EDI (Electronic Data Interchange) provides a host of benefits for companies of any size. Many companies deciding to bring EDI into their business system come to the same crossroad: does it make more sense to implement EDI in-house or is outsourcing your EDI service the best solution?Of course, the answer is that both options are the right choice for different businesses. Let's take a look at both scenarios.
Taking on EDI in-house makes a lot of sense for some companies. The initial expense is substantial. However, if you are exchanging data with hundreds of trading partners at a large volume, handling EDI in-house may be your best option.Here are some typical requirements of an in-house EDI system:
- Hardware – Your company will need a server capable of processing and storing incoming and outgoing EDI data. Plan on at least $25,000 for a decent Windows server.
- Software – The keystone of any in-house EDI system. You want your EDI software to integrate with your ERP system. Advanced integration often takes customization from an EDI expert or consultant.
- Staff – Hiring an EDI expert may make a lot of sense when running an in-house EDI system. EDI mapping and troubleshooting are essential when transmitting EDI with different trading partners. Different trading partners run different protocols requiring different EDI mapping.
Updating your hardware and software is vital in ensuring compliance with various standards and protocols. Scalability is also an important consideration when initially budgeting your EDI system. Your system should be capable of growing with you (and your trading partners).
Businesses often outsource their EDI services to Value-added Networks (VANs). You should have virtually no initial expense when outsourcing your EDI service. Rather you pay monthly to have a company handle all the complexities of EDI.In a typical VAN scenario, you would enter the data you need to send into your “mailbox.” The VAN then delivers the data to your trading partners “mailbox.” You may think of a VAN of as a postmaster. A VAN simplifies EDI making it accessible for any company that wants to implement EDI into their business system.There are two typical outsourcing configurations:
- On-Site Solution – A company has their EDI system on-site utilizing their VAN's software and hardware. An on-site solution may be hosting many clients on their system while keeping all data separate and secure.
- Web-based Solution – Operating from the cloud, you can access your web-based solution via an internet connection. EDI data and documents are transmitted and received through the solution's website.
While these two configurations are thought of separately, some VANs do both. The solution would depend on your needs. VANs typically base their pricing structures amount of EDI data you transmit in a billing cycle. Advocates of implementing EDI in-house often state this structure as the reason not to outsource. The cost of moving data has significantly decreased over the years, but this pricing model persists.BOLD VAN, however, offers trading partner pricing. You can exchange data across BOLD VAN's lightening-fast VAN. You are charged based on the number of partners traded within a billing period.Finding the right solution for your company depends on your needs and goals as a business. EDI's benefits are incredible and accessible regardless of your company's size.If you're unsure what the right solution is, outsourcing is likely the appropriate option. The initial cost is minimal and if you later to decide to handle EDI in-house, you can without losing an initial investment.