This question is coming up more and more often, especially for midsized companies. Do I need to keep my EDI data in house, or on my hosted server, or can I outsource it to a cloud solution provider? Are there cost savings? Are there security risks? Who is behind the cloud curtain? This post will endeavour answer some of those questions and more to help with your decision making process.

What does EDI in the cloud really mean?

For the purpose of this discussion, EDI in the cloud means an outsourced cloud-based service. A solution where you don’t own the software, but pay a third-party to managed your EDI requirements. It doesn’t mean owning your own EDI software license, and just running it on a server hosted on AWS for example.

Are there security risks with EDI in the cloud?

Any time data goes outside your network it brings with it a level of risk. However, as the nature of EDI is to exchange data with others, your data is already going outside your network and may be open to a certain risk level. Are you using standard FTP? If so, there is no encryption. But, you’ve probably thought about the data you are sharing via EDI and determined that the risk to your business of someone seeing that data is small.

Depending on the cloud solution you choose, you may have similar risks, or you may have less. If the solution uses a secure connection to your back end ERP, and secure transmission protocols to get data to your trading partners, you may actually reduce your risk factors.

I already have internal staff and the software, how can I cut costs?

It’s likely that the resource you have doing EDI wears multiple hats. Maybe they spend 25-50% of their day doing EDI, maybe more, or less depending on your footprint. There are likely many times you wished they didn’t spend so much time on EDI so they could invest time in more strategic initiatives. Depending on the cloud solution you pick, that resource may not get freed up at all as they still need to support the ERP system and any EDI related errors. However, if you choose a solution that has end-to-end service, from set up in your ERP all the way to managing errors and issues and communicating with your trading partners, you can actually free up 99% of that resources EDI time and put them to use elsewhere in your company.

Even though you may already own EDI software, by going to the cloud you no longer have to pay maintenance on it, or server costs to run it and potentially other license costs (Windows, Database license, Office license etc.)

What does an EDI cloud solution include?

It’s important to look at the service you will be getting from your cloud solution provider. Are there hidden costs associated with new trading partners, minor or major changes, and supporting failed transactions? How far will they go to help you? Will they reach out to your customers on your behalf? Do you still need an EDI guru on staff to understand what they are telling you so that you can reach out to your customers? If you can choose a platform that has the right support behind it, you can leave the staffing costs of EDI behind.

How do you know who is supporting you?

Just ask. Ask for a conversation with the support team manager, or support team members. Are they skilled in SAP or whichever ERP system you use? Will they know how to map data from your data format to standard EDI formats? Have they worked with customers, vendors, carriers, financial institutions etc. to understand how all of those EDI transactions function? Can they recommend ways for you to solve problems you might be having with a trading partner and their data rigidity which just doesn’t fit into your system?

These are all important questions you should know the answer to before choosing a partner. You don’t just want the cloud, but you want the right people behind that cloud.

Closing thoughts

Many skilled EDI resources are nearing retirement, so maintaining this skillset in-house is difficult. It often relies on one person, who can barely take vacation and would leave a giant hole if they were gone. Often the servers running the software are getting older because upgrades and server migrations are costly, leaving vulnerabilities in an essential part of your supply chain. EDI is one headache you can easily get off your plate if you do it wisely. Look for hidden costs in the pricing model, find out who you are working with, and sleep easy at night knowing you have one less thing to worry about.