Your first thought might be: “I know already or I wouldn’t be reading this publication.” Yes, we will give you the “schoolbook” definition. We will even tell you a brief history of EDI (Electronic Data Interchange), but our real purpose is to give you the modern era definition of EDI; and back it up with an expert opinion.Developed in the United States in the mid-1960s, the idea of what became known as EDI today originated with a group of railroad companies.

The standardization of documents proved to be necessary. They formed an organization known as the Transportation Data Coordinating Committee (TDCC) . Renamed the Electronic Data Interchange Association (EDIA) , they received a charter from the American National Standards Institute (ANSI) and became the ANSI X12 Committee.

Other businesses began to use proprietary systems to exchange invoices and purchase orders. They recognized the economic advantages of fast, efficient and accurate information flow. Sectors like  pharmaceuticals, groceries, automobiles, and banking developed their own set of data elements and messages to meet its particular needs, with the result that the various sectors were not able to exchange messages with other sectors. On the other side of the ocean,  standards for documents used in international trade, called Tradacoms,  were developed.

So now EDI is complete? It does everything and we just have to sit and run it? Today's EDI is still expanding in volume of trading partners, transactions and functionality. It's role and responsibility in the corporation is growing too. Let's get an expert opinion on modern-day EDI  from experienced consultant  Rob Guerriere.

“I have been noticing a common theme in my travels meeting leading North American corporations: there are a multitude of questions around who owns the business process behind EDI. It seems to me that executives leading merchandising, accounting, and logistics/supply chain want the EDI manager to step up into a position of a proactive business analyst, suggesting approaches to fix common process issues.”

“Let’s start by clearing up confusion on the definition of what most people mean when the use the term 'EDI' today: When a director, vice president, and senior management level business line professionals, and anyone with 'supply chain' in their title talk about electronic data interchange (EDI), they are not just talking about ANSI x12 or EDIFACT data standards. They are wrapping a lot more under the term EDI. Today, EDI encompasses all forms of B2B data communication, conversion, integration, collaboration, validation, translation, forecasting, government compliance, security, and {IMPORTANT} the business processes that utilize these transactions.”

“What’s interesting is the trend of questions around who is best qualified to address a business process issue (which EDI generally has one part). For example, a common business issue is invoice matching. The issue is large enough that niche business service companies exclusively focus their approach on selling to the accounting department. Many times the account department might go ahead with a program without taking into account suppliers, customers, or other trading partners or silo initiatives. The EDI supervisor might know a better corporate-wide approach to alleviate the invoice matching issue. But he/she is often pigeonholed as an IT service provider who needs to react to the business need, not approach the business with proactive suggestions.”

“EDI Managers/Directors/Supervisors: I think this is a great time in one’s career to step up to the plate. Prove that you do more than run your dad’s old EDI translator and have a big picture view of today’s EDI needs above the segment level. Demonstrate that you understand the technology, the marketplace, and common best practices by pitching solutions to common business process issues. In my opinion, the EDI manager is well positioned to take the lead. The only question left for an EDI manager to ask is, 'am I entrepreneurial business minded, confident, and do I have the communication skills needed to effectively influence decision-making across multiple departmental silos?'”

Covalentworks has a time-line on the history of EDI. Some of the key dates are:

1965: First EDI Messages.
1973: File Transfer Protocol (FTP) is published.
1975: Telenet, the first Value Added Network (VAN) started.
1981: ANSI X12 EDI data standards published.
1982: EDI Mandated for Automotive Industry. GM and Ford mandate EDI for suppliers.
1985: EDIFACT EDI Standard created.
1996: EDI over the Internet (EDIINT) formed.
2001: AS2 Communication Standard created.

Want to know more?  I have also put together my own version (unabridged) of the history, definition and timeline of EDI.