Should EDI be outsourced?
Technology has proven both a blessing and the bane of the CIO’s existence. The electronic transfer of vital information, such as invoices and supply chain data, is immeasurably impacted by EDI, the electronic data interchange. If the systems running EDI aren’t functioning with exact precision, a company can lose market share and even be penalized for missing contractual obligations for the late or missed delivery of goods and services.
In fact, there are multiple points of potential failure along the supply chain that create risks and uncertainty. In Deloitte’s report 'The Ripple Effect', supply chain hazards of import to the CIO and anyone else charged with overseeing a company’s supply chain are highlighted. According to the report, today’s risks to the supply chain are becoming increasingly costly. As a result, 71 percent of executives surveyed for the report said supply chain considerations play an important role in their company’s decision-making processes. The complexities of managing supply chain technology has become such a risk that many executives believe it should be outsourced, rather than tackled within the organization.
The move toward managed services in general continues to gain popularity as companies look to leverage the expertise of service suppliers dedicated to specific functions and technologies. This is particularly true when the technology is critical to the business despite not being their core competency, which is often the case with EDI. Outsourcing can remove the uncertainty of internal personnel issues, hardware and software support, and even connectivity issues from internal budgets to predictable contractual agreements.
In fact, in a 2013 report, Gartner estimated that globally, the outsourcing of IT services worldwide would reach $288 that year alone. That number represented an increase of 2.8 percent. According to the report, buyers will seek to transition more IT work to annuity-managed service relationships, both for cost takeout and increased predictability for those expenditures.
As budgets and pressures for IT services increasingly command attention, financially and in terms of human resources, it’s easy for security risks that can sink the entire ship to be overlooked. That is, until one of those hazards becomes a reality and critical orders and deliveries go missing on some loading dock. If the internal team tasked with managing EDI has the right monitoring tools in place so they spot the problem before it escalates, it can be repaired before any real damage occurs. But, if the team is, for example, too small, unskilled or simply overwhelmed by the gravity of their duties, the likelihood even a big problem will go unnoticed increases exponentially. Anyone familiar with supply chain matters knows such a happenstance can be tantamount to disaster.