Data can be packaged into different formats. Some formats are standardized so they can be used in applications written by different software vendors. Other formats are proprietary, only to be used by applications from a single vendor. Each business application stores data in its own proprietary format. Step 2 of the process is to convert the data from the proprietary format of the source application into an industry standard.
There are many different standards, but EDI and XML are the two most popular for B2B integration. Industry standards provide a common language that enables all business partners within a particular sector to communicate easily. Have you ever emailed a digital photo to a friend or family member? If so, chances are they were able to view the photograph on their computer without any problem. Reason being, the formats used for digital photographs—GIF, JPEG and TIFF (just to name a few)—are highly standardized. But not all types of data are as standardized as photos.
Have you ever created a file on a Mac and tried to transfer it to a PC? Were you able to open the file? And was it properly formatted? This has become less of a challenge recently as desktop software vendors have moved towards standardized formats. Ten years ago, it was a big problem. And it is still a big problem in the world of business interactions.
To solve these interoperability problems, the technology industry created B2B standards. EDI, created in the 1970s, was the first widely used standard for B2B. XML, introduced in the late 1990s, is another alternative that is steadily gaining adoption. The idea behind the standards is that all companies in a particular industry can share information electronically using a common language. Data from an Oracle ERP system can be extracted in its native format then converted to XML. The XML message can then be transmitted to a community of business partners that each understand XML. Each individual company can convert the XML into the format of its business application—perhaps Microsoft Dynamics.
Although we have been using the terms EDI and XML in the singular form above, there are actually a great number of different standards based upon these two technologies. Originally, different EDI standards were used in each country (US, Germany, France, UK, Japan), but over the years the industry has converged on two primary formats—ANSI X.12 (popular in North America) and EDIFACT (popular in Asia and Europe).The XML standards introduced later were designed for global use, but often within a particular industry. There is RosettaNet for the high tech sector, CIDX for chemicals, SPEC2000 for aerospace, GUSI for consumer products and so on.
Which standard should you choose? Well, actually you may not have a choice. Chances are that your customers will tell you which standards they prefer. You must “map” the data fields from your business application into the corresponding fields of the industry standard (e.g., EDI, XML) that you choose. Each time a message is sent to or received from your customer it will be “translated” into the appropriate format.
The good news is that you can tell your vendors which standard you prefer. And they will have to perform the necessary mapping and translation to do business with you.