DiCentral is looking for a few good EDI experts. But the company’s also happy to take on a few good VARs who can recognize their customers’ need for Electronic Data Interchange and are willing to send a few referrals its way.
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When suppliers send items to retail stores or other “trading partners,” such as Target or Costco, each chains imposes EDI standards that their suppliers must follow.
EDI enables the parties to speak to each other electronically in order to transmit information from sender to receiver in the format the receiver wants, explains Eric Braswell, DiCentral’s senior director of global channels.
Depending on how many trading partners a supplier deals with and which types of documents those partners want sent via EDI—purchase orders and advanced shipping notices — the process can grow overly complex and open businesses up to making errors, for which they often get charged, Braswell says.
DiCentral’s job is to keep track of what each trading partner wants. Because the company’s EDI system is Web-based, if suppliers do not fulfill the specific requirements outlined by each of those retailers, transactions will not go through, and the DiCentral system sends error messages, Braswell says.
DiIntegrator serves as an on-premise tool that integrates with various ERP systems including Microsoft Dynamics AX and GP, QuickBooks and SAP Business One, with plans for Dynamics NAV and Sage Accpac integration in 2009, while DiWeb serves as the Web-based translation piece to send information to more than 800 trading partners.
Smaller businesses can use DiWeb to manage their supply chains for a much lower monthly fee than the cost of DiIntegrator. DiWeb costs about $200 to start and $30 per month, Braswell says.
SWK Technologies, based in Livingston, N.J., was one of the first VARs to come on board, closing its first deal in August 2006, before DiCentral officially launched a channel program. Today, the Sage reseller, which ranked No. 37 in Accounting Technology’s Top 100 VARs, has roughly 25 to 30 customers using DiWeb.
“DiCentral is good for 1 to 30 trading partners, all determined by customer needs,” says Dane DeSantis, SWK’s channel sales manager.
SWK markets its own Mapadoc application, which serves as the EDI integrator for MAS 90/200 and 500, similar to the way DiIntegrator does with other ERP systems.
However, before working with DiCentral, DeSantis didn’t have a tool to help customers who weren’t MAS shops get EDI compliant.
“If they didn’t want integration, I couldn’t do anything for them, now I can make them happy (by referring them to DiWeb,)” he says. “If they leave Sage and go to Microsoft or SAP because Sage is not working for them or they got bought, they already have DiCentral, which allows them not to have to buy something else.”
For its first six-and-a-half years in business, DiCentral sold directly to retailers. Then, retailers started recommending the product to their suppliers.
Braswell helped construct the channel program in March, and it’s since grown to roughly 150 members, with 10 employees dedicated fully to the channel.
On average, 15 percent of the company’s overall sales come from the channel but the percentage continues to increase, with June hitting 61 percent. Ultimately Braswell would like to see the channel grow to 250 members accounting for 80 percent of sales.
Sage resellers make up the bulk of all the ERP VARs that DiCentral teams with, but Braswell is seeing a growing interest from SAP Business One resellers.
Woodland, Calif.-based SoftEngine is one of the latter, signing on in December after starting a project which required help from an EDI company. SoftEngine found DiCentral on SAP’s Web site and liked the responsiveness of its employees in addition to its technological know-how and help following implementation.
“They had the right attitude and a willingness to do everything to get our business, including special discounts,” says SoftEngine consultant Thorsten Staylor.
It also helped that DiCentral is one of the few EDI companies certified in that product as well as a silver development partner for Sage, a Microsoft Certified Gold Partner and a QuickBooks Gold Certified partner, though Braswell says he would like to see more QuickBooks ProAdvisors express interest in DiCentral.
He also would like to see more VARs in China, where DiCentral is in the process of opening its third office, as well as Latin America and South America.
Last month, the company announced its support for EDIFACT, the international EDI standards code used by the United Nations, and therefore is seeking resellers in Europe as well.
There’s no fee to join the channel program, and all members earn a percentage of the recurring revenue—ranging from 30 cents to $2 per kilobyte transmitted—for 36 months, starting at around 10 percent for referral partners and growing based on the level of involvement the VAR has with the end customers. The cost of on-premise integration, which is based on the number of trading partners and document types can range anywhere from $2,000 to $80,000, and VARs can earn a percentage of that base as well. VARs also can sell add-on modules, such as DiAnalyst, which generates weekly reports to measure visibility throughout the supply chain.
This hybrid model of traditional software fees blended with subscription pricing is something Braswell is striving for in a channel used to collecting money for software licenses.
“When VARs are selling boxes for margin, that becomes a commodity and the margin pressure becomes tremendous,” Braswell says. “They want a service where they could earn annuity on an ongoing basis.”
Need for Knowledge
He also wants to enlist VARs with a broad knowledgebase, or at the very least the resources to learn about EDI and how it can help their customers.
“EDI is a pain. VARs cannot have a casual level of attention to it,” Braswell says. “They need to continue to learn it and learn the value that DiCentral brings. Not being able to verbalize that value is a failure from the beginning.”
Right now, each partner gets a “tremendous amount of handholding,” with experts coming in to work various ERP opportunities, but Braswell says DiCentral eventually will offer certification.
John Thomas, president of Compliance Advocates, is one channel member who doesn’t need much assistance.
Thomas worked for 12 years handling vendor relations at Linens-N-Things, helping hundreds of suppliers understand the retailer’s EDI requirements so they would remain in compliance.
He applauds DiCentral, which he says makes it easier to track things like specific shipping-label information and other ever-changing requirements.
“Vendors have a responsibility to manage those changes,” Thomas says. If you don’t do it, you’re not in compliance (with retailer requirements), which can subject you to chargebacks.”
For example, if a supplier ships 1,000 cartons of a product at a cost of $10 per carton but fails to place the label on the correct side of the box, the recipient may charge the supplier $1 per carton. When the supplier receives the check, the amount is for $9,000, not the full $10,000.
When suppliers continue to receive those fines, they sometimes add them into the cost of the goods, Thomas says.
“Chargebacks are a huge nuisance, profit loss and distraction and it’s very common in the retail industry for this to exist,” he says.
Thomas left Linens-N-Things two years ago to help smaller companies that had similar problems.
“Mom-and-pops and new startups don’t even know what EDI means. Most retailers say you have to be EDI compliant even if you’re the only person in a company, so you need a resource to help you do the compliance,” Thomas says. “(DiCentral) enables a vendor who is not technologically savvy to be just as tech-savvy as one of the big vendors in full compliance. They provide a level of confidence and expertise to their customers that would not be economically feasible otherwise.”
Alexandra DeFelice is Associate Editor of Accounting Technology and can be reached at firstname.lastname@example.org.
Company HQ: Houston, Texas
Key products: DiWeb, DiIntegrator
Phone: (281) 480-1121, Ext.112
Web site: www.dicentral.com