Characteristics of EDI

Like e-mail, EDI allows sending and receiving of messages between computers connected by a communication link. However, EDI has the following special characteristics:

1) Business Transactions Messages: EDI is used primarily to electronically transfer repetitive business transactions. These include various transactions essential in E-Commerce purchase orders, invoices, approvals of credit, shipping notices, confirmations, and so on.

2) Data Formatting Standards: Since EDI messages are repetitive, it is sensible to use some formatting (coding) standards. Standards can shorten the length of the messages and eliminate data entry errors, since data entry occurs only once. In the United States and Canada, data are formatted according to the ANSI X. 12 standard. An international standard developed by the United Nations is called EDIFACT.

3) EDI Translators: An EDI translator converts data into standard EDI format code. EDI translation software is the ability to integrate the incoming EDI formats with internal business applications. That is, EDI translation software basically converts the internal proprietary format to the one that conforms to a standard acceptable to the trading partners; conversely, it maps incoming standard formats into the proprietary formats recognized by internal business applications.

The functionality of translation software could be obtained in three ways:

i) Lease or purchase software from a vendor;

ii) have a third party (such as a VAN) perform the translation;

iii) Develop software in-house.

The first two alternatives are usually the most cost- and time-effective as they are easy to install, maintain, and expand.

4) Private Lines: EDI ran on expensive value-added networks. These networks provided a high level of security and capacity. However, because of cost, their implementation was confined mainly to large trading partners. There were also some problems of compatibility. As a result, large companies doing business with thousands of other companies.

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