EDI In-House Or Outsourced: What's Best For Your Business?

In-house or outsource?  It is a question that almost every company has to answer at one time or another regardless of size.  When you look at the options, it can be overwhelming, but what are the true pros and cons of keeping your EDI in-house or outsourcing?

Depending on your company size, response time expectations of trading partners, how EDI is perceived as a differentiator within your industry, and other considerations specific to your specific business, some of these may be more or less important to you but they will all factor into your decision. The tables below can help you weigh those factors.

Keeping EDI In-House

Outsourcing EDI

Of course, it is important to realize that this is not an exhaustive list of the pro/con considerations, but merely a subset of the many considerations as you examine one route or another in your EDI ecosystem. Also realize there are many companies that use a hybrid EDI and MFT strategy, taking an in-house approach for some components of their business integration solutions and an outsourcing approach for others.

While some of the pros and cons can overlap, there are still plenty of things to weigh.  Ultimately the decision has to be about what is best for your company.  Whether you decide you want to take the hands-off approach, have total control of your EDI system, or something in between, Remedi has an experienced staff that can help you decide which options are right for you.

If you are still not sure which way to go or you do not want to lose complete control of your system, managed services or co-sourcing is another option.  Remedi has a number of clients that still house their EDI system but do not have the expertise or headcount to hire a dedicated resource. In that instance, Remedi can provide the client with the appropriate resources to manage the in-house EDI system without the concerns that outsourcing can create.  Read more about this approach in our newsletter Don't Outsource Your B2B eCommerce Solution, Co-Source Instead.

Three EDI Implementation Options

In-House: Managing EDI in-house means you have a dedicated onsite team, as well as the hardware and software necessary to manage your EDI solution. Associated costs include start-up and ongoing licensing fees, spending on infrastructure, and the salaries of full-time EDI technical-support personnel.

Co-sourcing: In this hybrid of in-house and fully outsourced EDI solution, you combine your own tech team’s expertise with a vendor’s offsite resources. Unlike conventional outsourcing, in which you would turn over control of your B2B integration solutions to the vendor, co-sourcing gives you back your authority. You rent or own your integration solution – while a third party monitors and manages it for you.

Fully Outsourced: In a fully outsourced EDI management model, the vendor provides you with a SaaS model or cloud service but does not require you to purchase any hardware or software. The set-up and maintenance of all EDI services, including mapping, licensing, operating systems, maintenance, and more, are the responsibility of the third party. That service provider also owns the software and all off-site infrastructure.

When Does It Make More Sense to Outsource EDI?

In spite of potential drawbacks, there are times when it makes more sense to outsource EDI than to keep it in-house.

Let’s say your core business function isn’t integration. That’s not a rare scenario – most organizations don’t specialize in that. In that case, it makes more sense to allow a third party specializing in integration to handle this project because there’s a greater likelihood of success.

“If integration isn’t your core business, it makes sense to outsource it”

Another situation in which it doesn’t make sense to handle an integration project yourself is if integration doesn’t provide you with a competitive advantage in your field. Why would you want to devote time and resources to a project that won’t make you stand out to customers? That doesn’t mean that an integration project isn’t a good idea – it just means that outsourcing it might make more sense so you can focus on areas that do provide a competitive advantage.

Four Catalysts to Outsourcing EDI

1. Staffing Changes: As previously mentioned, onsite EDI integration requires the time and know-how of an in-house team of technical employees. If you don’t have such personnel (or you do but have high turnover or are concerned about resignations), outsourced EDI is the way to go. Your EDI vendor will take care of all its own hiring–staffing necessary to keep your solution up and running smoothly.
   
   
2. New ERP or ownership: Choosing to implement an integrated EDI solution with an Enterprise Resource Planning (ERP) system will give you the ability to manage both communications with your trading partners and records on the back end of transactions. But it’s not easily or quickly done in-house.
   
   Also more complex than it might seem at first glance: keeping in-house EDI management going following a change in your company’s ownership. Because it’s independent of your business, a third-party EDI consultant will continue to handle your EDI needs seamlessly in the event of business leadership or ownership change.
   
   
3. Outdated systems: EDI-related hardware and software are costly to both buy and maintain. What’s more, they will require regular updates and replacements, adding significantly to initial expenses. Outsourcing your EDI needs means your third-party provider–not you–bear the cost and implementation burden of such changes.
   
   
4. Increasing maintenance costs: The price of keeping EDI-related infrastructure functioning smoothly is high–and rising all the time. Rather than scramble to find the money in your budget to pay more for what you’ve already purchased, consider using an outside vendor for your EDI needs. You won’t have to worry about the increasing price of hardware maintenance.

What Should You Look for in an EDI Outsourcing Consultant?

If you decide to outsource your EDI functions, you have to pick the right consultant the first time. EDI outsourcing is a critical relationship – one that has an impact on your customers and your reputation.

Maintaining SLAs with your customers is vital to staying in business. That’s why an outsourcing consultant with fully managed/monitored services and 24/7 support is crucial. If something goes wrong, the consultant will not only be aware of the problem but will have someone available quickly.

“EDI outsourcing is an important relationship – one that has an impact on your customers and reputation”

Moreover, having a dedicated consultant is essential, especially if this is your first integration project. You don’t want to be bounced around a consulting company; if you have questions, there should be a single point of contact to whom to turn. That person should be with you until the end of the onboarding stage so that if issues arise, they can be taken care of quickly.

A third consideration is whether the consultant can support obscure data formats and protocols. You might have a niche set of needs that not just any consultant can handle. Do plenty of research to find a consultant that can meet your needs.

What If You Change Your Mind?

What if you start off in an outsourcing relationship, but want to move your EDI solution to an in-house arrangement? Is that possible, let alone advisable?

It is both possible and advisable, provided you’re using the right outsourcing partner. You need someone who has experience carrying out both types of projects successfully. Not only does this partner have a solid base of knowledge, but the consultant will also have a strong set of relationships that enable the success of those projects.

FAQs

What is EDI outsourcing? 

Outsourcing your EDI needs means that you hire a third-party company to set up and manage your company’s use of EDI technology to communicate data with trading partners. 

What is in-house EDI?

On the other side of the coin is EDI that you manage in-house. This option means you’ll need the significant on-site space necessary for EDI’s physical architecture, such as the servers for processing EDI-platform components. It also requires a team of employees to manage the EDI solution.

Can EDI be outsourced?

EDI can easily be outsourced, and frequently is, especially by small and medium-sized businesses. Third-party EDI management providers shoulder the initial and ongoing costs of integration, including the purchase and maintenance of software, hardware, licensing, maintenance, and more.

What is co-sourcing EDI?

Co-sourcing your EDI implementation means that you physically house your own EDI system on your own premises–but you have an outside company with the expertise and availability to manage it. In this case, you get the best of both worlds: full control of your EDI integration and dedicated outside maintenance of the system. 

Learn what Remedi can do for your business.  See some of our recent data integration success stories.