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I have had several conversations in the last week with companies that use B2B/EDI managed services providers. Many of these companies already have EDI/B2B experts on staff and have made significant investments in internal EDI systems, yet they are outsourcing much of their EDI/B2B processes to managed services providers. WHY?  What is the value?

Here are some of the reasons as they were communicated to me:

  1. They would rather use their experienced B2B / EDI managers on strategic B2B projects, rather than on maintenance and day-to-day operational issues.  They feel that the operations of an EDI system is not something that needs to be done in-house.
  2. They have acquired several new companies and need to integrate new processes, customers and supply chains into their SAP or ERP system via EDI/B2B quickly. Their existing IT staff do not have the time nor resources to take on additional trading partner enablement projects.
  3. Many of the company’s supply chain partners are already connected with the managed service provider, so they can save money and integrate much quicker by connecting to the managed service.
  4. It is time to renew maintenance agreements and/or upgrade their existing EDI system. The company does not like the EDI system and the cost is prohibitive. They would rather outsource EDI going forward and pay a fixed monthly charge.
  5. The original EDI experts have long ago left the company and EDI is viewed as a weak link or risk in the IT environment. They would rather put their EDI system in the hands of experts that will monitor, support and maintain it 7x24x365.
  6. Several companies would rather use an SAP centric managed service provider that tightly integrates with their existing SAP system, rather than an agnostic third party EDI system that is expensive and not part of their corporate IT strategy.
  7. Many times the experts that work at the EDI/B2B managed service provider can implement or on-board trading partners much quicker due to their expertize and on-boarding tools and utilities.
  8. In the high tech industry – supply chains and contract manufacturing partners change so often that companies would rather have these relationships managed by an EDI/B2B managed service provider that can quickly on-board new partners and reuse existing maps and EDI or Rosettanet messages rather than hire more IT staff to keep up with the changes.

The bottom line – many of these companies feel they can get better results, in shorter time frames and for less money by using a B2B/EDI managed service provider than by increasing internal staff and investing in more and more EDI and B2B software systems, training, maintenance and support.

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  1. Bhavesh Kantilal
    We did a check for a customer where it made sense to move the EDI interfaces implemented as a Service by a partner to the central integration hub ; XI and we found that it made more sense to move it to the central integration hub rather than have a separate team.

    On analysis the upsides were;

    1. All Integration in one hub; less teams and hence less maintenance costs annually.

    2. Central monitoring and easy tracking with one team one platform solutions.

    Downsides and the biggest one to be honest was the lack of expertise on EDI Integrations and lack of dual skilled consultants; i.e; consultants who can combine EDI Functional knowledge with XI based Integration knowledge.

    If the market had more skills with this combined knowledge it makes sense to have just one layer; but if the core EDI skills are unavailable; then this can become a futile experience!

    Until the maturity is obtained; the service based concept makes sense; but from a long term solution and taking costs into factor; it does make sense to move it to your core integration team in-house.

    My 2 cents worth~


  2. Former Member

    very interessting blog. Here is my comment/extension on this:

    From a Geoffrey Moore’s perspective in particular EDI (EDIFACT, ANSIX12…) has gone from CORE (Invention & Inovation 10 years ago)  to a CONTEXT (Standardized Commodity) Technology which is no longer part of an innovative dissociating business strategy. EDI has become commodity for a company. So why invest that much money in such disciplines? Let’s source it out. It is needed,yes but the differentiation is playing in other business areas.

    From an intergation perspective it has become more interessting (with focus on innovation) how to govern, harmonize or simplify those services to invent new business or to better support business.

  3. Former Member Post author
    I agree with your comments that data integration and business processes integration is an area where innovation can be expected.  The concept of Enterprise Services Repositories and the notion of using SAP’s Netweaver PI as a B2B hub, either on its own or as a plug in to a managed services B2B/EDI offering hints at the ability to extend internal business processes seamlessly to your external multi-enterpise supply chains.

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