On-premises or in the cloud? Which is best for my EDI capabilities?

EDI (electronic data interchange) is increasingly important today for businesses large and small. You need to be able to trade quickly and efficiently with your partners wherever they are. Which EDI deployment model is right for your business: on-premises or in the cloud? This blog looks at the options you have available and highlights some key areas you’ll need to consider.

For CIOs, the issue is not whether to deploy EDI but which deployment model is best for their specific business. In truth, both on-premises and cloud deployments have strengths and weaknesses and when deciding which model to use, it comes down to your business requirements.

What are we talking about? It might be useful to quickly define what we mean in the context of EDI deployments.

On-premises EDI

In an on-premises deployment, EDI software – like OpenText™ BizManager™ – is loaded onto physical PCs or servers that are located at your offices. The application and all the data associated with it are stored securely behind your corporate firewall. You have complete control over all aspects of your EDI system including security, access and data integrity. However, this does mean that you need to maintain and manage the system yourself. In most cases, you need the skills and expertise within your IT team. You also need the budget to maintain and upgrade your EDI software and hardware when needed.

Cloud-based EDI

In the cloud-based deployment model, the EDI software is hosted and fully managed via an off-site cloud system operated by a third party services provider. All your data and configurations reside within a hosted platform, such as OpenText Trading Grid™ Messaging Service, and you securely access it through PCs at your office. To take this a step further, you can also outsource your B2B and your service provider to take care of the day-to-day management of your EDI capabilities, removing the need for you to invest in internal technology and skills. Cloud-based EDI solutions tend to be subscription-based to make for repeatable and predictable billing. However, some companies fear losing some control over data access and security. The best B2B Managed Services provide numerous capabilities for self-service to look up details into their trading community and to run reports on document transactions.

Hybrid EDI

Why choose, if you can do both? For many larger companies, the best option is to adopt a hybrid EDI solution to take advantage of both on-premises and cloud-based benefits. Companies who opt for a hybrid solution divvy up their business partners depending on size, importance and frequency of their transactions. A company could, for example, decide to keep their largest, most important and most stable business partners in-house, and retain full control over all their data, while pushing the rest of their trading community to the cloud.

It’s clear from these brief descriptions that the deployment option you choose will require careful consideration of key business factors such as the volumes of EDI traffic being exchanged between you and your trading partners, or the internal budget and resources you have at your disposal. You may want to download the EDI Basics eBook, a great resource to learn EDI essentials. Like most other important parts of your IT infrastructure, one size does not fit all when it comes to EDI.

5 key areas to consider when choosing an EDI deployment model

Choosing the right EDI solution can appear complex but a systematic approach to weighing the benefits of each approach will help decide the deployment option that’s right for you. From OpenText’s experience of working with companies of all sizes in all parts of the globe, I’d like to highlight some key considerations.

1. EDI volumes

For many companies with regular and predictable EDI volumes and a fixed set of trading partners, either on-premises or cloud EDI deployment is an appropriate approach. Even if your volumes change over time, on-premises OpenText BizManager has several scalable and flexible solutions to choose from that can grow with your company. But if you work in a very volatile industry or if you’re regularly entering new markets and onboarding new trading communities, the scalability of service and the document mapping and translation expertise of the service provider could make a cloud-based approach more beneficial since you can more easily outsource what you can’t handle internally.

2. Costs and budgeting

Cost is often seen as the key benefit of transferring to a cloud-based deployment model. However, just like everything in IT, it’s not that simple. Using a cloud-based EDI service will remove a lot of your capital expenditure in network and hardware as well as reduce your need for IT skills. However, you are replacing capital expenditure with operational expenditure. The subscription model of cloud-based deployment means that you only pay for what you use but the more you use, the more you pay. As your need for EDI grows so does your monthly subscription. You need to carefully consider your current and future EDI needs and calculate how much you would be paying if your requirements grew by 10, 20 or 30%.

3. Scalability and business agility

This may be the biggest benefit of a cloud-based EDI deployment for many organizations. Most service providers operate a cloud infrastructure with almost limitless scalability. If your company is growing rapidly and trading more documents with more partners, a cloud-based service will give you the flexibility to expand your EDI capabilities quickly and smoothly in a way that your internal system and staff may struggle to match. Allied to this, a service provider with global reach should accommodate all the current and future regulatory and industry compliance requirements for markets worldwide. If you’re looking to expand into new or global markets, a cloud-based EDI service can deliver the business agility you require. But, take note, you need to be aware of how this extension of service adds to your subscription fee.

4. Regulatory and compliance requirements

Both on-premises and cloud-based EDI systems can deliver very effective compliance when trading with a regular trading community. However, the regulatory and compliance environments are constantly changing. For example, if your organization does business with or in the European Union, the General Data Protection Regulation (GDPR) that took effect this year, likely kept you on your toes. For companies with rapidly expanding trading communities that are regularly entering new markets or territories, having access to an EDI provider with a robust customer support service, is likely to be advantageous. OpenText customer support provides you with experts you can call on for compliance, industry and country related questions, and who will help you meet the regulatory and compliance requirements of the markets where you operate.

5. Data protection and security

This is often cited as the most important criteria when making the decision between on-premises and cloud solutions. One question many ask themselves: “is my data safer behind my own corporate firewall or is it safer held in the cloud?” Today, this is not an easy question to answer. It often comes down to corporate culture. Many organizations – especially in regulated industries – simply cannot allow their data to be outside their control. In this instance, on-premises EDI may be the only option. However, despite what you may be hearing in the news, cloud-based services are very secure – with sophisticated encryption ensuring that data is protected both at rest and in transit. You need to ensure that the service provider will offer guarantees on data protection and integrity that are backed by SLAs.

Which EDI deployment model is right for you?

I hope you can see by now there is no easy answer to that question. Some say, if you have sufficient internal resources available, if your trading partner community is quite static and you trade predictable and manageable amounts of EDI documents, then it’s likely that on-premises would be a good solution for you. If your company is growing quickly, testing out new markets and territories, taking on new partners and exchanging new documents, and trading more and more globally then you’re likely to find that the flexibility and scalability of a cloud-based model works best for you. The third option many large companies choose, is a hybrid solution. They keep important trading partner data in-house while relaying on the cloud for the rest.

In the end, however, it often comes down to a matter of opinion, corporate culture, and your level of confidence in the cloud vs your own internal systems and staff. Thankfully, OpenText operates the largest business network in the world and provides a portfolio of B2B integration solutions to cover almost every type of business. Fill out the short contact form here and we will help you find the most suitable option for your needs.

If you’d like to know more about the different EDI deployment models available to you, transforming business performance through B2B Integration will be a key theme at this year’s Enterprise World in July. You can book your place here and join the conversation on twitter #OTEW.

J. Naomi Skinner

As Senior Manager, Product Marketing for OpenText Business Network, Naomi leads product marketing efforts for B2B integration including EDI with OpenText Trading Grid™ Messaging Service and OpenText™ Freeway. With 15 years experience in marketing across various industries, Naomi enjoys translating complex concepts into simple terms.

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