Where
did the "cost savings" for the SME go in light of this information?
It
seems that the cost is being shifted around, not reduced. 18K a year
is
fairly close to what I pay the VAN to transport and house my data
now.
Again,
where is the cost savings. It seems that the fence to e-commerce capability
is
still one of money. An SME will have to still lay out an ante if they are
going to
get
into the game.
I
find given the model presented below, that at best the costs are about the
same. I know
that
the model below will not fit all situations and god forbid that an 800 Lb
gorilla gets
mixed
into the projection. The model assumes that the implementer is going to do
everything
to
ensure that they are safe and that the implementer is well educated in
e-commerce requirements.
I
think that if you plug your associated number into the model below you will
have a fairly
accurate
number of what it will cost you to START UP. This cost analysis runs through
year 5 of
an
operation which will place you in an area of obsolescence.
I
consider that the information passed under the model is application to
application integration
of
the data. Anything less will be required to add in the additional labor needed
to gather
and
enter the data into the system. Labor costs are calculated on a full time
programmer being
employed
and may be a little low. I'm calculating based on a $50.00 per hour wage and
fringe
cost.
To
do "e-commerce", one must have as a minimum these components to play. Pick one
of either
component
number 3 or 4 to arrive at a bottom line year one start up. You may be
required
to
use both 3 and 4 dependent on the capability of the trading partner. If your
trading partners
are
primarily customers, you will definitely be doing both.
Rule
one is that the customer is always right.
Rule
two, is in all other situations refer back to rule number 1.
1
An "interface" to their backend application that allows for the import/extract
of data
for each system/transaction set EDI or XML. Cost to Build at $50.00 per hour
fringe and
benefits for a programmer and figuring for on average of about six man weeks
at 40 hours a
week. There are usually no off-the-shelf packages to accomplish this for
you, and one
size does not fit all.
12,000.00
per system
2
An EDI/XML translator package. Purchasing a vendors product is assumed to be
the
cheapest way to go as it is unknown how much time and programming resources
are needed
to build one. I'll give you an SME quote for a PC based front end system.
This is
the way most start into the game.
7,000.00
per license*
This cost is a recent quote from a vendor which I won't name. This is
for a
larger fortune 500 corporation and I'm sure that the amount reflects
that.
32,000.00
per license*
* It should be noted that these translator packages come in all sizes and
flavors
and can very in price dependent on what your budget is. The common PC
based
package will cost around $5,000.00 to $7,000.00. Cost increases as
capability
and bells and whistles go up.
Each of the packages will have a service plan for support based on the needs
of the company.
This varies by the vendor of the package and depends on the support plan
needed. Very few
vendors will provide 7/24 support operations, but if they do, you will pay.
Based on 5/8
support, you can expect this amount. It does differ between
vendors.
2,000.00
per license.
3
To use the web, an encryption package to secure the data for transport over
unsecured
web nodes as quoted below. It is assumed that the one time fee is best here.
It is
assumed that an eventual break even point would be reached. This is optional
but I
would say to you don't put your credit card number in your data if your not
using it.
Also, don't expect privacy of your data.
52,000.00
per license
4
Use of a Value Added Network (VAN) Based on non-negotiated byte count amounts
and the
users knowledge level.
Start up fee one time beginning dependent on VAN 500.00 to
start
Byte push charges, they differ per van 9,600.00
based on volume
Subscription Fee 1,200.00 per year
Using
the above quoted costs, here is the breakdown for the cost of getting into the
game either
way
for a well heeled SME to fully automate A/P, A/R, Purchasing, and Order
Processing. We are
assuming
that the trading partners for this SME are customers and that the SME is going
to end
up
complying with all the differences of the trading partner. This may or may not
be the case.
Traditional EDI Start Up and operation for 5 Years assuming no
obsolescence of interface or
translation packages.
1
Interface to Account's Payable 12,000.00 These first 4
are labor costs
2
Interface to Account's Receivable 12,000.00
3
Interface to Purchasing 12,000.00
4
Interface to Order Processing 12,000.00
5
Purchase of the Translator 7,000.00
6
Purchase of a support package 5/8 2,000.00
7
Subscription to One VAN(1) 1,200.00
8
Byte Count for data transmission via a VAN 9,600.00
----------
TOTAL $67,800.00 First Year
Start Up
Once you are up figure about 1/2 of the development cost to
maintain
the interfaces based on new trading partners and requirements in
each
subsequent year.
1
Interface to Account's Payable 6,000.00 These first 4
are labor costs
2
Interface to Account's Receivable 6,000.00
3
Interface to Purchasing 6,000.00
4
Interface to Order Processing 6,000.00
6
Purchase of a support package 5/8 2,000.00
7
Subscription to One VAN(1) 1,200.00
8
Byte Count for data transmission via a VAN 9,600.00
---------
$36,800.00 Second through
Fifth Year Operations.
Total 5 year cost of doing Traditional EDI. $215,000.00
(1)
You may be looking at additional VAN's dependent on the needs of the trading
partner (customer).
Traditional EDI/XML Start up and operations for 5 year period also assuming
no obsolescence of the
translator, encryption package and assuming that you are only using web
communications with trading
partners. All Trading partners are customers and SME will comply across
the spectrum with all requirements
placed on Them,
1
Interface to Account's Payable 12,000.00 These first 4
are labor costs
2
Interface to Account's Receivable 12,000.00
3
Interface to Purchasing 12,000.00
4
Interface to Order Processing 12,000.00
5
Purchase of the Translator 7,000.00
6
Purchase of a support package 5/8 2,000.00
7
Purchase of an Encryption Package (one time) 52,000.00
8
Purchase of Support 5/40 5,200.00 10% of list is
usual.
----------
TOTAL Year One Start Up Costs 114,200.00 First Year
Start Up.
Again figure about 1/2 of the development costs to maintain interface
through years 2 - 5.
1
Interface to Account's Payable 6,000.00 These first 4
are labor costs
2
Interface to Account's Receivable 6,000.00
3
Interface to Purchasing 6,000.00
4
Interface to Order Processing 6,000.00
5
Purchase of a support package 5/8 Translator 2,000.00
6
Purchase of Support 5/40 5,200.00 10% of list is
usual.
----------
TOTAL Cost years 2 through 5 36,200.00 Year two
through five costs.
Total 5 year cost XML/EDI via WEB. $259,000.00
Combined traditional and web based EDI/XML system start up and operations
also assuming no obsolescence
of the translator, encryption or other components. This model assumes the
use of both a VAN and
WEB based communications. All trading partners are customers and the SME
will comply with all requirements
placed on them.
1
Interface to Account's Payable 12,000.00 These first 4
are labor costs
2
Interface to Account's Receivable 12,000.00
3
Interface to Purchasing 12,000.00
4
Interface to Order Processing 12,000.00
5
Purchase of the Translator 7,000.00
6
Purchase of a support package 5/8 2,000.00
7
Purchase of an Encryption Package (one time) 52,000.00
8
Purchase of Support 5/40 5,200.00 10% of list is
usual.
9
Subscription to One VAN(1) 1,200.00
10
Byte Count for data transmission via a VAN 9,600.00 Cost varies
dependent on volumes of data.
---------
TOTAL Costs year 1 start up. $125,000.00 First Year
Costs of Start up.
Again figure about 1/2 of the development costs to maintain interface
through years 2 - 5.
1
Interface to Account's Payable 6,000.00 These first 4
are labor costs
2
Interface to Account's Receivable 6,000.00
3
Interface to Purchasing 6,000.00
4
Interface to Order Processing 6,000.00
6
Purchase of a support package 5/8 2,000.00
8
Purchase of Support 5/40 5,200.00 10% of list is
usual.
9
Subscription to One VAN(1) 1,200.00
10
Byte Count for data transmission via a VAN 9,600.00 Cost varies
dependent on volumes of data.
---------
TOTAL COST, years 2 - 5 $ 42,000.00 Cost of
operations years 2 - 5
TOTAL
COST 5 Year operations WEB/Traditional Combined $293,000.00
Mark
-----Original
Message-----
From:
Dave Taylor [mailto:[EMAIL PROTECTED]]
Sent:
Tuesday, October 24, 2000 11:37 AM
To:
[EMAIL PROTECTED]
Subject:
Re: XML for EDI book: Any comments?
Andy,
I
just talked with Cyclone about their EDIINT-compliant product and
they
quoted
me an annual license fee of $18,000 on NT or W2K, or a 1-time charge
of
$52,000. It goes up for various flavors of Unix and even higher for
OS/390.
Do
you know of any less expensive EDIINT-compliant communications
solutions?
This
is pretty stiff for most small/mediuim size companies trying to
utilize
integrated
EDI.
Dave
-----
Original Message -----
From:
"Andy Sicignano" <[EMAIL PROTECTED]>
To:
<[EMAIL PROTECTED]>
Sent:
Tuesday, October 24, 2000 10:27 AM
Subject:
Re: XML for EDI book: Any comments?
>
Mark,
>
I like a lot of what you said in your post, but I disagree on two
points:
>
>
1) XML may indeed facilitate communication between trading partners.
This
>
will require XSL transformation of messages. Although the W3C
standards
>
are settling down, we need solid implementations for this to become
a
>
reality.
>
>
2) It is already possible to send secure EDI transactions over the
net;
>
we've been doing it for three years. It will probably become a lot
cheaper
>
to do so in the near future, as vendors roll out products that conform
to
>
IETF's EDIINT AS2 specification.
>
>
Andy
>
--------------------------------------------------------------------------
-------------------------------------------
>
>
>
>
>
Mark Kusiak <[EMAIL PROTECTED]>@LISTSERV.UCOP.EDU> on
10/24/2000
11:45:35
>
AM
>
>
Please respond to Mark Kusiak <[EMAIL PROTECTED]>
>
>
Sent by: Electronic Data Interchange Issues
<[EMAIL PROTECTED]>
>
>
>
To: [EMAIL PROTECTED]
>
cc:
>
Subject: Re: XML for EDI book: Any comments?
>
>
>
The real truth about the XML vs. EDI is that XML is sexy. It's the
newest