EDI VAN Costs: Get the Right Solution for your Business
EDI is a veteran software technology that remains ubiquitous today. In 2019, EDI accounted for 78.4% of all B2B electronic transactions, and it’s continuing to prove its value to supply chains worldwide in this global market.1
While EDI performs largely the same role as it ever did, it has evolved to offer new features that make the process of B2B data more straightforward and effective.
The value-added network (VAN) is one such development, enabling businesses to facilitate multiple connections without the limitations of direct EDI. Specifically, it acts as a secure network through which documents are exchanged with multiple partners integrated into the same VAN.
Instead of maintaining multiple direct connections, businesses simply connect to the VAN, which typically supports numerous protocols and formats. VANs can work out to be extremely valuable investments for businesses dealing with global supply chains, as they streamline the data exchange in a secure way. To determine if a VAN is a worthwhile investment for your organisation, you have to calculate the costs associated with it.
So, what are some of the costs associated with VANs, and what value do they provide?
Suggested reading: Check out our eBook, The Supply Chain Centred Business, to learn more about how VANs can drive efficiency in supply chains.
What are the costs of a value-added network?
Formerly, EDI was an esoteric technology that absolutely required specialist knowledge to install, operate and manage.
This is still sometimes the case today, and it is safer to rely on experts who can handle any of the challenges you might encounter with EDI. However, as EDI networks have evolved, they’ve become more accessible, and modern EDI confers benefits beyond data interchange alone.
As EDI features have proliferated, so too have the options available to businesses and, in turn, the costs. Businesses today are more diverse than ever, and their needs vary considerably. EDI providers offer a diverse array of options, from ERP and API integrations to fully managed services, and selecting the right features can be challenging. However, by understanding the features your business needs, you can better assess which VAN is the best fit for your organisation.
EDI pricing models
EDI pricing models vary between providers, and the costs typically scale to business needs. Of course, a larger business with many integrations will pay more than a smaller business that needs a slimline integration solution.
VAN pricing models are primarily structured in one of three ways:
- By kilo character rate: A kilo character rate applies to every 1000 characters, including delimiters and spaces. While this might seem archaic, it’s still relatively common. The obvious issue here is that transferring the data itself is relatively inexpensive – but it’s the advanced protocol support, security, integrations, support, dashboards and UIs that you’re paying for.
- Flat rates by trading partners: Another possibility is that the provider charges a flat rate based on the number of trading partners. These subscription-based pricing models are becoming more common than kilocharacter pricing models, as they appear to make the process of partner onboarding faster.
- Bespoke pricing: In many cases, providing a standardised EDI product with standardised pricing neglects the differing needs of businesses. Data Interchange enables businesses to choose the features and level of support they require, ranging from upgrading existing on-premises EDI to fully managed services. Mixing and matching EDI features provides ultimate flexibility while ensuring businesses only pay for what they need.
The complexity of EDI implementations and the features offered have evolved alongside business needs. It’s worth highlighting that costs vary depending on whether a business requires a simple VAN solution for managing multiple integrations, or a more fully-featured EDI solution that can translate documents between multiple formats and protocols.
For example, Data Interchange offers EDI options like our B2B gateway, Odex, that maps internal and external data across EDI standards such as EDIFACT, VDA, TRADACOMS and PEPPOL, and major secure transfer protocols like OFTP2, AS2, SFTP, and FTP.
Data transformation and routing tools simplify the sharing of internal and external data without manual re-keying. Meanwhile, our VAN, DiNet, offers a singular secure connection to exchange completed documents between trading partners.
Consider how pricing models tally with features. Does the provider offer flexible models that suit all businesses? And do they offer tailored solutions based on unique business requirements?
Integrations have become a key component of modern EDI, enabling businesses to connect internal systems like ERPs with their EDI functions. EDI no longer exists in isolation from other technologies.
For external integrations, APIs offer an opportunity to enhance existing EDI systems – Deloitte highlights how EDI and API hybrid integrations represent the future of B2B data interchange. 2
For internal integrations, enterprise resource planning (ERP) integration effectively links the business’s front and back-end data. ERP tools seek to centralise enterprise data associated with functions such as:
- Project management
- Risk management
EDI is linked to accounting and procurement. Purchase orders and invoices are exchanged from the EDI to the business’s internal data systems.
For example, if stock is running low, the business’ ERP can trigger an EDI 850 purchase order (PO) to send to their supplier without it being manually triggered. The ERP automatically triggers document creation for exchange via the EDI VAN with minimal human interaction. ERP integration also works in reverse; inbound EDI data can be parsed and saved to the ERP for automatic order processing and analysis.
Integrating front-end and back-end processes to create seamless workflows is a top priority for businesses, with over 80% of business leaders highlighting that improving data integration is of critical importance.3 An integrated system increases productivity and further reduces human labour. As such, the cost benefits of ERP integrations are significant.
Not all EDI integrations extend to ERP at all, and some charge extra for the privilege. Data Interchange understands that ERP integrations are integral to modern EDI, and our VAN offers extensive integration options.
Pro tip: You can learn more about integrating EDI with your ERP in our blog.
Maintenance and operation
Like any software system, EDI has long-term maintenance and running costs. VANs need to be regularly updated to keep up with industry developments, so it’s vital to choose a provider that has its finger on the pulse of the industry.
When it comes to running VANs, businesses can choose to handle that in-house, or they may opt for managed options. EDI-as-a-service places responsibility into the hands of the provider, thus removing the need for the business to build its own internal EDI functions.
To utilise a VAN in-house, businesses need to consider:
- Who’s going to run the VAN
- Creating and preparing EDI documents
- Managing incoming data
- Data integration
In supply chains and logistics, time is of the essence, so it might be more cost-efficient to work with an EDI provider that offers fully-managed solutions.
Consider the benefits of a managed service
The benefits of outsourcing EDI to the provider can outweigh the costs. EDI skills are scarce, and hiring and managing internal teams can be costly. Smaller businesses may require EDI integration but don’t have the upfront investment to hire internal teams.
Data Interchange offers EDI-as-a-service with a flexible VAN that can scale to business requirements. Our specialists can handle EDI processes on the business’ behalf, enabling effortless integrations in even the most technical scenarios. This ensures maximum uptime and provides peace of mind that EDI will be handled in the most professional way possible.
An effective EDI managed service unlocks competitive advantages which offsets the costs.
Suggested reading: Read our blog to figure out whether in-house or managed service EDI is better for your business.
Making a VAN work for you
VANs make trading across complex supply chains simpler. Instead of using multiple disparate communication methods, VANs streamline connections into a singular integration network. Consolidating to a VAN enhances the potential of EDI by reducing manual work and human error while streamlining processes.
Data Interchange’s VAN – DiNet – provides extensive protocol and data format support. With a sleek, modern dashboard, it’s easy to track and analyse data exchange and audit processes, unlocking opportunities for optimisation.
We offer flexible costs that provide businesses with the exact features they need to grow, and don’t weigh them down with outdated cost structures and pricing models.
Flexible costs that work for you
The costs of VANs vary between businesses – and that’s the way it should be. One of the strengths of modern EDI is its flexibility, and Data Interchange always works with businesses to provide them with what they need and not more.
Investing in a one-size-fits-all option may result in feature bloat, hidden fees and increased running costs – Data Interchange offers cost-effective solutions that scale with businesses and their operational requirements.
By working with Data Interchange, you can be certain your business will get what it needs from a VAN, regardless of sector, industry, current size and future direction.
Talk to one of our experts today to find out how we can help you.
1 Why EDI Still Accounts for 78% of All B2B Transactions