significant productivity gains of EDI are lost if your current system takes hours to locate documents.

After the initial implementation, where else should you look for ROI?The accounting team will typically be the first team to realize measurable positive impacts of EDI enablement, including the following:

• Customer payments will be timelier

• Fewer compliance deductions, fines and/or chargebacks

• Reduced pricing mismatches

EDI 101


How It WorksJust like when selecting an enterprise resource planning (ERP) system or accounting package, EDI software must handle a variety of tasks reliably and in a cohesive manner. EDI software automates and integrates B2B transactions, and as a result of that there are many moving parts that need to be considered when choosing an EDI solution.

Translation

EDI is a method of communicating business documents predicated on an accepted set of agreed upon standards and rules. The process of translating an EDI document is critical in the EDI workflow to ensure that the document received is a valid and acceptable document. While the process of EDI translation can be considered a prerequisite for any EDI solution, not all EDI translators are equal. The quality of the translation capability is measured by the degree to which it is automated.

Data Management An EDI solution is uniquely positioned to record the milestones of internal processes as they relate to business conducted with trading partners. A system that provides a full suite of alerts and an easy to use dashboard to review these alerts allows users to manage by exception. Managing by exception enables organizations to realize the full operational value of EDI, relying on the EDI platform to do its job while you focus on growing your business.

Integration

Integration is a means of moving data from one system to another. In practice, integration often involves bridging the gap between the disparate business practices of two or more different organizations with minimal impact on the organizations’ internal business processes. Since most commercial or custom enterprise resource planning (ERP), warehouse management systems (WMS), and transportation management systems (TMS) systems do not natively accept EDI formatted transactions, a key role of the EDI solution is to integrate with the back-office business system.

Communication

The first and last steps your EDI solution will perform are related to communications. The communication platform will send the EDI documents back and forth over the internet to complete transactions. The EDI solution you select should be able to communicate automatically using the method required by your trading partners. Setting up EDI communications should be straight forward and intuitive, included as part of the overall EDI solution rather than as separate technical components.

Mapping

An EDI solution’s mapping capability will convert a file from one format to another format that a back-office system understands. Common data formats supported by a top tier mapping capability include:

• EDI files • Flat files • Named record flat files • XML • ODBC

Mapping may be accomplished through a mapping tool within the EDI solution or as a service by the EDI provider. In order to take on EDI mapping internally, you will depend on an internal skill set, frequency of new trading partners, and ease of use of the mapping tool.

FIND THE RIGHT SOLUTION

Monthly Transaction Volume500

Software / SaaS Solutions

SELECTING THE RIGHT SOLUTION


Prior to selecting the specific solution that is the right fit for your business, narrow the potential providers based on the two primary solution types: Software-as-a-Service (SaaS) solutions and web-form solutions. Software (on-premise installation) and SaaS solutions offer a more comprehensive approach to EDI while web-form solutions can help trading partner relationships that involve low transaction volumes. The chart below depicts the two primary drivers, level of automation and transaction volume, which drive an organization beyond where web-form solutions can help to where software/SaaS solutions are typically the right fit.

Solution Types

Software / SaaS Solutions • Does your trading partner(s) expect a high level of precision that only automation can ensure?

• Can you benefit from integration with your back-office system?

• Do you require a solution that can be configured to automate your specific processes?

• Does your organization exchange (send or receive) 500 or more EDI documents per month with your trading partner(s)?

Web-Form Solutions • Do you have a designated resource to manually manage transactions and data entry?

• Do you want to become EDI compliant without the need for software installation or hosting with a specific trading partner?

• Does your business exchange (send or receive) less than 500 EDI documents per month with your trading partner(s)?

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Web-Form Solutions

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EDI 101


Key Considerations for Selecting EDI Software

What is the technology in which the software is written?

Many EDI solutions on the market have been in their current state for decades. Look for an up-to-date back-end database and an application written in a modern framework like .NET.

Is the company innovating and growing?

Finding a provider for your EDI solution is an exercise in determining the right fit for your organization now and in the future. Your provider should have a strong solution today and be investing in product enhancements and new offerings to continually support customer success.

Where is the company headquartered?

Some EDI providers geographically dispersed across the globe. Identify where your development and implementation resources are located to avoid delays in implementation and communication barriers. Can your managed services team communicate directly with development by walking down the hall? Can your hosted system provider have a face-to-face meeting between the production IT staff and the implementation team? These are critical considerations when your company’s financial future is at stake.

Have you actually seen the software in a demo?

You must see the software in action from setup, to mapping, to daily data visibility to fully understand if this is truly an enterprise solution that can support your company’s critical operations for the coming years. If your EDI data is just going into a black hole and coming back converted to your format, you may have challenges maintaining your EDI solution.

How unique is your business? If your business requires flexibility, has specialized processes, or uses custom systems, verify that the EDI solution can adapt to your needs. Most EDI solutions are rigid and offer some basic settings that require custom development. Be sure business rules can be configured in the solution without custom programming to limit the total cost of ownership.

EDI 101


How are you onboarding a new trading partner?

Traditionally, adding a new trading partner has been a manual task with significant data entry and configuration. A good EDI solution will automate the entire setup for you using an intelligent algorithm coupled with a database lookup of common trading partner information.

How are you made aware of errors?

Errors often cost your business the most money and can damage important customer relationships. They also cause the most ongoing work for the EDI coordinator in the long term. If a transaction is not acknowledged, how will you know? How will you find transactions with errors? What if an invoice is rejected? These critical questions should be answered by a simple consolidated screen interface allowing alerting, search, data repair and resending in a matter of seconds.

Does the company offer training and support?

Engage with a provider that can lend business expertise in the implementation of EDI. It is not enough to offer a solution. You need real EDI professionals to facilitate the go-live process and be available to support any future issues. Be sure you can immediately access your support team. When your client demands immediate answers, your EDI support should be there to help. Also, if required, your provider should offer direct EDI and solution training in a comfortable face-to-face environment or over the web.

Is the company able to provide you access to the tools if you choose to be self-reliant?

As your business grows, you should be able to take the reins on your EDI operations. This is the most cost effective way to run your business. In the long run, the option to own your mapping and configurations process is a critical option to look for in EDI software.

Does the company charge transactions fees?

A savvy buyer will investigate the return on their EDI investment as well as the payback period of software based (non-transactional) solutions compared to web-form (transactional) solutions. Transactional models are rarely a good model for the long term, even though the up-front costs can be lower.

EDI 101


Product Functionality Descriptions

DashboardsHow does a business effectively manage by exception? How can you monitor key data, errors and workflow using an EDI software solution? The answer is by leveraging a dashboard, providing you visibility and access to your entire EDI operation. When evaluating EDI software solution dashboards, keep an eye out for an intuitive interface and the ability to quickly find the information you are looking for to retain the efficiency benefits of EDI enablement.

• Can you drill into data quickly?

• Can you create tailored views by individual users?

• How long does it take to research an error?

• Can you quickly find related transactions?

Manage by ExceptionTime is of the essence in any organization, and when evaluating EDI software solutions it is important to make sure users will not have to “babysit” the system. Watch for configurable, proactive and reactive alerting options along with user-friendly reporting and error management capabilities to ensure that time is well-spent in the system.

• Is there proactive alerting prior to an issue occurring?

• Can the frequency of alerts be configured and can it be sent to different individuals?

• Are errors easy to manage?

• Do reports make it easy to drill down into errors?

TechnologyInvesting in a new software solution raises many questions—specifically surrounding long-term support and development. Make sure to ask your potential provider to explain its commitment to product development and advanced technology. EDI software solutions bolstered by up-to-date technology innovation and user-driven enhancements serve as the foundation for profitable growth.

• Does it have a modern intuitive interface?

• Does it support current technology?

• Is it written in a supported code base?


IntegrationAt a time when companies are turning to EDI to deliver more value to the organization, integrating EDI and enterprise resource planning (ERP), accounting or other back-office systems can provide tremendous benefits. Ask potential providers about integration options and software partnerships to ensure that system integrations are a core function of the solution, and their services teams have experience completing similar projects.

• Do you have a non-standard back office system?

• Are you able to integrate into multiple file formats?

SecurityWhether you are exchanging HIPAA electronic patient health information (i.e. ePHI) or other important EDI documents, software security must be top-of-mind. To avoid intercepted data and other vulnerabilities, check with potential providers on what security methods are implemented in the proposed software solutions. Many times, a solution provider will have various protocols in place for both internal and external software users.

• Can user access be restricted by individual user level or through role based security?

• Is the database encrypted?

• Does the application support multiple levels of EDI security?

OnboardingAdding a new business trading partner to the EDI software solution should be an easy process — not a difficult one. Be sure to ask potential providers about the trading partner onboarding process and if it is handled by the EDI system end users or by system administrators with technical expertise. To support business growth, investing in a customizable and configurable solution supports long-term, sustainable trading partner relationships.

• How much time does it take to set up a new trading partner and their associated transactions?

• Can document mapping be done without going to the solution provider?

• Can document maps be customized and configured based on specific business processes?


Delivery OptionsIt comes as no surprise that all customer business needs are unique. Partnering with a provider that is built around the concept of scalability and features a variety of solution offerings can position a company to capture market opportunities and expand significantly. Make sure to ask potential providers about solution implementation options—including managing your own implementation and support in order to leverage your company’s operations and internal talent.

• Are there multiple delivery options (SaaS, on-premise software, managed EDI)?

• Can implementations be managed by internal resources or do solution provider resources have to be engaged?

• Can ongoing support be managed independently?

Training and SupportTraining and support are key attributes to a company’s success in day-to-day EDI software solution management—which is why it is important to choose a provider that is making good on its commitment to deliver premium customer service and training offerings.

• How in depth is training? Are live trainings offered or are they delivered via tutorials?

• Is training conducted by professional trainers?

• Is domestic support in the same office as headquarters?

• Is first level support included?

CompanyChoosing an EDI software solution provider can be an overwhelming task. In assessing different companies, look to understand the company’s history, core business focus, client base and growth. It is important to see that the company is continuing to invest in its most important assets: its clients— providing the opportunity to share in a long-term business relationship built on expertise, innovation, trust and success.

• How long has the company been in business?

• How many customers does the company have?

• How many employees does the company have?

• Are EDI solutions core to the business?

• Is the company growing?

Achieve Operational ExcellenceOnce you have solved automation, it is time to consider driving supply chain value through the entire organization. Often the EDI manager will be inundated with requests from other business units, especially finance, accounting and customer service. Ensure your provider has the ability to offer self-service tools to not only find quick solutions for problems, but to also allow your EDI manager or IT to focus on critical projects.

• Is there a way to enhance supply chain visibility and control?

• How can they make problem solving more efficient to avoid chargebacks?

• Are there checks in place to ensure invoices match POs?

EDI 101

Solution Provider Evaluation Scorecard

Company

Product

Services

Growing and investing in EDI products

In-house customer support

Different solution delivery methods options (on-premise, SaaS)

Live demonstration

Training and support

Configurable user permissions and access

Dashboard able to be tailored and customized

Enabled to follow your business processes

Ability to integrate with multiple file formats

Real-time data mapping capabilities

Automatic trading partner setup

Manage errors by exception

Proactive alerting to prevent errors

Ability to find and/or drill into data quickly

Regular product releases covered by maintenance

Product written in a supported code base and supported technology

Option to manage your own ongoing support and maintenance

Ability to manage your own implementation

Implementation tailored to effectively meet your timeline

Able to outsource all EDI needs

Live training

Training conducted by professional trainer

First-level support

Product documentation available as a self-service resource

Support to supplement your EDI staff

Category Criteria 1EDISource Vendor 2 Vendor 3

THE BUYING PROCESS



Buying Process – Prep Work ChecklistBased upon past experiences, what are you looking for in an EDI system?

Within your organization, who or what groups have a vested interest in your new EDI solution?

Who will ultimately make the decision on your new EDI system?

Is there a deadline for having your new EDI system up and running?

Is there an approved project for your new EDI system?

Will multiple users need access to your EDI system?

Do any of my business users need limited access to the system to inquire on EDI documents or their status?

What is your backend system?

Do you require integration into this system or other systems? If so, what file formats are needed for integration?

Are there other files formats besides EDI that need to be integrated (CSV, XML, etc.)?

Do you require a test environment?

Do you have resources on staff (or consultant) that can provide back-office system support?

Will you have internal resources manage your EDI project, or will you leverage provider resources to either

handle or assist?

Is sample data from your back-end system and/or file layouts available?

How many trading partners do you have? And, do you expect that number to grow in next six months?

What kinds of EDI transaction sets do you do today?

How many transactions are sent or received per week, or per month?

Can you supply an EDI Implementation Guide for the documents you are trading with your partners?

What communication methods do you use with your trading partners?

Are there any trading partner special requirements?

Will you be doing any HIPPA/healthcare transactions?

Do you have the need to be able to search and find data easily?

Are chargebacks, fines or deductions an issue?

Do your orders often contain new items or items discrepancies (items and price discrepancy, etc.)?

Are unpaid or rejected invoices an issue?

What are your reporting needs around your EDI activity, system or transaction level?

Are there specific business processes that will need to be incorporated into your EDI process?

Are there any data or item conversions required (customer part number mapped to internal part number, etc.)?

Are any of my business process time-sensitive? If so, what is the turn around time?

Do you need to be alerted immediately of any EDI processing issues?


1 EDI Source, Inc. is the leading provider of EDI software and SaaS designed to help organizations transform business-to-business operations. For more than 25 years, companies ranging in size from startups to Fortune 500 corporations in various industries have come to rely on 1 EDI Source for innovative, easy-to-use software and cloud-based solutions to improve customer relationships and drive operational excellence.

Call 1.877.334.9650 or visit 1edisource.com.

ABOUT 1EDISOURCE, INC.

Documents

1EDI_BuyersGuide_v5.pdf