Communities - EDI and digital signatures
by Nigel Taylor, Head of e-Invoicing, GXS
Wednesday, June 20, 2012
Over the course of this blog series we have looked at how EDI and digital signatures have fared against one another within commonly contested categories, including tax compliance and other regulation within Europe. The European Commission is making strides towards promoting e-Invoicing adoption and in the advent of this changing environment it is important to know which platform is best for your company.
In this final blog, we will look at how EDI and digital signatures compare when it comes to building communities between trading partners. A community of integrated trading partners is an important aspect of e-Invoicing so that all companies can connect and collaborate with each other.
If we start with digital signatures, it is hard to define the format’s ability to create a trading partner community. This is essentially because digital signatures are used for evidential purposes only. Pure-play e-Invoicing providers that leverage digital signatures often rely heavily on web portals as a means of connecting trading partners, and it is these portals which can build a sense of community as multiple buyers and suppliers are empowered to connect and communicate with one another.
Web portals tend to not be popular with suppliers. As web portals do not offer integrated solutions, from one ERP to another, the ability to send/receive invoices is limited. This creates extra workload for the supplier’s AR team having to re-key data. For companies issuing significant volumes of invoices this is not a practical solution and perhaps only suits micro-suppliers. As larger companies use e-Invoicing more and more, suppliers are forced to use multiple portals to work with their different large buyers. This splits the workload across different entry systems and increases maintenance and complexity, so it is understandable to see why this would be inconvenient.
Contrast this with EDI and it is evident that community is inherent to end-to-end EDI processes. EDI requires trading partners to set up networks between one another to facilitate secure document exchange. However, despite its integration pedigree, EDI can be slower in building these connections between trading partners due to the more technical nature of the network. EDI’s biggest strength – reliability and security in VANs – can also be a weakness when trying to connect diverse communities very quickly.
e-Invoicing providers have made extensive use of internet technology and portals to facilitate flows between smaller companies and their larger buyers, particularly in the goods not for resale (indirect materials) space. In response, B2B integration (EDI) companies have also developed similar innovative and cost-effective internet-based community solutions, and combined with SME enablement tools are pushing B2B integration into the cloud to connect both direct and indirect material supplier communities. In the indirect materials market, where no specific business model has achieved critical mass, the door is still wide open.
When building communities, neither digital signatures or EDI has a significant advantage over the other. So when deciding what solution is best for you company the truth is that either solution, or both in parallel, can work for your different business needs. Be sure that the service provider you work with has a comprehensive trading partner enrolment program, to connect your trading partners with the integration solution that suits them and in the shortest possible time.
At GXS we have years of experience working with companies around the world and recognise this diversity by offering both EDI and digital signature solutions. I hope that the insight provided over this series has helped to inform and educate those wanting to learn more.