Debunking The API Vs. EDI Integration Argument

By John Thielens, Cleo

As work-from-home and remote management requirements have forced enterprises to adopt cloud-based applications, enterprises that had previously relied on legacy systems are now looking at using Application Programming Interfaces (API)s rather than Electronic Data Interchange (EDI) for partner onboarding – often igniting a debate surrounding which of the two is the better option. However, each plays a vital role in how companies integrate their systems and interact with their business ecosystem.

With today’s modern B2B onboarding processes using both cloud and on-premise applications, both API and EDI support are necessary to operate as efficiently as possible. Here’s why the API vs. EDI debate is losing its momentum in 2020 and what to consider to maximize output.

Why You Need EDI And APIs

Both EDI and APIs transfer data from one system to another, but it’s not always easy to know which to use. Unfortunately, there isn’t always a clear-cut answer to that question, as its often dependent on each unique ecosystem of trading partners and applications. Organizations need to support both mechanisms in one aggregated place if they intend to grow their business, or even remain competitive in today’s mixed landscape of businesses that leverage cloud and/or on-premise systems.

This is where the idea of an “outside-in” approach to EDI/API integration comes from, as the data exchange requirements are often dictated by a business’ external ecosystem. For example, industries that exchange a lot of financial data may require more security, governance, and compliance layers than non-standardized API integrations can provide.

While it isn’t always black and white when you should use one or the other, it is clear that leveraging both EDI and API in tandem is a superior approach. API integration augments EDI and gives deeper context to the B2B integrations with your digital ecosystem, while EDI helps enable downstream business processes and data orchestration.

How To Support EDI Onboarding

Organizations need the ability to connect internal systems with external customer, vendor, or supplier systems and reliably exchange purchase orders, invoices, ASNs, and other EDI data according to the agreed-upon standards and transaction sets when onboarding new trading partners.

Onboarding a trading partner involves configuring each specific partner’s EDI profile and building the appropriate maps to send, transform, and receive data. Businesses that do not sufficiently execute these processes risk SLA non-compliance and potential chargebacks, jeopardizing existing relationships with partners, and reducing new sales opportunities.

To avoid this ripple effect, any EDI integration technologies that companies adopt to manage these processes must:

• Accept EDI and non-EDI data
• Seamlessly route data
• Securely move data; and
• Provide visibility into these data processes

It is also critical to leverage pre-built project templates and have increased visibility to accommodate all those partners, especially because each trading partner will have different needs and processes that must be adhered to. Fortunately, there is existing technology that can help enterprises support and automate all of these processes and requirements.

However, that solution must also support the onboarding of on-premise and cloud applications, which helps individual lines of business conduct operations to execute end-to-end data processing. While your platform’s transformation capabilities can support those integrations, you may find it more helpful to leverage its API capabilities.

How To Support API Onboarding

Supporting API onboarding also means supporting the various types of APIs, including REST and SOAP varieties. Most cloud applications include REST APIs to communicate, as they’re more robust and easier to service. SOAP APIs are XML-based protocols that usually provide added security for more regulated data transactions.

It’s also important to understand the business needs of the API, whether it’s to speed up a partner B2B ordering process or provide access to another data source or analytics platform. That way, businesses can ensure the API enables their trading partner relationship, either through a process or in a direct manner.

Enterprises generally solve application onboarding processes with APIs in several ways, such as:

• Building the API-based integrations from scratch, which often requires extensive resources and time
• Tweaking the provided APIs and adding on to them, which renders the business responsible for making any changes when the API gets updated
• Leveraging a prebuilt application connector that integrates with the application’s APIs but is maintained by the vendor

A centralized integration solution will provide the platform to accomplish any of these approaches but having rich APIs and application connectors will dramatically accelerate the ecosystem onboarding process and deliver faster time to value.

For example, APIs may be necessary to look up catalog inventory or check pricing within an e-commerce platform. If a customer decides to make the order, EDI may be necessary to kick-start the ordering, shipping, and fulfillment processes. Both processes are equally critical to business success, and increasingly often must work in tandem.

Whether onboarding a trading partner, customer, cloud service, or SaaS application, each has its own unique configuration, customization, and integration challenges. But the fact is, your competitors are facing the same challenges. Whoever can quickly adapt to each communication and data requirement – whether it’s EDI, non-EDI, or API – will separate themselves from the pack and earn new business.

About The Author

John Thielens is CTO of Cleo.