Tuesday, October 27, 2009

Too Big to Manage? Complexity, Cloud Computing and EDI

This week I read an article called Too Big to Manage?, in the Wall Street Journal, The Journal Report, Monday, October 26, 2009. The subtitle is Some companies are simply too complex to be run efficiently. The focus of the article was complexity, and how complexity can overwhelm management. I have been there. I have been an executive that was completely overwhelmed by the complexity of managing all the various components and competing interests in a fast growing high tech company. This article resonated with me. In hindsight I recognized that much of the complexity was unnecessary and not core to the success of my company.

One of the solutions, listed in the article, that helps companies reduce complexity is to, "Outsource or spin off nonstrategic services. Many companies have taken entire business processes off of their books, such as IT, finance, logistics and human resources, thus simplifying their internal operations dramatically."

In my experience, R&D, product delivery (software development and professional services), marketing, sales and customer service were core, but just about everything else should have been outsourced.

In this article I identify the large number of people and departments that get involved in even a simple EDI implementations. Traditional EDI is complex and resource intensive. Many large companies have directly contacted me this year to ask my advice on outsourcing EDI as a nonstrategic service. It is required, but not as an internal effort. Many companies are better served by simply connecting their SAP ERP to an SAP-centric EDI Exchange and letting all the complexity be managed in an external cloud computing environment.

Focus your IT brain power on something that will actually produce additional value for the company. Traditional EDI and B2B are no longer considered competitive differentiators. All large companies have these capabilities. Therefore, the advantages are now found only in making it less expensive, simpler and more widely used, all of which are accomplished by outsourcing to a quality EDI service provider.

SAP has recently invested in and become a co-owner of an EDI Exchange for SAP users. Why? The same reasons - the believe they can create an EDI Exchange in a cloud computing environment that can provide EDI services faster, simpler and for less money than SAP users could do in-house.

I look forward to your thoughts and comments.

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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