Electronic Data Interchange

Electronic Data Interchange, or EDI for short, is the dinosaur of B2B e-commerce that still will not go away. The forerunner of today’s Internet-driven e-procurement, EDI was established in the early 1970s as a way to automate buyer-seller transactions, such as invoices and purchase orders. Large corporations began standardizing the format for electronic business documents, and industries started agreeing on common standards, administered by recognized standards organizations. The two most common EDI standards are EDIFACT in Europe and ANSI X.12 in North America.

For many businesses, EDI is far too expensive to implement. All EDI traffic takes place over a value-added network (VAN) that exclusively transmits the data over a private network, offering transaction management and auditing. Businesses implementing EDI used to require expensive mainframe computers, with VANs that charged for each character transmitted.

From a technical standpoint considering the Internet of today, EDI is well past its prime. Data transmission rates are often still at 9600 bits per second (for you non-techies, a cable or DSL Internet connection is about 200 times faster), standards differ across industries, and on the surface it is just a glorified email inbox. So why is it still around? Quite simply, the amount of time and money companies have invested in EDI over the years makes changing to a new system not very attractive. Industries spent years agreeing to EDI standards, and none are too willing to start the process again.