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A Waning Love for EDI

EDI was invented in the 1960s. And while an aging technology, many enterprises still rely on it to automate document flow between their trading partners.  It has come a long way from big railroad and automotive companies’ proprietary networks, but one binding commonality persists: EDI is primarily a one-to-one connection that takes significant time and resources on the part of both buyers and sellers to set up properly.  In addition, EDI is simply a connector that eases document flow; it has no built-in intelligence to ensure the documents it passes back and forth meet any quality criteria. Successful implementations require heavy buyer/supplier involvement not only at the onset but also throughout the course of the relationship.  For smaller enterprises, there are huge barriers to entry for those who do not possess the capital for an EDI system and the subsequent training required.

Business-to-business networks aren’t new, but their evolution into communities of buyers and sellers that take on a life of their own is a recent phenomenon.  Ultimately, today’s cloud B2B networks are communities.  And in a community, information and insights abound, visibility and communication are enhanced, and discovery of new suppliers and/or new sources of revenue are made possible.  Companies of any size can log in to the internet, join a business network, and be up and running in a matter of hours – all sharing a common platform.  As more members join the network, it inherently becomes more valuable for every existing member.

We are all familiar with what Amazon.com and eBay have done to transform commerce in the consumer space.  The same opportunity exists for business networks to change the face of B2B commerce.  And while procurement and accounts payable automation deliver measurable benefits in the form of hard dollar and process cost reductions to enterprises, business networks will take that value to the next level by extending these processes across organizations.

And, the community that exists within networks in combination with the vast ocean of transactional information can create insights that help participants make better business decisions.  Not only will organizations have efficient technology in place to automate their procurement, AP, channel sales, and supply chain processes, they’ll be able to make data-driven decisions through snapshots, profiles, trends, and patterns of intelligence queried directly from the business network; in other words, Big Data analysis can be extended beyond the four walls of an enterprise.   If you think about it, this is a new type of analysis afforded to companies actively trading on networks.

After 40 years of extensive and expensive EDI implementations, trainings, and customizations, the current direction in the marketplace is disrupting the age-old EDI model.  Thankfully we now live in an era where we can connect and collaborate with our trading partners with an ease that 40 years ago no one could have imagined.

 

 

About the author
Kevin Costello
Kevin Costello
President, Ariba

Kevin Costello joined Ariba in 2002 and later SAP when Ariba was acquired in 2012. As President of Ariba, Kevin was responsible for driving the company’s strategy and go-to-market execution related to its two lines of business – cloud applica... Read More >>>

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