It is expensive to set up your own in-house EDI system. You might start looking at EDI software and think it's not so bad but that is one small part of your total costs.  To set up an in-house EDI system, you will need to have:

• EDI Translation Software - The low end packages are a few thousand dollars and they go up from there.
• EDI VAN Services - A few hundred dollars to set up and monthly charges based on volume.
• EDI Integration with your Business Software (Your ERP package or accounting package such as SAP, Quickbooks, whatever you run your business with). This can be expensive. Even if there is "canned" software available, some customization will probably be required to make it work in your business environment.
• EDI Technical Staff - You will need at least one technical person to set up the EDI Translation Software and integrate it with your business software. They will need to understand many aspects of your business as well as all of the EDI requirements from your trading partners and of course the computer systems and software that are involved.
• EDI Coordinator - At least one person will oversee the day to day operations of your EDI system.

So you can get the idea from the above, that there will be some significant upfront software investments and some ongoing investments in staff and operations to maintain an in-house EDI system.

If you anticipate having a small volume of EDI transactions and only one or a few trading partners, it might make more sense to outsource than to set up your own EDI software.

Why not Outsource EDI?

One of the biggest negatives of outsourcing your EDI is that you loose control. You are now dependant upon a third party to handle a very critical part of your operations. You might think, I outsource my payroll and that is not a big deal. True, payroll outsourcing has been around for a very long time and is very reliable and cost effective.  EDI outsourcing has been around for a long time too, but is not so reliable because there are so many variables in the trading partner environment.

What do I mean by losing control?  I often hear from companies that they need a new trading partner set up and they cannot get it done in a timely fashion.  Their EDI outsource partner takes weeks to months for new trading partner implementations and in the mean time, the company is receiving chargebacks for non-compliance. The length of time to set up a new trading partner can be because the EDI outsource company is overworked or because it just takes them that long to set up something new.  Even when everything goes correctly the first time, it does take a long time to set up new trading partners.  If you have the resources in-house, you at least have more visibility into the process and better communications with your trading partners.  Some trading partners might even cut you a break on chargebacks once they know that you are actively working on their EDI set up.

The other thing that I often hear from companies, is "my EDI Outsource Company does not care when I receive chargebacks."  They care, but they don't care like you care, its not their money.  Often it seems like they do not even want to help you fight your chargebacks.  This may partly be because of their fear of taking responsibility for your chargebacks and possibly being sued.