Swapping electronic documents among trading partners isn't a mid market norm-just yet.
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by Richard McCausland
For Callen Photo Mount in Paterson, N.J., it was a good news/possibly bad news kind of situation. A manufacturer of photo matting, it had the opportunity to supply major retailers Wal-Mart, Michaels, and A.C. Moore. However, all three were insisting on the formalized Electronic Data Interchange of commercial documents, such as purchase orders and billing statements.
That’s when Digital Strategies in neighboring Summit came to the rescue. A Softline/AccountMate reseller, DSI was able to cobble together a solution that tightly couples the Visual AccountMate financial package with an EDI Auto translator from vertical specialist Union Data Systems. EDI Auto is able to generate sales orders in compliance with the American National Standards Institute 850 format. Likewise, once products are ready to ship, the tool can create an ANSI 810 invoice.
Callen is now processing tens of thousands of orders a year, comprising hundreds of thousands of line items. That’s massive transactional volume. Fortunately, “EDI has permitted Callen, a family-owned business, to provide almost flawless response to the requests of very large companies,” says DSI president Paul Joinnides. In fact, Callen has been able to reduce its back-office staff to two, “even while order volume is increasing, and their ability to process and deliver on time is improving.”
What’s more, Joinnides points out that all these benefits accrued from using $1,000 desktops, a $5,000 server, the “inexpensive” EDI Auto tool, and approximately $15,000 worth of AccountMate software.
EDI may not yet be mainstream technology, but that’s not for lack of trying on the part of accounting software publishers. Consider these developments:
● Utilizing the Internet, the fairly new Accpac Exchange supports established EDI (ANSI X12 and Edifact) and emerging “EDI over the Internet” (AS1 and AS2) standards. The module integrates with both Advantage and Pro Series out of the box, as well as functioning stand-alone. Specifically, it’s designed to enable small and medium-sized companies to send and receive EDI documents without the expense associated with traditional Value-Added Networks (essentially proprietary e-mail systems that store and deliver EDI-formatted documents). These expenses include set-up fees, leased lines, and interconnect costs.
|Implementing EDI: Six Key Issues|
1. Volume. Consider the number of transactions your company will be transmitting on a daily basis. Also, consider whether your transaction volume will change over time.
● At its Momentum 2003 conference this October, Microsoft Business Solutions will launch its Microsoft Business Network, designed to make it easier and more cost-effective for small and medium-sized firms to automate communication with their trading partners. MBN 1.0 integrates with Outlook, and optionally with Great Plains Edition and BizTalk Server.
Expectations are high in the mid-market that MBN will trigger enormous customer interest in electronic data interchange, just as Microsoft CRM was able to do for automated front-office sales and marketing functionality. End users may not be prepared to buy into EDI right now, but gradually they’re being made aware of its many potential advantages.
“EDI really has permeated down” into the middle market, according to Karen Adame, product marketing director at Irvine, Calif.-based Epicor. The reason for this, she believes, can be summed up in a phrase: quote-to-cash-or, “how quickly can I do that transaction?” Reduced data entry, faster and more accurate order fulfillment, and a speedier invoice/payment cycle combine to make EDI “potentially very beneficial to all kinds of companies,” according to Adame.
Bridging the Gap
Based in Burlington, Ontario, eBridge Software provides tools that allow mid-market accounting packages to accommodate bi-directional data exchanges within an EDI (ANSI X12 and its international Edifact cousin) or eXtensible Markup Language framework. The company targets small and medium-sized manufacturers and wholesale distributors (annual revenues of $5 million to $500 million) who require integration with their trading partners.
Over ten years, eBridge has established partnerships with many of the leading mid-market accounting software publishers: Accpac, Best, Epicor, Exact, Intuit (QuickBooks), Microsoft Business Solutions (Great Plains and Solomon), Open Systems, and Softline (BusinessVision). Products include the flagship eBridge, Mapper (for reformatting e-business documents), ASN, CRM Integration, and the eBridge Software Development Kit.
“EDI as we know it is still very expensive and cumbersome,” says eBridge business development director Greg Swallow. That doesn’t mean that companies of the magnitude of Daimler Chrysler and Wal-Mart aren’t insisting that even their smallest suppliers get with the program. And what do these smaller firms do? “The first person they go to is their accounting reseller because it involves purchase orders and invoices,” says Swallow.
Now the average accounting VAR isn’t likely to have more than a handful of EDI clients, according to Swallow, so they’re unwilling to build up an in-house expertise in that area. They turn, instead, to a third-party specialist such as eBridge.
Fortunately, “Because there is an ANSI standard, it does keep [EDI] within a box, and we can buckle onto that” with solutions that integrate with several accounting software packages, notes Swallow. This greatly multiplies the number of potential EDI customers, giving eBridge the critical mass it needs to deliver affordable mid-market EDI solutions.
The Internet can only make things better, as companies move away from the fee-intensive VANs. “Using the Internet for back-and-forth communication is helping EDI go mainstream,” observes Swallow. Tier-two companies are rapidly embracing the benefits of paperless document exchange. “The Winn-Dixies are making it happen,” he says, referring to the southeastern U.S. supermarket chain.
EDI Consulting Group
Exact Software North America
After serving as spokes within an EDI hub, some of these same mid-market companies are looking to achieve further efficiencies-and a more substantial return on their initial EDI investment-by promoting electronic document exchange with their own supplier base. Johnson cites one customer who went the EDI route at trading partner insistence. “They were actually able to turn the cards and require EDI compatibility from both their larger customers and vendors. They now have six trading partners running EDI, and are producing and fulfilling orders more rapidly than ever before,” notes Johnson.
Accounting software vendors and their resellers need to respond to the accelerating interest in EDI, says Epicor’s Adame. “At a minimum, they have to have some sort of partnering relationship,” she says. That’s the path Epicor has taken, both with eBridge and with ACOM, headquartered in Long Beach, Calif. The latter’s EZConnect engine allows trading partners to exchange documents in compliance with EDI, XML, and other structured data formats.
EDI is “the original B-to-B e-commerce,” contends Microsoft Business Network product manager Marcus Schmidt. “It started with a lot of mainframes and minicomputers talking to other mainframes and minicomputers.”
Reflecting those roots, “it’s still an expensive proposition,” he says, with VANs functioning like toll roads, charging per document or kilo-characters of data. Those amounts can quickly add up.