In House Vs Managed EDI Services: Which Is Better?

Table of Contents

A3Logics 22 Aug 2022

Table of Contents


In the modern era of business, digital transformation is not just a trend but a necessity. Businesses everywhere search for impactful and cost-efficient ways to overhaul their IT infrastructure, encompassing applications, systems, and processes. The challenge amplifies when they navigate the complexities of new technologies and workflows, particularly in electronic data interchange or EDI.


So, when it comes to EDI, what’s the better approach? Building an in-house team or leveraging external EDI services? This is a question that almost every firm intending to utilize EDI grapples with. The reality is that managing an in-house EDI team is no small feat. It demands significant investment, both in terms of finance and resources. On the other hand, several businesses, even with adequate resources and personnel, tend to lean towards external EDI solutions, reducing the onus on them.


Now, you might wonder, what drives this decision? How should a business pinpoint the most suited option for its needs? Is there a one-size-fits-all answer? The simple truth is there isn’t. Both in-house and managed EDI come with their respective advantages and challenges. Factors like the company’s scale desired turnaround time and the role of EDI within its operations play pivotal roles. Some of these considerations might hold more weight for your organization than others, but they collectively shape your final choice.




Let’s dive into some telling facts about the world of EDI. Recent data suggests that most big corporations are increasingly adopting in-house EDI processing. A staggering 95% of EDI customizations can lead to soaring maintenance expenses. This might explain why nearly 41% of businesses hesitate to fully embrace EDI, largely due to the steep costs involved.


However, the landscape is evolving rapidly. Modern EDI services are proving to be more wallet-friendly, ushering in a change in perception. With this shift, experts predict that by 2030 the EDI market could touch a whopping $9 billion. This promising growth is contingent on significant technological progress and the availability of specialized skills. (Data courtesy: SelectHub)


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Selecting the Model


A careful analysis is paramount when deciding on the best model for implementing electronic data interchange (EDI). This involves posing pertinent questions to ensure the chosen solutions resonate with your organization’s distinctive requirements and ethos.


Interestingly, several enterprise software developers now proffer EDI. You can outsource these or collaborate with these electronic data interchange providers for supplementary services. Answering certain key questions can guide you in discerning the most fitting path for your ERP and IT endeavors.


Pose these essential questions to shed light on your uncertainties:


  • Would it be more advantageous to outsource to an IT consultancy or an EDI services provider?
  • Should you channel funds into assimilating EDI tools, employees, and service management even if they aren’t a primary business function, or would seeking a managed service provider be wiser?
  • Would it be beneficial to lean on an EDI partner to streamline interconnectivity for uninterrupted business transactions? Are challenges emerging in trading with partners, or are there instances of lost clientele or supplier issues?
  • Which model boasts a more favorable total cost of ownership (TCO)?
  • In sectors like healthcare, by outsourcing EDI, can resources be more effectively allocated? Can your EDI collaborator ensure transactional precision and efficacy?
  • Is round-the-clock robust EDI monitoring and management on your wishlist?
  • Are the expenses for sustaining the necessary EDI hardware and software support within your budget?


It’s wise for enterprises to engage in this evaluative process to draw an accurate comparison between in-house and managed service models. Thanks to their broad clientele and varied requirements, you might discover that some managed electronic data interchange providers possess deeper expertise than in-house teams.


Moreover, consider the logistical elements:


Does the EDI services provider operate in your time zone? Do they adhere to best practices that suit your needs and share a similar holiday schedule to prevent potential downtime during vital deployments or support phases?


In today’s business environment, EDI support services is nearly ubiquitous. Therefore, adherence to regulatory EDI standards (e.g., EDI 834, 820, 277, 204, 810) is crucial when engaging in transactions. A clear view of your provider’s procedures is imperative, ensuring written agreements are in place for accountability.


Lastly, elements like networking hardware, servers, operating systems, licensing, maintenance agreements, and personnel expenses should be competently managed by your chosen EDI solution provider in USA, regardless of whether they’re in-house or externally managed, as these are integral to their core competencies.


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


To provide clarity on the ongoing discussion between in-house and managed EDI services, let’s dive into a comprehensive comparison of the two:




Whether choosing to outsource your EDI or implement it internally, responsibilities remain. But the workload’s magnitude differs. With managed EDI services, experts handle everything, from supplying translation software or hardware to managing communication networks and offering technical support. A reputable provider ensures seamless electronic communication between you and your business partners. Your role? Overseeing the software. Conversely, with an in-house EDI setup, responsibilities amplify as you directly manage all the elements mentioned.


Skill Sets


Possessing the right skill set for the complete integration process is fantastic. But if not, substantial investment in hiring and training becomes necessary. With ever-evolving communication protocols, finding adept personnel can become challenging. An option? Engaging third-party IT consultants to simplify intricate workflows. Managed EDI services offer the advantage of immediate expertise. Their seasoned team addresses errors, ensures rapid partner onboarding, and consistently monitors systems to prevent downtime.


Cost & Investment


Cost evaluations differ between the two. For an in-house EDI, expenses span software acquisition, hardware (like servers), licenses for each EDI standard, IT department establishment, and recruiting EDI professionals. If EDI isn’t your business’s focal point, it might dilute employee productivity. Contrastingly, outsourcing to an EDI service provider consolidates expenses into setup fees and periodic subscriptions. This fosters a focus on primary business areas, promoting efficiency and cost-saving.


EDI Mapping


EDI mapping is vital for e-communication with partners. In-house models require software management to align EDI documents with partner processes. Despite standardized EDI solutions, transmissions often necessitate varied documents. Managing these could amplify costs. In supply chain contexts, many stakeholders, from freight carriers to warehouses, integrate into the EDI community. Efficient EDI mapping solutions auto-update workflows without added costs. Experts consistently ensure data maps remain current and partner-compliant.


Round-the-clock Support


24/7 support is imperative for EDI. An internal EDI model demands continuous monitoring and a dedicated team attuned to global partner schedules. Ensuring minimal downtime and timely acknowledgments is essential to prevent financial repercussions. Managed EDI services, provided by genuine product engineering firms, inherently include constant support, ensuring a seamless EDI experience. With robust backup systems, they guarantee network recovery, negating potential business disruptions.


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
  • Hosted on your own servers and hardware
  • You have total control of the system
  • From software, hardware to mapping, you take all the responsibilities
  • Can cost between $100,000 and $500,000 to set up
  • Must hire skilled and knowledgeable employees
  • Costs for licensing, technology, security even during times of low volume
  • Manage EDI portals for each partner
  • Prone to human error as there are no dedicated experts
  • Have to update EDI maps and manage all changes

Managed EDI

  • A third-party service provider manages EDI operations
  • Cloud-based technology
  • The lower total cost of ownership
  • The service provider takes care of every component
  • You have to incur only a set-up fee
  • No hiring or recruiting cost and efforts
  • Only pay for what you use and can also scale up & down according to business needs
  • Access one EDI portals versus many
  • The experienced team offers EDI solutions, hence reducing errors
  • The company updates the map automatically


Why Should You Outsource EDI?


Certainly, while managed EDI services may have shortcomings, the benefits of opting for such services often outweigh setting up an in-house model. This especially rings true when EDI integration isn’t central to your primary business operations. The in-house route would mean establishing a dedicated department, investing in technologies, allocating funds, and more. Such diversions can shift the attention of your adept employees from their main responsibilities, potentially impacting the desired outcomes. Given these considerations, it seems practical to engage a third party specializing in EDI services to oversee your needs, potentially boosting your chances of achieving success and garnering tangible results.


Furthermore, if steering your own EDI system doesn’t carve out a distinct place for you in your industry, then the energy and resources invested might not yield the desired returns. Why sink time, money, and effort into an endeavor that doesn’t significantly elevate your business standing? Outsourcing EDI allows you to channel your resources and attention to core business areas, providing a leg up against competitors.


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Key Criteria to Select EDI Hosted Service Provider


When considering an EDI provider, it’s important to factor in several key criteria. Here’s a checklist to guide your decision-making:


Global Reach


For truly global operations, an organization should partner with EDI managed services that cater to international users. These providers enable businesses to expand their reach to traders and partners beyond their immediate locale. They are pivotal in ensuring swift and effective communication with collaborators across various geographies.

Informed Decision Making


When aligning with an EDI services provider, it’s crucial to gauge their industry knowledge. A top-notch EDI provider will understand your business challenges and recommend impactful solutions. Their expertise can guide your decision-making and streamline solution deployments.


Continuous Support & Monitoring


Post-EDI integration, dependable providers offer exhaustive monitoring and ongoing support. Their meticulous analysis swiftly pinpoints issues, furnishing businesses with actionable insights and solutions. Such providers also provide detailed reports, arming companies with data to preempt future challenges.


Advanced Tools and Strategies


With the fast-evolving technological landscape, businesses must remain agile. Especially sectors like healthcare, where diverse trading partners with varying capabilities exist. Companies need a blend of direct and indirect EDI to cater to small and large partners. Top EDI managed services equip companies with various tools, covering areas like vendor-managed inventory, scan-based trading, and adept logistics management.


Connectivity and Compliance


Efficient and prompt transmission of transaction sets is paramount for business scalability. Only with rapid transactions can firms dispatch and obtain documents in real time. The right EDI provider ensures seamless connectivity, adherence to regulatory transaction norms, and the swift movement of various media formats.


Adaptable Change Management


While the trading environment of ANSI X12 EDI might appear constant, the underlying standards and partners undergo shifts. Companies need the flexibility to onboard new traders or phase out old ones. An adept EDI provider will facilitate the introduction of fresh standards and the testing of revamped solutions. Their comprehensive offerings will include operational services for rolling out novel programs and holistic program management for broader initiatives.


Security Concerns in EDI


Electronic Data Interchange (EDI) has changed how businesses communicate. This system lets businesses share documents and data with ease. But, like all online systems, there are security issues. Using in-house EDI services or an EDI service provider in the USA means you need to know about these risks.


Understanding the Risks


  • Data Breaches: EDI’s main risk is outsiders getting to private data. When this happens, private details can leak.
  • Data Tampering: Another danger is when someone changes the data. This can cause wrong information to spread.
  • Man-in-the-Middle Attacks: This happens when someone gets the data shared between two groups. They might change it before it gets to its end.
  • System Failures: Not all risks come from outsiders. If the system breaks, data might get lost, hurting the business.


Measures to Enhance Security


  • Encryption: A top way to keep data safe is to use encryption. It changes data into a code. Only those with a special key can see the real data.
  • Regular Audits: Checking your EDI system often finds weak spots. Be it an in-house system or from a service provider in the USA, always make sure it’s safe.
  • Strong Entry Rules: Make sure only allowed to use the EDI system. Use strong passwords, double checks, and even finger scans.
  • Backup Plans: Always have a backup. If something goes wrong, you won’t lose your data.
  • Teach and Inform: Often, mistakes by people can risk safety. Teach your team about security. This can lower the chance of mistakes.
  • Choose Good EDI Providers: Pick trusted EDI solution providers if you get EDI services from outside. They should care about safety and use the best tools to protect data.


EDI services make business tasks easier and faster. But, with more online work, we need better safety. Knowing the risks and using strong safety tools lets companies use EDI without worry. It’s always smart to think of safety first. In our online world, knowing more is the best shield.


EDI in Different Industries


Electronic Data Interchange, or EDI, acts as a helping hand for businesses, letting them communicate swiftly. Though the heart of EDI solutions stays the same, its use changes with industries. From hospitals to shops, each area uses EDI to tackle its special problems and grab its perks.


Healthcare: Streamlining Patient Care


EDI services in healthcare have become key in boosting patient care. Hospitals and clinics tap into EDI to swap patient details, bill info, and past health records. This smooth info swap ensures patients get timely and right care.


  • Challenges: Keeping patient details safe is a top priority. With tough rules like HIPAA, health folks must make sure EDI transactions are locked tight.
  • Benefits: Quick bill tasks, less paper mess, and instant peek into patient files. This means better care for patients.


Retail: Enhancing Supply Chain Efficiency


Retailers bank on doing things fast, and EDI services are central to this. Shops use EDI for stock checks, order tasks, and talking to suppliers. Be it big malls or tiny stores, EDI makes things run smoothly.


  • Challenges: With changing seasons and stock, Retail’s ever-shifting nature requires an EDI that can adapt quickly.
  • Benefits: Instant stock checks, quick order tasks, and clear transactions with those who supply goods. This makes sure shelves stay full.


Manufacturing: Optimizing Production Lines


Manufacturers turn to EDI services to sync their making lines. They communicate with those who supply, check raw stuff stock, and make sure finished goods are sent on time.


  • Challenges: Making has many steps, each with its own info. Joining this info via EDI without slip-ups is key.
  • Benefits: Less stop time in production, getting raw materials quickly, and sending orders smoothly.


Logistics: Ensuring Timely Deliveries


For transport groups, EDI services switch up the game. They use EDI to pick the best routes, track shipments, and update clients.


  • Challenges: Logistics need info on the go due to goods moving. This makes setting up EDI a bit tricky.
  • Benefits: Instant shipment checks, smart route picks, and faster drop-offs.


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Finance: Simplifying Transactions


Banks and insurance groups tap into Managed EDI solutions for money tasks, customer communications, and rule-based reports.


  • Challenges: Money details are touchy. Keeping money moves safe and sticking to set rules is critical.
  • Benefits: Speedy money tasks, less paper, and swift rule-based reports.


Future of EDI Services


As we stand at a tech crossroads, EDI services keep pace. For years, they’ve been a business communication pillar. And as tech moves, so does EDI. With big tech like AI and blockchain on the rise, it prompts a question: Where are EDI services headed? Let’s uncover what future moves we might see from top EDI providers.


AI: The Smart Future of EDI


Artificial Intelligence (AI) is changing the game, EDI services included. AI can quickly shift through heaps of data, making it an EDI gem.


  • Challenges: Weaving AI into present EDI systems without causing hiccups seems tough.
  • Benefits: AI spots trends, handles data tasks, and finds errors better. That translates to quick work and fewer mix-ups for firms. Top EDI providers are already eyeing how to tap into AI, aiming to lead in the field.


Blockchain: Secure and Transparent EDI


Blockchain offers a space where data stays both locked and clear. Its shared setup fits EDI services like a glove.


  • Challenges: Blockchain’s shared setup is a win but also a hurdle. Marrying it with solo systems, which many firms now use, gets tricky.
  • Benefits: Blockchain logs data that’s tough to tweak unnoticed. For Managed EDI services, it spells stronger safety and trust. Firms can trust that their data in transit is pure. Top providers dive deep into a blockchain, hoping to give their users top-notch safety and clarity.


Adapting to New Business Models


Business trends shift. As they do, EDI service providers must shift, too. EDI will be key in clear communication, whether gig work, work from afar, or teaming up across borders.


  • Challenges: Moving with new business styles means grasping their special asks and hurdles. It asks for nimbleness and fresh thinking.
  • Benefits: Being flexible lets EDI services serve a wide business palette, ensuring they stay handy and key.


EDI services have sunny days in the forecast. We can hope for quick, safe, and sharp communications with AI and blockchain. EDI will also ensure it’s a top business communication tool as firms change up. Top providers steer this change, crafting new ways to fit the shifting business scene. Looking ahead, one fact stands out: EDI won’t fade. They’ll keep holding a core spot in business communication.


Integration with Other Systems


In our current tech-driven business world, integration isn’t just a nice-to-have. It’s a must-have. EDI services, famous for making business communications smoother, aren’t on their own. They’re part of a bigger tech family, linking with systems like Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP). But why does this matter to businesses, and what’s in store for EDI’s future? Does this integration mean for businesses, and how does it shape the future of EDI?


Connecting EDI with CRM: A Customer-Centric Approach


CRM systems sit at the core of our communication with customers. They keep crucial customer details, remember our transactions, and help firms get customers. Merging EDI services with CRM adds a fresh layer to this customer communication.


  • Challenges: The big test? Keeping data uniform. CRM systems change a lot because data gets refreshed often. Making sure EDI and CRM agree takes careful thought.
  • Benefits: Once linked, firms can auto-handle orders. When a customer orders something, the CRM tool communicates directly with EDI, making everything smoother. This boosts order speeds and slashes mistakes.


Merging EDI with ERP: Streamlining Operations


ERP systems oversee a firm’s main tasks. They deal with everything, from buying goods to managing staff. When EDI link with ERP, data flows smoothly everywhere.


  • Challenges: ERP tools are intricate. Bringing them and EDI services together demands deep knowledge of both. It’s vital to ensure data goes where it should without jams.
  • Benefits: This connection ends with manual data input. Say a seller adjusts stock data; the ERP tool can instantly show this, all thanks to EDI. It’s a time-saver and makes data spot-on.


Exploring Other Integrations


Beyond CRM and ERP, EDI services can connect with many tools, from handling supplies to online sales platforms. Each link-up has its perks, from pinpoint data to smoother tasks.


  • Challenges: Like other links, the main test is keeping data even. Every tool has its way of keeping and handling data. It’s key they all get each other.
  • Benefits: We get a united business scene when EDI services link with other tools. Data moves without stops, jobs get automated, and firms work better.


Links are changing how we see EDI services. As firms chase better work and spot-on data, linking EDI with other tools is a clear path. Sure, tests are there, but the gains are bigger. In a time where data rules, making sure all tools communicate right is success’s key. As EDI services shift, they’ll play a bigger role in this connected business scene, becoming a must-have tool for today’s firms.


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Final Thoughts


In today’s business communication world, EDI services shine bright. They’re known for smoothness and trust. Whether a firm picks in-house or managed services, one aim stays clear: smoother tasks and better communication. Looking at how EDI works, from links with other tools to use in many sectors, shows its key place in today’s business.


Choosing between in-house and managed EDI isn’t just about knowing what they offer. It’s about matching those offers with what a company needs. Each company is unique. What’s right for one might not fit another. With the info given, firms can make smarter choices.


EDI isn’t stuck in one place. It changes, gets the hang of new tech like AI, and fits into new business styles. This knack for change is why EDI services stay important now and in the future. Firms that get and use these shifts stay ahead and prep for the future.


Now, you know a lot about EDI. So, it’s action time. Think about what your firm needs, look at the tips given, and pick a path to push your business ahead. In our online age, knowing lots and changing fast leads to wins




What is EDI?


EDI stands for Electronic Data Interchange. It’s a tool that lets businesses digitally send documents and information to partners, skipping paper methods.


Why do businesses find EDI valuable?


EDI makes processes smoother, cuts down mistakes, boosts how quickly we communicate and saves money.


How do managed EDI and in-house EDI compare?


If you pick managed EDI, an external company takes care of everything related to EDI. In contrast, with in-house EDI, the company’s staff manages it.


Can we trust EDI’s security?


Absolutely! EDI is safe when you take the right precautions. But, like any online tool, it’s key to keep it updated and watched to avoid risks.


What’s the price tag for starting EDI?


Costs differ. You might spend between $100,000 and $500,000 if you want in-house. Managed EDI has an initial charge plus a regular fee, either monthly or yearly.