As 2020 approaches and new technologies develop, it’s important to Kim O’Shaughnessy at Selecthub is reviewing EDI’s place in the supply chain. To better understand what’s on the horizon for this long-standing software, Selecthub asked several experts their thoughts on the EDI software trends of 2020 and the years to come.
1. Large Companies Shift Back to In-House Processing
In the past, smaller companies would integrate EDI through in-house processing. But as some companies grow very large, they’re finding this isn’t the best way of doing business. We spoke to Jim Gonzalez, Owner of EDI Support LLC, for his thoughts on the subject. “In the future, what I see is a lot more people bringing it back to in-house processing.”
He goes on to discuss why third-party EDI processing isn’t cutting it for many businesses. “Anytime they get a PO, they pay a couple cents. But as their business grows they realize that those cents start to add up … When you’re paying 10-15 cents per PO and you maybe only get 10 of those a week, that’s okay. But now they’re doing a thousand of them — or two thousand of them — because we’re becoming more of a drop ship type world. That’s when they start to see the value of having their process in-house.”
Some EDI companies are already attempting to combat this shift. Many vendors are trying to change how EDI is traditionally priced, charging per relationship rather than per transaction. However, payment structure isn’t the only reason companies are moving back to in-house.
2. Demands on Smaller Companies Grow
However, an in-house system shouldn’t be the go-to solution for all businesses says Jeff Douglas, Solutions Manager at Babelway. He says, “I think what we’re seeing now is a burst of new iPaaS vendors that are saying that this technology can be put back into the hands of the companies. They’re saying that it’s not complicated and you can empower your business by doing this yourself without a third-party. And you kind of beat some of the extra cost and frustrations … Seeing that trend of SaaS in the EDI world gives companies more power and more control which I think is good for their business.”
This is especially true for small- to mid-sized businesses looking to grow. He discusses the tension in the relationships between large and small companies. For instance, a large company like Walmart has the leverage to dictate what kind of B2B communications it wants to use.
But then on “the other end of it, you have these small companies that are met with all these demands from their larger partners. They’re burdened with supporting all the standards and technologies out there in order to do their business in the world of electronic exchange. Unfortunately, the demand to support multiple things is not going to go away for them … If you want to grow your business, you’re going to have to accommodate these demands.”
With that in mind, it makes a lot more sense for smaller companies heavily focused on growth to turn to these iPaaS providers rather than integrate EDI in-house. However, this doesn’t mean large companies won’t also benefit from iPaaS, especially if they plan on integrating some of the newer technologies replacing EDI.
3. EDI Replaced by API in the Next 10 Years
This wouldn’t be an EDI trends article if we didn’t talk about the infamous end of EDI. Jan Arendtsz, founder and CEO of Celigo sums up this topic for us: “It’s an annual ritual to predict the demise of EDI. Competing standards, web services and modern APIs — all have been forecast to end EDI at one time or another. But EDI is here to stay for now as it still works well for many users,”
But he said for companies that find EDI non-accessible (whether it’s due to a lack of expertise, technical resources or infrastructure), there are still options.
“For many companies, using a cloud-based integration platform (iPaaS) accelerates the process and reduces the time to complete EDI integrations. Modern iPaaS is intuitive enough for business users yet robust enough for the needs of IT. A next-generation iPaaS platform will enable API enhancements and drive B2B process improvement — with or without the help of IT.”
4. IT Skills Shortage
Whether companies choose API or EDI, they’re going to have a difficult time staffing their operations. But according to Jett McCandless, Co-Founder and CEO of project44, staffing an EDI project will definitely be the bigger challenge. McCandless states, “No one that graduated with a computer science degree in the last 10 years has been trained on EDI. That isn’t because they forgot to train them. There are better technologies to accomplish today’s goals. In today’s world, companies are competing for the best software engineers. The best software engineers don’t want to use EDI. Companies that continue to use EDI have access to less software engineering talent.”
5. Possible EDI Resurgence
We’ve talked at length on how EDI could lose its current status. But if the market really is set for growth in the coming years, what will continue to support it? One trend taking off in Europe is the Pan European Public Procurement Online (PEPPOL) EDI protocol. Jeff Douglas had some thoughts on this topic as well. He says, “PEPPOL is a really interesting movement lead by Europe’s government entities … It seeks to facilitate EDI connectivity the same way a VAN would, but in a standard way.” Companies sign up to become PEPPOL participants, which basically means they’re signaling to other companies they’re ready to receive data in accordance with this protocol.
To read the full article, visit https://selecthub.com/electronic-data-interchange/edi-software-trends/