Electronic data interchange: an overview of its origins, status and future

Abstract

<p>Electronic Data Interchange (EDI) is a method of allowing business trading partners to exchange information in a standardized way without human intervention. Since its origins in the 1960s, EDI has grown and has become a pervasive entity in the global business marketplace. In 1994, over 40,000 organizations had implemented EDI worldwide. Growth has been based on both increasing pressure from large companies on their suppliers to adopt EDI, as well as numerous perceived benefits. These benefits include reduced costs, faster cycle times, improved customer service levels, increased monitoring abilities, and improved document integrity. Obstacles to EDI implementation and growth include relatively high setup costs as well as a continuing need for widespread standards. National and international standards, such as X. 12 and EDIFACT respectively, are being implemented, but growth is gradual. Besides standards, other major components of EDI include software, hardware, as well as communications links. Traditional EDI communications links were achieved through point-to-point connections between trading partners, but have been mostly replaced by Value-Added Networks (VANs). VANs offer the advantage of providing numerous additional services such as data backups, transaction logging, and security to companies. However, VANs charge for these services on a per-use basis, and as transaction volumes grow, many companies are finding costs associated with VAN use to be increasingly prohibitive. More recently, the use of the Internet is being examined for use as an EDI network due to its fast response times and low-cost flat rate pricing structure, but concerns about security have so far prevented its widespread use.</p> <p>The following report discusses all of these issues and serves to provide an introduction to Electronic Data Interchange. In addition, issues concerning corporate EDI readiness, security, legalities, and auditing are discussed. A cost/benefit analysis is also provided, as well as some final recommendations for implementing EDI.</p>