Monday, February 28, 2005

Why outsource EDI?

Although EDI can be complex and expensive, some companies choose to handle all of their EDI needs in-house (see my post in this blog called “What does it take to do EDI in-house?” for an explanation). Other companies choose to outsource both the personnel and all of the necessary components to a third party EDI company. Reasons to outsource EDI to an EDI provider include:

• Lower cost
• Faster implementation of new EDI partners
• Access to an easy-to-use EDI system
• 24 hour/7 days per week monitoring and maintenance
• Fewer distractions from the company’s main mission

An EDI company that specializes in outsourcing solutions can take care of all of the components of EDI. The EDI provider takes care of the software, VAN transmission, hardware, communications, labor, special expertise and constant monitoring. Frequently the cost is less because the EDI provider can pass along savings due to the economies of scale associated with providing EDI to a number of clients.

And outsourcing EDI can help a company more quickly achieve the benefits of EDI such as:

• comply with their customers EDI capabilities and requirements
• lower costs for their customers by reducing the administrative burden on their customers
• increase their efficiency by automating business to business processes
• improve the speed and accuracy of documents received from customers
• support selling to their customers in the way they want to buy.

What does it take to do EDI in-house?

Many companies choose to have an in-house EDI department or EDI specialists within their Information Technology department. EDI capability requires knowledgeable personnel as well as the following components:

• Software for communications
• VAN service for EDI transmission
• Software for mapping EDI documents

Software for communications is required to send and receive EDI information with reliability and proper security. VAN, ASYNC, BISYNC, AS/2, direct connection and Internet communications will be mandated by various EDI partners. EDI VAN service is necessary to interconnect with business partners who may use the same VAN or another VAN.

A server or PC, communication devices and peripherals will be needed as well as secured office space, monitored security, backups and redundant power. Additional software will be needed if integration of the EDI transactions with back office systems is desired. An EDI VAN will need to be contracted for transmissions. Personnel must be trained in how to use the software and communication devices. Maps will then need to be developed.

Maps are one of the most difficult components of EDI. EDI documents themselves are very difficult to read. Maps are used to relate each field of an EDI document to another format, such as a file or a web form that is easy to read. Maps must be perfectly constructed to be useful. Frequently, logic must be programmed to decode the EDI information within EDI documents. And EDI partners will sometimes change their EDI documents which will necessitate changing the maps.

EDI capability must be monitored 24 hours a day, 7 days a week because EDI business partners expect to be able to send and receive EDI transactions all the time. Monitoring and maintaining EDI compliance is a full time responsibility for one or more people in most companies that choose to do EDI in-house.