An Introduction to EDI

EDI, Electronic Data Interchange, is the term used to describe the exchange of  structured data between the computer systems of business partners. Despite all the publicity and coverage being given to eCommerce and the Internet, traditional EDI still has a major role to play in conducting business electronically. Figures from the US Commerce Department, showed that approximately 250,000 companies conducted $3 trillion worth of electronic business-to-business transactions during 2000. This was not Internet based B2B, but, rather, more traditional electronic exchange using EDI. Internet-based business-to-business transactions totalled $200 billion during the same period.

Traditionally, EDI has been associated with the exchange of trading information. These have commonly been the equivalent of documents such as orders and invoices, but as EDI applications are developed in finance, administration, health care, etc., a wider view must be taken as to what constitutes trading relationships and trading documents. In essence, EDI is being considered for the exchange of most structured data between originators and recipients of such information. Indeed, a number of people are taking the view that Electronic Data Interchange is a too restrictive name and wish to substitute the term 'Electronic Commerce'.

This particular article is written for the Opportunity Wales project and, as such, will look at the subject of "classical" EDI from the perspective of an SME (small and medium sized enterprise). The SMEs perception of EDI is frequently different from that of their larger trading partners, many of who are already EDI literate. To make the sending and receipt of EDI messages easier for SMEs, hybrid solutions are being introduced - many of which are based around Web- or Internet-based solutions. This article looks at traditional EDI - the Internet-based approach is considered in a subsequent article.