penny wise, pound foolish…

The old saying used as a title for this blog relates back to an earlier and simpler time – before EDI, that’s for sure – and relates to British currency.  They have the Pound and the Penny and even a Half-Penny, too.  But this was all brought about by topic in the Inovis Trusted Link group (over on Yahoo!) that got Me to thinking about AS2 and costs and related things – again.  Not that I think about AS2 a lot, but…

But what being “penny wise and pound foolish” means (basically) is that your so concerned with the pennies and how they’re being spent, you kind of lose sight of how you’re spending your pounds.  Or dollars and cents…  It’s all pretty much the same.  But it’s all about being so concerned with the small stuff – the petty details – that you lose sight of the BIG picture – the final outcome.

Anyway, the original poster over there was wondering on where he could receive some “AS2 training” – and everybody then kind of went off into the “oh, we use ______ for our AS2 connection and love it!” kind of comments – but very few seemed to offer an answer to the poster about his question – AS2 TRAINING.

Like there is such a thing!

“But, wait!” You say.  “What does this have to do with being ‘Penny wise and pound foolish’?”  I’m getting there, I’m getting there.

Seriously, though, let’s take a look at what AS2 really IS.  It’s a method of communications.  It’s a way to connect.  In a nutshell, AS2 is (from Wikipedia):

“Applicability Statement 2 (AS2) is a specification about how to transport data securely and reliably over the Internet. Security is achieved by using digital certificates and encryption.”

I kind of liken AS2 to DSL/broadband connectivity for surfing the net vs. the “old” dial up that is BSC.  It’s connecting to our trading partners via the same protocol that governs the Internet – the place we surf, download and blog – Hyper Text Transfer Protocol (HTTP).

And did you really need any kind of “training” when you started using your DSL – or your wireless broadband or your cable modem or your ____ connection to the internet…?  Nope.  There’s not really a whole heckuva lot to learn.  Other than a “how to hook up your new AS2″, there’s not a much there.

Data goes in, data goes out…  Just like the Itsy Bitsy Spider…  Or the waves, crashing to shore…

But back to AS2 and what it’s all about.  AS2 is just a way for us to send data over the internet connection (HTTP) from one system to another.  No muss, no fuss, no bother.  And in some cases – or as many would lead you to believe – at no cost.

But, wait a minute!  Hold on there!  There ARE some costs involved in AS2 communications…!

When it comes to communications – sending our EDI information back and forth – so many people seem to focus solely on the concepts of the “per KC charge” or fee structure for trading data.  Inovis, GEIS, AT&T, Sterling, ICC, and all the rest, charge us (generally) a flat fee for each KC we send or receive.  Depending on how you’ve set up your contract, you may get a flat fee – say, $4000.00 a month – for a flat amount – say 50,000 KCs – of data you send or receive.  Then, after that, they charge you an “over-limit” fee of 5 cents a KC – or more or less – depending upon your contract.

With AS2, those KC charges all go far, far away…  But, what so many seem to forget – or if they’re selling – want you to forget – are the OTHER charges that can be and are associated with AS2.  Depending on what system(s) you may use to translate and transmit your data, there could be some licensing fees associated with setting up AS2.  Maybe, just maybe, your software provider allows one AS2 connection for “free” but charges a license fee for each and every AS2 connection over and above that “freebie”.  Some may not even have AS2 built into their system and you need to “add” programs or modules to your EDI application to get AS2 connectivity.

Then you get to think about the wondrous wonder of the Internet and connectivity – BANDWIDTH.  If you have a narrow “band” for your Internet connection, then this additional data may clog that tunnel.  Just think of the scenes from “Independence Day” and how Will Smith’s girlfriend (fiancé?) was caught in the tunnel as Los Angeles was being blown to bits by the invading alien horde and her and her kid and the dog were trapped in the tunnel as the fireball of alien laser energy was blowing LA apart.

Now, while your bandwidth may not be as limiting as a 2 lane tunnel in LA, it can still have some limits.  And congestion in your tunnel may not be as dire and deadly as it was in “Independence Day” – lives may not be wiped out in seconds.  But it can cause you problems with your ISP if they only give you a limited bandwidth per month.  Now you’re over and you’re getting charged for that overage.

Then there’s the concept of labor…  And right after Labor Day, too.  But there is the cost of the man-hours (or woman-hours!) it takes to set up those connections and maintain those connections.  It may only take a few minutes to set up those AS2 connections and maybe a few more to test that connection, but there are still some costs involved.  And then what if Jane AS2 Master quits and you hire Joe EDI Master who knows NOTHING of AS2 and has to learn by the seat of his pants, on the fly, as he goes along?

Plus, here’s another wrinkle in the smooth fabric of cost – wrong, bad, or error data…  Let’s say that ABC Company’s newest shipping clerk created a shipment (and, therefore, generated the ASN) for a shipment, but missed an entire pick-sheet of cartons in the truck or container.  Once he’s hit send (or whatever) and that shipment notification is generated, he can’t go and fix it – without RESENDING that ASN – corrected, of course.  So now you’ve got 2 documents – one is missing information that the other document contains.  Sure, if the EDI system at ABC Company is set up correctly, that new ASN is sent out as a replacement, but how does YOUR system handle it…?  Does it just delete the old record and rewrite the new record?  Or do you have 2 records in your system…?

So many people and companies seem to focus on the pennies of the situation those darn “per KC charges” and then lose track of the big bucks of the EDI process and programs and all of the other systems that EDI touches.  They’re so focused on the small things and the smallest cost, and they lose track of the overall costs of the project or system.  They’re so concerned with the “per KC charge” that they forget (or lose track of, anyway) the other associated costs with what they’re doing.

Don’t get Me wrong – the small stuff matters, too.  Like those “per KC charges”…  But if you’re so focused on that small figure, what happens to your bottom line costs when you take into consideration the other costs (as suggested above)…?

Penny wise and pound foolish.

It’s the same when you get that sales call from some network or VAN claiming they can save you up to half of your VAN costs!  WOW!  Sign Me up!  But, wait a minute!  What about those other costs…?  Beyond those pesky KC charges?  Don’t they matter, too?

The sales folks at those other VANs and providers aren’t thinking about your total dollars – they’re just hitting you with the easiest cost to argue – the KC charge.  They know it’s a high-profile cost of EDI.  It’s one that you have to justify every time the contract comes up or the bill needs approval.  But what of those other costs…?  The costs of downtime – what happens when the network is down…?  What about the time you’ll have to spend on trading partner notifications?  What about the time you may have to spend on reconfiguring your communications systems – or even worse – the translation set up.

So, basically, the concepts of just saving a few cents here or there on KCs are very Penny Wise, Pound Foolish.

Author: Craig Dunham – EDI Coordinator
Read more about Craig here: http://editalk.com/contributors/