You need to choose the right way to digitise
Are you handling e-documents? Are you in the process of digitising and automating your invoice or order/purchase handling? During this type of processes, the question of how to transport the documents concerned will inevitably have to be answered. There are basically 3 different ways to go, depending of the needs of your company.
The face-off, having the money or having the stuff
There will typically be significant differences between the approach that you will have to take, depending on whether your connection is with a customer or a supplier. And this difference in approach also applies to your customers and suppliers, as they transition into the digital realm.
The way a digital business document exchange will function is determined by the weight that each entity has in the relationship. The rule of thumb is that the customer can dictate the connection type, the document types, the document formats and the information level required to meet the acceptable minimum level. In the case of the supplier, this power of influence is much rarer.
However, there will be instances where this rule does not apply. Customers that represent too small a portion of a supplier’s overall business, often end up being the ones accommodating said supplier’s expectations or demands. There will also be suppliers that have such unique offerings that alternative suppliers are either out of the question or too expensive/risky for the buyer to engage with.
These dynamics, along with myriads of different legal requirements, are the main reasons that there are no true universal standards available that can be easily and cheaply implemented. It is important to accept that the ease with which we can all exchange e-mails across the globe and expect the transaction to be comprehensible in both ends, is not applicable to e-documents. Rules need to be set, managed and agreed upon for every single connection and exchange we make.
“There are basically 3 different ways to go, depending of the needs of your company.”
Be the character that suits you
There is more than one way to go about this. Each with its own special set of benefits and quirks, it all boils down to your particular situation, temperament or maybe even personality. You may do it like the DIY-guy, the Good ol’ Grandad or that Animal-loving Extrovert:
1. The DIY-Guy
Doing it yourself is the most laborious option. Each connection of course has to be dealt with individually, not only in terms of the technical aspects, but also the business side of it.
However, it is also the option that offers the highest level of control with all aspects of the implementation and the systems maintenance. This is also the option that offers the highest level of freedom to choose which document and data types to digitise.
It is mostly viable only for the largest of organisations with very high in-house IT maturity and substantial recourses. Benefits are more pronounced in companies that deal with only a handful of very large customers and/or suppliers exchanging high volumes.
- Full control of the interfaces, implementation process, management and scope.
- High efficiency when there are few connections that carry extremely high volumes.
- Almost full discretion in the design of document formats.
- Very high maintenance, ties down many internal resources and systems.
- Low level of scalability.
- Difficult to change to a different methodology.
- Expensive and time consuming to build format support and add new connections.
2. The Good ol’ Grandad
Maybe you want to go the good ol’ Grandad way with an EDI solution? Having a third party do most of the tedious setting up and managing will free internal resources in terms of systems and staff needed to run the solution. Maintaining the connections, validating and converting the exchanged documents is done by the EDI provider.
However, adding new connections or business relationships will often prove to be a chore. Moreover, it will add considerable cost, both on implementation and to the operating expenses.
- Most providers can grant low-cost access to limited pools of businesses that are already connected.
- High efficiency in setups with a small to medium amount of connections that use static profiles.
- Many will be able to develop custom conduits for connecting directly from various ERP systems in both ends of the exchange.
- Often based on old EDI technology that is starting to show its age, especially in agility, flexibility and scope.
- Limited reach and isolated networks – often enclosed behind pay-walls.
- High cost involved in any sort of change or addition.
- Difficulty to handle receipts or end-to-end tracking when files cross between networks.
- Hard (expensive) to replace in favour of another operator.
3. That Animal-loving Extrovert
The third and last option is to do it as the animal-loving Extrovert; chose the networked approach. With this approach, you will see a much higher level of standardisation, as the operators working in this fashion need to exchange files under strict regulation, observing commonly agreed interface frameworks. You will often find that many operators in the traditional EDI space are also looking at combining the two paradigms, solely out of necessity.
The networked approach is very much governed by legislation and driven by the need for greater efficiency in the public sectors. This is most common among the West-European countries, but is rapidly spreading across the globe.
- Highly standardised and as such very easy to switch between operators when needed or desired.
- Access to very high numbers of other businesses with whom you can connect more or less seamlessly.
- Highly scalable and predictable.
- High degree of compliance, tracking and data availability.
- Typically, the available variations of document types are limited.
- Customisation limited within the various open standards.
- Efficiency suffers in setups where exchange happens between low number of connections with low document volumes in combination with using non-standard formats.
“You may do it like the DIY-guy, the Good ol’ Grandad or that Animal-loving Extrovert.”
From a purely financial stand point, it can, in some instances, prove quite difficult to predict which method will make the most sense. For this reason, it is a good idea to bear in mind that the cost of going DIY is often assessed in an overly optimistic fashion.
This is not because people who choose this option are overly optimistic, but usually because there are too many associated costs that simply are not mapped from the beginning, as they can be very difficult to identify in advance.
Add to that, the various cost centres that are involved and the fact that these often do not fully contribute to the final reporting and cost analysis.
With this review in mind, you should be well equipped to start your investigation of the digital business document market. Under no circumstance should you allow lack of information hinder your decision, as any of the 3 options described will be far better than sticking with paper.
Do you have any questions or would like to discuss any of the aspects touched upon above? Please do not hesitate to contact me for further details!