Streamlining EDI Design and Implementation Leveraging SAP-based Middleware and Cloud Networking To Reduce Complexity and Costs

Contents
Overview of Electronic Data Interchange (EDI) ............................................................................................ 2 Basic Elements of an EDI System .................................................................................................................. 3 A Disciplined Approach to Defining EDI Requirements & Objectives ........................................................... 5 SAP-Based Modules, Methods & Tools for Implementing EDI ..................................................................... 5 Business-Specific EDI Interfaces & Detailed Data Mapping .......................................................................... 8 Leveraging Standards-Based Networking & Cloud Infrastructures .............................................................. 8 Comprehensive Systems Integration ............................................................................................................ 9 The Bottom Line: ........................................................................................................................................... 9 ABOUT IDHASOFT: .................................................................................................................................. 10

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Copyright 2012 Idhasoft, Inc. www.idhasoft.com/sap Phone: 877- 454-4727

Streamlining EDI Design and Implementation

Overview of Electronic Data Interchange (EDI)

EDI is generally defined as computer-to-computer interchange of specifically formatted messages that represent documents within different organizations business systems. EDI offers a standardized method for exchanging a sequence of messages between two parties, either of whom may serve as originator or recipient. EDI is distinguished from other types of electronic communication or data exchange in that the usual processing of received messages is by computer only. Human intervention in the processing of a received message is typically intended only for error conditions, for quality review, and for special situations. For example, emailing or otherwise transmitting human-readable business information is not considered EDI. Also the transmission of binary or textual data is not actually EDI unless it is specifically formatted as data elements of an EDI message and is not normally intended for human interpretation as a routine part of the online data processing. EDI can be best be defined as the transfer of structured data, by agreed upon message standards, from one computer system to another without human intervention. Because EDI has now become such an integral element of supply chain operations for most large and many midsize companies it has also developed into a fundamental requirement for doing business with these organizations. In essence, if your company cant speak EDI then you run the risk of being left out of the loop for participating in valuable and profitable inter-company opportunities. From an efficiency standpoint, EDI also can significantly streamline the flow of routine transactions between companies, thereby reducing the cost and time required for order processing, fulfillment, invoicing, payment, etc., while also eliminating human errors and boosting customer satisfaction. Implementing EDI can seem like a daunting task at first because of the need for software systems that can convert raw data from each companys accounting system into EDI-formatted information, but the payoff can be huge in terms of transaction speed and accuracy, especially when scaled up for handling large volumes of transactions. Actually, the initial investment in an EDI-capable system can yield significant ongoing dividends in that it can be leveraged for implementing EDI hand-shaking transactions with a wide range of companies and, since EDI data is agnostic with regard to the underlying communications medium, it can be used across virtually any private networking or cloud-based infrastructures.

The bottom line is that EDI can provide both enhanced operational efficiency and improved profitability.
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Streamlining EDI Design and Implementation

Basic Elements of an EDI System

Because every companys internal software systems are uniquely tailored to meet specific requirements, EDI acts as a universally standardized translation methodology that enables the interchange of data between companies. As shown below, the basic elements in the EDI process flow consist of converting the internal data into an Intermediate Document (IDOC) format that is processed through the originating companys EDI subsystem and transmitted across the communications link. The receiving companys EDI subsystem then converts the IDOC into the appropriate formatting for their internal accounting system.

Some major sets of EDI standards include: The US standard ANSI ASC X12 (X12) is predominant in North America. UN/EDIFACT is the international standard that is predominant outside of North America. The ODETTE standard is used primarily within the European automotive industry

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Copyright 2012 Idhasoft, Inc. & US Data Management, LLC www.idhasoft.com/sap www.usdatamanagement.com Phone: 877- 454-4727 Phone: 888-231-0816

Streamlining EDI Design and Implementation In order to facilitate the exchange of accurate and detailed information between different business systems, EDI defines a variety of specific document types to address the range of typical generic transactions that occur within any business system. In general, these EDI documents contain the same information that would normally be found in a paper document used for the same organizational function. For example an EDI 940 ship-from-warehouse order is used by a manufacturer to tell a warehouse to ship product to a retailer. It would typically include a ship to address, bill to address, a list of product numbers, UPC codes, quantities, etc. The following list contains examples of some commonly used EDI transactions.

180 - Return Merchandise Authorization on Notification 810 - Invoice 812 - Credit / Debit Adjustment 816 - Text Message 820 - Payment Order / Remittance Advice 830 - Planning Schedule 832 - Price / Sales Catalog 834 - Benefit Enrollment and Maintenance 835 - Health Care Claim Payment/Advice 837 - Health Care Claim 850 - Purchase Order 852 - Product Activity Data 855 - Purchase Order Acknowledgement 856 - Ship / Notice Manifest 860 - Purchase Order Change Request 864 - Text Message 867 - Production Transfer and Resale Report 869 - Order Status Inquiry 870 - Order Status Report 940 - Ship from warehouse order 997 - Functional Acknowledgment

Although most people think of EDI only in terms of supply chain management, EDI technology is also used to exchange inter-company information in a wide range of industries, such as medicine (patient records and laboratory results), transport (container and modal information), engineering, construction, and many other fields. In some cases, EDI can even be used to create entirely new business information flows to support new operations that were not previously existent as paper-based flows.

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Streamlining EDI Design and Implementation

A Disciplined Approach to Defining EDI Requirements & Objectives

The successful integration of EDI within an overall business system requires a structured implementation process that clearly defines objectives ahead of time and lays out the specific parameters, schedule and outcomes for the project. Every company is unique and has specific requirements and issues that must be taken into account. Idhasofts experience over many such implementations has shown that any successful EDI project requires a disciplined approach with careful attention to the following areas.

Up-Front Planning Top-down Design Detailed EDI Data Mapping Pre-Live Testing & Training Step-by-Step Go-Live Process Roll-out EDI to Trading Partners On-going Monitoring and Optimization

The following sections provide an overview of the SAP-based capabilities that can be leveraged for implementing EDI systems, with specific focus on areas where Idhasoft SAP experts have already tailored these capabilities to address customer requirements.

SAP-Based Modules, Methods & Tools for Implementing EDI

With its comprehensive ERP capabilities and worldwide installed base, SAP software offers a solid foundation for implementing EDI subsystems to support both out-bound and in-bound EDI transactions. The primary method for implementing EDI is through the use of Application Link Enabling (ALE) technology. ALE is a proprietary methodology that is used for creating and running distributed systems within SAP environments and it also provides a convenient technique for designing SAP-based subsystems to communicate with external EDI partners. ALE is comprised of the following three layers and incorporates controlled exchange of data messages, thereby ensuring data consistency across loosely coupled applications. Application Services Distribution Services Communication Services Page 5
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Streamlining EDI Design and Implementation The fundamental approach of ALE is to provide a distributed and fully integrated R/3 system that is segmented across the three distinct layers. This enables every application to be fully self-sufficient and provides an inherent level of built-in autonomy and data redundancy. The ALE architecture thus allows for applications to be easily distributed and synchronized via message-based communications. In ALE implementations, the applications in the sending system would create EDI-compliant IDOC intermediate files and validate all required IDOC data, version levels, filtering and receiver information within the SAP environment. The IDOCs are then transmitted over any communications medium and are received, unpacked, filtered, converted and processed by the receiving system.

This ALE-based methodology is also used to create an external EDI-compliant system when a non SAP system is on the other end of the communications channel. ALE communication occurs from the SAP side and EDI from the non-SAP side, with the standards-based IDOCs providing a universal mechanism to deliver the data between the ALE and EDI systems. For the exchange of data between a SAP and Non SAP system, an EDI subsystem is used to convert and deliver the IDOC data.

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Streamlining EDI Design and Implementation Message Control (NAST) is primarily used for outbound EDI communications from the SAP application and Workflow is typically used to manage inbound EDI data.

(Image provided by SAP AG)

Another key aspect of any EDI implementation project is to identify and define the roles of various business and technical staff (agents) within the customer and partner organization. From the list of possible agents, the implementation team determines the specific permitted agents for both the Business Layer and the Technical Layer, with their access and data modification permissions clearly defined.

(Image provided by SAP AG)

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Streamlining EDI Design and Implementation

Business-Specific EDI Interfaces & Detailed Data Mapping

Over the course of many SAP-based inter-company EDI implementations, Idhasoft consulting designers have already created a broad range of ALE-to-EDI translations and IDOC formats to support virtually all of the typical business transactions used in supply chain management as well as other applications. The key to both rapid development and robust ALE-to-EDI functionality is the ability to provide accurate data mapping between the internal application and the EDI standards. Having worked with most of the leading EDI translation systems and with deep experience in both ANSI and EDIFACT implementations, Idhasoft is able to build upon proven and tested subsystems along with the ability to quickly adapt them for any set of special requirements. From the initial Conference Room Pilot (CFR) script, through design, coding, testing, training and Go-Live implementation, the entire EDI project is coordinated between Idhasoft and the in-house customer team members in order to fulfill both the high-level vision and the detailed objectives of the project.

Leveraging Standards-Based Networking & Cloud Infrastructures

One of the major advantages with modern EDI implementations is the ability to communicate the data over virtually any standards-based communications network, including internetworking cloud-based infrastructures. By leveraging widely-accepted and well-defined standards such as HTML, XML, HTTP(S), RFC, R/3, BAPI and Idoc, inter-company EDI systems no longer need be confined to private value-added-network (VAN) structures, thereby both increasing communications flexibility and driving down costs. Working with either the proven SAP Supply Chain Suite or with customer-specific network requirements, Idhasoft has the hands-on experience to build an efficient any-toany cloud-based EDI connectivity solution that helps eliminate costly point-to-point networks and enables broad participation with trading partners anywhere in the world. Page 8
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(Image provided by SAP AG)

Streamlining EDI Design and Implementation

Comprehensive Systems Integration

Supply Chain Management is undergoing a process of rapid change and is no longer simply about reducing costs. More importantly it is about enhancing business value and embracing proven disciplines to leverage the supply chain for competitive differentiation, financial return and demand driven operational and innovation excellence. Idhasoft is a premier provider of SAP-based end-to-end Supply Chain consulting services. Our team of consultants possesses industry expertise in a full range of both strategic and tactical supply chain services, which assist our clients in realizing the full potential of their supply chain investments.

The Bottom Line:

EDI implementations require a deep understanding of business processes, supply chain requirements, data-interchange standards and the underlying software technologies for mapping and processing EDI information. Working with a partner who already knows the territory is vital for ultimate success. Upfront planning and commitment is critical to achieve the following key benefits: Cost effective interchange of data without human intervention Reduced risk of data entry errors and faster processing times Scalability for large volumes of transactions Reduced paperwork and faster retrieval of information when needed Standardized data interchange method for use with a range of supply chain partners Networking flexibility for communications via private or cloud-based networks

EDI is just not an expense Its an untapped asset waiting to be realized.

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Copyright 2012 Idhasoft, Inc. & US Data Management, LLC www.idhasoft.com/sap www.usdatamanagement.com Phone: 877- 454-4727 Phone: 888-231-0816

Streamlining EDI Design and Implementation

ABOUT IDHASOFT:
Idhasoft Inc. is a global leader in strategic technical solutions, SAP gold channel partner and 2010 SAP Business All-in-One Partner of the Year-USA, providing innovative end-to-end business solutions to companies around the world. Idhasoft founding vision is to serve the SMB marketplace with a unique blend of business solutions and services. We help our clients drive efficiency, improve profitability and build a lasting competitive advantage. Idhasoft capabilities and services include the following: 100% commitment to SAP solutions, services and technologies SAP Gold All-in-One Solution Provider and Premier Implementation Partner Partner Center of Excellence Certified master VAR SAP Certified Industry Specific Solutions Dedicated SAP Practices- ERP, CRM, SRM, SCM, BI and Net Weaver/Portals Senior SAP experienced consulting team with both industry and SAP experience Invited expert each year at ASUG, SAPPHIRE and other SAP conferences State-of-art Solutions Center with SAP Ramp-up Applications Idhasoft's pre-configured Industry and Solutions templates Our consultants work closely with SAP COE and SAP Product Development

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Copyright 2012 Idhasoft, Inc. & US Data Management, LLC www.idhasoft.com/sap www.usdatamanagement.com Phone: 877- 454-4727 Phone: 888-231-0816