Marlow's EDI Done Right

SaaS vs Managed Services; The ARE Different

Written by Marlow Atticus
Published on Monday, 29 August 2011

cloud-question-mark-cloud-computingI've written plenty about getting suppliers into electronic trading with their partners. I've shared that if you have EDI services and so do you partners, you should be collaborating so that you can exchange data electronically. I've also shared that if you have EDI capabilities and your convinced that bigger partners are the only ones that are qualified to have EDI capabilities, you're making a poor assumption. Many smaller to mid sized supppliers do indeed have the ability, but have not shared they can exchange with you. You should put together a strategy to work with these smaller companies. Lastly, if you yourself do not have EDI capabilities, it's not too late to make a difference in your organization.

Those companies that don't have EDI capabilities but are looking to start an Electronic trading program have a signicicant issue to consider:

-Should we manage the program ourselves or should we outsource?

I thought I'd share my thoughts and understanding of the various methods companies are offering, what each option means, and clear up any misunderstanding with the terminology that is being used around this topic.

If your thinking that you may want to "Self Manage" your EDI program here are things that you will need to support -

1.       You'll need EDI translation Software

2.       You'll need to write Interfaces between the EDI software and the Business Application that will creating or receiving the data with your partners

3.       You'll need to set up a communication or Transport mechanism to send and receive the data with your partners. Many partners are using what is referred to as a VAN (Value Added Network - similar to the Postal service that delivers mail). Others will make a direct connectioin with some or most of their partners. The VAN provides a reliable and consistent method of delivery. However there is a cost to both partners.  A direct connect can be done through AS2 software or FTP, which will require more resource time to set the connects up  and test them.

4.       You'll need support resources. This will likely be Technology resources for the interfaces, creating the EDI mapping  within the EDI software.

5.       You'll need Business resources. For many that means a Business Analyst that work with the business stakeholders on current and future opportunities on the daily operations

6.       You'll need resources to implement the trading community. These are likely to inclued an EDI Coordinator or EDI Analysts that will work with the partners to test and connect them.

An increasing number of companies are not interested in managing some or all of this process themselves. Rather, they are likely to talk about Outsourced Services. In my definition of Outsourcing we're talking about not needing the EDI software. Rather, those services are provided by a Service Provider. There are many types of providers, so you'll want to make sure that you are aware of the differences and where their resources verse your resources begin and end. Here are some that companies are considering -

Some Software packages like SAP, Oracle, Manhattan, etc , offer what they will call EDI modules. These modules support data feeds between their Applications, however many of them only offer connections with your partners through a "Portal".  Unfortunately these portals require the suppliers to interact directly with the tool and do not allow the suppliers that may have EDI capabilities to use their systems to trade with you, thus defeating the purpose of collaborative methods of trading. In addition, many of these will require your own resources to create and maintain the systems. Many do not support more than a few of the traditional business documents that partners are using to automate a supply chain , meaning you may be limited in how far you can take your electronic trading program. When you look at these options keep in mind that you'll need to supply items 4 and 5 above.

Many of the VAN Service Providers will support an outsourced model which is actually a "Managed Services" model. GXS is an example of a Managed Service EDI provider (they may offer others but this is the typical offering) which means that they will manage the software and hardware to support an EDI program either off-site or in your facility, but you'll need to provide resources to manage the day to day operation of the tool. In addition, any expansion of business documents from what is initially implemented will mean paying Professional Service charges. Providers that offer these services tend to be large companies that are really good at moving data, however are not well versed in knowing what's going on in any specific industry in the supply chain. This means they tend to have a standard set to documents and maps for all comers. Any enhancements require charges outside of the standard package pricing to support your business needs.  When you look at this options keep in mind that you'll need to provide items 3,  4 and 5 above.

The last option I'll address is SaaS (Software as a Service) or what I think of as Cloud computing. Companies like SPS Commerce or DiCentral are providers of SaaS EDI services. These companies maintain the hardware and software at their facilities like some options provided by Managed Services providers, however they provide many of the other parts of the items I listed with the "Self Service" model such as -

  • One set of data formats between your company and themselves while offering the same options between themselves and your trading partners. This becomes important when you use Oracle Gateway file exchange between yourselves your selected provider, and those of your partners that already support EDI themselves can use that to support you, and can connect to your partner's SAP system.
  • They do the setup and maintain the data communication method with your partners. Many of the SaaS Providers will support any method your partners wish to use, whether that be VAN, AS2, FTP etc.
  • Most of these providers charge a flat Rate verses a per-charagter rate
  • You will need to provide some up front resources with a SaaS provider regarding the extract and importing of the agreed upon data file formats during the initial setup,  however once built, minimal IT resources are needed unless changes are made.
  • Instead of EDI Coordinators or Analysts, most companies selecting a SaaS model, will have a Business Analyst resources as part of their program. This person tends to be the one that manages the business related items about the partnership while the provider manages the data.
  • These providers also provide on-boarding services with a trading community as do "Managed Services". You would do this yourselves on a "Self Managed" EDI department.

In summary, think about how much you want to manage and the resources you'll need to support the outsource services that you're looking at. Can your provider advise you as to what is new with EDI trading? Do they understand how your supply chain works and what you'll need in the future?  I'll add one more thing; if you are currently managing EDI internally, you can certainly move to an Outsource model.

Good Luck.
Marlow 

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Marlow's EDI Done Right

Marlow Atticus writes about the right way to use EDI and transactions in the supply chain. His 20 years' experience shows up in his frank commentary about how companies are using (and some times misusing) the transactions that drive the supply chain.

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