The term EDI vendor can be used to refer to a number of different organizations. In the most general sense an EDI vendor is any company that makes available EDI software or services. EDI vendors can concentrate on services, like EDI VANs and EDI Service Bureaus, or they can concentrate on providing EDI software. An EDI vendor typically also focuses on specific market segments. Some EDI vendors 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 vendor.
Selecting Your First EDI vendor
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". The low number of EDI transactions for these types of companies usually mean a specific type of EDi vendor. For this type of organization a full service EDI vendor may be the best starting point. Many VAN EDI vendors and web-based EDI vendors 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 vendor 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
How do you know when your full service EDI vendor 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, three factors influence which EDI vendor you choose: 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 vendor? Finally, consider how many trading partners are you using with your EDI vendor? How many could you use?
Choosing your EDI Vendor
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 an in-house EDI Vendor. 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 vendor cost you per year? and finally (c) Connectivity costs - how will you connect to all your trading partners using your current EDI vendor and how much will that cost?
The $1,000 EDi Vendor Question
Many small and low volume users of EDI are finding that full service EDI vendors are simply too expensive as they begin to fully adopt EDI with many companies paying as much as $1,000 to $2,000 per year on EDI charges. As you begin the process of selecting your EDI vendor, make sure to look at it from a long-term perspective as well as a short term one.