Outdated technology is a silent killer. According to a 2014 study by Constellation Research, since 2000, 52% of Fortune 500 companies have either gone bankrupt, been acquired, or ceased to exist primarily because of their inability to keep pace with digital transformation. Similarly, according to a 2013 Microsoft study, over 90% of consumers surveyed said that they would consider taking their business elsewhere rather than work with a company that uses outdated technology. In this context, the continued use and adoption of B2B Electronic Data Interchange (EDI) – with its antiquated batch processing approach among others – is a bit of an anomaly.
EDI works a lot like fax machines by transmitting data over timers. It basically stores information and then forwards it in batches without any confirmation. This delay pushes up freight cost. Organizations lack end-to-end visibility, and take decisions based on outdated data. Moreover, they are not able to leverage cutting edge technology such as Big Data.
In this scenario making the move to APIs is a no-brainer. APIs enable real time B2B interfaces which can be used with EDI even though it is batch based. APIs can simplify B2B boarding which has always been a frustration in EDI. APIs also open the doors for new experiences through mobile, social and IoT. that case, what exactly is holding back businesses to take the leap? Benoit Lheureux, calls the phenomenon the ‘B2B Tower of Babel’ in his blog on Gartner. He explains: “If you’re Wal-Mart (“do you want to sell your products in my stores?”) or Amazon (“do you want to sell your products on my site?”), you definitely call the shots. Whether they issue an EDI implementation guide or an API specification, such channel masters require suppliers and vendors that wish to do business with them to utilize their approach to B2B.”
So, even though EDI is outdated, it has age on its side. Having been invented in the 1940s, it has been widely adopted around the globe and even works in areas where consistent internet connectivity is an issue. In brief, the general sentiment toward EDI is something like, ‘Why fix it when it ain’t broke?’. However, even if EDI isn’t ‘breaking’ your business, it certainly has a cost associated with it. So take gradual steps toward optimizing your B2B data integration technology by modernizing it. Start with these three options:
Option 1: Mixing APIs with EDI
Take small steps forward by using APIs to complement EDI. An EDI platform that is embellished with APIs can share data with external applications. This is done through REST APIs that expose EDI platform services and offer EDI as a service. Such a platform not only offers visibility into various business processes, but allows you to securely exchange business documents.
PwC, in its 2012 technology forecast (see below), explained that RESTful APIs as an architectural and programming model, sharply reduce the cost and complexity of integrations. In addition, they deliver a scalable approach for both internal and external use.
This setup also offers heightened security by enabling you to manage all business partners centrally. You can apply common security policies to all data flows irrespective of protocols or channels. By developing a single repository of all APIs and EDI partners, you can even simplify the on-boarding process.
All you need to do is to apply a modern connectivity framework to legacy technologies. For instance, if you want to develop a mobile app, you need to apply a modern API layer. Then extract and share the data through this layer and over traditional EDI protocols to deliver to your partners. This way, you are able to multiply real time business transactions while retaining the robust structure and security provided by EDI. You could even choose an interoperable EDI and API gateway. Such a gateway would apply a combination of EDI and APIs to a business transaction. You get to choose how to go about it. Getting the right IT partner can help you balance this kind of gradual evolution.
As Ross Mason describes in an article in TechCrunch: “What’s great about APIs is they don’t require an understanding of how the system on the other side actually functions, allowing business users to self-serve. As a result, APIs are igniting a cultural movement that shifts IT away from delivering narrow projects to the business, and toward delivering reusable capabilities that enable business users to deliver their own projects in their own way.” This, I believe, builds a strong case for modernizing your EDI technology with APIs.