EDI outsourcing can happen in several different contexts,
but essentially it takes place when a company decides
that outsourcing EDI would be of strategic interest – EDI
has in that situation been determined to not be one
of the company’s core strategic areas. There
are three major types of EDI outsourcing:
EDI Service Bureaus
EDI Outsourcing of an entire EDI Department
Onboarding of Suppliers or Customers
EDI outsourcing with EDI Service Bureaus:
This is common when small companies are asked to do EDI
with a larger company. This is often a customer like
a retailer or large manufacturer. When asked to do EDI,
often the small company doesn’t know anything at
all about EDI and decides to do EDI outsourcing because
it is simpler. Though it may be more expensive in the
long run, EDI outsourcing is a good option for companies
unfamiliar with EDI and that have a low transaction volume.
It will, however, over time be more expensive than purchasing EDI
software and managing it in-house.
Outsourcing the EDI department: This means that a company
has decided that EDI is neither a strategic competency
within the organization, nor an area that provides competitive
advantage. EDI outsourcing in this context makes a lot
of sense, especially when a company wants to focus resources
on their core business. EDI outsourcing is always
relevant when an organization has difficulty seeing the
strategic aspect of EDI.
Outsourcing the on-boarding of EDI trading partners:
When a large organization (eg. a retailer) does EDI outsourcing
of the on-boarding process, it means that they are outsourcing
the work of getting individual suppliers up on EDI. EDI
outsourcing is important in this context because most
retailers have thousands of suppliers and lack the manpower
or expertise to get all of these on-boarded to EDI. When
a retailer does EDI outsourcing of the on-boarding process,
it is generally because it’s a significant drain
on resources.
There are some important points an organization should
consider when contemplating EDI outsourcing:
How experienced is the entity with which you
will do EDI outsourcing? For how many years have
they done it? What are the characteristics of their
typical EDI outsourcing project? Get details!
Will EDI outsourcing really save money? In many
situations the outsourcing organization has found
that outsourcing may not be as cost saving as originally
forecasted. This is especially true when the EDI
outsourcing was of the entire EDI department. This
is often due to the fact that knowledge of the
company’s business process and any changes
to this is important for the EDI department, but
when EDI is outsourced it is difficult to ensure
that the outsourcing vendor understands the inner
workings of your organization (and the effect of
changes to business processes on the EDI outsourcing).
Please do careful and detailed calculations showing
best case, average and worst case scenarios of
EDI outsourcing. Also know that when entering into
an EDI outsourcing agreement, the outsourcing organization
is no longer accessible to your needs in the same
way How will the outsourced EDI collaborate with
the rest of your organization? Before engaging
in EDI outsourcing, you need a clear understanding
of how you will be interacting with the vendor
on all levels, so your needs are met. EDI
XML
As a small but growing business
doing EDI, you must eventually decide – has my company outgrown EDI
Outsourcing? When should you move away from EDI Outsourcing
and on to the purchase of EDI Software? The answer
to this question will depend on several factors. EDI
Outsourcing is convenient for organizations using EDI
in a reactive mode, but is not ideal for growing companies
wishing to take advantage of all the features of EDI.
EDI Outsourcing can become expensive. While an
EDI Outsourcing organization has the infrastructure to
quickly enable your EDI operations, the EDI Outsourcing
company relies on variable pricing. This can make EDI
Outsourcing expensive for a growing business. The
answer to the question of when to move on from EDI Outsourcing
to the purchase of EDI Software might seem to be: abandon
EDI Outsourcing when it becomes prohibitively expensive.
The better answer, however, is
to plan an exit from EDI Outsourcing well before the
price of EDI Outsourcing becomes
too high. When EDI Outsourcing is your vehicle
for exchanging EDI, you are unable to take advantage
of the back-end benefits of EDI. Specifically,
integrating your EDI data into your ERP system is difficult
to impossible when using EDI Outsourcing. With
EDI Outsourcing, you receive a report of in-bound documents
that then have to manually processed. It’s
best to view EDI Outsourcing as beneficial only when
you first begin to use and test EDI, and then move on
to the purchase of EDI software when you have outgrown
EDI Outsourcing.
Once you are sure that EDI is
right for your business, you will probably also find
that EDI Outsourcing has become too limiting. With EDI Outsourcing, you
may be restricted in the number of trading partners you
can connect with. With EDI Outsourcing, you will not
have any control over who processes your EDI within
the EDI Outsourcing organization. EDI Outsourcing is
a shared resource – which means that other companies
will be working with your EDI Outsourcing provider – often
these companies are your competitors. EDI
Outsourcing may be a good value for the beginner; but
when companies get serious about EDI, EDI Outsourcing
is usually the first victim. EDI Outsourcing may
be appropriate for first time users; but even small businesses
will soon outgrow the need for EDI Outsourcing. When
you are ready to move on from EDI Outsourcing, Trading
Partner from EMANIO is powerful and easy to use.
23 Apr 2008 at 6:00am
Event Features Experts from Largest Outsourced EDI Service Provider, the Leading On-Demand Business Software Suite Provider, and Energy Beverage Supplier, Mad-Croc
21 Apr 2008 at 2:28pm
SPS Commerce, the leading provider of SaaS EDI services and member of NetSuite's NS-BOS Developer Program, and NetSuite Inc. (NYSE: N - News), a leading vendor of on-demand, integrated business software suites that include Accounting / Enterprise ...
21 Apr 2008 at 2:05pm
SAN MATEO, Calif. & MINNEAPOLIS----SPS Commerce, the leading provider of SaaS EDI services and member of NetSuite's NS-BOS Developer Program, and NetSuite Inc. , a leading vendor of on-demand, integrated business software suites that include Accou...