A Buyer s Guide to Migrating to an EDI Managed Service

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1 CONTENT SYNDICATION E-COMMERCE INTEGRATION business integration BUSINESS INTELLIGENCE A Buyer s Guide to Migrating to an EDI Managed Service For Consultants and Agencies Website: info@tiekinetix.com contentsyndication.tiekinetix.com North America: info@tiekinetix.com Europe: Phone North America: USA: Asia: Phone Europe: Europe: Phone Asia: Asia:

2 Seamlessly exchanging critical information A true necessity of business, of both brick and mortar and online is the power to connect applications and processes with that of their supply chain partners. The pace of business is reliant on consistent, established connections and driving growth by the most efficient and operationally sound methods. Companies the world over are coming to the conclusion that interoperability is not just a basic tenant of the day to day, it s a necessary component. Did you know? Most IT professionals would rather outsource their EDI needs versus managing inhouse. Executive Summary Business interoperability is simply defined as the use and exchange of information. This is exemplified in technical applications such as XML, EDI or VAN service (Value-Added-Network). As the upfront costs of infrastructure, implementation, hardware and software pay are recovered, the inevitable number crunching will occur. How can EDI costs be reduced further, while retaining every possible efficiency? The most basic definition of Business Interoperability is the ability to exchange information, and most companies are able to do this today using a wide range of technical solutions, from EDI to XML to valueadded network services. But as more and more business is conducted electronically, the definition of Business Interoperability needs to be expanded. Companies have the ability to share data, but are they confidant that the information is accurate, up to date, and being shared in an efficient manner? Is it in a format that all of their trading partners are able to process? And most importantly, how can companies achieve tighter integration with trading partners and also reduce the risk of human error? Traditional companies want to squeeze every last penny out of their supply chain. Online companies are eager to plug into the supply chain as a matter of survival. And the savviest among all these companies are looking for ways to transform their supply chain into more of a streamlined profit center. We see these trends often in the retail sector, where the large retailers are imposing more and more demands on their suppliers to synchronize product information and intensify business processes, as manufacturers are putting pressure on their resellers to be more active in marketing their products. By improving their Business Interoperability, companies can meet these demands and gain an all-important competitive edge in what is an increasingly virtual supply chain. 2

3 Did you know? Some EDI providers will manage your on-premise EDI software from the cloud. Cloud-based offerings are part of the Software as a Service (SaaS) model that is becoming increasingly appealing and popular among small and midsize businesses globally, and are likely something enterprise businesses may have had on their radar for some time. Businesses focused on the buying and selling of goods have always set their sights on maintaining their competitive edge by making advances in their product lines, competitive pricing, service delivery and other actions that result in a positive bottom line. Core competencies are not always the only actions business must engage in in the course of doing business. These other actions can include payroll, tax preparation, and the like. Without these functions individually working properly and highly optimized, the business and its entire infrastructure would cease to perform. EDI or Electronic Data Interchange is a great example of a non-core function, but is invaluable to maintain business document exchange, sales forecasting data, business partner relationships and inventory status. EDI is built on the need for industry specific standards for dialogue between businesses. These standards have grown to be the backbone of much of the critical business document exchange today, and its strength is the reason it s been around in some capacity since the mid-1960 s. The complexity of EDI is mainly in the rigorous details of mapping and setup, as well as the routine day to day maintenance. If a new trading partner is introduced, or if a partner amends their EDI conditions, a fair amount of legwork is required to ensure that the updates is accurately enabled. An EDI system needs management and maintenance with massive overhead to enable its success. Dedicated computer systems, licensed software tailored to meet specific needs, communication facilities, as well as trained and dedicated staff to manage and maintain the system is an absolute requirement. Management of EDI can often reduce the overall output of an otherwise successful IT department and can make for a situation that is draining on its resources. Overwhelmed EDI management can result in the delays of projects and response to customers, reduced innovation, and issue escalation only by crisis. Inevitably, the management of these complex systems accelerates at the pace of business, as does the complexity of each update to the system. Based on these staffing and maintenance updates and requirements for a successful EDI infrastructure, it is becoming common practice for businesses to outsource their EDI applications to an outside vendor. 3

4 Infrastructure Key components of a typical infrastructure of a world-class data center provided by an outsourced EDI vendor would include: SAS 70 Compliant Type II Data Center Facilities Redundant Power Redundant Internet Connectivity (multiprovider) Advanced security, cooling systems 24/7 Monitoring Services Clustered managed database environment Common Problem Its been said many times within the EDI community that companies want to run their business, not an EDI department. This is a reality no matter the size or scope of the infrastructure. Most companies fall within three buckets of EDI in house usage. On the small side is the one-man department, with simple mapping updates whose time most likely is underutilized, and is reactionary to the next software update, or trading partner error. Conversely, there is the larger overworked 2-3 person department that s backlogged with management by crisis reactions, belated updates and delayed processing. And lastly there is the large certified team of EDI managers and coordinators facilitating 24/7 all manner of maintenance to their mapping requests. Each of these common scenarios has inherent flaws in either employee bandwidth, overhead and/or various levels of preparedness. It s a common pitfall that staff is either a drain on resources and is underutilized and hard to reflect true ROI, or suffers from the opposite issue and is perpetually underprepared/staffed and is a bottleneck to the development of business and profitability. These all too common situations often result in delayed strategic projects, low bandwidth for innovation, and an overall management by crisis mindset. An additional complexity to all of these scenarios is the considerable investment in redundant computer systems, network security and software licenses to accommodate these processes, in addition to the employee investments themselves. All of these factors have a direct correlation to either the bottom line of an IT budget or to a business s bottom line. Question: What is the best course of action to reduce these malleable costs, yet allow for full flexibility with their trading partnerships with equal or better service? Answer: Outsourcing your EDI processes is just such a way to improve efficiencies, reduce issues with EDI delivery, and bring down overall costs associated with the staffing and upkeep of proprietary systems. It goes without saying that outsourced EDI providers are providing the most rigorous provisions for its customers. EDI outsourcing companies must be properly equipped to continuously demonstrate real, honest and effective cost reductions for customers and business partners while leveraging years of industry know-how. Physical security concerns aside, the expertise of those running your electronic transactions are just as important as the safety and security of the data, no matter the timing nor the situation. 4

5 Did you know? Most IT professionals see strong return-oninvestment with their B2B managed service in just a few months. A Managed Service provider will have a seasoned networking and infrastructure team ready to install, configure and maintain any needed hardware, software, or communications. They should have operations staff monitoring processing and handling inquiries, errors, and failures and they will have EDI mappers with expertise in most common translator packages and platforms. This instant global footprint of skills, resources, and knowledge is the key to outsourcing a critical business process like EDI. Staffing Making the case for outsourcing often relies on the offset expenses that come with staff reallocation. Time and time again, the costs associated with outsourcing EDI is far less than that of annual salaries, training, benefits and overall career paths associated with IT employees running contemporary EDI systems. With an outsourced solution there are never staff shortages or processing backups due to understaffing, nor downtime due to overstaffing. Software A major benefit of working with a Managed Service provider is having the flexibility of always being completely compliant, up to date, while never having to make updates, or suffer any latency due to out of date systems or licenses. So too is the avoidance of the management of hardware, software and total support of your EDI system. Top 3 Factors Here s the top three factors to consider when selecting an EDI Managed Service provider: Staffing Software Maintenance Maintenance Maintenance is typically the focus of daily tasks for most in-house EDI departments. With a Managed Service provider running your EDI system any trading partner issues and subsequent resolutions, testing trials, or unique trading partner requests (map alterations/additions), backup and general maintenance are all handled, immediately. The system (and your supply chain) remains operational no matter the regional holidays or global location of the trading partner nor staff/critical issue level. Timing variations caused by the time it takes to enter a new trading partner can be alleviated by the scope of new work provided by the managed service provider. Any new processes can be mapped out to specific intervals, from hours to completion to manpower needed to achieve deadlines. These factors can be easily mapped out against a predictable low cost, utilizing only the services you need. Like many things, common issues that arise with EDI become larger problems the longer the issue goes unresolved. This can result in a slow response to customers, delays to strategic projects, no time spent on internal innovation and a emergency escalation mentality. This works directly against many of the business drivers of many IT Departments, such as the need for increased productivity, efficiency and agility, doing more with less, and reliable cost reductions. Hiccups caused by inefficient or overwhelmed EDI departments can lead to strained/lost business partner relationships and lost revenue. Outsourcing critical business processes like EDI is a calculated decision 5

6 Did you know? EDI can be turned into a predictable low cost with managed service. that allows companies to focus on their core competencies, rather than compliancy mandates with trading partners. Outsourcing also allows for an instant expertise in managing all partner issues/testing/implementation issues and grants companies an instant global footprint of proficiencies, understanding and resources. An additional benefit to an outsourced solution is the convenience of all support inquiries from trading partners are handled by the service provider. The reality of the situation is that EDI and its necessary training and understanding by a portion of a company s workforce, is abstract. These skillsets are not easily convertible to other capacities of the organization. As the trusty saying goes, leave it to the experts. Conclusion The size of a company and the capacity of its IT and EDI departments has a huge bearing on whether an outsourced Managed Service solution fits their needs and objectives. The goal of this whitepaper is to educate readers to the many benefits of these EDI in-house alternatives both financially as well as from an operational standpoint. Moving EDI processes to a third party provider can be a favorable and cost savings decision that makes sense in both the long and short term, typically paying for itself in as little as 3-6 months. Outsourcing EDI provides true value and balances sensible action with tactical vision. Effective managed service for your EDI process owes more to oversight of departmental process rather than innovation. Ready for Managed Service? Contact us today. For more information on Managed Service for EDI please contact: Whitepapers: info@tiekinetix.com North America Europe Phone: Phone: Asia Phone: