Is EDI a Business or IT Function?

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This blog post has been updated from an earlier post.

On one of the LinkedIn EDI groups, there has been a debate raging over whether EDI is a business function or an IT function. This is an interesting question that impacts any company that does EDI.

In most companies, including many of our own clients, EDI is an IT function. IT controls the resources and therefore the agenda and timelines. IT controls the rollout of new partners, and IT provides the resources to do the mapping, communication setup and trading partner testing. Once it’s done, the business people get involved. The down side here is that most IT departments are taxed for resources, haven’t budgeted for bringing on new trading partners and don’t have dedicated resources that do EDI all the time. The result: EDI gets implemented at a slow pace, often at the detriment of the business relationship with the trading partner.

In other companies, again including many of our clients, we see EDI as a business function with the business unit working on doing all the setups. In many cases things take forever to get setup or they don’t get setup because the business operations people do not have the requisite technical expertise. The result in many companies is the proliferation of web-based EDI services; services that allow the business unit to do EDI without having to have the involvement of the IT group, which is not usually the best long term solution.

From our experience, the best sites – those that respond quickly and in a timely manner to trading partner requests – are those where there is a partnership between the IT group and business unit. The reality is that IT doesn’t understand the business implications of EDI, and conversely the business unit does not have the technical skill to do the implementation and setup. Marrying the two together into a separate EDI group takes the best of both worlds and allows for a streamlined approach that addresses all issues business and technical. This works for many companies but not all.

A second approach that helps companies that are either too small to have dedicated EDI people who may not have an IT department and use outside IT consultants on an as needed basis is to hire a company that can act as their EDI group. Hiring the resources of an outside expert gives companies a leg up. Implementations can be done quickly and in a more cost effective manner using expert resources. Paying $20K a year for services versus hiring a dedicated resource at $80K a year makes good business sense in my mind. It’s cheaper.

The reality is that the debate will continue to rage on as long as there is a marriage of business information transmitted in an electronic manner. A business must look at the strategic value of creating a dedicated EDI department that bridges IT and business operations versus outsourcing. One is cheaper than the other but the other has distinct benefits. The islands of technology and knowledge approach, we all know rarely works efficiently.

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