In the 4 years that I have been in this industry, I have seen a steady increase in companies moving toward EDI outsourcing. What are the benefits of hosted EDI? What are the potential pitfalls? And when does EDI outsourcing make sense? I will attempt to answer these questions with a brief review of this growing trend.
First of all, the most obvious benefit to outsourcing is that you do not need EDI technical staff. Your EDI service provider in effect becomes your EDI staff. Many outsourced or hosted EDI solutions also offer integration. The days of integration being only available with expensive in-house software are over. Another great advantage of outsourcing your EDI is that it is quite often more cost effective. You will pay over time of course, but your upfront cost is usually significantly lower than buying EDI software making it more appealing for a smaller company.
A disadvantage to EDI outsourcing includes the fact that you are giving up control. You'd better make sure that you do your homework before signing on the dotted line. Check references. Find out how secure your data is and ask about support. Also, if your EDI provider has little or no experience in your industry, trading partner implementation can take much longer, and time is money. One of the potential drawbacks many companies never consider is that you can outgrow your outsourced solution and have no options for upgrading.
So this all begs the question...does outsourcing make sense for MY company? To answer that you need to look at your business requirements and your resources, both financial and personnel. For companies who do not have many trading partners but still want integration, EDI outsourcing may be a great solution for you. And hosted EDI solutions may be a good fit for companies who do not want to employ EDI staff. Just keep in mind that you are trusting a critical function of your business to a third party. Choosing wisely will save you a lot of trouble down the road.