Electronic Trading (EDI, eBusiness, eTrading, eCommerce et al) has promised much for decades but the complexity of data formats has often meant that the benefits have not been fully realised.
Why you need electronic trading?
The business case for trading electronically as customers and as suppliers is now more generally accepted than it was ten years ago. By using EDI (Electronic Data Interchange) or other methods of integrated, system-to-system exchange, companies in the supply chain have made significant improvements, benefits and savings.
Customers in an integrated electronic trading community can typically expect to reduce manual work and error processing within administration, which leads to lower process operating costs. This leads to improved process effectiveness and efficiency, which again reduces cost and improves performance. These in turn improve reliability and people performance thus increasing productivity, which means enterprises can expand whilst avoiding the usual increases in associated establishment costs whenever a company grows. The business process becomes more reliable and offers repeatability, making it easier to comply with ISO and Sarbanes Oxley quality procedures. Getting rid of re-keying and the resulting transposition errors means information quality and business process timeliness both improve.
When the timing of the invoice to goods delivery is shortened it improves the likelihood of trouble free delivery approval. Data integrity can be secured across the supply chain because suppliers' information is automatically input to customers' systems. Improved processing efficiency increases the opportunity to negotiate early settlement discounts. Early settlement discounts reduce the cost base for customers.
Benefits for customers and suppliers:
- Getting rid of unnecessary cost and time - benefits the whole supply chain
- Removing unnecessary process risk - benefits the whole supply chain
- Dispensing with unnecessary tasks to reduce overall workload improves the performance of the supply chain, the overall cost of managing it - benefits customers and suppliers at every level.
So why, even now, is there so much unnecessarily duplicated effort, so much wasted time and unnecessary cost? What is still going wrong? What is the cure for these ills?
Problems in the past
All the benefits, savings and improvements shown above rely on the business messages being integrated with the senders' and recipients' computer systems. Lack of automatic, integrated operations means manual intervention and increased, rather than decreased, costs. Without integration, electronic trading is a drain on companies, not a help.
Integration is easier said than done. The varied file formats companies use to handle data add complexity to the task. Send a supplier an order from your systems and the chances are that it will be entirely different from the format their systems use. Information they want to send you will rarely be formatted to suit your systems. Hundreds of suppliers lead to hundreds of potential bottle necks and to delays in implementation. The problems of integrating so many varieties of formats were all supposed to be fixed by making EDI a common go-between that all trading partners could use.
Unfortunately EDI presents another variety of difficulties that act as a barrier to successful integrated electronic trading. The supply chain struggles to accommodate not only the different formats and standards that have been devised for EDI (more than one "standard" effectively means "no standard"), but now messages can be written in the XML language, may be spreadsheets, fixed width files, comma separated variable files (CSV), SAP IDOC files... The list grows daily.
All these messages may also be carried via EDI VAN, AS2, FTP, FTP(S), HTTP(S), email and various other transport methods. More message formats, more transport methods, "might is right" standards (sometimes portrayed as "Standards are fine! As long as they're mine!"), fees for transactions or for message size, buying EDI software, buying a computer to run the EDI software, buying message translation software to put in the EDI software every time a new trading partner demands electronic trading, staff to run the software and "map" the data, imposed rules... The job becomes enormous and a constant drain on IT resources.
This means that EDI is as difficult as it ever was, or could be. Integrated EDI (the only kind worth doing) stays just too much for many companies to cope with using conventional EDI software and methods. Little wonder there are still companies who fail to take advantage of all the benefits, savings and improvements that are still there waiting for them!
Software as a Service making a real difference
There is another way. A way that brings all the benefits of integrated electronic trading within easy reach of every company.
Software as a Service (SaaS) is now transforming many aspects of business IT. One look at saleforce.com in customer relationship management, Netsuite for ERP and Google Apps in the area of basic office computing shows how effective this way can be. SaaS also makes its mark on integrated electronic trading.
Electronic trading SaaS solutions work by providing a simple-to-use, comprehensive, standard communications link to a hosted integration solution for customers and suppliers alike. The service converts the formats output by in-house office systems to the formats required by the recipient trading partner. Companies subscribe for the number of trading relationships they wish to establish with their business partners. The SaaS takes care of the message mapping requirements, communications protocols and dialogue with the trading partners.
All this is managed. There is no need for extra hardware or software. SaaS is "multi-tenanted" so costs are spread over all users. Firms with small volumes of transactions can benefit without large capital outlay.
With SaaS, all business partners get the benefits of trading electronically, using their chosen formats and their preferred communications methods. All trading partners gain the advantages traditionally reserved for the largest organisations, simply by paying a rent based on how much of the service they need. The service allows companies to add new trading relationships as and when required. Electronic Trading via SaaS has no capital cost and needs only the minimum of IT skills. Companies see the benefits of electronic trading first and then expand its use to suit their businesses.
Organisations turning to SaaS include:
- Large customers who are keen to embrace effective data integration with their suppliers but do not want to impose unreasonable administration and cost
- Smaller customers who want to trade electronically with a wide range of large and small suppliers
- Large suppliers who want to handle electronic trading with many customers, exchanging information in formats convenient to each customer
- Smaller suppliers who want to meet customers' electronic trading needs without unreasonable cost or inconvenience
- ERP providers who see that providing an integrated SaaS electronic trading package, enabling trade in virtually any message format, provides significant added value for their clients.
SaaS data integration takes the agony out of complex, integrated electronic trading. It ensures that managed rollouts succeed in providing business benefits for all the partners. SaaS provides an easily used solution for integrated electronic trading that leads to improved and strengthened supply chain relationships.
You really can have all the benefits, savings and improvements that integrated electronic trading offers. Integrated electronic data interchange is, and always was, a very good idea but too often proved just a bit too far out of financial and technical reach to enjoy. SaaS removes barriers and makes integrated electronic trading a practical, proven reality that business needs right now. Correctly implemented, SaaS provides EDI results.
Using the technology in practice
As always, the proof of a technology can be best seen in live implementation. SIG plc is an international specialist supplier of insulation, roofing, commercial interiors and specialist construction & safety products. From their base in Sheffield SIG trades across Europe, turning over in excess of £1,500 million and employing 8,000 people. SIG Trading (SIGT), the main UK distribution subsidiary company, uses electronic trading to reduce costs and to speed up the response to customers.
SIGT had been utilising EDI and other forms of electronic trading for nearly two decades but found that there were complexities in operations, particularly with information delays and slow update of electronic trading by many customers. In 2003 SIGT started using the COINS ETC system, a construction industry electronic trading community which is powered by First B2B's SaaS data integration technology, in order to trade with a number of customers who were already utilising the system. They found that the "open service" provided was highly effective. SIGT had the opportunity to rationalise its electronic trading in November 2005. After very careful evaluation of all the options, the decision was made to move the eBusiness, including EDI, onto Coins ETC.
Careful rollout planning, including a seminar for trading partners, allowed rapid implementation of the COINS trading arrangements, with users soon coming to appreciate that the First B2B SaaS technology within COINS ETC enables just about every communication method to be utilised including EDI VAN. The superiority of using AS2 to control sending and receiving of eBusiness messages over the internet (whether in XML, EDI or simply specified file formats) soon became apparent to the majority of users.
The technology makes using AS2 very straightforward and pain free for those companies taking up the offer. For a low-cost, one time only fee, First B2B does the implementation; configuration and testing so that trading partners can quickly benefit from lower costs and much faster turn round of messages. This flexibility has allowed SIGT to open the eBusiness door to many more customers and suppliers thanks to the Coins ETC (powered by First B2B) truly open, safe and rapid service.
John Whaling, SIGT's Management Services Director confirms the step change in electronic trading arrangements that the First B2B technology has allowed: "The implementation of COINS ETC among our trading partners has been extremely smooth. The obvious performance benefits, and the fact that there is no hardware or software installation on site, have meant that the change has been well received and there has been a genuine win-win situation for us and our trading partners. Any technical matters have always been resolved very rapidly as First B2B have more than 60 years e-Business experience available in house which, together with their cutting edge software, means that there is no issue we have come across that they have been unable to handle."
