3 Cost Reduction Approaches for QAD EDI Support
Picking the wrong approach to EDI support for your business can mean endless log jams of projects or pouring too much money into third-party resources that don’t support your needs. Looking to avoid these issues? This article will discuss three cost reduction approaches to EDI support—the outsourced approach, the in-house approach, and the hybrid approach—and the potential benefits and risks involved with each.
Approach 1: Outsource
In this approach, the company hires a third-party to cover nearly all the company’s EDI needs, particularly the implementation of new EDI partners, maintenance, and on-going support.
Implementation of New EDI Partners
This involves several tasks. The third-party establishes connectivity to and from the VAN, AS2, FTP or other communication method. It will also cover the front-end solution—translating the raw EDI file to the Standard Neutral Format (SNF) for QAD eCommerce. It will also execute and support eCommerce, QAD’s back-end solution. This includes trading partnership support and loading the SNF to QAD with user-friendly formats/reporting within QAD.
Maintenance and On-Going Support
The provider will provide maintenance of existing EDI partners, supporting changes in IDs, versions, specifications or issues, as required. Support efforts involve several components. The first involves reviewing all daily EDI processes such as communications translation and related programming. Another involves monitoring and supporting front-end and eCommerce processes for daily processing. One aspect of support is not always covered by the third party—QAD systems support for QAD processes interfacing to EDI, such as errors reported in release loads.
Outsourcing EDI support may allow businesses to reduce their headcount, since there will not be a need for a full-time internal EDI resource (such as an EDI administrator). Companies will also be able to redirect or conserve their current resources because the in-house time commitment to EDI is very low. In fact, some companies can expect their SMEs to only spend about 10% of their time on EDI. Third-party resources will also be able to handle any special requirements companies may have with their trading partners. Additionally, some providers may offer 24-hour support services for issues that may arise.
However, outsourcing nearly all of a business’s EDI activities introduces potential risk in numerous ways. The approach still requires some resources such as SMEs who know the relevant partner relationships, so even this approach is not entirely outsourced. Additionally, the provider handling so much of the company’s EDI burden results in the business having less visibility into its EDI system.
There are also several potential issues that businesses may encounter with the quality and cost of service from the provider. The outsourced party may not provide support as fast as the business would like, nor is it guaranteed to perform as well as a full-time employee performing the same task. Furthermore, third parties can also be costly for the business, especially if it has a high volume of trading partners and transactions.
Approach 2: Hybrid Approach
The hybrid approach offers options for customization. The front-end consists of EDI communication with the partner, translation of the EDI document to the QAD eCommerce SNF file layout, and executing the eCommerce process in QAD. The back-end consists primarily of creating transformation maps in eCommerce as part of the SNF to QAD process, along with setting up the eCommerce TPL for partners.
Either of these ends can be outsourced to varying degrees. In a hybrid approach, the third-party responsibilities could consist of as little as handling only the EDI communications, and supporting existing and new partners at that level, or may also include data translation from the EDI format to eCommerce SNF format, along with executing the eCommerce process to pass the data into QAD.
The optimal split of duties would be based on the skillset of internal staff, and availability of the required software and licenses. There are three primary examples of how internal skill set and software availability come into play. First, creating transformation maps within eCommerce can be complex, and may need to be outsourced; similarly, the EDI to SNF translation requires its own set of skills and software and can be outsourced as well. Lastly, in this approach, the internal staff would take a larger role in support of the internal eCommerce portion of EDI, such as TPL set up and monitoring of the process, while the outsourced party largely provides the front-end support. This eCommerce support role would require internal resources with a certain skillset that also includes troubleshooting and adequately communicating needs to the third party.
A primary benefit of this approach is that the company will require a smaller skill set for the in-house personnel, and as a result, certain EDI activities may be performed as a part of another job, as opposed to being a full-time effort. The hybrid approach also allows for more control over the speed of EDI responses, and it ensures that the company is the single point of contact for EDI.
This approach can waste time and effort if the division of responsibilities between the third party and the business is unclear. For example, confusion can arise if the business expects the third party to check the session reports in QAD while the third-party expects the business to check them. The approach can also create confusion whenever communication of necessary changes is not synchronized between the two parties.
In addition, there may be a delay between time availability of in-house and third-party resources when completing projects.
Approach 3: In-House (With Possible Staff Augmentation)
In this approach, internal resources cover the full solution—everything from connectivity to and from the VAN (or other communication method) to the ongoing support involved.
Businesses should note that, under this approach, they will be responsible for all the appropriate software and licenses involved (connectivity software for the VAN, communications, translation software for EDI to SNF translation, etc.) and the skillsets required for tasks such as support.
Staff augmentation roles may include the following:
- Application support
- Incident management (approvals, escalations, KPIs, SLAs)
- Assign internal resources to projects, major developments/enhancements
- Documentation and communication of (support model, etc.) to end users
- Support plants for new supplier EDI setups.
The in-house approach offers full control over the business’s own system and trading partners; the business can respond as quickly as desired to trading partner requests without being bogged down by other parties. The company can make changes to the EDI solution as quickly as desired as well.
Although this level of control can be a blessing due to the reasons above, it is not without its downsides. Put simply—it’s all up to the business. The organization is completely responsible for maintenance, monitoring the EDI solution, investing in the staff with the right skill sets to support the EDI solution, and support, which may require after-hours availability. This approach can also create a “log jam” of projects due to limited EDI resources—having too many projects to get done, and too few personnel able to do them.
Choosing and implementing the right EDI approach for your business can be a crucial step toward reducing cost. Logan Consulting can help in this process. If you would like to learn about the EDI services Logan Consulting offers, please get in touch with our experts by clicking here.
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