Automating Purchase Order Visibility: EDI vs In-house Tech vs Software Vendors

A critical decision 

When it comes to automating purchase order follow-ups and visibility, companies often face a critical decision: purchasing a ready-made solution like Leverage, building a custom in-house system, or implementing traditional Electronic Data Interchange (EDI) with suppliers. Each approach has its own cost implications, both in terms of initial investment and long-term maintenance. Based on the interviews with over 50 manufacturing companies, below we outline our findings of the difference in cost.

Our methodology 

For our EDI analysis, we collected the average integration costs per supplier, the annual maintenance costs that are charged by an EDI specialist, and the annual transactional fees for each purchase order over time. 

For the in-house build, we assessed the average US salaries for software engineers in IT, the amount of time it took in-house teams to initially build and maintain an equivalent working system, as well as the annual cloud hosting costs that were needed among manufacturing companies. 

For Leverage, we compared these against the average cost to implement the platform, including both hard hourly costs of involving internal IT stakeholders for the implementation, as well as the average subscription costs among our customers. 

These numbers can be found below. 

Findings

We then extrapolated these numbers out over a ten year period to see how they compare over time. 

Takeaways 

The most important insights that we took away from our countless conversations with manufacturers were the unexpected costs in the following two buckets: 

• On-going software maintenance fees for IT teams for their in-house builds
• The costs to ongoing costs to suppliers for EDI 

Too often, companies look at the year one differences, but don’t look at the long-term ramifications of this crucial decision. 

Furthermore, this study only analyzes the difference in hard costs among these choices. For a more strategic analysis of why teams buy vs build, you can read more here.  

For help running a similar assessment for your business, feel free to book a meeting with our product experts here.