This blog post is part 1 of a 3 part series describing the various types of EDI implementations (Initial, Limited Use, and Extensive).  Please read yesterday’s post for a more detailed introduction.

Stage 1: The Initial Stage EDI User

EDI is a technology that is often times implemented simply to comply with the requirements of one’s trading partners.  Try telling Walmart or Target that you plan to send them paper invoices and you’ll soon learn their thoughts about EDI.

I categorize companies that are fairly new to EDI and use it mostly to stay in compliance with the requirements of their trading partners as “Initial Stage”.  The world of e-business can be confusing and overwhelming – especially since many IT experts have limited experience with EDI and business to business e-commerce, so getting started can be tricky, especially for the Initial Stage EDI user.

When you explore options, you’re sure to learn about various services, software solutions and portals that can help you comply.  The terminology (X12, XML, ISA, VAN, AS2, EDIFACT, etc.) and components (communications, integration, translation) that work their way into the conversation can be mind-numbing… and the price tags can be intimidating!

Since the main benefit at this stage is usually to comply with the EDI requirements of a larger business customer, integration and streamlined processes may take a back seat to simply getting something implemented so you can check the box that says “EDI capable”.  For this reason, web EDI or portals are popular at this stage.

I’ve made no secret that I believe e-business portals are a poor solution – most just transfer the data entry responsibilities (and opportunity for data entry errors) from one organization to the other.  Paying for the privilege of performing data entry functions for your trading partners doesn’t sit well with me, especially when there are real opportunities to improve processing within your own organization.  Having said that, I recognize that using an e-commerce portal is the path of least resistance for many that are just getting their feet wet with EDI.

However, if you’re going to go down this path please don’t consider the e-business issue closed…starting with a portal should just be the first step to implementing real e-business within your organization!  In fact, I submit that using a real EDI solution and enjoying the benefits of integration with your ERP system – even on a small scale – is a real option for the Initial Stage EDI user.  Given recent advances in technology and a number of innovative new options (such as outsourced EDI), you can now dip your toes in the EDI water without investing thousands of dollars and countless man-hours.  By doing so you’ll satisfy your immediate compliance needs while laying the foundation for e-commerce within your organization that will be an effective long term solution.

The next stage is the “Limited Use” organization, which is where many companies in the initial stage graduate to.  Stay tuned for a new post in the next couple days with additional details.