What is the future of EDI?

What is the future of electronic data interchange, otherwise known as EDI? According to EDI experts, the answer depends on several factors, including the technologies involved and the underlying business processes. Basically, it depends on how it is being used. EDI has been used to electronically send and receive documents such as orders, delivery notes and invoices for over 30 years. In most industries, running a supply chain without using EDI would be inconceivable.  In this time, companies in these industries have so refined and optimised their processes that they would no longer work without electronic support and modern EDI. Two of the many examples from the car industry are just in time (JIT) and just in sequence (JIS) logistics. However, there are now other technologies available to rival classic EDI. Is it time for a rethink?

As technology develops and progresses, of course it’s going to affect the way things are done. And currently, it’s plain to see that the trend in the IT sector is towards the cloud. It is therefore worth taking a moment to look at how the cloud has developed over the last few years. This shows us the overarching framework in which modern EDI will continue to develop.

Cloud as a major trend

The first cloud wave were the infrastructure clouds, also known as Infrastructure as a Service, or IaaS. Examples included AWS, Azure, Alibaba & Google Cloud. In the second wave, software vendors (SW vendors) started moving their applications to the cloud, some earlier, such as Salesforce, others later, such as SAP with S/4HANA. This is another trend that cannot be reversed. Companies are increasingly using cloud applications because they let departments access the tools best tailored to their specific tasks. Earlier concerns such as lack of security or lack of control over data no longer seem to worry companies today. They now recognise that cloud providers can actually guarantee a higher degree of security than they could in house. In short: the cloud is here to stay. Indeed, the future belongs to vendor clouds, otherwise known as Software as a Service or SaaS.

The first integration clouds quickly followed the infrastructure and vendor clouds. This is simply because these needed integrating with one another as well as those systems still running on premises. So why not move integration to the cloud, too? In this context you will often hear terms such as Integration Platform as a Service (iPaaS) or Middleware as a Service. This cloud-based integration is based on the increasing use of modern web APIs, which we shall be shortening to API.  These mediate between the various vendor clouds and the client’s on-premises inventories. Basically, these integration clouds with their web-APIs are found in the gaps between the various domains.

Extrapolating these trends, in the near future, companies will only be running a few systems on premises. The majority of their applications will be cloud-based. If these are available as SaaS, they will be running from vendor clouds. If not, they will be in infrastructure clouds.  Bit by bit, the classic on-prem EDI systems will also disappear from a company’s premises. Instead, efficiency, security and synergy will have pushed them into integration clouds.

Demographic change is having a significant impact on this. On the one hand more and more EDI experts are retiring, while increasingly few people are being trained in EDI. Nevertheless, EDI retains an important role in the digitalisation of business processes and will continue to be a central component of integration platforms in the future. Drawing from this trend, it can already be predicted that companies that do not use cloud-based integration services are heading for a competitive disadvantage. At the same time, we can see how IT security is becoming ever more challenging, a situation which could also be significantly helped and future-proofed by moving into the cloud.

Now that we’ve looked at the overarching changes and long-term trends, let’s take a look at how they are already impacting  modern EDI today.

The future of EDI: Modern API technology will change EDI processes

As already discussed, APIs are on the rise in all areas of data exchange. They do have some disadvantages, which we will discuss in more detail below. However, they have quite obvious advantages over classic, file-based data exchange via EDI. Not only is it possible to transmit information very quickly. The sender also gets immediate feedback on whether the message has been successfully transmitted and its processing status. Although this is possible with classic EDI, the technology is designed for asynchronous exchange of mass data and high throughput. And this slows down the processing time for an individual transaction. It is also more difficult to assign feedback than with an API.

Ultimately, technical changes bring about changes in how things are done.  One example is the shift in responsibility for error handling. As long as it passes some basic conditions, the actual content of an EDI file isn’t checked until it has been received by the recipient. This means that the file is first error checked in the destination system. And if the EDI file contains errors and cannot be processed, it’s the receiver who has to debug it.

In contrast, data transferred over an API is error checked during transmission. As a rule, the sender is responsible for transmitting error-free data. However, the sender often doesn’t have all the information he needs. This makes error correction difficult, if not impossible.  In these cases, both parties need to agree on a strategy so that the entire process is not potentially jeopardised by an error.

Can classic EDI and APIs be used together?

Probably the greatest advantage of APIs is their ability to link systems deeply and directly. An API gateway ensures the connection is technically secure. However, APIs are only of limited suitability in an EDI data environment. As your many trading partners will never have identical API interfaces, making direct API connections to them involves a far higher programming and maintenance workload. Possibly three to five times higher than for classic EDI. Furthermore, only a few applications used in house will have an API interface – and then maybe only to a specific, corporate API.

An advantage of classic EDI is its standardised B2B connections. Industry standards let you exchange documents with a number of partners without having to first inspect which interfaces are available. An EDI connection is also fast to set up, through ready-made mappings and partners already on board.  You can read more about this in our blog post Perfectly networked with the SEEBURGER Cloud Integration Managed Service.

However, modern APIs do have a place in a classic EDI environment. They can even improve certain processes and applications. For example, an API-based process can support and stabilise time-critical processes. Or, as not offered by an EDI interface, an API could call up the progress of an EDI file being processed.

As you can imagine from the above, it is unlikely that APIs will completely replace classic EDI technologies. Instead, everything points to a peaceful coexistence of classic EDI and modern API processes. The implication is that an integration platform needs to support both technologies. Furthermore it needs to provide central interfaces for monitoring, configuration, self service and support.

It is particularly important to emphasize that using a mix of APIs and EDI requires joint/cross-company monitoring of the entire process in order to ensure that is completed. Imagine, for example, a scenario in which time-critical ASNs (Advanced Shipping Notice) are transmitted via an API. The remaining steps in the chain, such as the purchase order, call-off order and the invoice are transmitted via classic EDI. Central monitoring would be essential.

The future of EDI: EDI and API integration become one

Some companies have already started using API-based connections for B2B processes. These include Daimler Truck North America and Tesla. In the future, therefore, companies will want API-based connections with JSON, SOAP or REST services  as well as the traditional BSB connections through ANSI X12, EDIFACT  or VDA messaging through OFTP2, AS2 or VAN.

However, a company already has a number of internal applications and existing systems that they need to connect. They are not starting from scratch. And it’s the classic integration technologies, namely, B2B/EDI which are particularly good at integrating internal systems.  For an integration platform, API is merely another protocol.

The big advantage of an integration platform that supports both EDI and API integration is that it can be used in many other situations. Indeed, it prompts companies to specifically look for synergies between EDI and API and therefore to consolidate and optimise their current integration approaches. Some examples could be:

• Supporting partners by adding APIs to your EDI set-up. By, for example, offering your business partners more opportunities to validate information through APIs, you can help them avoid common EDI transaction errors.
• Using APIs to improve the quality of your own EDI processing. E.g. by adding additional information to your incoming or outgoing transactions during processing. An API searches for information in the backend systems to augment details, or to address errors.

As API-based integration grows in importance, so too do the number of APIs found in the corporate world. However, modern web APIs are still young. And there is a lack of defined standards. This is in contrast to EDI, which has had decades to mature and therefore has defined standards in several sectors and industries.

It is therefore important to always keep track of the APIs in your organisation and who uses them. To ensure that an API is actually used once it has been set up, and to manage and monitor its traffic. This is all part of API management. You therefore need to ensure that as well as EDI and API integration, your integration platform also supports API management as this is an integral part of API integration. Learn more in our Webcast API led B2B integration Will APIs take over or complement EDI.

Increase value by running your integration platform in the cloud

Operating a combined EDI/API integration platform is complicated. There is a huge range of ways to connect systems and partners. And it’s business-critical – if it doesn’t work, neither do you. Many organisations, overwhelmed with operating the platform themselves, now prefer to use a cloud-based integration platform.  This relieves them – as is typical for the cloud – of a whole range of tedious tasks. Think of operating the data centre infrastructure, the operating system, the database, the communications infrastructure or performing release upgrades. Moreover, with certain providers and operating models, a company will save on their previously high costs for monitoring, troubleshooting and security. And this all leaves more time for the really important things, right from the start.

However, companies get the greatest value from an integration service provider who, alongside the benefits we’ve already mentioned, has extensive experience in integration. Their knowledge allows them to provide you with standardised processes and pre-configured content, so that your company can migrate quicker and get your new integration platform working faster.  SEEBURGER is such an integration service provider, with over 35 years’ experience in integration.

As EDI experts, we offer EDI as a service in our SEEBURGER Cloud , with best-in-class service levels and easy access to our large repository of over 15,000 standard mappings. Thanks to our canonical map strategy, we have ready-made mappings which covert your partners’ various EDI formats into a standardised XML-based meta interface structure. This decouples them from your ERP interfaces. Now, partner connections and ERP connections can be managed independently of one another and easily integrated into the service. Native support for modern APIs makes the EDI service a valuable integration cloud service, which can be used in many situations, such as in the image above (figure 3).

A huge range of communication channels are readily available, including connections via OFTP2, AS2, SFTP, REST, JSON etc. or even a connection to our SEEBURGER VAN (powered by our partner DXC) . Our Cloud Communication Service also offers direct connections to thousands of business partners, which can be activated at any time.

These connectors and our ready-made mappings reduce time and effort in setting up and operating your integration platform. They also provide more flexibility and agility in responding to changing business needs.  Consolidating EDI and API in one cloud-based service – that is the future of EDI!