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5 Benefits of Migrating from Traditional to Cloud EDI

The transition from on-premises software to cloud-based solutions continues to gather momentum across various sectors. Electronic Data Interchange (EDI) systems are no exception.

December 14, 2023

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According to a recent survey by Gartner, 85% of businesses are expected to fully embrace cloud software solutions by the end of 2024, reflecting a steady annual increase from the 70% observed in 2021. Global confidence in the cloud's reliability, cost-effectiveness, security, and scalability has never been greater.

So, is it time you migrated over from on-prem to cloud EDI? This article will delve into the key benefits of making the switch and shed light on the potential challenges you might face as a business leader.

The Old vs. The New: Understanding the Differences Between Traditional and Cloud EDI:

Traditional EDI: The Established Way

When we talk about “traditional EDI,” we’re referring to EDI software that runs on-premises, i.e., on your company’s own servers. This has been the standard set up since the dawn of EDI in the 1960s.

But traditional EDI has its downsides. While it gives you greater control over your EDI infrastructure, it’s generally characterized by high upfront costs, complexity in maintenance and scalability, and a requirement for substantial IT expertise.

Cloud-Based EDI: A Modern Way to Host Software

In contrast, cloud EDI refers to using internet-hosted software applications to exchange business documents and data. Think of Google Docs over Microsoft Word (although Word is also available in the cloud these days.) With no need for substantial upfront investment or complex in-house maintenance, cloud-based EDI offers a flexible, scalable solution.


Decoding the Differences

While both systems serve the same core purpose of facilitating business document exchange, they differ significantly in cost, complexity, scalability, and security. As we delve deeper into the benefits of migrating to cloud EDI, you'll see why this switch could be a game-changer for your organization.

The 5 Key Benefits of Migrating to EDI Cloud Solutions

Here are the key reasons we’re seeing a dramatic shift from on-prem to cloud-based EDI solutions, especially among companies operating in multiple geographies or those planning aggressive expansion.

1.   Reduced Costs

One of the most significant benefits of migrating to EDI cloud solutions is the potential for substantial cost savings.

Traditional EDI systems usually require high upfront costs for hardware, software, and installation, plus ongoing costs for system maintenance, upgrades, and server storage.

Cloud EDI, however, operates on a Software as a Service (SaaS) model, minimizing the need for hefty upfront expenses. The vendor handles maintenance, upgrades, updates, and bug fixes, eliminating these costs and allowing for predictable budgeting.

While opting for cloud-based EDI could be a more cost-effective solution for your business, remember that despite a potentially lower TCO, the migration process will require an investment of time and money. These migration costs are an important consideration to factor into your decision.

2.   Scalability

Traditional EDI systems can be rigid and complex to scale, making it challenging to adapt to evolving business needs. In contrast, cloud based EDI offers an agile solution, allowing businesses to scale freely depending on their requirements. This flexibility makes it an excellent choice for companies planning to grow or those that experience lumpy demand.

3.   Data Security

Cloud providers offer robust security measures, including encryption, regular security updates, multi-factor authentication, and stringent access control. Additionally, data in the cloud is typically backed up in multiple locations, mitigating the risk of data loss due to local hardware failures or natural disasters.

Of course, no system is ever totally secure. But research suggests cloud is safer than on-prem. According to Gartner, by 2025, 99% of the infrequent cloud security breaches will be due to customer error, not the system itself.

4.   Integration and Automation

Cloud EDI offers seamless integration with other systems due to its flexible and universally compatible APIs. These Application Programming Interfaces make it easy for different pieces of software (internal and external) to communicate, share data, and work in tandem to achieve business objectives.

In the supply chain, for example, integrated cloud EDI facilitates reduced order cycle times and rapid order fulfillment, ultimately increasing business agility and fostering stronger business relationships.

5.   Remote and Hybrid Work

Cloud EDI is generally more accessible than traditional on-premise EDI solutions. This is because of its internet-based structure, which allows it to be reached from anywhere and at any time, as long as there is internet connectivity. On-premise solutions, on the other hand, often require users to be physically present at the location of the servers.

This increased accessibility makes cloud EDI particularly suitable for the modern world of work, characterized by remote working, global collaboration, and flexible hours. Teams across different locations and time zones can easily access and work with the same data, promoting seamless collaboration and real-time decision-making.

Potential Challenges of Migrating to Cloud EDI

Every digital transformation journey presents obstacles, and transitioning to cloud EDI is no different. At 1 EDI Source, we harness our over 30 years of expertise to help you smoothly navigate these complexities.

The Migration Process

The migration process can be complex and time-consuming. Large enterprises in highly regulated industries with global operations and legacy systems will need careful planning and support from an experienced EDI provider.

Training and Skill Requirement

The shift to cloud EDI may require some upskilling for your IT team. Although cloud EDI is far more user-friendly than traditional EDI, allocating time and resources for appropriate training can help to ease the transition and increase adoption.

Data Privacy and Compliance

Data privacy is a critical concern when moving to a cloud EDI system. Data privacy laws vary by region and industry–healthcare and finance are heavily regulated, for example. So, again, partnering with an established EDI vendor with experience in your industry is a must.

Technical Issues and Downtime

Cloud EDI providers typically offer high reliability and a near-100% uptime guarantee. But technical issues at migration can still occur, potentially leading to downtime, disrupting operations and communication with trading partners. An experienced EDI vendor can limit your exposure (am I sounding like a broken record yet!?)

Is It Time to Leap Toward the Cloud?

Yes, for the vast majority of businesses, it’s time to make the jump. Companies are embracing cloud software at an astounding rate, and when it comes to cloud EDI, it’s predominantly for the following three reasons:

  1. Reduced Costs: Migrating to cloud EDI offers significant cost savings compared to traditional on-premises systems. With no upfront hardware or software expenses (subscription model) and the vendor handling maintenance and upgrades, cloud EDI allows for predictable budgeting and lower total cost of ownership.
  2. Scalability: Cloud EDI provides a flexible and agile solution, enabling businesses to scale up or down effortlessly based on demand. It adapts to evolving business needs, making it ideal for the majority of growing companies.
  3. Security: Research suggests that the cloud is generally safer than on-premises solutions. It’s not surprising, as cloud vendors have a huge vested interest. As a rule of thumb, if your cloud EDI software vendor spends more on security each year than your business, your data is likely to be safer in their hands!

If you’re looking for a comprehensive, seamless, and stress-free transition to cloud EDI, do not hesitate to contact one of our experts at 1 EDI Source.