Electronic Data Interchange (EDI) has long been the go-to solution for automating the exchange of key business documents like purchase orders, invoices, and shipping notices.
However, with the explosive growth of eCommerce and the skyrocketing complexity of global supply chains, companies are looking for EDI solutions that can keep pace with their changing needs.
That's where cloud-based EDI shines—and it's revolutionizing how businesses approach B2B integration.
In this article, we'll explore the core features and benefits of cloud-based EDI and explore whether and how it can help your business scale B2B transactions efficiently.
The Rise of Cloud EDI
The EDI market is projected to expand to $4.5 billion by 2030 at a CAGR of 12.5% over the forecast period. The same report states that cloud EDI is driving this trend, accounting for a much greater percentage of EDI adoptions than on-premises software.
While traditional on-premises EDI systems still have their place for companies with stable trading partner networks and predictable transaction volumes, cloud EDI is scalable to businesses of all sizes and caters to any transaction workflow.
Here are just a few of the factors driving the shift to cloud EDI:
- The Rise of eCommerce: The meteoric rise of B2B eCommerce, DTC (direct-to-consumer), B2B2C (business-to-business-to-consumer), and other digital sales models means companies handle more transactions from more channels than ever. Cloud EDI provides the scalability and flexibility needed to handle these increased volumes without costly infrastructure investments.
- The Complexity of Global Supply Chains: As companies expand into new markets and work with trading partners around the world, the complexity of their supply chains grows exponentially. Cloud EDI provides a centralized, standardized, single platform for managing these complex networks.
- The Need for Agility: With rapid tech advances, changing buyer preferences, and a seemingly endless stream of “unforeseen” events, companies need to adapt lightning-fast. Cloud EDI enables companies to roll out new trading partner connections, support new document types, and integrate with new applications and systems, all with minimal time and effort.
- The Demand for Real-Time Visibility: With so much riding on the accuracy and timeliness of B2B transactions, companies need real-time visibility into their EDI data flows. Cloud EDI provides a centralized, web-based dashboard that gives companies instant access to key metrics, transaction statuses, and performance indicators.
In many ways, cloud EDI adoption mirrors what’s happening elsewhere in B2C and B2B software. Wherever you look, the practice of selling and installing software locally on computers is becoming obsolete, replaced by SaaS (Software-as-a-Service.) EDI has become part of this trend.
Why Cloud EDI Offers an Edge
So why exactly is the cloud becoming the go-to choice for deploying EDI solutions?
There are six core factors:
1. Ease of Use and Accessibility
One of the greatest challenges in EDI is the time and effort required to onboard new trading partners. With legacy on-premises systems, each new connection (often) requires custom mapping, testing, and configuration, which can take weeks or even months.
With intuitive cloud EDI, onboarding is a breeze. Leading cloud EDI platforms come equipped with pre-built connectors, customizable mapping templates, and intuitive partner configuration tools that streamline onboarding.
Danielle Finch, Compliance Coordinator from 1 EDI Source customer Adidas, described how this impacted her workflows: “We’re skipping the whole step of waiting for the EDI team to come back to us to supply information on a transaction…Now we can just pull it up ourselves in IntelligentXchange and do what we need to do.”
2. Seamless Scalability
Another key advantage of cloud EDI is its ability to scale effortlessly to meet changing business needs.
With on-premises systems, scaling up to handle increased transaction volumes or adding new connections can be a major undertaking, requiring significant investments in hardware, software, and IT resources.
With cloud EDI, scaling is simple. Need to handle a surge in orders? Allocate more cloud resources to your EDI platform—no hardware investment is necessary. Looking to expand into new markets or take on new trading partners? The cloud makes it easy to spin up new connections in minutes.
This flexibility enables you to quickly adapt to changing demands without worrying about capacity planning or infrastructure management.
3. Intelligent Automation
One of the most exciting aspects of cloud EDI is its ability to leverage advanced technologies like artificial intelligence and machine learning to automate and optimize B2B transactions.
With intelligent automation, you can eliminate manual processes, reduce errors, and streamline your operations in ways that aren’t easily made possible with traditional EDI.
For example, cloud EDI integrations with Enterprise Resource Planning (ERP) and Warehouse Management Systems (WMS) allow you to automatically validate incoming purchase orders against your inventory levels.
4. Cloud EDI Saves Money
Cloud computing negates the need for expensive on-premises software, which also requires maintenance and repairs.
Plus, cloud EDI software from leading providers such as 1 EDI Source is accessible and easier to operate, enabling businesses to reduce their staffing costs and stave off talent shortages.
Approximately 80% of IT professionals have reported that migrating to the cloud has enhanced productivity and saved costs. On average, businesses save around 20% on software costs by opting for cloud alternatives to on-premises software, attributing savings to more efficient workflows, scalability, and reduced maintenance costs.
Moreover, 84% of businesses observe a reduction in computing costs from adopting cloud tech. By utilizing cloud storage, companies can reduce their need for in-house servers, potentially saving up to 40% on the cost of physical space alone.
5. Customizable Workflows and Mappings
Every business has unique processes, data flows, and integration requirements. That's why flexibility and customization are critical in EDI.
Cloud-based EDI offers the flexibility to customize your platform according to your specific requirements, free from the limitations and constraints of traditional on-premises systems. These legacy platforms, often held together by a patchwork of tweaks and “duct tape,” can collapse like a house of cards with one wrong move.
Leading cloud EDI platforms like 1 EDI Source offer a wide range of customization options, from drag-and-drop workflow designers and visual mapping tools to APIs and scripting languages, allowing deep customization and integration.
Whether you need to support a specific document format, connect to a proprietary application, or implement a complex multi-step approval process, cloud EDI allows you to make it happen––without the risk of failure.
6. Enhanced Security and Compliance
Of course, none of these benefits would matter if cloud EDI couldn't deliver the same level of security and compliance as on-premises systems.
Cloud EDI providers invest heavily in state-of-the-art security measures, from end-to-end encryption and multi-factor authentication to continuous monitoring and threat detection.
They employ teams of security experts dedicated to staying up-to-date with the latest threats and vulnerabilities, and they undergo regular audits and certifications to ensure that they meet the highest standards of security and privacy.
In addition, cloud EDI providers are also well-versed in the complex web of regulations and standards governing B2B transactions.
Is Cloud EDI Right For You?
While on-premises EDI still has a place for companies with stable, predictable transaction needs, the flexibility, scalability, and advanced features of cloud EDI make it the superior choice for businesses dealing with the complexity of modern supply chains.
Ultimately, the decision to adopt cloud-based EDI will depend on your unique needs, resources, and strategic priorities. However, if you’re looking to drive efficiency, agility, security, and innovation while reducing cost—and, frankly, what organization isn’t?––cloud EDI is worth serious consideration as a future-proof solution.
