Oct 08, 2020 Admin

EDI Service Provider

In house vs Managed EDI Services: Which One is Right for Your Business?

With businesses moving to digital transformation, they seek effective and value-driven ways to change their existing IT structure, including applications, systems, and processes. Things get more complicated when they have to manage the latest technologies and workflow themselves without any support from professionals, especially when it comes to EDI. There are two schools of thought about whether in-house EDI is better or managed services. Every company planning to implement an electronic data interchange system has to select between the two at some time. We cannot deny the fact that handling an in-house EDI team can be a daunting task and companies have to spend a fortune to manage resources and technologies. However, some enterprises have all that it takes to implement EDI software in-house, from personnel to resources but still, they opt for outsourcing. Some businesses may select in-house integration and prefer handling day-to-day operations and management while others decide not to add workload and opt for managed EDI services

Why is that so? How should companies decide what is best for them? Which option is better? Honestly, there is no brief or precise answer to all these questions. Both options have their pros and cons that need to be considered along with other factors, such as company size, expected response time, the importance of EDI in an organization, etc. You may find a few of these aspects more important than others but they combinedly contribute to your final decision. 

As per stats, large companies are drifting towards in-house EDI processing. 95% of EDI is customized, which leads to high maintenance costs. Due to exorbitant costs, around 41% of companies still do not prefer to use EDI. However, today's solutions are turning out to be cost-effective. Hence, it is expected that the EDI market, by 2025 is expected to reach $5.9 billion that will require strong technology advances and skills. (Source: SelectHub)

Selecting the Model

Considering the perfect model for you to implement must be evaluated after a thorough investigation, which can be done through a set of questions. Their solutions must align with your unique needs and company culture. 

However, a few enterprise software development providers also offer EDI solutions that you can either outsource or associate with them for support services. These key indicators will give you a near to clear picture of which path could you opt for your ERP and IT operations.

Ask these fundamental questions to clarify your doubts before investing in any model.

  • Should you prefer outsourcing your service to an IT consulting firm or an EDI service provider?
  • Should you invest your capital in integrating EDI hardware, software, staffing, and management of services despite them not being a critical part of the business or simply look for a managed services provider?
  • Should you take the support of the EDI partner to simplify interconnection for seamless business trading? Is it becoming hard for you to trade with the partners, or losing customers, or abandoning suppliers?
  • Which of the models is offering you a low total cost of ownership (TCO)?
  • With outsourcing EDI for healthcare, can you redeploy resources? Can your EDI partner help you meet the accuracy and efficiency of transactions?
  • Are you looking for 24X7 robust EDI monitoring & management services?
  • Can you bear the cost of upholding hardware and software requisite for EDI application support service?

Any company must follow this approach to explore the true comparison between the in-house and managed services provider. You may find some managed providers to have much more expertise than the in-house due to their diverse clients and their requirements. 

Additionally, you can check whether the EDI service provider has the same time zone or different, can follow best practices for you as well as observe the same holiday calendar so as to avoid unavailability during essential deployment or support. 

However, EDI support and services have become a common practice, hence transactions acknowledgment must be carried keeping regulatory EDI standards, such as EDI 834, 820, 277, 204, 810, & more in accordance. You must have visibility of the entire procedure they follow while having written consent in order to chargeback when anything goes wrong. 

Your items such as networking equipment, servers, OS, licenses, maintenance contracts, and staffing costs must be well maintained by the EDI service provider, whether in-house or managed as a part of their core capabilities. 

Comparing In-house EDI provider with the Managed EDI Service Provider

To help you end this never-ending debate of in-house vs managed EDI services, here is a detailed comparison between the two:

Responsibility

Whether you outsource EDI or set up an in-house model, there are certain responsibilities that you have to abide by in both cases. However, the extent of the workload may vary between the two. With managed services, professional handles and coordinates all services and tasks. From providing translation software or hardware and mapping to managing communication networks to technical support, a reliable company takes care of every detail and component required for electronic transmission between you and your partners. You simply have to appoint a person to manage the software. Talking about the do-it-yourself EDI environment, the responsibilities will increase as you will be managing all the above-mentioned elements on your own. 

Skill Sets

It is great if you have the personnel and skill sets to deal with the entire integration process. However, if not, then you have to invest heavily in hiring and training people for the same. Also, as the communication protocols and formats are increasing, you may face a hard time finding proficient people who have the skills and knowledge required to maintain the operations. The other alternative is to seek assistance from third-party IT consultants who can help you with complex workflows. But you must know that the process is not going to be smooth sailing. When you have managed service for EDI integration, you get the specialization and expertise needed without any hassle. The team of EDI vendors will troubleshoot any errors, enable agile trading partners onboarding, and monitor the system to eliminate downtime. So, rather than assign an internal workforce for complex problems, it is better to let an experienced team handle them. 

Cost & Investment

Cost & Investment

When we talk about cost and investment, both options have different levels. While you select between the two, it is important to evaluate the expenses and assess if your company can afford it. With an in-house approach, you have to incur expenses to acquire software (mapping and translation), hardware (servers, backups, etc.), a license which is purchased annually for each EDI standard and format), set up an IT department, communication & transmission-related costs (ex: FTP, AS2, VAN, exchange certificates), and recruit EDI professionals. Also, if this is not the core part of your business, then your employees will be divided between different activities, hence affecting their productivity. On the other hand, outsourcing EDI support services provide you with all the requirements with main expenses, including setup fees (generally not too high) and monthly or annual subscription fee. You can divert all your resources and time to other critical operations and business areas which will further contribute to accuracy and efficiency while saving a huge cost. 

EDI Mapping

EDI mapping is one of the most important components required for electronic communication with trading partners. Once you decide to go for an in-house EDI model, you will also have to manage the software needed to reconcile the EDI documents and files with your partners. Although EDI follows a standard solution, you will still need different documents and formats for each transmission as processes may vary. This may result in a large number of maps and the cost to maintain and accommodate changes or add new documents can be quite high. For supply chain solutions, everything from freight carriers and distribution centers to warehouses and more is a part of the EDI trading community. With perfect EDI mapping software solutions, you can automatically update your company workflow and operations without any additional costs. The experts work constantly to ensure that all the data maps are up to date while complying with all the requirements of your partner. 

Round-the-clock Support

EDI system

You need 24*7 support with EDI implementation and whether you select in-house or outsourced EDI matters a lot in this. When you set up the EDI model in your organization, you must also appoint dedicated resources to monitor the EDI system and software at all times. You must have a support team that works round the clock as your partners can be in different time zones with varying business hours and activities. You must take EDI services online and make sure that there is minimal downtime. Also, acknowledgments must be sent within the stipulated time according to the agreement to avoid chargebacks or order cancellation. Hence, your team must handle EDI 24*7 to identify issues instantly and resolve them in real-time. An authentic product engineering services provider offering EDI Services provides dedicated support services as part of their core capabilities, assuring you that the system is running smoothly without disruptions. With a Tier 2 or Tier 3 backup system, the professionals ensure a solid network recovery plan to eliminate any downtime or interruption in your business. 

Also Read: How EDI Can Benefit Logistics & Supply Chain Operations?

To sum it up, here is a table that describes the difference between in-house and managed EDI services in brief:

In-house EDI

You manage all the EDI operations

Managed EDI

A third-party service provider manages EDI operations

Hosted on your own servers and hardware

Cloud-based technology

You have total control of the system

The lower total cost of ownership

From software, hardware to mapping, you take all the responsibilities

The service provider takes care of every component

Can cost between $100,000 and $500,000 to set up

You have to incur only a set-up fee

Must hire skilled and knowledgeable employees

No hiring or recruiting cost and efforts

Costs for licensing, technology, security even during times of low volume

Only pay for what you use and can also scale up & down according to business needs

Manage EDI portals for each partner

Access one EDI portals versus many

Prone to human error as there are no dedicated experts

The experienced team offers EDI solutions, hence reducing errors 

Have to update EDI maps and manage all changes

The company updates the map automatically

 

Why Should You Outsource EDI? 

Yes, managed EDI solutions have its drawbacks and flaws but still it makes more sense to opt it than having an in-house model. It becomes even more important when your core business function or task is not EDI integration. In such a scenario, you will have to appoint a separate department, employ resources and technologies, incur expenses, and whatnot. This will take away the focus of your skilled employees from key activities and also affect the overall outcome. Thus, it will be wise and logical to hire a third-party that specializes in EDI to manage your project and it will also contribute to success and effective results.  


Moreover, if handling your own EDI system doesn’t provide you with a competitive edge in your sector, then all your efforts are in vain. There is no use of investing time, money, and resources in a project that hardly adds to your success or makes you stand out. Outsourcing can allow you to dedicate your focus and resources to areas that are core to your business and can give an advantage over your competitors. 

Key Criteria to Select EDI Hosted Service Provider

Various criteria must be considered before outsourcing your EDI project-

Global Infrastructure 

In order to extend the connection, the organization must open its doors to multiple global users. Managed providers must encourage companies to broaden their process and operations horizon to traders and partners outside their area or country. They also assist companies to have quick and effective communications with partners across different geographies. 

Decision Support

Companies collaborating with an outsourcing EDI services provider must check their knowledge to evaluate their skill in understanding business issues and providing substantial solutions for the same. Expert service providers assist in making the right choices and the right solution implementation.

Live Operational Management Services

Any hosted service provider offers comprehensive monitoring and support services even after successful EDI integration services. Their stringent analysis identifies issues quickly while alerting the organization with recommended responses to the problems. Additionally, they also offer a complete problems report to act for future responses and better deter the upcoming. Hosted services providers eliminate the procrastinations with the support of metrics offering robust solutions from the collection and analysis of transaction information.

Extensive Tools and Methods

The ever-changing market and technology demands organizations to align with them to stay competitive. Additionally, the healthcare industry has to deal with distinct trading partners that come with different levels of sophistication and sizes. In order to deal with them, companies require both direct and indirect EDI for handling small as well as big partners. Hosted partners will help companies embrace a broad spectrum to provide effective and high-grade solutions for companies, such as vendor-managed inventory, scan-based trading, and logistics management abilities.

Also Read: Inventory Management Software Development: Cost, Features, Benefits and More

Connectivity & Translation Standards

The effective and agile transmission of transaction sets is the key to scalability. Only with quick transactions, companies can send and receive documents or requests within minutes. Hosted provider assists companies to have uninterrupted and high-speed connectivity as well as compliance with regulatory transaction standards that enable rapid transportation of media or document format limitations.

Change Management Processes

We see the trading environment of ANSI X12 EDI remains static, whereas the standards and trading partners keep on changing. You are free to add new traders or remove the old ones. Additionally, you can also add and work on different standards with the help of a hosting provider who offers testing of new or changed solutions as well as assistance to change old solutions to new ones. The process offered by the managed providers consists of operational services to roll out new programs and overall program management for the initiatives.

Final Thoughts

Choosing between do-it-yourself EDI and managed services is a strategic decision that demands in-depth research and analysis. To determine the right solution for your company, you must set clear goals and objectives while assessing all the aspects. You can also refer to various tech blogs for guidance. Your aim must be to select the option that lowers your costs, increases productivity, and streamlines processes. With EDI implementation, you can save time and resources while focusing on other critical tasks. 

A3logics is a trusted company offering outsourced EDI services to varied businesses. Our managed and end-to-end solutions ensure scalability, reliability, and enhanced results with cost-effectiveness. So, connect with us to discuss your project and rest assured that you will get top-notch EDI solutions.

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