Monday, October 12, 2009

EDI - $500,000 Invested and it Still Doesn't Work

It is very important these days for IT and business departments to get a fast return on their investment. I have heard business managers mandate 90 day ROIs or the IT project will not be approved. This is a big challenge for EDI vendors. Why? Let me share some experiences.

Many EDI translators are expensive. When you add up the license costs, the various servers, development, testing and production, consulting, implementation, training, hardware, communications, mappers, EDI standards, ERP adaptors, integration development etc, it is not unusual for all of this to add up to over $500,000. Here is the big problem - it still doesn't provide an ROI after all of that investment. The $500,000 is just to get you prepared.

Prepared, that is, for the start of your expensive and long multi-year trading partner implementation project. This could be more expensive than the original investment. The ROI will only start once data is moving in production through the EDI and integration system between you and your trading partner. Everything that you spend money on that does not move production data between you and your trading partner can not provide an ROI.

Here is an alternative to consider. Skip all of the software, hardware, integration code development, consultants, etc, and simply use a managed EDI service. Only pay for actual implementations and production services. That way every penny that you spend is for an ROI, not to prepare you for an eventual ROI.

SAP co-owns their own EDI managed service for SAP users that runs in a cloud computing environment so you have no hardware or software to purchase and maintain. You only pay for connecting to your trading partners and supporting a production environment. Something to consider.

If you would like to discuss this topic in more detail please email me.

For related articles please see:

Implementing EDI

Staffing for an internal EDI department

EDI Business Network Transformation

EDI and B2B Challenges

EDI data, mappings and other intellectual assets

Considerations for outsourcing EDI

SAP's New Strategy for EDI

The Real Purpose of EDI

More on EDI Staffing

Documenting EDI data requirements

Creating an EDI Implementation Guide

Author Kevin Benedict
Independent EDI, B2B and Mobile Computing Consultant

I am a loose canon. No individual or company, no matter how much I try, is willing to be responsible for my comments. So alas, they are mine alone.

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