Data Interchange is here to stay. SAP has provided many
tools to ease the integration to EDI subsystems and these,
together with a methodology of how to implement EDI are
described in the following pages."
Data Interchange) works by providing a collection of standard
message formats and element dictionary in a simple way for
businesses to exchange data via any electronic messaging
and e-commerce are miracle words in today’s IT world. Like
any other mystery it draws its magic from the ignorance
of the potential users. It is true that there are many fortune
making companies in the IT world who specialize on EDI.
They sell software and know-how for giant sums of money.
Looking behind the scenes reveals, that the whole EDI business
can simply be reduced to writing some conversion
programs. This is not too easy, but the secret of EDI companies
is, that the so-called standards are sold for a lot of money.
As soon as you get hold of the documentation, things turn
out to be easy.
enabling, or e-enabling, enterprises and applications to
form trading networks and marketplaces is not a trivial
task; it is a challenge, especially when you wish to develop
it as a product.
Commerce actually began in the early 70's when companies
began completing business transactions via networks. This
was referred to as Electronic Data Interchange or EDI. As
time went on, EDI began to evolve into transaction processing
over the Internet rather than through networks. This is
where the term Electronic Commerce was born. Traditionally,
the term EDI is still used for transaction processing over
networks. Now the term Electronic Commerce is used to describe
transaction processing over the Internet.
Data Interchange (EDI) is about doing business and carrying
out transactions with your trading partners electronically.
EDI covers most things that are traditionally done using
is described as the interchange of structured data according
to agreed message standards between computer systems, by
electronic means. Structured data equates to a simple and
direct method of presenting the data content of a document.
The method of ensuring the correct interpretation of the
information by the computer system is defined by the EDI
is a technique used to communicate business transactions
between computer systems of different companies and organizations.
Note that sometimes the EDI mechanism deployed at a company
is often used to interface to other systems within the same
is EDI? (A comprehensive definition).
Data Interchange, or EDI, is the electronic exchange of
business data. Using a standard format, EDI provides a method
of transmitting business data from one computer to another,
without the need to re-key data. This electronic link can
result in more effective business transactions.
does "more effective" mean?
effective" means potentially time-saving and money-saving.
With EDI, paper transactions can be replaced with electronic
transmissions, thus time is saved, and the potential for
error is minimized. Data can be exchanged at any time. Related
business expenses, such as postage, printing, phone calls,
and handling, can also be significantly reduced. EDI can
aid in the support of manufacturing efforts, such as Just-in-Time
and Third Party Warehousing, and financial efforts, such
as Electronic Payments.
should not to attempt to switch to a full SAP EDI implementation
overnight. It takes time for people, systems, and processes
to adapt to any new methodology. Implementing SAP EDI is
a project in its own right and needs to be handled phase
by phase as in any other information system implementation.
We describe some of the issues and how to implement an SAP
EDI solution in the following pages.
of implementing EDI are considered to be:
configuration - Message control, partner determination,
- Just getting the systems to talk to each other. SAP,
Testing - How
do you test with someone you may never meet? How do you
do your own testing without sending data to your partner?
How do you differentiate between a test message and a real
- How do you map an IDoc to an EDI message? What fields
types of EDI
summary, there are TWO types of EDI:
Manual (printed) EDI.
EDI messages are sent automatically, but messages are printed
out by recipient for processing. This type of EDI can be
"switched on" in one day.
EDI messages are sent automatically and are received by
recipient for automatic processing. This type of EDI requires
both parties to have advanced systems.
organisations are currently pushing "Manual EDI"
only. This has commonly been referred to as "just another
FAX machine only more complex and expensive!".
Improves data accuracy:
You can eliminate the need to re-enter data from paper documents
and thus prevent potential data entry errors. It is estimated
to be one-tenth the cost of handling its paper equivalent.
complexity: With EDI, companies use standardized data
formats to exchange documents. EDI allows companies using
different systems to achieve computer-to-computer electronic
exchange of business documents.
needs: EDI can help companies reduce the need for personnel
involved in paper business transaction processing.
exchange: The lead-time between start and completion
of order processing is greatly reduced. By timeout scheduling
companies can plan production more accurately and thus reduce
parts of the business cycle can be supported by EDI?
business documents that are currently exchanged using paper
can probably be supported by EDI. Standards exist for electronic
documents and are defined for a wide variety of paper-based
communications. Standards include ANSI X12 and EDIFACT.
ANSI X12 is primarily used in the United States, while EDIFACT
is used in Europe and Asia. The EDIFACT standard is becoming
a global EDI standard.
industries are using EDI?
company that buys or sells goods or services can potentially
use EDI. Because it supports the entire business cycle,
EDI can streamline the relationship that any company has
with its customers, distributors, suppliers, and so forth.
retail, automotive, grocery, freight, and financial industries
were early users of EDI. The electronics industry and the
U.S. government are currently big users of EDI.
the question arises.
our company use EDI?
offers many potential benefits. EDI is a productivity tool
that is beneficial to both suppliers and customers. It is
a service to customers and is often viewed as an indicator
of technical ability.
kind of software is needed to implement EDI?
translation and communication software is available for
most computers, whether PCs, minicomputers or mainframes.
Basically all EDI software packages do the same thing. Translation
software translates business documents into a standardized
format that complies with ANSI X12 or EDIFACT, and communication
software sends and receives documents.
kind of hardware is needed to implement EDI?
selection is dependent upon your preferences for speed,
operating system, and level of integration with the current
systems. The EDI system may be able to run on your existing
is the flow of EDI?
flow of EDI depends on the sophistication of your systems
and your EDI software. If you have internal purchasing/order
entry systems, you will need interface programs that can
extract and insert data out of and into these systems. EDI
programs that interface with your internal systems are preferred
over software that requires re-keying of data.
a purchase order as an example of a business document you
would send to us, the flow of EDI documents is as follows.
A purchase order is first created in your internal purchasing
system. Your purchasing system communicates the order to
your EDI software in a specially formatted syntax. Your
EDI software then creates an EDI standardized document and
sends it to a predetermined VAN. (A VAN, or Value Added
Network, is a third party company whose job it is to receive,
store, and forward documents for interchanges between trading
partners.) Using EDI communication software, we dial the
VAN at predetermined intervals and receive all waiting documents.
These documents are then processed through our EDI translation
software and output to our order entry system. Finally,
an EDI document called a functional acknowledgment is sent
to you as a receipt of the purchase order.
business document or information can be exchanged via EDI.
The criteria The Fresh People consider in deciding what
applications or processes to convert to EDI are:-
High Manual Administration Labour Content.
High Transaction Volumes.
High Error Frequency.
Highly Critical Information.
Highly Time Consuming.
Unnecessary Steps Eliminated.
effectiveness and success of EDI is measured by the degree
of integration of EDI as the communication mechanism for
the business systems. The extent of this integration is
the true measurement of a successful EDI program and will
be the driving force.
focus is upon the interchange of data as opposed to simply
electrifying the exchange of paper documents.
R/3 Business Software and EDI:
R/3 does not have its own built-in EDI logic, but instead
it provides a clearly defined interface which third-party
vendors can use to integrate their systems, providing an
'EDI sub-system' for SAP R/3. SAP provide a certification
programme, so individual products from third party vendors
can become 'SAP Certified', meaning that they comply with
the interface correctly. A list of certified EDI subsystems
is available on the SAP web site.
EDI interface is used to connect an EDI subsystem to the
SAP system. EDI subsystems perform all EDI-related tasks
such as Converting the data Handling messages or interchanges
Communications Managing the partner profiles Monitoring
processing. The EDI interface is based on IDoc technology.
IDoc technology is independent of EDI standards. All data
is exchanged via files between the SAP System and the EDI
subsystem. The synchronous RFC (remote function call) is
used to define the time of transfer of the files between
both systems. Via
the EDI interface, the following data can be exchanged:
Outbound IDocs. IDocs are transferred from the SAP System
to the EDI subsystem.
Inbound IDocs. IDocs are transferred from the EDI subsystem
to the SAP System.
Status report. To inform the SAP System of the progress
of processing of the outbound IDocs, the EDI subsystem transfers
the status report to the SAP System.
object of the certification is the technical test of the
interface between SAP System and EDI subsystem. The transfer
of outbound IDocs, inbound IDocs and the status report are
tested. The test is performed for the EDI standard UN/EDIFACT.
As an example, the messages used are:
Outgoing order (ORDERS)
Incoming order (ORDERS)
Outgoing order response (ORDRSP) and
Incoming order response (ORDRSP).
technologies have evolved as a data carrier replacing the
paper document. It is not a new concept or a new practice.
EDI has existed for more than 2 decades in Europe and North
electronic interchanges used proprietary formats agreed
upon between two trading partners requiring new programs
each time a new partner was added to the existing system.
Later on some industry groups began a cooperative effort
to develop industry EDI standards for purchasing, transportation,
and financial applications. Many of these standards supported
only intra-industry trading, which led to a large number
of EDI formats.
1979, the Accredited Standards Committee (ASC) X12 was formed
to develop a generic EDI standard. In 1993, Version 3, Release
4 contained 192 standards. There are over 100 additional
standards in development. In the U.S., the most commonly
used standard is ANSI X12, coordinated by the American National
Standards Institute (ANSI). While in Europe, it is the Electronic
Data Interchange for Administration, Commerce, and Transportation
(EDIFACT) standard. SAP maps it message types by EDIFACT
or Intermediate Document is a standard SAP document format.
IDocs allow different application systems to be linked via
a message-based interface.
are three main aims behind the use of IDocs:
The structured exchange of business documents so that they
can be processed automatically.
The various degrees of structural complexity as displayed
by different application systems can be reduced to a structure
which is as simple as possible.
Example: the structure of an SAP application document and
the structure of the corresponding EDI message under the
IDocs allow for extensive exception handling before the
data are posted to the application.
are defined and considered on two levels, the technical
and the business level. The former allows them to support
application-independent functions, e.g. routing and handling
Defined by the three record types compatible with the
Defined by the segments of an IDoc. Segments are structures
used to interpret field SDATA in the data record. An IDoc
type is defined by the relevant:
Attributes of these segments
(e.g. maximum usage, hierarchical sequence, segment status)
today are burdened with a set of problems that leaves IT
managers and CIOs with the daunting task of making heterogeneous
computing environments communicate with each other. Furthermore,
they face the challenge of leveraging their legacy and ERP
investments while trying to achieve internal integration
(front office to back office). Also of paramount importance
to businesses these days is "external integration,"
or business-to-business (B2B) -- the integration of buyers,
suppliers, marketplaces, and the imminent "S"
word, the "supply chain."
problems affect most businesses and organizations today.
But what are the shortcomings of traditional technologies,
such as electronic data interchange (EDI) and enterprise
application integration (EAI)? EDI provides point-to-point
solutions that are both expensive and inflexible. In addition,
EDI transactions are not real time and are difficult to
implement. The problem with EAI products is that they are
inwardly focused and do not support cross-enterprise integration.
Also, for EAI to work, both sides of the "pipe"
require proprietary software. ERP and other enterprise applications
have similar inherent shortcomings; they provide no support
for external integration. And if you are wondering about
the HTML-based e-commerce Web sites, their problem is that
they are manual, tedious, and error prone. Although these
arguments are debatable (especially around EDI), early deployment
of next-generation technologies such as webMethods B2B has
illustrated that these traditional technologies are insufficient
when compared to the newer tools.
a day companies like webMethods solution comprises three
products: webMethods B2B, webMethods B2B for Portals, and
webMethods B2B for Partners. These products achieve integration
between enterprises, provide an integration platform for
marketplaces, and offer rapid integration with trading partners,
respectively. These products also support multiple protocols:
EDI, XML, commerce XML (cXML), RosettaNet, and the like.
SAP realized the need to e-enable their solutions, it entered
into a strategic alliance with webMethods as a development
partner for B2B e-commerce and integration. Furthermore,
SAP invested in webMethods. This partnership provides for
licensing and joint development of products, such as SAP
Business Connector (the transaction engine for mySAP.com)
and SAP B2B eProcurement. Although webMethods does develop
connectivity products for other ERP systems, webMethods
has a pool of developers and architects based in Walldorf,
Germany, the headquarters of SAP AG.
SAP Business Connector is a comprehensive, jointly developed
product with several features that e-enable SAP solutions.
(See Figure 1.) It is completely integrated with the R/3
system and provides for both synchronous and asynchronous
communications. The product supports remote function calls
(RFCs) and transactional remote function calls (tRFCs),
which are transparent to the system. It also enables the
integration of R/3 with New Dimension products over the
Internet. In addition to routing intermediate documents
(IDOCs) and RFCs, it plays a vital role as mySAP.com's portal
connector. As a basic function, it lets you convert application
link enabling (ALE) and BAPI messages to XML, and vice versa,
while supporting the IDOC and BAPI XML specification. Because
it exposes the R/3 system through XML, it provides the capability
of interfacing the R/3 system with non-SAP systems. No XML
standards have been approved yet, but the SAP Business Connector
is supposedly adaptable to evolving standards (although
this ability remains to be seen). Internet security is bundled
with these features, as well.
The SAP Business Connector comes with easy-to-use tools
and nifty GUIs that make most of the development "drag
and drop" or "point and click." For example,
mapping RFCs from the R/3 system is a three-step process
wherein you look up the RFC from a panel, construct an inbound
map, and specify the interface and service to invoke. The
B2B Developer tool provides visual data-flow and transformation
services (see figure 2). Along with providing the capability
of mapping IDOCs and RFCs to XML structures, it also lets
you perform structural, value, and name transformations
of the data in the
FIGURE 1 SAP Business Connector.
Pipeline. This tool can be used as a test bed for B2B services.
One perform data mapping by pointing the IDOC fields on
the left-hand side column to the XML fields on the right-hand
side. What remains to be seen is if webMethods will provide
prepackaged mapping for standard business documents based
on its deployment of solutions across industries or specifically
within an industry. (This prepackaging is already available
with certain EAI vendors such as CrossWorlds and Active.)
This feature would definitely add value to the product.
Another aspect of the SAP Business Connector is the Routing
Rule Manager that provides
FIGURE 2 Visual data flow and transformation.
methods for routing messages and data from various sources
to different destinations. Creating routing rules entails
specifying several entries on a panel, such as sender, receiver,
message type, and destination URL. The routing rules specify
the preprocessing invocation, transport method, XML dialect,
and so on. The SAP Business Connector also serves as a message
store of all data flowing through the software and contains
logs of its "transactions." The audit log records
all the states and processes the data has been through
Is EDI the Answer, or Part of the Problem?
the beginning of the 1990s, publishing appeared, compared
to many other businesses, to be grossly unwieldy, unpredictable,
unprofitable, out of control -- in short, chaotic.
was an industry afflicted by huge advances that led to disappointing
sales, skyrocketing returns, loss of vision, and loss of
control in the distribution
which meant that some important trading partners were forced
to wait as long as 180 days to be paid for their products.
management of the large publishing houses, many of whom
came from other industries, felt that things must change.
of the chief forces driving that opinion was the development
of computer systems that promised Electronic Data Interchange
(EDI): the exchange of completely electronic information
among trading partners regarding job specifications, purchase
orders, job status notifications, invoices, advance-ship
notices, paper usage, and component inventory. Data about
customer behavior, channel costs, production processes,
and the like would flow easily and instantaneously. By tapping
those rivers of data strategically, and analyzing their
patterns, it would be possible for publishers to create
new and better products, marketing, and channels of distribution,
which in turn would increase sales, revenues, and profits.
Olson, CEO of Random House, the largest publishing house
in the world, was quoted in a U.S. News & World Report article: "We saw a need (five years
ago) to have an integrated system that would provide, at
the push of a button, information that would go throughout
the company and be available to customers if necessary."
that is the dream, how do we get there? The answer that
major publishers are currently embracing is: re-engineering
through the adoption of "enterprise-wide" software
based on relational databases. Relational databases can
be very powerful tools, and an enterprise-wide approach
should generate the greatest strategic control and efficiency.
relational databases with which most people are familiar
are those checkbook programs that automatically add to your
balance after you enter every deposit, subtract after you
enter every check or ATM withdrawal, and keep your balance
information always accurate, up-to-date and instantly available.
the hugely complex business of publishing, with all its
facets of creation, production, and distribution, be similarly
modeled? As Jonathan Newcomb, CEO of Simon & Schuster,
explains: "If you don't understand where exactly you
are in all your copyrights, how much you put into each project,
and how much has to go back out for rights and permissions
and advances and royalties, and how much you're going to
invest in plant and paper and printing and binding, and
what the likely returns are going to be from each project
-- and each project is different -- if you can't track that
incredibly complex matrix, then you aren't going to be able
to be successful in this business.
How EDI can help:
will enable re-engineering of business processes.
EDI can simply automate existing business processes. The
big value of EDI is in enabling re-engineering.
can automate business existing business processes
Decreasing data entry costs
Decreasing document costs (printing, mailing, etc.)
can improve customer service
Provides data so customer can automated/re-engineer their
Creates a competitive advantage over other suppliers
Increases relationship with customer (creates barriers of
entry for other suppliers)
improves inventory control (and inventory turns) by updating
the stock requirements list
Inbound PO acknowledgment
Inbound shipping notification
can be used to communicate with carriers
Release/consolidation of forwarded inventory
Re-engineers the order cycle
Vendor Managed Inventory (VMI) outsources inventory control
for purchased items to the vendor
Lockbox outsources the accounts receivable process to the
Payables (EDI or EFT) outsources accounts payable function
to the financial institution
Inventory with Information
Communicating MRP forecast information to vendors decreases
inventory in the pipeline due to demand spikes
SAP transactions for EDI usually takes three weeks (per
Assumes that the SAP transaction is EDI enabled. Non-enabled
transactions will take longer due to the development effort.
This depends on the gap between the data exchanged and the
data SAP stores in its database (as well as gaps created/removed
through SAP configuration).
enabled transactions provided in 3.0E include
(EDI & EFT)
ship to setup
against scheduling agreements
tasks for distributing data via EDI are
Message specific configuration
Development to fulfill gaps (as needed)
A Universal Tool for Interface Programming:
R/3 IDocs had been introduced as a tool to implement EDI
solution for R/3, it is now accepted as a helpful tool for
any kind of interface programming. While this is not taught
clearly in SAP’s learning courses, we put our focus on writing
an interface quickly and easily.
EDI interface is used for the connection of an EDI subsystem
to a SAP system. EDI subsystems take over all EDI oriented
Conversion of data
Message and interchange handling
Administration of partner profiles
Monitoring of processing
EDI interface based on the IDOC technology. The IDOC technology
is independent of EDI standards. All data exchange between
the SAP-system and the EDI subsystems is handled via files.
The synchronous RFC (Remote Function Call) is used to determine
the date of disposal of the files between the two systems.
data can be exchanged via the EDI interface:
IDocs transfer to the EDI-subsystem by the SAP-system.
IDocs transfer to the SAP-system by the EDI subsystem.
To communicate the process of adaptation to the SAP system,
the EDI subsystem transfers the status report to the SAP
a decision has been made to implement EDI within your company,
Establish your own plan for implementation.
Purchase or develop EDI software.
Determine and assign internal resources required to implement
Select a Value Added Network.
following is a list of questions that our company should
consider prior to making an investment in an EDI program.
The answers to these questions will impact the resources
required, the financial investment to be made, and ultimately,
the success of EDI within our company.
soon do we need to have some type of EDI capability?
companies find their initial venture into EDI is in reaction
to a request from a key trading partner. If you do not currently
have a program in place, but wish to satisfy needs of your
trading partners, you may want to implement an interim EDI
Program to pilot the use of EDI in your company.
which functional areas should we focus our attention?
we are willing to invest a number of resources into EDI
initially, consider focusing efforts in either the Purchasing
area (your company as the Customer) or the Order Management
area (your company as the Supplier).
transaction sets should we send/receive? The priority of
implementing a particular EDI document will be determined
by the volume of paper documents processed, trading partner
requirements, and other business needs.
we anticipating a major systems change in the near future?
so, you may want to delay full-scale integration of EDI
and develop an interim approach.
is our timetable for implementing EDI within each functional
our internal business systems support EDI? Business systems
with import/export capabilities or MIS resources to develop
these capabilities are essential to a full-scale integration
implementation of EDI require that we purchase additional
most cases, existing hardware can be used. Ultimately, this
will be determined by your selection of a software option.
Value Added Network provides the service of storing and
forwarding EDI documents to and from Trading Partners. VANs
often provide additional services, such as audit reporting
and translation. Typical costs are dependent upon volume,
at a minimum cost of approximately $600 per year. While
you may want to select a VAN that is currently being used
by your key trading partners, most of the major VANs have
agreements to "interconnect" with their competitors,
so you should not feel restricted in choice of a VAN. When
interviewing VANs, user will want to verify they have agreements
to interconnect with the VANs used by partners and determine
what additional costs are incurred for the interconnect.
only specifies a format for business information; the transmission
of the information is covered under other standards. A real
world analog is sending a business form from one company
to another. The "form" could be sent via US mail,
US Registered mail, via private carrier (UPS/FEDEX) or simply
faxed between the companies. EDI only requires that the
trading partners follow the content standards
VANs connected to the Internet are connected to one another,
thus avoiding most of the problems of interconnecting proprietary
networks. VANs can then focus on services to their customers
such as automatic bid submission, market and business opportunity
analysis, and translation software.
professionals are finding that the integration of SAP and
EDI systems is fundamental to many of the e-commerce applications
they are being asked to support. All too often, however,
SAP teams do not have a working knowledge of their organization's
in-house EDI subsystem, and vice versa.
article aims to bridge that gap by providing SAP professionals
with an understanding of the basic tenets of EDI technology,
what capabilities an in-house EDI subsystem needs to provide,
and the role they should be prepared to take in order to
ensure a smooth and successful integration between these
business can always be up-to-date with direct Internet procurement
and prompt EDI support.
the company identifies that accurate and punctual information
about their suppliers' deliveries and shipments an advantage
for the company, If They want to rely on the planned goods
receipt in the MRP/Scheduling and if processing of their
goods receipt with electronically sent delivery notes particularly
implemented with an EDI system like SAP is the ultimate
solution as we have already realized while discussing that
good integration will provide
Flexible and user-friendly Partner Customization
Customer specific business logic in SAP R/3 Integrated SAP
translator and labeling solution Automated processing of
all important customer,
supplier and banking EDI messages
is a tendency for each organization to establish is own
rules and administrative policies, leading to rising costs
of dealing with multiple trading partners, each in turn
with its own requirements and procedures. However, new technologies
and business practices are necessary if EDI is to move beyond
the 30 to 40,000 organizations presently using EDI. According
to Department of Labor and Internal Revenue Service statistics,
there are about 6.2 million entities with employees and
about 14 million other "business" entities. A
business that wants to sell chairs, for example, would have
to check with many different customers to see if they had
any requirements. By making it possible for a business to
use a common method to look for customers, the barriers
entering to the electronic marketplace are greatly eased.
This does not mean that there is only one source that everyone
goes to for a list of current business opportunities. Rather,
a prospective supplier only needs to go to a single electronic
marketplace. To communicate with each other, the various
participants in electronic commerce need to harmonize their
procedures and processes. Examples include common trading
partner registration and the adoption of standard implementation
conventions for EDI messages.