EDI Outsourced Or In-House: What’s the Best Business Option?

In this article, we cover:

● What is EDI Outsourcing?
     ● When To Outsource EDI?
     ● Pros of Outsourced EDI
     ● Cons of Outsourced EDI
● What is In-House EDI?
     ● When To Do EDI In-House?
     ● Pros of In-House EDI
     ● Cons of In-House EDI
● Comparative Costs of Doing EDI
● Blended EDI Services
     ● Pros of Blended EDI
     ● Cons of Blended EDI
● Essential Keys to Consider for EDI Outsourcing

EDI outsourcing involves partnering with a provider who is responsible for managing the technical aspects of EDI, such as setting up and maintaining the system, handling data translation and mapping, and providing support and training.

Many companies choose to outsource their EDI to a specialized service provider in order to take advantage of the benefits of EDI, including cost savings, improved efficiency, and the ability to focus on their core business activities. Selecting the best option for your business will largely depend on the needs of your company, business goals, and resources. 

What Is EDI Outsourcing?

The term "EDI outsourcing" refers to any type of EDI service where a provider handles the technical aspects of EDI, such as setting up and maintaining the system, handling data translation, communication, and mapping. While providing support and training. This includes related software, hardware, and ongoing changes to EDI specs or maps.

When To Outsource EDI?

Companies may choose to outsource their EDI for a variety of reasons, including cost savings, lack of in-house expertise, and the need to focus on core business activities. Outsourcing EDI can allow a company to take advantage of the benefits of EDI without having to invest in and manage the technical infrastructure themselves. It can also provide a company with the flexibility to scale up or down their EDI capabilities as needed, without incurring the costs of maintaining an in-house EDI system.

Overall, EDI outsourcing can be a cost-effective and efficient way for companies to implement and manage their EDI processes, enabling them to streamline their operations and improve their relationships with customers and suppliers.

For further insight, we highlight some of the pros and cons of EDI outsourcing below.

Pros of Outsourced EDI:

Access to Experts

EDI vendors consist of experts that handle EDI responsibilities all day, every day, for customers of various sizes and industries. They are always up-to-date on the latest EDI trends and best practices, know how to quickly address errors, maintain system uptime, work efficiently, and can answer any questions. 

Management & Support

It is possible for EDI service providers to offer 24/7 support, but this may depend on the specific provider and the terms of the service agreement. Some EDI service providers may offer round-the-clock support as a standard feature of their service, while others may offer it as an optional add-on or charge an additional fee for it. In general, it is important for businesses to carefully review the terms of their service agreement with an EDI provider to understand what level of support is included and how to access it. This can help businesses to ensure that they have the support they need to effectively manage their EDI processes and minimize any disruptions or issues that may arise.

Allocate Your Resources to Mission Critical Business Objectives

All EDI-related tasks are handled by a third-party provider. This can allow a greater focus to streamline operations such as expansion, relationships with customers and suppliers, and more. Furthermore, outsourcing EDI requires less employee headcount to maintain EDI. Thus, saving the company time and money by avoiding onboarding/training operations for new partners.

Cons of Outsourced EDI:

Lack of Control and Agility

When outsourcing, companies give up some of their control since they are reliant on a third party. This means if a company has requests, such as onboarding a new trading partner, updating the software, or fixing errors, the company has to wait on the vendor to complete the task rather than being able to perform it themselves. Essentially, the company runs more or less on its vendor's schedule. 

Lack of Visibility

Like control and agility, outsourcing EDI results in less visibility for businesses. This is because they are not the ones managing and maintaining the EDI technology and processes. Therefore, businesses usually rely on reports from their EDI provider to inform them of EDI performance, errors or bottlenecks, software updates, etc.

Switching Providers

If a company is not satisfied with the current services it is receiving from its EDI provider, it can be an expensive and time-consuming process to search, select, and switch EDI vendors.

While there are cons to outsourcing EDI, the approach has come a long way since it was first introduced. Customers do give up some control, agility, and visibility with outsourcing, but not nearly as much as they did even just a few years ago. Third-party service providers have made large strides to minimize the lack of control, agility, and visibility that consumers experience when outsourcing EDI.

What Is In-House EDI?

In-house EDI  refers to a company managing their own EDI processes internally, rather than outsourcing them to a specialized service provider. With in-house EDI, a company is responsible for setting up and maintaining their own EDI system, handling data translation and mapping, and providing support and training to their employees.

When To Do EDI In-House?

Managing EDI in-house requires a significant investment in time, resources, and expertise. Companies that have the necessary resources and expertise to set up and maintain their own EDI system may prefer to manage it in-house. Moreover, it can potentially reduce costs associated with software licenses, hardware, and maintenance. Companies that are looking to reduce costs may find it more cost-effective to outsource their EDI.

Additionally, companies that want greater control of their businesses and EDI processes may want to consider in-house EDI. In-house EDI gives businesses complete governance over when actions are performed, instead of having to wait for a third party to complete the tasks whenever they get around to it. 

Lastly, companies that want full transparency and visibility into their EDI processes and performance should consider in-house EDI. In-house EDI gives businesses the highest level of insight and visibility into EDI so they can better monitor and manage the technology and processes, as well as analyze performance.  

Pros of In-House EDI:

Greater Control and Agility

In-house EDI gives a company complete control over their EDI system and the data it handles. Furthermore, companies can be more agile and on their own time, since they are the ones responsible for performing maintenance, updates, onboarding, etc. Companies that value complete control over their EDI processes may prefer to manage it in-house.

Greater Visibility

Businesses have visibility into all aspects of their EDI technology, processes, and performance. This helps companies become more informed. Companies can use this information to decipher areas of improvement, perform optimizations, create strategies, and more.

Cons of In-House EDI:

Greater Responsibility

When EDI is in-house, companies naturally have more responsibility than if they outsource. This means a company's employees have more work to complete which can burden their workloads. Additionally, the company implementing and using EDI is responsible for the success of the technology and processes. 

Greater Workload

Bringing EDI in-house means that companies may need to hire additional employees to manage EDI responsibilities. Hiring can be a time-consuming and expensive process. 

Reliance on Internal Expertise

Businesses have to rely on their employees for the success of their EDI. This may be an issue when unusual and new roadblocks, disruptions, and scenarios occur, and internal employees do not know how to fix or address them. Compare this to outsourcing EDI which puts the responsibility in the hands of a company that deals with various clients all day, every day—meaning they have experience with nearly every situation and can work quickly.
            

What Are the Comparative Costs of Doing EDI?

The costs associated with implementing and managing Electronic Data Interchange (EDI) can vary depending on a number of factors, including the size and complexity of a company's EDI system, the number of trading partners involved, and the approach the company takes to managing EDI (in-house or outsourced). Here are some potential costs to consider:

When it comes to outsourcing EDI, companies can expect costs and fees regarding:
●    Service and maintenance 
●    Usage metrics (ex. the number of documents sent)
●    Onboarding new trading partners
●    Switching providers (if unsatisfied with the current provider)

When it comes to in-house EDI, companies can expect costs and fees regarding: 
●    Ongoing software licensing 
●    Infrastructure/technology costs 
●    Internal staffing and hiring

Blended EDI Services

Blended services are an innovative approach to EDI. Think of blended services as a hybrid approach that combines in-house and outsourced EDI. This approach is particularly helpful if a company wants to handle certain aspects of its EDI technology but not all areas.

Pros of Blended EDI:

Greater Customization and Flexibility

Companies can work with a managed service provider to create a personalized plan that is tailored to their specific needs and wants. Responsibilities can be divided between the company and the third-party provider, however the business wishes. 

Improved Agility

Businesses become more agile with blended services. This is because blended services involve teams from both parties and encourages them to work harmoniously so they can quickly tackle any requests, errors, projects, tasks, etc. 

Cons of Blended EDI:

Communication

Since one singular party is not responsible for all EDI-related tasks, communication is key with blended services. If the business and the service provider are not aligned or do not communicate well, tasks may be overlooked, forgotten about, performed incorrectly, etc.

Neither Here Nor There

Utilizing blended services can result in a company not achieving the full rewards that the self-service and outsourced EDI approaches offer. At the same time though, blended EDI services also prevent companies from experiencing the full extent of the cons associated with the other two approaches. 

For example, blended EDI may provide companies with greater control and agility than outsourcing EDI, but it may also mean that companies have somewhat more responsibility regarding EDI and must hire more employees to accommodate this.

Essentially, blended services are a safe option for most businesses since it falls in the middle ground. 
    

The Essential Keys to Consider for EDI Outsourcing

It can be intimidating for a company to pick its first EDI provider or find a new EDI provider. Furthermore, EDI needs to look different for each company, so how does your business know what to look for in a provider?

We highlighted a few commonalities that businesses should search for in an EDI service provider. These recommendations are helpful for the large majority of companies looking to outsource their EDI needs, no matter their size or industry. 

Do They Lead a Business-Process Driven Approach?

A business-process approach is a series of steps that are taken to achieve a desired outcome. The goal of business processes is to streamline and organize processes, making operations as efficient as possible. 

A business-process-driven approach helps companies provide excellent and consistent services, while achieving desired results. EDI providers that utilize a business-process-driven approach help their customers achieve reliable, efficient, and streamlined operations and services.

Do They Account for Your Long-term Growth?

Companies are in the business of making money. In order to make money, companies are always looking for ways to grow their business. 

Therefore, companies need to find service providers that can handle their current EDI needs and are able and willing to handle their EDI operations in the future as the company evolves and grows. Not only that, but the service provider should also help propel a company's growth by incorporating EDI best practices and by making optimizations, so your company performs at peak productivity and strengthens relationships with trading partners.
        

Do They Provide Control & Agility to Your Business?

As we covered earlier, control and agility are becoming increasingly important for businesses. Control helps businesses operate how they want and need, while visibility makes companies more informed and knowledgeable about their operations by providing real-time data. 

Additionally, control and agility help businesses remain in good standing with trading partners. This is because they can quickly react to a trading partner's message or request. For example, if a trading partner wants to switch EDI protocols, service providers should be able to swiftly update a company's protocols to align with the trading partner's new requirements. 

A solid service provider will ensure your business has access to the control and agility it needs to operate as successfully as possible.

How Cleo Can Help

With Cleo, customers have the option of managed services, self-service, and blended services. Our customers also decide whether to deploy their EDI tools on-premise, in a private cloud, or as hosted managed services. With these offerings, Cleo empowers customers to select the approach that best fits their current business needs and positions them for future success.
For more information on Cleo's 24/7 managed services packages, their features, and more, check out our page here. Get in contact with us today by emailing us at sales@cleo.com, calling us at +1.815.282.7695, or submitting a callback request.