Exploring the Pros and Cons of In-house and Outsourced EDI: Making the Right Choice for Your Business
Every day, more and more businesses are going paperless and implementing electronic data interchange (EDI). It should come as no surprise – EDI makes data exchange between business partners worldwide much easier. Organizations can choose between two paths: keeping EDI in-house or outsourcing it. Which option should they choose?
Join us on this journey as we dive deep into the pros and cons of both choices. Along the way, we’ll equip you with the knowledge necessary to make an informed decision according to your company’s unique needs.
EDI Implementation Options
Before we start dissecting the pros and cons of each choice, it is important to outline all the possibilities. There are two main options and a blend between them.
The company can manage its EDI processes internally. Managing this requires setting up and maintaining a system for electronic data interchange, handling data translation, and providing constant support. This can be done via purchased EDI software. Generally, the costs include:
- Licensing fees
- Infrastructure costs
- Payment for technical EDI resources
Fully outsourced EDI solution
In this option, a third-party organization provides EDI services without the need to purchase additional software. The costs largely depend on:
- The scale of the infrastructure
- The number of documents
- Integration points
Hybrid EDI Managed Service
In the hybrid model, an external service provider utilizes purchased EDI software, while the outsourcing organization manages all EDI processes or a specific service, tailoring it to your needs. The costs usually include:
- License fees for the software
- The cost of outsourcing operations
- Software hosting infrastructure.
In-house EDI: Pros & Cons
The biggest benefit of keeping EDI in-house is the complete control that a company has over its document interchange processes. Often, organizations can adapt to changes faster since internal workers are responsible for EDI onboarding, maintenance, or updates. Thanks to this, businesses with in-house EDI have a clear vision of the system’s performance, and the collected information can be used to create strategies and find areas for improvement.
However, in-house EDI also has a few disadvantages. Companies using in-house EDI requires dedicated resources, including IT infrastructure, software and skilled personnel.. Hiring additional workers leads to increased costs and time consumption. Since organizations handle EDI on their own, they are also solely responsible for their own success.
Businesses with an in-house EDI system often overlook the fact that they have to rely on their own expertise, making it difficult to face certain challenges and evolve. Fortunately, this isn’t the only option – let’s compare in-house EDI to fully outsourced EDI.
EDI Outsourcing: Pros & Cons
Having EDI specialists on hand is priceless for any modern company that deals with data interchange. With outsourced EDI you can focus on other responsibilities and let experts take care of your electronic document interchange. Professional management and support also result in the reduction of any issues that may arise. EDI outsourcing services allow you to focus on expanding your business and building relationships with partners and customers.
In the grand scheme of things, EDI process outsourcing saves the organization money and time by avoiding the costly process of hiring and training new employees.
Like everything, outsourced EDI also has its flaws. Giving up control of a company’s EDI system can pose a challenge – you can’t fix errors, add a new trading partner, or fulfill any other EDI requests. Instead, you have to wait for the outside vendors to complete the task on their schedule. The lack of control also means a lack of visibility. An organization has to rely on reports from its EDI provider to cover performance, among other aspects.
A very important consideration in favor of outsourcing is scalability. While in-house solutions may require additional investment when scaling up, outsourcing solutions usually do not.
Another important factor is the implementation time for in-house EDI versus outsourced EDI solutions. If time is a critical factor, outsourcing can provide a faster implementation process.
5 Key Reasons to Outsource EDI
Even though outsourced EDI has some minor shortcomings, it is still a very good solution for many companies. Why? Here are the 5 main benefits of using EDI outsourcing services.
- Cost savings. By leveraging the expertise and infrastructure that come with a specialized EDI provider, you can avoid many upfront costs, such as purchasing and maintaining the system.
- Professional expertise and experience. EDI service providers have a deep understanding of industry standards, legal compliance requirements, and best practices. Outsourcing electronic data interchange allows you to benefit from their experience.
- Flexibility. Electronic data exchange requirements change over time, but EDI service providers easily accommodate those changes to ensure your business remains agile.
- Security. EDI outsourcing services can help ensure that sensitive business data is duly protected from breaches or unauthorized access.
- Faster onboarding of trading partners. Setting up EDI connections between new partners can be time-consuming. An EDI provider can handle the technical aspects of onboarding and allow you to start exchanging data with new partners.
How Do I Choose an EDI Provider?
Looking for an EDI provider can be intimidating. The main goal is to find a company that accommodates your needs. The right provider should quickly react to your requests and offer you reliable reports.
Additionally, EDI process outsourcing should help your business streamline and organize processes to improve efficiency. This way, your EDI service provider will help propel your growth.
Comarch isn’t just another EDI service provider – we strive to become your invaluable, long-term partner who ensures that EDI migration and everyday operations work smoothly. Having almost 30 years of experience, we’ve created Comarch EDI – a cloud-based platform to optimize data exchange between you and your trading partners.
In the end, every path we’ve covered has its strengths and weaknesses. Analyze your needs and make sure you make the right choice. This decision to outsource EDI or keep it in-house can shape the trajectory of your organization.