One of the most frequently asked questions regarding EDI is about its cost. There's the initial cost of startup and the ongoing cost per transaction. And while startup costs are relatively easy to calculate, per transaction costs continue to be more difficult, primarily because those costs can include a wide variety of factors including human intervention, capital equipment, postage, and even the cost/savings of correcting for errors. A recent study presented by NewEDI reports that costs overall have been coming down.
Of course that's good news for supply chain participants and those EDI service providers that are on the newer side of the technology spectrum. Reduced costs per transaction are a byproduct of the shift from on-premise software installations to online services, so this shift shouldn't be much of a surprise to anyone who has been watching the industry over the last decade or so.
While the results of the study are limited in scope, I found one aspect particularly interesting. Specifically, the segment regarding the services being used. While the survey indicates that 25% of respondents us only Internet EDI and 29% use only VANs, a larger group (37%) use a combination of Internet EDI and VANs.
An additional 9% indicate they use Interned EDI only but may consider adding VAN technology to its capabilities in the future.
I'm unsure about the classifications used here so it's difficult to draw conclusions about the trend toward online EDI solutions. For example, the study segments "Internet EDI" as including "EDIINT and AS2" which essentially pegs the category as only including AS1, AS2, and AS3 according to the EDI Center. This leaves out an entire category of EDI solutions providers that don't categorize themselves as VANs but as SaaS EDI solutions like TrueCommerce, EasyLink, SPS Commerce, and many others.
This segment of the market is where I would expect the greatest opportunities for cost reduction. While EDIINT services offer great opportunities to bypass VANs and even SaaS based providers, they still rely on some internally maintained technology to handle the direct transaction connections. SaaS (or Cloud) based services generally take a more all-inclusive approach including direct integration with ERP systems and management of the transaction translation between trading partners.
We've requested clarification from NewEDI on these classifications and the inclusion or exclusion of this category of solutions providers and will post their response as we receive it. For now, we'll conclude there is a gap in the analysis that may skew the results.