What is EDI

Simply put, EDI is the transfer of electronic files and documents between companies. EDI is strictly standardized in order for businesses to be able to easily engage in EDI with one another. The general standard for EDI in the US is ANSI X12. This standard was set up by the Data Interchange Standards Association. There is also an international EDI standard that is in use. This standard is known as UN/EDIFACT(United Nations Electronic Data Interchange for Administration, Commerce and Transport). It was set by the UN in 1986 in order to create and easy to use international standard for EDI in both government and business.

The EDI standards were designed to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender and recipient. This includes a variety of technologies, including modem (asynchronous, and bisynchronous), FTP, Email, HTTP, etc. It is important to differentiate between the EDI documents and the methods for transmitting them. While comparing the bisynchronous protocol 2400 bit/s modems, CLEO devices, and value-added networks used to transmit EDI documents to transmitting via the Internet, some people equated the non-Internet technologies with EDI and predicted erroneously that EDI itself would be replaced along with the non-Internet technologies. These non-internet transmission methods are being replaced by Internet Protocols such as FTP, telnet, and e-mail, but the EDI documents themselves still remain.

Barriers to Adoption

There are a few barriers to adopting electronic data interchange. One of the most significant barriers is the accompanying business process change. Existing business processes built around slow paper handling may not be suited for EDI and would require changes to accommodate automated processing of business documents. For example, a business may receive the bulk of their goods by 1 or 2 day shipping and all of their invoices by mail. The existing process may therefore assume that goods are typically received before the invoice. With EDI, the invoice will typically be sent when the goods ship and will therefore require a process that handles large numbers of invoices whose corresponding goods have not yet been received.

Uses of EDI

This is the where EDI originated and where it is still primarily used. EDI primarily came into being for the purpose of E-commerce. A standard set of rules for data transfer allows for easier file transfer between businesses.

Health Care
Though a new process, EDI has begun gaining popularity in the health care industry in the last few years. EDI has great potential for the health care industry. Shared Electronic Health Records,E-perscribing and more are all potential benefits of a broad range adoption of EDI in health care. The push for EDI in health care is getting stronger partly due to the efforts of some organizations such as Health Level 7.

EDI Vs Paper

EDI has many obvious advantages over paper when it comes to information exchange.
  • Faster
  • Cheaper
  • More Flexible
  • Easier

Links Related to EDI

EDI standards from the Federal Information Processing Standards - http://www.itl.nist.gov/fipspubs/fip161-2.htm

Homepage for the EDI standards -http://www.x12.org/x12org/about/faqs.cfm