Electronic data interchange hits a home run

Veterans Affairs and Treasury have come in ahead of the other civilian departments with
an electronic data interchange system that pays VA vendors $4 billion a year through
electronic funds transfer.

The EDI payment interface between the two departments' financial systems took more than
a year and a lot of teamwork to build. "We got in each other's backyard and played
ball till we found out how they hit it," VA systems accountant Rick Stauffer said.

Other civilian agencies can piggyback on the EDI systems work, he said.

VA and the Treasury, which acts as VA's banker, both had to modify their financial
systems to support the American National Standards Institute's X12 EDI 820 transaction
format for electronic payment orders and remittance advice.

VA Finance Center director Harlan Hively said his staff pushed for the standard
interface, hoping to improve the accuracy of vendor payments and reduce the frequent Cobol
reprogramming required whenever proprietary record formats changed.

Under the new payment system, programming adjustments will be made only in one place by
one organization--Treasury. "Instead of Treasury coming to us [and other agencies],
saying you've got to change this and that, now Treasury can go into its EDI software and
make those changes," said Keith Wanless, manager of the Electronic Commerce Service
at the VA Finance Center in Austin, Texas. "Those types of efficiencies really pay
off."

VA and Treasury officials are relying on the no-hands-on EDI approach to ensure cleaner
financial data, too. With the mainframes exchanging data unattended, VA officials feel
reasonably sure what's coming out of the VA system is the same as what's going into
Treasury's system.

"Nobody is keying documents into accounts receivable" or putting aside faulty
invoices in the "too hard" drawer, Stauffer said. "You put your smartest
people at the front end of your system and don't allow data to come in unless it's
perfect."

EDI also has given VA its first document control system for invoices. In the past,
vendors would mail in bills and not know until 30 days later whether they had made it
through the mail, the mailroom or the optical character recognition reader, Stauffer said.
Now invoices are received overnight and acknowledged automatically.

The VA, a veteran EDI user, started to develop EDI capabilities about six years ago
around its IBM Corp. MVS-based financial applications. The department will process 650,000
vendor payments this year using EDI. Employees put in fewer weekend hours during crunch
processing periods, and inquiry staffs are smaller.

"What gets me excited is to make something simple that was complex," Stauffer
said. Instead of sending multiple daily deposits to a bank, for example, the finance
center uses EDI to create a single payment order to the bank each day, along with a
complete payment history to identify the items.

For EDI electronic funds transfers, the VA uses the GenTran EDI translator and
Connect:Direct for NetWare from Sterling Software Inc., Dallas. Both EDI applications run
on an IBM ES/9021-982 mainframe at the VA Finance Center.

The Treasury Finance Center, also in Austin, receives the X12 EDI 820 transfers over a
direct fiber-optic T1 link. The Treasury runs Sterling Software's Vector:Connexion on an
IBM 3090-600E mainframe to convert the VA's EDI payment records into the Corporate Trade
Exchange (CTX) disbursement format required by banks.

At both finance centers, the IBM Customer Information Control System, or CICS, is the
interface between the EDI translator and the financial data stored on the mainframes.

Payments to VA's top 250 vendors now account for 60 percent of the payment workload;
credit card payments to thousands of other vendors account for the most of the rest. With
EDI and credit card payment methods now well in hand, "we really look forward to
reducing the paper process," Wanless said.

The VA's seven-person Electronic Commerce Service team is larger and more
multidisciplinary those of most federal EDI sites, he said. "We've broken traditional
boundaries," said Wanless, who heads the systems analysts, Cobol programmers and
business experts from payroll and accounts payable, all trained in EDI.

After completing the EDI payment system in July, two team members have begun work on
new applications to extend VA use of the ANSI X12 EDI 820 standard "beyond the
traditional purchase order and payment process" to mortgage lending transactions with
banks and health claim payments to insurance companies, Wanless said.

"We recognize that EDI is a generic process," even though most federal
agencies use it only for purchase orders, he said.

The VA, like every other federal agency, is under a 1996 deadline established by the
Debt Collection Improvement Act of 1996 to make nearly 100 percent of all new payment
obligations by electronic transfer. By year's end, agencies face another deadline, set by
executive order, requiring them to conduct all routine procurements electronically.

"Agencies have to get moving on this," Wanless said. "They really can't
ignore it."