This article will explore three topics. First, the benefits of migrating your EDI infrastructure to the cloud. Second, identifying and preventing the potential risks of a move with so many strategic considerations and critical connections. And thirdly, why some organizations feel it makes sense to keep their EDI/B2B infrastructure on-premises.
Key Takeaways:
Major Benefits of Migrating On-Premises EDI to the Cloud
Potential Downsides of Migrating On-Premises EDI to the Cloud
What Are the Benefits of Migrating On-Premises EDI to the Cloud?
Scalability and Flexibility
Compared to on-premises solutions, cloud environments offer unmatched scalability. As a result, businesses can easily scale up or down based on their needs. And do so without significant investments in additional hardware or IT resources.
Example: Consider a retail company that sees spikes in transaction volumes in preparation for the holiday shopping season. With an on-premises EDI system, they face two issues. The first is a need to over-invest in hardware or virtual server architecture. They do it to ensure enough capacity during peak periods. The second is underutilization of capacity during off-peak times. In contrast, a cloud-based EDI system allows the company to scale their resources up temporarily to manage increased demand. After peak season, they can scale back down. Hence, they are able to optimize resource utilization and cost.
Cost Efficiency
The most immediate advantage of migrating EDI to the cloud is the potential for significant cost savings. The source with the most potential for these savings is the combined hardware and system maintenance costs.
Example: A company that currently hosts its EDI infrastructure on-premises is spending heavily to do so. These costs include servers, maintenance, upgrades, connectivity, and physical data center space. Migrating to the cloud transfers those costs to the cloud provider who manages the hardware. Companies no longer need to buy, maintain, or upgrade expensive servers. This also allows them to reduce energy costs associated with running in-house data centers.
Additionally, the pay-as-you-go pricing model of cloud services means businesses only pay for the computing resources they actually use. This model allows for more predictable and manageable expenses over time. Pay-as-you-go models offered by providers such as AWS and Microsoft’s Azure also allow companies to rapidly scale cost-effectively. This is because they don’t have to buy additional hardware. Hosting their infrastructure in the cloud gives them the extra processing or storage capacity they need when they need it. So they can easily accommodate sudden growth or seasonal surges in transaction volume.
Improved Disaster Recovery and Business Continuity
Cloud platforms are designed with redundancy and data backup capabilities. This ensures that critical EDI operations are protected from unforeseen disasters, such as hardware failure, power outages, or cyberattacks.
Example: A manufacturer with a cloud-based EDI solution can be confident their data remains available even in the event of a local disaster. Providers such as AWS and Microsoft Azure host across multiple geographically redundant data centers. They also offer automated backups and rapid disaster recovery mechanisms, which have the potential to help businesses recover within minutes instead of hours or days.
A word of caution here regarding disaster recovery expectations:
- Infrastructure complexity will influence your recovery time. Recovery times depend on how your applications, databases, and services are structured. So it’s critical to have a well-architected—and well-documented —infrastructure.
- A Disaster Recovery Plan is essential even with automated cloud backups. It should go without saying but we’ll say it anyway. The plan should prioritize business continuity.
- Important as it is, a plan isn’t enough. Businesses must evaluate their disaster recovery plans regularly to validate they can restore everything as expected. A real disaster is no time to discover your plan has gaps.
Enhanced Security
Cloud providers invest heavily in security technologies, from encryption to access control systems. They do this to comply with the most stringent data protection standards. Hence, many businesses are now finding that the cloud can offer higher security levels than their on-premises infrastructure.
This is chiefly because the resources of cloud providers like Azure have invested in security compliance measures that are outside the budgets of many businesses.
Example: A global electronics manufacturer uses a cloud-based EDI system to manage real-time communication with suppliers and distributors. The setup allows them to exchange sensitive information such as engineering specs, product designs, and order details. Keeping such data private is a mission-critical function. By leveraging AWS or Azure’s built-in security features, the manufacturer can encrypt sensitive IP and design details in transit and at rest.
They can also use MFA (multi-factor identification) and RBAC (role-based access controls). In addition, the manufacturer can implement automated security monitoring and AI-based threat detection to help reduce the risk of IP theft or cyberattacks that could disrupt production.
Cloud providers also regularly update their security protocols. They do this to mitigate risk and ensure ongoing protection against evolving cyber threats. Additionally, with cloud hosting, businesses can ensure compliance with regulatory standards like PCI-DSS by leveraging the provider’s existing certifications.
Faster Time to Market
While on-premises EDI can shorten order-to-cash cycles and speed other transactions, migrating EDI infrastructure to the cloud can still enable faster onboarding and more agile integration of new trading partners. This is because the cloud's flexibility and automation capabilities allow for rapid provisioning of new resources without the need for physical hardware setup, which can be a bottleneck in traditional on-premises environments.
Of course, the skill and experience of the staff managing the migration, and the EDI environment affects the level of efficiency the organization can expect.
Example: An e-commerce business wants to add new trading partners or support a new EDI standard. In an on-premises environment, this could take weeks or even months due to hardware procurement and configuration. Contrast this to the cloud, where they can quickly spin up new virtual machines or microservices to support the integration and go live in a matter of days or even hours.
All things being equal (price, product quality, etc.), this agility enhances a company’s ability to respond quickly to market demands, potentially giving them a competitive advantage.
Increased Agility and Innovation
In the digital era, advanced technologies are key to growth and survival. By ‘advanced technologies,’ we mean machine learning, artificial intelligence (AI), and big data analytics. However such technologies may be difficult or costly to implement on-premises. In a cloud environment, these capabilities can be more accessible due to their on-demand infrastructure and pay-per use models.
It matters because these technologies can build on the efficiency EDI brought to supply chains with transaction monitoring and forecasting features.
Example: A logistics company using cloud-based EDI could integrate AI-driven analytics to forecast demand, track shipment patterns, and optimize routes based on real-time data. Cloud-based platforms make it easier to integrate these services, whereas on-premises infrastructure would require extensive capital investment and IT expertise to deploy and maintain.
Seamless Collaboration and Connectivity
It’s fashionable in B2B marketing jargon to talk about the necessity of seamless collaboration and connectivity. The reality is, achieving those things is a struggle for many organizations. Cloud-based EDI platforms make it easier to connect with global trading partners, suppliers, and customers. Why is that?
First, the cloud offers standardized APIs and services. This allows businesses to quickly integrate and manage different functionalities. For example, AWS APIs are made available for every AWS service such as Amazon S3, Lambda, DynamoDB, and so on. Developers can use these APIs as pre-built components to build their own systems and integrations as well as custom APIs.
Example: A global automotive manufacturer has design teams in Europe, assembly plants in North America, and suppliers in Asia. All would benefit from cloud infrastructure to synchronize production data, manage inventory, and monitor supplier performance in real-time. In the cloud, data lakes and centralized storage solutions (like AWS S3, Azure Blob Storage) provide a single source of truth for the entire organization. These aspects of cloud hosting reduce the chances of data duplication, inconsistency, and miscommunication across regions.
Reduced IT Workload and Maintenance
Migrating to a cloud-based EDI infrastructure shifts the responsibility for system maintenance, updates, and troubleshooting to the cloud provider. This frees up internal IT teams to focus on more strategic initiatives.
Example: A healthcare company relying on on-premises EDI infrastructure might need a dedicated team to manage servers and troubleshoot hardware issues. And yet another team to manage the EDI environment. Moving to the cloud lets this company avoid the distraction and complexity of maintaining the hardware and servers. As well as the costs. They can also redeploy those internal resources dedicated to supporting the physical components of the infrastructure.
Sustainability Goals
From Canadian wildfires to flooding and mudslides in North Carolina, extreme weather events that dominate the news remind us that climate change and global warming are real trends with still-unfolding impacts on society and supply chains. However, cloud computing can help organizations and individuals reduce their environmental impact by reducing their energy consumption.
For example, according to a recent SEEBERGER newsletter, cloud provider AWS is on a path to powering their cloud services with 100% renewable energy sources by 2025. And because cloud services can scale resources up or down based on demand, users can potentially avoid overprovisioning and wasted energy usage at the same time.
And because users can update cloud-based software centrally versus individual software installations, cloud computing helps to further reduce e-waste production.
Global Reach and 24/7 Availability
Cloud platforms offer global infrastructure, ensuring that EDI services remain accessible to trading partners worldwide, with minimal latency or downtime.
Example: A fashion retailer with suppliers in Asia, Europe, and North America obviously needs to work across time zones. With the cloud’s global network of data centers to process EDI transactions, they can. And with near real-time performance. This ensures they’re able to quickly and reliably process critical documents such as invoices, purchase orders, and shipping notices. And, at the same time, improve supply chain efficiency.
That said, it’s important to recognize that no system is 100% immune to downtime. Still, cloud providers generally have strong SLAs, often guaranteeing 99.9% or 99.99% uptime.
It’s true that well-managed on-premises systems can achieve high availability. However, they often fall short of the 99.9% or 99.99% uptime cloud provider guarantees. This is due to the cloud’s redundancy, multi-region failover, and auto-scaling capabilities.
Should I Keep My EDI Infrastructure On-Premises?
Control Over Infrastructure and Data
On-premises solutions offer complete control over the hardware, software, and data. This control is important to some businesses. They require direct access to physical/virtual servers and the ability to customize and optimize the infrastructure. For them, the ability to configure their infrastructure to meet specific business objectives is a key advantage of on-premises EDI.
Data sovereignty can be a concern. This especially applies to industries that deal with sensitive or regulated data. Some organizations prefer to retain full custody of their data and limit third-party access, which can be harder to manage in the cloud.
Long-Term Cost Stability
It’s true that the upfront cost savings with the cloud can be head-turning. However, the subscription-based or pay-as-you-go cloud services model can lead to rising costs over time. These costs may be significant. In contrast, on-premises infrastructure costs tend to be more stable and predictable after the initial capital investment.
That’s because maintenance and occasional upgrades make up most of the follow-on costs. What does that mean to decision-makers?
If it ain’t broke, don’t invest the money in fixing it. Organizations that have already invested heavily in on-premises infrastructure might consider that they get more ROI by continuing to use it but in new ways. For example, expanding the document types they use. Or using EDI for business automation or systems integration.
Customization and Performance Optimization
With the cloud, savings come with trade-offs. Simply put, the limitations that make the cloud cost-effective can make it difficult for businesses who require unique configurations.
Also, some industries or use cases demand real-time data processing with minimal latency. On-premises systems can more efficiently support this requirement. In the cloud, latency can vary based on network conditions.
Data Privacy and Compliance
Industries with stringent compliance requirements (e.g., healthcare, financial services), can find it easier to meet regulatory standards with on-premises solutions. The reason is control.
Having full control over where data is stored, how it’s processed, and who has access to it can help businesses ensure they remain compliant with regulations like HIPAA, GDPR, or industry-specific mandates.
Example: Healthcare EDI data handling in the U.S. is subject to HIPAA rules, which primarily govern PHI (protected health information). This may require patient data to remain in specific jurisdictions. On-premises infrastructure guarantees compliance with these regulations. On the other hand, cloud services may not always offer sufficient guarantees regarding data location.
Another factor to consider is data residency requirements. Data residency requirements dictate organizations must store data within a specific geographic region and not transfer that data across borders. This can impact U.S. healthcare providers that handle international patient data, as they must navigate both HIPAA and foreign data privacy laws.
Security Concerns
Although cloud providers often offer robust security, businesses may still prefer on-premises EDI infrastructure. This allows them to manage security internally for sensitive or proprietary data. For organizations that face specific security risks, an on-premises solution offers two strong advantages. One, a greater sense of control. Two, the ability to customize security protocols more tightly than cloud-based services.
Internal IT teams may also be more comfortable handling security incidents on premises. In the event of a breach or a threat, they can respond immediately and have direct access to the affected infrastructure.
Limited Dependency on Third-Party Providers
Issues with third-party providers can all impact business operations and not in a good way. These issues include service outages, data breaches at the provider level, or poor customer support response times. Keeping their EDI infrastructure on-premises avoids the risks of the vendor dropping the ball on critical functions such as uptime, data availability, or security measures.
Being in control of downtime and maintenance schedules offers another plus. It allows businesses to align IT operations with their own business cycles rather than being subject to the provider’s timelines.
Performance Consistency and Availability
Reports of inconsistent performance are another reason some organizations have pulled back from migrating their EDI infrastructure to the cloud. For many businesses, shared infrastructure or network latency creates a risk of inconsistent performance, one greater than the promise of cloud providers’ high uptime and SLAs, and even systems savings.
Lastly, direct control over infrastructure performance offered by on-premises EDI and B2B integration environments is appealing to many businesses. At least to those businesses who want to allocate resources as needed without fear of negative impacts caused by internet congestion or the provider’s broader user base.
Security or Breach Incidents in the Cloud
Instances, where enterprises have suffered from an attack on their cloud infrastructure, give businesses with particularly sensitive data or stringent security needs justifiable cause for alarm. Admittedly these incidents are rare, but they can lead some organizations to reconsider whether moving their critical systems to the cloud is the safest option.
So, Should You Migrate Your EDI Infrastructure to the Cloud?
Obviously, the cloud offers numerous benefits like scalability, cost savings, and flexibility. At the same time, there are valid reasons some businesses may choose to stick with on-premises EDI infrastructure.
These reasons can even be compelling enough for others to repatriate from the cloud. They include maintaining control over their systems, managing predictable costs, adhering to strict compliance regulations, and avoiding potential cloud performance issues.
At Remedi we believe that EDI is the original digital transformation technology. And we also believe that for many businesses, migrating their on-premises EDI system to the cloud makes sense.
It’s the next logical step in the evolution from manual transactions to automated, and then on to an integrated and intelligent infrastructure for supply chain data exchange.
Businesses should consider both the benefits and potential drawbacks of cloud migration, so they can make an informed decision that aligns with their long-term strategy, data security, and operational needs.
Organizations that are considering a partial or total “lift and shift” of their EDI infrastructure to the cloud may also want to seek guidance from a company like Remedi.
As veterans of dozens of infrastructure moves, we can help you devise a thoughtful plan to minimize the impact on the business and trading partners.
Reach out here if you’d like to discuss your options for migrating your on-premises EDI infrastructure to the cloud.
About Remedi
Remedi Electronic Commerce Group helps companies save time and money, provide a better customer experience, and quickly respond to new opportunities using integration and B2B e-commerce solutions built for a digitally-driven economy. Reach out if you’re facing EDI/B2B integration challenges that could benefit from a new perspective.
Other articles in this series:
What Are My Options for Migrating EDI to the Cloud?
How Do I Choose the Right Cloud Provider to Host My EDI/B2B Infrastructure?
What is the Best Way to Migrate My On-Premises EDI/B2B Infrastructure to the Cloud?
