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How to stay within your EDI budget and still trade effectively with your trading partners?


Small businesses usually come to us when they are ready to start trading with a single trading partner. They are ready to sell to one or two buyers (aka trading partners) and they have been mandated by the trading partners to send and receive documents via EDI.

The biggest problem we see here is that there is no plan or strategy for EDI. It doesn’t matter whether you are a small or a large business, if you don’t know what you need and what you already have with which you can achieve a certain goal, it is going to result in a failure. It is important to know that your thought process behind securing an EDI budget from the management should not be based on “at what price can I get the cheapest solution available in the market?” but “what is the most effective solution in the market for my needs and can this solution grow with my needs?”

Steps to staying within the EDI budget

The first step of staying within the budget and effectively trading with your trading partners is to plan your EDI project before you start reaching out to any EDI software vendors. Sometimes, companies don’t have the resources to plan the project and that is fine. Your goal should be to find a partner (someone/organization) that has a lot of experience working on different EDI softwares and can become an extension of your tech team to help plan and manage your EDI project effectively. This partner will help you:

  1. assess your internal technical infrastructure and skill set of your internal team, resources and see which type of software will fit well with your business needs. Let’s talk about the options you have in the market in detail:
  1. SaaS/iPaaS EDI Solution– An EDI software that you can use on a yearly subscription or monthly subscription. This would allow your company to not worry about setting up EDI on a server or hosting in the cloud and worrying about updates. This will require you to have EDI knowledge on staff or the right consulting partner. This option will typically have integration setup to your backend system to limit manual work with processing EDI.
  1. Managed EDI Service– A company that offers an EDI software and takes care of end-to-end EDI for you is a managed EDI service. These companies usually have built their EDI software on web forms. This option is usually viewed as being the cheapest but it could also be the most expensive if you don’t have a partner help evaluate your situation. The web solution provider will usually have some established relationships with EDI trading partners you are looking to work with. Some managed EDI providers will have their web EDI solution integrated with your backend solution and others may not. This is where you will need an external EDI expertise or knowledge in-house to help
  1. Licensed based On-Premise Software- This is the one where you purchase an EDI Software and install it on your physical server or on a cloud server. You can then configure the EDI trading partner connections, test and go-live with them.
  1. ask the right questions to understand what each solution provider will bring to the table, which EDI standards and EDI documents they support along with the cost. There are different EDI pricing models you can choose from that fits your business growth model (how you predict your business will grow over the next few years). The right partner will also guide you on the contract term with the EDI provider. Ideally, it is advisable to sign a one-year contract and let the EDI provider earn your business as you work with them. This will help you plan your yearly budget accordingly and not get stuck with them if you don’t like them for 3 or 5 years.
  1. develop an outcome-based EDI project strategy once you sit together and figure out which EDI solution is the best for your business w.r.t your needs. The most effective method of EDI implementation involves a step-by-step approach to onboarding your partners:
  1. Project timelines
  1. Order of trading partners to be on-boarded
  1. Desired outcome
  1. Tools required
  1. Any external factors that might affect the timelines

The next course of action should be to keep a track of number of transactions and documents as your business grows and adds more trading partners. Depending on the pricing model you choose with your EDI provider, your monthly pricing should not be affected considerably unless it’s an exponential increase in the number of trading partners or documents.

If you follow all the above step by step, this should pave a path for staying within your budget and being smart about how you should spend your EDI project funds. The key is to choose the right partners that are not biased about guiding you in the right direction. In EDI, this can truly define the path of your project- whether it will be successful or not. Most businesses will not have the resources and knowledge internally and therefore, taking help from experienced individuals will help save a lot in the long-term.

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