Beyond Traditional EDI

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GLOBAL INTEGRATION ON DEMAND

Hubspan White Paper: Beyond Traditional EDI

Why Traditional EDI no longer meets todays business or IT needs, andwhy companies need to look at broader business integration

Table o Contents

Page 2 Executive SummaryPage 2 De nitions o EDI

Page 3 The Limitations o Traditional EDI

Page 3 A Brie History o EDI and Related Standards

Page 4 New Solutions or Advanced EDI

Page 5 Business Process Integration

Page 5 The Three Stages o B2B Interaction

Page 6 WebSpan: A Complete Solution or Advanced EDI

Page 6 Conclusion

March 2010


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Executive SummaryEDI (Electronic Document Interchange) is an immensely use ul standard and process, and has become nearly universal over thecourse o several decades. Traditional EDI, however, no longer meets todays business or IT needs. There are multiple reasonsor this, including an increased need or interoperability, broader business process support and real-time interactions.

Among nearly all industries, we have seen increased complexity in IT systems and interoperability requirements acrosscompanies needing to exchange in ormation. It is no longer realistic to assume or expect your suppliers, customer or otherpartners to adhere to a single standard or business process or in ormation exchange. Most organizations want to leverageexisting applications and systems, and customers have the power to insist you do business their way.

Also, companies want to do more than just exchange documents. They want the exchange to be part o a broader businessprocess and t into key initiatives, such as business process management and service oriented architecture (SOA). Companiesrequire more sophisticated process work fow, business rules, security policies or compliance management. These lie outsidethe realm o traditional EDI.

Finally, static document exchange, such as sending and receiving an 850 purchase order is rarely enough in todays global,real time economy. In addition to sending a PO, you may want to query the vendors inventory levels, delivery time or current

pricing. This requires real-time interactions that traditional EDI does not support.These challenges and others have led to the development o power ul new advanced EDI solutions. This new generation oEDI provides agility, reliability and scalability byproviding comprehensive business-to-businessintegration processes.

For example, todays advanced EDI solutionssupport multiple standards, ormats, applicationsand protocols, allowing all parties to work rom theirexisting systems and do business in their pre erredway. This allows you to easily extend your existingapplications, middleware and EDI implementations

behind the rewall to vast business communities.These solutions also go beyond documentexchange to support the overall business processand centralized services in rastructure.

Importantly, companies also have a choice o howto consume this new generation o advanced EDIsolutions, with many vendors providing on-premiseor cloud-based, o ten called so tware-as-a-service(SaaS), products and services, or a combination othe two. The bene ts o SaaS-delivered solutionsinclude ease o scalability and the ability to startsmall and grow, limited capital expenditures anda ordable subscription pricing, and on-demandreliability and agility, among others.

One example is WebSpan, a cloud-based plat ormrom Hubspan and IBM that solves the problemsassociated with traditional EDI. It is delivered asa service so you can ocus on your businessrather than on the complexity o major B2B

integration initiatives.

Beyond Traditional EDI White Paper Page 2

Beyond Traditional EDI Hubspan White Paper

Defnitions o EDIEDI (Electronic Data Interchange) is traditionally de ned as theelectronic exchange o documents between companies, usinga network or the Internet. Vendors known as Value AddedNetworks (EDI VANs) have managed most o the EDI tra cover the years.

The National Institute o Standards and Technology de nes

EDI as: the computer-to-computer interchange o strictlyormatted messages that represent documents otherthan monetary instruments. EDI implies a sequence omessages between two parties, either o whom may serve asoriginator or recipient. The ormatted data representing thedocuments may be transmitted rom originator to recipient viatelecommunications or physically transported on electronicstorage media.

As the above de nition implies, the success ul exchange odocuments requires speci ying what documents are to beexchanged as well as how they are to be processed. Thus EDIhas also come to mean a speci c document standard, suchas ANSI X12, EDIFACT or Spec 2000. ANSI X12 is probably

the most widespread standard employed today.

EDI standards provide:

A syntax and encoding scheme for messages, specifyingthe structure o datav

A data dictionary

Combinations of data elements to be used for standardmessages such as purchase orders or price updates


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The Limitations o Traditional EDIWhy is traditional EDI no longer adequate or todaysbusiness needs? The undamental reason is that mostbusinesses need more than just the exchange o documents

in a single standard. Also, business relationships acrossall industries, be it manu acturing, health care, insuranceor others, have become undamentally more complexand distributed, and need to operate in real time. Finally,companies can no longer demand that partners orcustomers adhere to their standards, but rather mustcreate business community networks that have inherentinteroperability and fexibility.

There are three ways in which conventional EDIalls short:

1. Many standards, but not interoperability: While the establishment o EDI standards was a great rststep, it does not address the myriad o applications, dataormats or protocols companies have to deal with today.To exchange in ormation across systems, companies areaced with multiple standards in a nearly endless numbero combinations. The documents can be held in variousenterprise applications, such as SAP, Sales orce.com, orlegacy systems, and may need to be sent or received inany number o ormats, rom EDI to XML to HTML, andothers. There are multiple communication protocols, suchas HTTPS, FTP, SMTP, and others, which companiesmust manage to establish the connections. There areeven multiple EDI standards, not just one, including ANSI

X12, EDIFACT, Tradacoms and Spec2000. On top o allthat, EDI standards are like building codes: they only giverequirements, not speci cations. Just as a code is not abuilding design, EDI standards are not implementationdesigns. Each customer, partner or supplier canimplement the standard in a di erent way, resulting ininteroperability issues.

2. Document integration, but not process integration:Traditional EDI only manages documents and not theassociated processes. For example, the standards speci ythe data elds in an 837 health care claim, but not whohas the authority to issue one, access the claim, orhow to route it. Or or a manu acturer, EDI does providestandardized documents, like the 856 shipping notice, butit does not allow the company to dictate speci c security

policies or tie the exchange to the rms overall supplychain management process. Business processes andbusiness rules are critical, but theyre outside the scope otraditional EDI.

3. Batch exchange, but not real-time interaction: EDI originated as a batch process where documentswere gathered and then sent in a group. This worked wellwhen people such as purchasing agents managed thedocuments and coordinated by phone or email with theirsuppliers. Batch, however, does not allow or real-time

transactions, such as inventory queries. At todays speedo business, level o automation and degree o integration,real-time in ormation exchange is essential.



A Brie History o EDI and Related StandardsMany companies and industries independently developed ways to exchange documents electronically, as ar back asthe late 1960s. There were no general standards, so each industry developed its own. Standards were independentlydeveloped by multiple industries, such as the Railroads in the U.S., Export companies in Britain, working with theU.K. government and then the U.N., General Motors, Sears, K-Mart, U.S. grocery stores, insurance companies andpharmaceutical companies. The K-Marts system was used by hundreds o companies in the mid-1980s.

This proli eration o standards led to the rst inter-industry EDI standard in 1975, although it only covered someindustries. The rst generic ormats, the original ANSI X12 standard, were published in 1981.

The standards have evolved and expanded or nearly thirty years. They are now used throughout the world or B2Bintegration, including or an estimated 85-90% o all eCommerce transactions.


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New Solutions or Advanced EDIBecause o the challenges traditional EDI presents,technology vendors began looking or ways to move beyond

just EDI and incorporate greater fexibility, interoperability

and business process management. Many o the early EDI VANs have incorporated new eatures and capability toaddress some o these issues. There is also a new breed ovendors that built business integration plat orms designedspeci cally to accommodate the complexity, neededinteroperability and real-time business exchange requiredby companies across all industries. The most agile o thesesolutions are cloud-based plat orms typically delivered witha range o expert services to help manage the integrationand the business communities.

These advanced EDI solutions provide multiple benefts. Most importantly:

Complete interoperability: Todays solutions provideany-to-any support across multiple standards, protocols,ormats and applications. Maybe you use Ariba, while yourpartners use PeopleSo t and Oracle; you might be usingHTTP while they use FTP; you may have standardized on

ANSI X12 while theyve chosen EDIFACT. Best-o -classadvanced EDI solutions support all these standards andmore, and mediate transparently between them. Thebottom line: You dont have to ask your customers orvendors to change their systems in order to work withyours. This also means you do not have to change yourin rastructure. Rather, they actually extend your existingapplications, middleware and EDI implementations to vastbusiness communities.

Business process support: Advanced EDI solutionsconnect business processes between companies, not justdocuments. They support cross-enterprise interoperabilityo security, workfow, business rules, compliance, andother processes. They support the business processeson each side o the exchange, mediating the policy and

process di erences between you and your partners.Many o the solutions incorporate business processmodeling and management capabilities or tie into yourexisting BPM solutions.

Real-time information exchange: Your IT solutions mustsupport the real-time nature o business transactions.

Advanced EDI solutions, particularly those that leverage

cloud computing, enable real-time, on-demandin ormation exchange. Some solutions can also help yourcompany appear to operate in real-time, even i yoursystems cannot. For example, the more advanced cloud-based integration plat orms enable both synchronous(real-time) and asynchronous transactions, and bridgebetween the two.

Advanced security: Todays solutions o er improvedcompliance, security and policy management. Leadingintegration solutions provide assurance o security overthe entire transaction, including encryption ( or data at restand in motion), access controls, authentication, securitypolicy mediation and key brokering and management.Look or vendors that adhere to strict security compliancemandates, such as PCI DSS or SAS 70 Type II.

Flexible consumption models: Many solutions no longerrequire a he ty investment o so tware and hardware thatyou need to deploy and manage, leveraging innovativecloud-based plat orms and managed services. Todayscloud-based integration solutions o er all the bene tso so tware-as-a-service, going ar beyond the servicesprovided by traditional EDI VANs. These include cost-e ective subscription pricing, the ability to start smalland scale as needed, expert managed services tomanage the community on-boarding and changes,

and deep knowledge o integration, technologies andindustries. Many companies are choosing to outsourceintegration to enable their IT sta to ocus on corestrategies and projects.

Advanced EDI provides strong bene ts, and the businessuses are wide-ranging. Operationally, it can cut costs andincrease e ciency. On the supply side, it can provide bettervisibility, shorter response times and increased accuracy.On the demand side, it can help generate higher revenue,improve customer service levels and create strongercustomer relationships. Finally, in some cases, it may simplybe a requirement or doing business with a major customeror partner. And unlike traditional EDI, these advanced EDIsolutions can help you adhere to those requirements quicklyand cost-e ectively.




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WebSpan provides comprehensive integration services across companies, systems and business processes.

chosen to outsource their EDI to a quali ed service provider,such as a VAN or Clearinghouse. These service providershandle the connectivity and delivery o the EDI, ensuring thesender and receiver are able to transmit the EDI documentsmore easily. While this is a critical piece or EDI, this is

just the rst step or the WebSpan Advanced EDI solution.Beyond connectivity and transmission, the WebSpanplat orm incorporates EDI into an overall business process,while providing vast eatures across security, management,process visibility and compliance to internal and externalregulations. With WebSpan, EDI experts also manage theentire process or you, including on-boarding, connections,community management, ongoing account managementand Tier 1 support.

WebSpan Provides Interoperability across Standards

and FormatsWith WebSpan, you no longer have to worry about whois using what standard or in what way. You can maintainthe EDI standards and business rules you want, whilestill integrating with a multitude o other ormats. Forexample, you can send an invoice in the EDI 810 ormat,and WebSpan enables your customers to use Oracle,SAP and Ariba on the other side, providing thetrans ormation, business rules, security and otherservices required by all parties.

WebSpan: A Complete Solution for Advanced EDIWebSpan is a SaaS Integration Plat orm that combinesthe innovative, cloud plat orm and managed services oHubspan with integration so tware rom IBM WebSphere.

The result is a highly fexible and secure solution thatleverages the So tware-as-a-Service model to reduce thecost and complexity o integrating processes within andbetween enterprises. The WebSpan cloud-based solutionhandles basic to complex integration processes - rommanaged le trans er to advanced EDI to sophisticatedeCommerce operations and more.

WebSpan Advanced EDI is a comprehensive solution thatautomates critical business processes between you andyour business communities. WebSpan not only providesstrong EDI transactional support, it also seamlessly

mediates the various ormats, protocols, applications,security policies, workfows and business rules betweenyour organization and your integration community.

WebSpan enables companies to work within legacyEDI systems while extending your EDI to work hand-in-hand with other standards, systems and cutting-edgebusiness processes. The WebSpan Advanced EDI solutionoptimizes the sharing o in ormation over the Internet with acomprehensive integration plat orm plus managed services.

How WebSpan is Di erent rom a VAN or Clearinghouse

Managing an EDI program is o ten complex and expensive,which is why many companies across industries have


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About Hubspan, Inc.Hubspan is the leading provider of business integration solutions, helping companies automate business processesand provide strong collaboration among internal and external communities. Hubspans cloud-based integrationplatform is cost-effective, scalable and reliable. With its any-to-any connections, Hubspan ensures seamlessinteroperability across systems, applications, and standards. Thousands of companies worldwide, from small andmedium enterprises to Fortune 500 companies, successfully use the Hubspan platform every day to achieve strongerbusiness collaboration. For more information, go to www.hubspan.com .


ConclusionThe need to exchange in ormation electronically is anecessity or businesses across industries and geographies.Since EDI was introduced in the 1980s, many companies

have adopted an EDI standard or process to expedite andstreamline the transmission o data between businessesand systems. The American National Standards Institute(ANSI) ormed the X12 standard in an attempt to makeit easier or companies to communicate on a single EDIstandard. EDI has not only survived but grown in usageover the past ew decades.

But today, the phrase standardized EDI has nearlybecome an oxymoron, what with multiple standards, suchas EDIFACT, Tradacom, Spec 2000, along with more than400 standardized business documents. And many

companies have outgrown the capabilities o traditional EDI.In act, legacy EDI does not meet todays requirements inthree key areas: multiplicity o standards, increased need

to automate the overall business process rather than justthe exchange o documents, and demand or real-timein ormation exchange. There is also the need to improveoverall security and compliance to key internal andexternal regulations.

Another step in the EDI evolution is required. Whatsneeded is a more fexible system o interoperability acrossstandards combined with increased security, visibilityand business process, as well as improved adherence tocompliance mandates.

To meet todays demands, a new breed o advanced EDIsolutions have emerged that support multiple standardsand legacy systems, integrate business processesbetween companies, and provide cross-enterprise real-time interactions. WebSpan is a cloud-based advanced

EDI solution delivered as a service that meets todaysEDI challenges and provides a cost-e ective approach tobusiness process integration.

WebSpan makes your business more competitive, agile and responsive Automates business processes with a cost-effective subscription pricing model

Allows all members of the integration community to work in their existing systems

Mediates between security policies and business rules to sustain compliance tointernal and external regulations

Provides the highest level of data protection, identity management and accesscontrol rules

Includes expert managed services for on-boarding, community management andchange management

Documents

Beyond Traditional EDI