What is EDI / Electronic Data Interchange?

EDI is the abbreviation for Electronic Data Interchange, a system that allows linked computers to conduct business transactions such as ordering and invoicing via an Intranet or the Internet, using preset content standards and with minimal human intervention. Although it is seldom in the news, EDI is the standard format for exchanging business data and is behind 95% of worldwide electronic commerce transactions.

How does EDI work?

EDI documents contain the same data that would appear on a paper document used for the same purpose. For example, a paper invoice sent from one business to another will list the item(s) being billed, the invoice number, and available payment options - these data also appear on an EDI file. The EDI standards used in North America are the ANSI ASC X12 and Uniform Communication Standard (UCS), which are nearly identical, whereas the international standard UN/EDIFACT is used almost everywhere else in the world.

The EDI standards identify and select the formats, character sets and data elements to be used. They also prescribe which bits of information are compulsory in a document and how the document should be structured. Because there is more than one EDI code in use, EDI translation-software is sometimes necessary to interface between internal systems and the global standards.

EDI Consulting

Many companies employ an EDI consultant to design, implement and/or manage the software used for EDI documentation. Generally, consultants will specialize within a particular industry, such as the healthcare or food industry, as the terminology and content requirements of a particular area can be quite specific and require expertise. Consultants can identify a company's needs in terms of EDI information, then design or customize software to suit these needs while ensuring that the system remains industry-compliant. Most individual consultants and EDI consulting firms will also provide training for internal management of EDI within an organization.