Choosing EDI-as-a-Service and TCO

This blog post is the third part of a series highlighting the best practices for EDI-as-a-Service in planning and evaluation.

As past entries in this series pointed out, determining if EDI-as-a-Service is right for your business, and which provider solution makes the most sense, requires some careful consideration. Two very important caveats are to be sure to choose a solution based on requirements instead of provider capabilities, and approach your selection with a broadened view of total cost of ownership (TCO).

Pick EDI-as-a-Service for Requirements, Not Provider Capabilities

When EDI-as-a-Service offerings initially became available, “on-network translation” were the provided capabilities which hosted on Value Added Networks (VANs). Data format flexibility was minimal due to limited EDI translation options, where direct integration with enterprise applications and data resources could be offered, but came with a large price tag for the customization.

Present-day options for EDI-as-a-Service offer greater flexibility in the following areas:

  • Range of services: May include full life cycle management, last-mile integration, customized monitoring and other options.
  • Transaction support: Providers may support transformation of XML, flat file and spreadsheet data in addition to standard EDI transaction formats.
  • Last-mile integration: EDI-as-a-Service must integrate directly with enterprise applications and data to avoid costly manual processing. To satisfy this last-mile integration requirement, some providers offer adapters and custom integration services.
  • Licensing options: Typically includes fixed-price subscriptions, usage-based subscriptions and hybrid options with perpetual license entitlements.
  • Deployment options: Different providers offer varying methods of how to maintain the EDI-as-a-Service system, including hosted or cloud environments. Some also offer on-premise options if security, availability or latency issues are a concern.

In taking time for this analysis before you evaluate service providers, you are providing yourself the most insurance against choosing a solution adding unnecessary cost and complexity.

Better Understand TCO

TCO can include direct and indirect costs you don’t realize while conducting research to find a provider. To avoid missing or misunderstanding a provider’s fee structure and one-time charges, there are a few steps to conduct a complete analysis so you can better understand what your TCO will be:

  • Provisioning charges: One-time charges for account setup, mailbox setup, software licensing and other initial provisioning activities may be assessed.
  • Implementation charges: Last-mile application, data integration, per-transaction and per-partner configuration charges may be costs assessed by specific providers.
  • Recurring fees: Most providers will assess monthly or annual subscription fees varying based on level of service, which may include per partner/endpoint or per deployed EDI process fees.
  • Usage-based fees: Some models include billable fees based on measured usage, like per-transaction/document or per kilocharacter fees
  • Partner setup fees: These will cover ongoing partner setup costs incurred after the initial implementation.
  • Change fees: Changes to existing EDI processes, new transactions, EDI version updating, and changes to last-mile application and data interfaces are sometimes charged by providers.
  • Exception-handling and error resolution fees: These fees are typically assessed per-incident and cover the cost of diagnosing and handling out-of-band exceptions.
  • Early termination fees: If you end an engagement before the agreement ends, some terms require payment of an early termination fees.
  • Indirect costs: Sometimes the cost of supplemental solutions or processes needed to satisfy requirements that are not met by your EDI service provider, such as incomplete support for required partner transactions.
  • Switching costs: This may mean losing your EDI implementation investment when you are moving to a new EDI service or self-managed arrangement, unless your provider offers a bridge plan to the new solution.

Overall, understanding the need to select EDI-as-a-Service based on your company requirements and making sure you understand a provider’s TCO will help you make a better educated decision when looking to change your EDI provider structure.

For more information about EDI-as-a-Service, download our “Best Practices for EDI-as-a-Service Planning and Evaluation” whitepaper.

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