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Traditional electronic data interchange (EDI) has been evolving for approximately 25 years and has truly become the paperless environment that is so often talked about. EDI is a complicated mixture of three disciplines: business, data processing, and data communications. This paper examines the concepts from the perspectives of each discipline.
Internet standards are excluded from the discussion of communications protocols, since the audience is probably already familiar with SMTP, MIME, and other Internet messaging protocols.

What is EDI?

Since EDI is commonly defined as the direct computer-to-computer exchange of standard business forms, it clearly requires a business process. Because the key idea involved is the exchange of documents that allow a business application to take place without human intervention, data processing is clearly necessary for application processing. Data communication is then necessary for the exchange to take place. It is the marrying of these three disciplines that allows the "paperless trading" that comprises EDI technologies.
Besides the three career disciplines that are internal to the organization, three other issues are important for EDI trading to take place: standardization of formats, security, and value-added networks (VANs).

Looking closer at EDI

EDI is commonly defined as the direct computer-to-computer exchange of standard business forms. The key idea involved is the exchange of documents that allow a business application to take place without human intervention. The ability to send business documents between machines simplifies and expedites the business process itself. Many businesses choose EDI as a fast, inexpensive, and safe method of sending purchase orders, requests for quotations, quotations, invoices, payments, and other frequently used business documents.
Often today one will see the term EC/electronic data interchange (EC/EDI). This term has evolved from placing EDI under the EC (EC) umbrella, EC being the broad view of electronic trading. EDI is defined as the interprocess (computer application to computer application) communication of business information in a standardized electronic form. EC includes EDI, but recognizes the need for interpersonal (human to human) communications, the transfer of moneys, and the sharing of common databases as additional activities that aid in the efficient conduct of business. By incorporating a wide range of technologies, EC is much broader than EDI. However, the focus of this document in on EDI, not EC.

Comparing EDI and fax

Similarities exist between EDI and fax in that both use telephones lines and both can travel from computer to computer (Sawabini, 1995). There are distinct differences however. Fax is primarily paper based and requires a human interface. Fax receipts are not generally acceptable to applications. Fax machines accept nonstandard data formats, and anything that can be scanned can be faxed, whereas EDI requires standard message formats between trading partners.

Comparing EDI and e-mail

Similarities also exist between e-mail and EDI. Both travel from computer to computer and both use an electronic mailbox. However, three of the four differences listed for EDI vs. fax also apply to EDI vs. e-mail: e-mail message format is not standard, e-mail requires human interface, and e-mail is not acceptable to applications.