Orin,
It sounds like you have put a lot of thought into the calculation of the
cost of EDI. However, it seems to me that your cost rate is too low.
In a true charge back system you would have additional elements such as
equipment (PC, Communications, Computers for processing, etc.), office
space, utilities, office furniture as well as other administrative expenses
that are charged into the department.
I have seen in the past charge back rates of $300 to $600 per hour depending
on the complexity of the system being used (example: SAP would be the high
end). I would think that charge back costs would be higher today.
Tom Fennelly
Unisource, A GP Company
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From: Orin Rehorst[SMTP:[EMAIL PROTECTED]]
Sent: Sunday, June 25, 2000 11:35 AM
To: [EMAIL PROTECTED]
Subject: Cost of Non-Standard EDI
Here's a calculation of the cost of using EDI in a non-standard way.
Two
common examples of non-standard EDI are, 1) using codes other than
those in
the X12 or EDIFACT lists, and 2) placing data in different segments
or
fields.
Please comment on the calculations.
I've calculated the cost of implementing one non-standard
"incident." The
cost is at least $1100 in the first year and at least $900 per year
thereafter.
Calculation:
1) Initial trading partner setup time, including
interaction,
testing and implementation, per transaction set: Normal: 1 to 3
hours. With
non-standard feature: 8-16 hours.
2) Annual maintenance including version updates, testing in
conjunction with other transaction set changes, and miscellaneous
maintenance work: Normal: 16.6 hours. With non-standard feature:49.8
hours.
How did I arrive at these figures? I used the following assumptions:
Assumption: The average EDI analyst earns 45,000 per year plus
overhead of
25%, which brings the total to 56,250. The number of hours worked is
2000.
Therefore, the cost per hour is about $28.
Assumption: One analyst can handle about 120 trading partner /
transaction
set combinations. (I know this figure would vary widely depending on
transaction set complexity and volumes sent or received. Is this a
good
average?)
Calculation:
The initial year costs would be:
1) extra cost for setup would be non-standard less standard,
or 8 to
16 hours less 1 to 3 hours plus
2) extra maintenance cost during the year would be 49.8 less
16.6,
or 33.2 hours
Therefore, the extra cost, first year, would be 40.2 to 46.2
hours
or $1,125.60 to $1,293.60.
Also, the extra cost, per year thereafter, would be 33.2
hours or
$929.60
Using non-standard EDI looping structures would incur much higher
costs.
What are some other examples of non-standard EDI?
Thanks,
Orin Rehorst
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