For decades, electronic data interchange (EDI) was mainly about cutting costs and speeding up supply chains. Today, new factors such as global mandates, government requirements, and artificial intelligence are rapidly changing the landscape.
This rapid shift has left many businesses struggling to adapt, and resulted in significant confusion about what the future of EDI will look like.
To shed light on these topics, we interviewed ecosio’s Head of Solutions Engineering, Paul Wandl. In the following discussion, he breaks down the evolution of EDI: from the rise of mandate-driven networks to the exact role AI will (and won’t) play in daily operations.
How has EDI’s usage changed over time?
EDI is a tool which was established decades ago. It always developed with processes. It always developed with industries by business partners. I would split this question up into three areas:
First of all, communication. Communication is always the part integrating the processes between two business parties. The goal was always to push efficiency forward, speed and also make the process more stable.
The second dimension is the technical one. EDI was more structured in value added networks (VANs). It developed through Internet based communication and to B2B connections. Then we saw ERP integrations, deep ERP integrations in cloud ERP systems, for example, and now we are seeing a trend to networks demanded and defined by legal authorities.
The third dimension we currently see is the factors driving EDI forward.
Back in the days, it was always an intrinsic factor. As a company, I wanted to be more efficient. I wanted to have more stable communication to my partners or I wanted to reduce costs and drive automation forward. At the moment, we see a big shift into external extrinsic factors. What do I mean with that? Mandates are defining requirements, for example, how to send an invoice, how to do e-reporting. This is a big game changer how EDI will develop forward and on which requirements EDI has to be based on.
Why does EDI still matter today?
EDI was always a tool to make processes more stable and more efficient. This will stay. Still, we have the challenge to set up our business as efficient as possible with as few errors as possible and cost efficient as well. EDI will still stay in this area.
The only question is how will EDI support you doing that? Your EDI partner has to grow with our requirements today. This means your EDI provider for invoices needs to change to an e-invoicing provider, which is compliant and makes you compliant and keeps you compliant. The business requirements will still be the same like twenty years ago.
The technology and the process requirements will change over time. And choose the right partner which goes with you here to support you here not just today, but also in in five years in the future.
How has EDI evolved as global trade has become more complex?
EDI was always a tool supporting a process. That means if a process gets more complex, also EDI has to evolve with that. If we think about the supply chain nowadays, which is way more complex than twenty years ago, we see that also document types, communication processes, and dependencies between different parties have to grow with that. Today, we see document types like delivery forecasts not only happening in automotive anymore, we see it also happening in retail and other industries. We see that 3PLs, so third party logistics, are not one out of hundred anymore, but we see it more regularly in our processes. And it’s very important that EDI grows with you and your processes.
What impact does effective automation really have on a business?
Automation helps you focusing on the tasks you really have to do. What do I mean with that? Let’s make an exercise. Form a list with the tasks you do every day. Which task tasks do you do in the morning, at lunch, in the afternoon? Now in the second step, let’s add the time you need to deal with this process. In the third step, think about how repetitive are those tasks. What could I autumn automate? What could I automate with AI nowadays?
And how much time would get free or would be free on the end of the day to focus on on the real important parts of your work. See automation as a tool to help you focusing with automated processes. Errors will reduce and the turnover time for those processes will be faster. So automation is a great tool to drive you and your company forward.
What recent developments are changing EDI right now?
EDI always changed over time. EDI always grew with processes and EDI always grew with technology. Nowadays, EDI has to focus a completely new scenario.
Extrinsic factors like authorities and mandates are changing the way how EDI has to be done. If we look at LATAM, for example, so South Middle and Southern America, we can see that EDI is already mandated from order to invoice and all of the documents in between.If you go back to Europe, we see here a big trend to e-invoicing. If you go a little bit more eastern, we already see in Eastern European states e-documents and e-delivery documents.
So the big trend we see is at the moment EDI will get more and more mandated by states and technical and process requirements will be defined externally instead of internally.
What will the EDI networks of the future look like?
EDI and the networks behind EDI always developed with technology and requirements of the current situation. Back in the days, we had strongly proprietary VANs, value added networks developed they developed to B2B connections. Later on, we had cloud based ERP systems with deep ERP integrations into them.
Nowadays, we are seeing a big change again to mandate driven networks. What do I mean with that? Ten years ago, I would have told you to send an invoice via a AS2 in EDIFACT format. Today, you would have to follow different requirements.
States, mandates, and authorities are defining exactly how on a technical basis and how on a network basis messages have to be transmitted. With that, we see new EDI networks. EDI networks defined by mandates with certified providers or mandated platforms by authorities themselves. With this, you need a partner supporting you with this global challenge.
How will AI impact the future of EDI?
Today, AI is a powerful tool to be integrated in as many processes as possible. Also in EDI, we need to think about how to use AI efficiently. I see two very important areas where AI will influence the work. First of all, the projects, the EDI projects themselves, how to onboard a new supplier, how to onboard a new customer to you. Here, AI will make the process way more efficient and way faster to onboard new partners.
A mapping won’t take days, a mapping will take hours, and we’ll do a quality check instead in the end and not the development of it. The second area where AI could influence our work is the operational phase when exchanging the documents. Let’s remember, we already finished the onboarding project between you and your customer and orders are flowing into your system every day. The order, the transformation of the order, the integration of the ERP system has always to be the same.
Today, the order must look like the order tomorrow. Otherwise, I wouldn’t have a deterministic behaviour. There, I see well established document transformation platforms like the ecosio Integration Hub as the way to go. Still, AI is important.
So the setup of this platform could be supported by AI. The daily operations should should still remain deterministic, so an well established integration hub is the way to go.
