Why Outsource your EDI?

I often receive calls from IT guys where the first question is 'Why should I outsource'. They can see the benefit of automating the exchange of documents, but do not see the value of paying someone else a monthly fee to manage it. With my several years of experience within the industry, here are the reasons why outsourcing just makes sense.

Reduced VAN Costs

When using an outsourced EDI service, not only do you avoid having to setup a VAN account, but the end user can not get the same rates as the high volume EDI outsourcer. True - the outsourcer will probably making a profit within the margin of what they have contracted with the VAN and what they charge you, but chances are you will still be saving money on what you would be paying anyways.

Reduced AS2 Costs

If your trading partners include Wal-Mart, Lowes, Food-Lion, or any other company that mandates AS2 communications - then an outsourcer will be able to help mitigate the Software costs across many suppliers. AS2 software is not cheap, and unless you are doing large volumes, your cost savings will not add up to the original purchase price and annual maintenance. Most EDI providers have already ate this cost in order to supply a more robust EDI offering, or have a solution such as slightly higher transmission rates. Either way, they can once again offer this service at a fraction of the cost of doing it yourself.

Learning EDI Standards

Like anything else, there is a learning curve to the inner workings of EDI. If you have some programmers on staff that have nothing to do but spend several days just learning the standards of EDI, then they can probably get the documents to work for a tradin partner. However, most companies do not have this luxury. The EDI outsourcer already knows the general standards, and most likely already has the maps written and tested. And remember, if you have more then one trading partner that you wish to exchange EDI with, no two companies use the same segments. So once you have one working, you will then need to change and tweak it to make it work for others. Often times, these tweaks are not minor and could cause you to re-think the logic you have already implemented.

Problem Resolution

For most clients I have worked with, the biggest value we offer is the ability to outsource the problem. If you send an invoice to Wal-Mart via EDI and something is wrong, they are not going to call you and say 'you are missing your terms description'. They are going to send a document saying you are missing the ITD15 segment. If you work in the industry, this is a quick and easy explanation of what needs to change, but if you do not, you are going to spend an hour just trying to figure out what you are missing. Little things like these pop up all the time whether it be in the actual document or in the transmission, even though the entire system is automated end to end. Having a person to call and get answers right away can be invaluable.