There are both advantages and disadvantages to having EDI in-house or outsourcing it. We want to clarify these benefits and drawbacks so you can make an informed decision for you and your company.
Let's start by giving you a clear breakdown of the pros and cons of having EDI in-house:
Advantages
- Your company has full control over its EDI infrastructure, including upgrades, customizations, and security.
- The solution can be tailored to your company’s specific requirements and workflows.
- Seamless integration with existing systems and processes.
- While initial costs may be higher, it can be more economical in the long run for large companies with high EDI volumes.
Disadvantages
- EDI requires substantial investments in hardware, software, training, and personnel.
- Your company is responsible for the operation, maintenance, and updating of the system, which can be time-consuming and require specialized expertise.
If you have enough staff to set up your own system and you have a relatively large company that will
expand significantly in the coming years, it may be a good investment to do it yourself.
However, if you need to get started with EDI immediately, it may be a good idea to outsource it,
especially if you don’t have enough staff to develop and maintain it continuously. Let’s break down the
advantages and disadvantages of outsourcing it:
Advantages
- No need to invest in hardware or specialized personnel.
- Access to expertise and support from the provider who specializes in EDI solutions.
- Ability to scale up or down as needed without major investment.
- The provider is responsible for maintaining and updating the system.
Disadvantages
- Your company is responsible for the operation, maintenance, and updating of the system, which can be time-consuming and require specialized expertise.
- Dependence on the provider’s operational stability and support quality.
- There may be additional costs charged by the provider for certain features or support.
Overall, in-house EDI can be a significant investment, requiring the right employees with the necessary expertise to build a system that works for everyone. It requires time, money, and staff to do it yourself, but it provides the freedom of full ownership.
Outsourcing EDI can involve a smaller investment, as it is usually a subscription-based solution that you can cancel if your company decides to develop its own system in the future.
Finally, there is also a hybrid form of EDI, which combines both an internal EDI and a third-party EDI solution. This solution can be good if you already have an internal EDI solution but need to convert some additional document types. It could also be because some of your document types are very complex, so you choose to keep them in-house but want a provider to handle more routine document formatting.
Let’s take a look at the hybrid model:
Advantages
- A hybrid EDI approach allows your company to leverage the benefits of both internal and third-party providers. You can maintain an internal EDI solution for critical processes or high-volume transactions while using a provider for less frequent transactions or specific needs.
- By having both an internal solution and a third-party provider, your company can spread risk and reduce dependence on a single supplier or technological approach.
- Use the internal solution for core business processes where control and customization are crucial, while outsourcing less critical or more standardized processes to a provider.
- A hybrid approach can be a transition strategy for companies looking to migrate from an internal EDI solution to a fully managed provider. This allows your company time to evaluate the provider’s performance and build confidence in the external solution before potentially moving all processes to the provider.
Disadvantages
- Your company will have multiple systems that everyone must access and understand.
- Dependence on the operational stability of two providers.
- There will be extra costs for both paying an employee to manage in-house EDI and for purchasing solutions from an external provider.
Whew… Lots of things to consider! But we hope this has given you an overview that can help you make the right decision for both you and your company.
If you’re still unsure, don’t hesitate to give us a call. We can look at your needs together and find the right solution for you.