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EDI Downtime: Internal vs. External Services

A survey sponsored by supply chain newsletter ec-bp.org reveals that internally installed applications produce more downtime than do systems based on externally managed services and software-as-a-service (SaaS) based systems. While only 7 percent of respondents said they had never experienced downtime at all, 51 percent responded that they had downtime within the last month.

The survey asked users of Electronic Data Interchange (EDI) about the types of systems they use to communicate with their trading partners regarding orders and supply chain issues. Systems were broken down into four types: internally installed software applications, managed service providers, VAN (value added network) connections, and SaaS services providers. Common wisdom has it that cloud or SaaS-based services are less reliable than alternatives because they are outside the direct control of the users. In fact, the opposite seems to be true.

A majority (52 percent) indicated that their internally based systems experienced outages lasting from two hours to longer than a full day, while 44 percent said SaaS-based systems experienced “brief/inconsequential” outages with no disruptions lasting longer than eight hours. That was followed closely by those using managed services, responding that 42 percent experienced brief outages, but 31 percent had longer outages lasting from four hours to more than a full day.

Another surprising finding was that the longstanding VAN services that have supported the EDI infrastructure since its beginnings were reported by 53 percent as having outages lasting from two hours to more than a full day.

Troubleshooting

Responses show more outages for internally based applications than for other types.

Responses show more outages for internally based applications than for other types.

The consequences of these findings are manifold and have continuing impact on both the companies that are using the services and those supplying them. For the trading partners relying on constant uptime to support their trading activities, short outages, particularly with regard to EDI systems, are likely to have only slight financial impact as long as the outages don’t result in loss of data. However, when trading is interrupted for longer periods, resulting in delays to orders being sent and received, the consequences can be significant.

Most suppliers are judged by their customers according to a scorecard valuation that includes timely delivery, not only of products, but of responses to orders and notifications of shipments. When those electronic documents are not delivered within the prescribed time frames, scores can be lowered and, in extreme cases, can even result in chargeback or cancellation of agreements. The outages that last more than a full day are particularly troubling for high-volume trading relationships, and those are the ones most likely to cause serious problems.

For the final question in the survey — “How did your company deal with the situation?” — a full 73 percent of those companies using internally hosted applications indicated they were “confident in the resolution process,” which seems counterintuitive since that group experienced the most frequent and longest outages. As a final and most dramatic resolution, the respondents were asked about plans to replace the offending systems. According to the results, the managed services providers are the organizations most at risk, with 14 percent indicating they were in the process of replacing their systems.

Seventy-one percent of respondents using SaaS-based services said they were confident in the resolutions put into place. It is interesting that this group is nearly as confident in the solution as those using internally based systems, because they have less direct control over the systems they are using. And none of those using SaaS are in the process of finding replacements for their EDI systems.

Coping Mechanism

Confidence about problem resolution is high for internally based systems and SaaS-based systems.

Confidence about problem resolution is high for internally based systems and SaaS-based systems.

While the common perception may be that having closer control over systems by installing them inside the corporate firewall results in better overall response and reliability, the survey respondents show this is not the case. In fact, those companies that rely on SaaS/cloud-based EDI services have fewer and less disruptive outages.

5 comments on “EDI Downtime: Internal vs. External Services

  1. t.alex
    September 15, 2011

    The survey produces interesting results and it makes sense with the current cloud services provided by companies nowadays. Those who specialized will definitely know better how to reduce the downtime, something equivalent to monetary penalty in most contracts. 

  2. jbond
    September 15, 2011

    This was a very interesting survey. It would appear that some respondents are still happy with issues being resolved internally even though they suffer the most outages. I wonder what would be the case for the companies if they started using SaaS services instead. I would think that if some companies saw the results of this survey, they might consider moving some things into the “cloud”.

  3. Scott Koegler
    September 15, 2011

    The survey did ask about preventing downtime and nearly all respondents said they saw no way to completely eliminate down time, but minimizing negative effects, length and frequency were the most optimistic possibilities.

    As for internal applications being satisfied with the resolutions put into place, my guess is that there is some employment protection in process here. Certainly SaaS systems can lead to reduced staffing requirements, not to mention reduction in local control of the systems. 

  4. FLYINGSCOT
    September 15, 2011

    Could you please clarify something for us?  Is the survey comparing the same systems with the only difference being where the system is hosted (internal vs cloud) or are you comparing cloud based external commercial systems with home grown internal EDI systems (ie. internally developed and not commercially available outside)?

  5. Scott Koegler
    September 15, 2011

    The survey asked about EDI systems of whatever type or provider was being used. Most systems are either one type or another, so it is unlikely  that the same system would be both locally installed AND SaaS… though some are both locally installed and alternatively remotely managed. There was no distinction between home-grown and commercial. 

    The intent was to find out about installed, managed, and SaaS rather than to find out about specific brands.

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