Why you should consider outsourcing EDI and B2B Messaging and the factors to consider when choosing a partner

Transcription

1 WHITE PAPER Why you should consider outsourcing EDI and B2B Messaging and the factors to consider when choosing a partner By: John Goodsell Orbit UK Unit T1 Quay Plaza Quay Road Salford Quays Manchester M50 3BA

2 1. Introduction 2. Reasons to Outsource 3. Choosing the right EDI Managed Service 4. Orbit UK A Flexible Solution Click links above to view

3 1. Introduction The concept of outsourcing EDI is by no means a new one. For more than 20 years companies have been entrusting third parties with the management and delivery of their EDI messaging, whether it is for the receipt of orders from a customer or for the notification of a new risk in Insurance. Over the years the terms have changed from Bureau Service, through Value Added Network (VAN), Software-as-a-Service (SaaS) to Cloud Computing, but the principle remains the same. The use of EDI is often something very alien to an organisation s core business, be it manufacturing, retail, insurance or banking, and usually the decision is made to use a trusted partner to handle some or all of the EDI function associated with their operation. There a number of diverse reasons why a company may look to go down this road, these include: Reducing operating costs Resourcing issues Integration with other platforms M&A activity Disaster Recovery Speed of deployment This white paper looks at some of these reasons in more detail and at some of the criteria that need to be considered when choosing a partner.

4 2. Reasons to Outsource 2.1 Cost Savings Perhaps the most prominent reason for outsourcing any business process is to save money. An EDI infrastructure has a number of components that can be expensive to operate: Software Software is needed to handle the translation of data between your in-house format and the standard EDI format that can be exchanged with trading partners. The EDI software may also handle the transmission of formatted messages to your partner, typically via a Value Added Network (VAN) or via a point-to-point connection using a protocol like AS2 or FTP. Alternatively a secondary piece of software is required for this purpose. Typically EDI software is expensive as it designed to accommodate a large number of message protocols and formats that are not relevant to your organisation. So you end up paying for a lot of functionality that you will never use. VAN Charges Costs associated with Value Added Networks can be high and it is arguable that the value add in VAN has largely been eroded with modern Internet-based technologies. Moreover the billing mechanisms for VAN services are often very complex having their roots in legacy services such as dial-up and X Human resources The very nature of EDI mans that there are a number of human resource issues facing organisations who manage their EDI infrastructure in-house: EDI skills Increasingly the technical skills required to manage an EDI infrastructure are becoming harder to find. As the experts that grew up with the technology are beginning to retire there seem to be few individuals ready to take their place. Unfortunately, EDI is regarded as yesterday s technology and does not compete with the growing list of skills that are required in the modern data centre. Increasingly organisations are required to develop skills in-house to ensure that they have continuity of support for their EDI processes Resource management The day-to-day EDI processes themselves do not, in many organisations, require full-time management. Once implemented EDI needs to monitored and managed but this is not particularly labour-intensive. However, when a new EDI development is required, such as a new trading partner or the implementation of new messages, the resource requirements can rise dramatically. These peaks can be difficult to manage from a human resources perspective. While a number of people can be trained in EDI skills, if they are not using them on a regular basis, the likelihood is that they will need an increased lead time when called upon and may be less effective than would normally be expected. Availability Often changes to EDI processes are in response to requests by trading partners and as such time scales are outside of an organisation s control. A partner may decide to implement a new message type or even change the EDI standard that they use. Typically, the company in question will prioritise their internal changes and will often not give their trading partner much notice of the impending change. Moreover, if a number of trading partners are affected, the organisation in question, may allocate each partner a very tight window in which to affect the change and any associated testing. The ability to be able to react quickly to changes in an EDI environment is vital and does not always sit well with the management of limited IT personnel who are usually focused on internal projects.

5 2.3 Mergers and Acquisitions In today s commercial landscape companies need to expand to survive. Organisations are continually looking at companies they can absorb to augment their business profile in a particular market sector or technology. M&A activity brings with it a plethora of problems associated with different technology platforms and IT infrastructures. It is common for a company to have the remnants of multiple EDI infrastructures as it incorporates other organisations. The process of merging these can be time consuming and presents high risk for little benefit. Often these disparate systems are left to operate in silos to avoid any disruption to service during the merger process and there is little appetite afterward to revisit and rationalise these processes. In consequence they are left operate in a lights-out environment, often without the in-house knowledge to keep them up to date or to manage problems when they occur. It is not unheard of to find that a company has a PC in the corner with a modem attached that is exchanging EDI messages with a number of trading partners. All the time everything works the PC goes unnoticed, when it fails it can often take days to identify the problem and fix it, if indeed a fix is possible. 2.4 ERP Upgrades In a manufacturing and retail environment one of the most common reason to update your EDI processes is as a consequence of changing or upgrading the ERP platform. The key to a successful EDI supplychain is tight integration between you EDI processes and your ERP application. Increasingly organisations are reviewing their ERP platform and adopting a new piece of software. All too often this will involve making changes to a piece of legacy EDI software that has not been touched for years and for which the skills are very thin on the ground. 2.5 DR Planning As the range of Trading Partners and associated protocols become ever more diverse the number of different connections that you need to maintain increases. While most connections tend to be based on Internet technologies which can all traverse the Corporate Internet connection, invariably they require the deployment of a diverse range of communications and data protocols, including AS2, XML, EDI, HTTPs and the various flavours of FTP. These will often require different applications to format the data and to drive the connection, all of which will need to be replicated in a DR environment. Having a single way of exchanging data with third parties is a goal that many organisations strive for; however, the very nature of trading relationships generally makes it a goal that is unattainable. Having a third party manage all your connections to your business partners is a simple way of addressing this issue and simplifying your internal infrastructure.

6 3. Choosing the right EDI Managed Service While the reason for outsourcing EDI might be clear the choice of Service Provider is not always so clear cut. There are a number of considerations when considering a Managed EDI Service. 3.1 One size doesn t fit all Many organisations have a very stable EDI infrastructure which they understand and which does its job. Often the problems they have are initiated by their trading partners. For instance a particular trading partner may want to change the EDI standard that they use, such as going from Tradacoms to EDIFACT, or they may want to implement a Web-based solutions using XML - a change which your organisation may not be equipped to deal with within the required timeframe. In instances of this type it is often appropriate to outsource only those parts of your EDI infrastructure which are appropriate at a given time and address a real business issue. Further down the line it may be useful to extend the relationship, but this decision remains in your hands. All of the Orbit UK Managed Services are designed with this flexibility and scalability in mind. A number of our existing customers still maintain some part of their EDI functionality in-house, but have chosen, for various business reasons, to pass management of some part of the connectivity, message translation and reporting to us. 3.2 Reliability No organisation is going to hand the management of a vital part of their supply-chain to a company that cannot guarantee a secure and reliable service. Issues such as business continuity and security standards are vital when selecting an outsourced supplier. Aligned to these key factors is the issue of customer service. An organisation needs to know that if they have problems there will be someone at the end of a phone that not only understands their environment but can expedite a swift and effective solution. Historically the drive for fast responses to EDI issues has come from the retail supply chain particularly in respect of logistics that underpin it. However, more recently other sectors such as Insurance are increasingly demanding swift resolution to their messaging problems as they face tighter and tighter regulation from the likes of the FSA. The true value of a Managed Service lies in the management. The customer expects the service to operate according to strict SLOs and expects issues to be addressed quickly and effectively. Moreover, this management needs to be pro-active, so that where possible a problem is identified and fixed before the customer, or their partner, becomes aware of the issue. 3.3 Visibility

7 In this age of ever-increasing regulation across all market sectors, the key requirement for an organisation is management information. A company not only needs to comply with industry standards and regulations, but also needs to be able to demonstrate that they do. To this end data is the key. Organisations are under ever increasing pressure to collect data relating to internal processes and to demonstrate its accuracy and validity. In a B2B environment this becomes even more pertinent as there will be at least two parties involved in the message exchange and both need to know what data was sent, when it was sent and if it was successful. A managed messaging service needs to deliver on a number of criteria to provide this level of detail, both in real-time and via batch reporting. 3.4 Security Finally, one of the requirements that IT departments are increasingly being asked to address in all types of business is security. Whilst the security of internal data is vital to all organisations, perhaps an area that is more challenging is that of data that enters or leaves the enterprise when exchanged with a third party. Any process that is handling EDI or other B2B messaging data needs to be secured using standards that are acceptable to both parties. A Managed Service needs to offer a range of security solutions which fit not only the data but the connections that are being used. As with date formatting standards it is not always possible to impose one organisation s security standards on to a trading partner, so where SFTP might be a standard for one company, another company may insists on an HTTPS link. The mediation of connectivity and the associated security is a vital part of any messaging service.

8 4. Orbit UK A Flexible Solution At Orbit UK we feel that we have a flexible solution that meets all these criteria. Since the launch of our Managed Service platform we have implemented solutions for our customers which encompass all of the issues highlighted in this white paper. If you would like to see how we have helped organisations in many different market sectors and view some of our case studies and/or see our range of services please visit our website at. New products and services Channels that utilise more contemporary technologies such as XML and Web services Support for Polaris EDI standards Direct connectivity options - FTP, SFTP, HTTPS For more information click here.