What is an EDI Provider?
The term EDI provider can be used to refer to a number of different organizations. In the most general sense an EDI provider is any company that makes available EDI software or services. EDI providers can concentrate on services, like EDI VANs and EDI Service Bureaus, or they can concentrate on providing EDI software. An EDI provider typically also focuses on specific market segments. Some EDI providers may focus on specific vertical markets while others may provide software or services for specific company types - like enterprise organizations or small and mid-sized businesses. For a company that is brand new to EDI one of the first and most crucial decisions will be to select one or more types of EDI provider.
Selecting Your First EDI Provider
Most businesses begin trading via EDI because they have to. Typically the requirement has come from a new customer in the form of a "mandate". These types of companies are usually not very EDI savvy and have a very low volume of EDI transactions. For this type of organization a full service EDI provider may be the best starting point. Many VAN EDI providers and web-based EDI providers have rate plans that are very affordable and that provide a full-service experience that does not require you to learn EDI. As your use of EDI begins to grow however you will find that the need for a different EDI provider may arise. Understanding how and when to make the transition to an in-house EDI software can be crucial to ensuring that you get the most from your EDI investment.
Knowing When to Make the Transition to an EDI Provider
How do you know when your full service EDI provider is becoming too expensive? The answer is going to vary on your business and your level of usage of EDI. As a general rule, however, you should consider three key factors: First is the question of commitment to EDI. More specifically, is your use of EDI a long-term commitment or are you going to stop within one or two years? Second is the question of cost; how much are you spending per year on your current EDI provider? Finally, consider how many trading partners you have, or could have, using EDI; how will you communicate with each of these partners?
Taking all three of these questions into consideration you can quickly build a pay-off formula that can help you determine if you should consider in-house EDI software. The variables you will use are: (a) Time - that is - do you plan to use EDI for at least the next 2 years? (b) Cost - specifically - how much does your current EDI provider cost you per year? and finally (c) Connectivity costs - how will you connect to all your trading partners and how much will it cost to maintain those connections?