Was ist EDI? Definition und Ursprung
Was bedeutet EDI –
EDI als Abkürzung steht für „Electronic Data Interchange“ und bezieht sich auf den elektronischen Austausch von geschäftlichen Dokumenten und Informationen zwischen Unternehmen, i.d.R. in standardisierten Formaten.
Electronic data interchange is one of the most important prerequisites for companies to exchange messages such as orders, invoices, delivery notifications and other business documents between their computer systems in a paperless and efficient manner, thus significantly reducing manual processes.
EDI is actually quite an old hat – it has existed since the 1960s, with the aim of largely automating paper-based business processes. To this end, the first standards such as EDIFACT and X12 were introduced in the 1970s. In the 1980s and 1990s, the use of EDI expanded, particularly in the automotive industry and in retail.
With the advent of the Internet in the 2000s, new EDI technologies, based on protocols developed. Even today, EDI continues to play a crucial role in the global supply chain and e-Commerce.
Why EDI?
It goes without saying that the electronic exchange of data offers companies many practical advantages, such as:
- Automation: a large proportion of business processes can be automated with EDI, and human intervention is rarely necessary. Automated processes also open up completely new perspectives and business models for companies, such as a 24/7 online store.
- More efficiency: the natural consequence of automated processes is that the need for manual data entry and paper-based processes is significantly reduced, which in turn leads to faster transactions and lower error rates.
- Lower costs: by automating business processes, companies can also save costs for paper, printing, shipping and manual data entry.
- Error reduction: since data is transferred electronically and appropriate standards are set in advance, there are fewer errors that can be caused by manual data entry or interpretation of paper documents.
- Speed: EDI enables the rapid exchange of information between business partners, which leads to shorter response times and improved supply chain efficiency.
How does EDI work?
What you need for an EDI connection: software and EDI standards
First of all, you need a suitable software that is able to create, process and interpret EDI messages. It should also support the common EDI standards.
EDI software often comes in the form of a platform solution: many well-known software manufacturers, such as SAP and IBM, have such platforms in their product range.
Of course, a suitable data format is also needed for the electronic exchange of messages to succeed – we will present the best-known standards here:
- EDIFACT (Electronic Data Interchange for Administration, Commerce, and Transport): this international standard is frequently used in Europe and other parts of the world. EDIFACT offers a wide range of message types for various industries and business processes.
- XML (Extensible Markup Language): Although XML is not a specific EDI standard, it is often used as the basis for custom EDI implementations. XML allows for flexible structuring of data and is used in many industries.
- openTrans: openTrans is an open and international standard for the electronic exchange of data used in purchasing, procurement and supply chain management.
- BIS (Business Interoperability Specifications) – Peppol: the BIS are a set of standards developed as part of the Peppol eDelivery network to exchange electronic business documents, such as invoices and orders, securely between different trading partners in Europe – not only in B2B, but also in B2G.
- HL7 (Health Level Seven): HL7 is a format for data exchange in the healthcare sector and is used in medical institutions and healthcare organizations worldwide.
Selecting the right EDI standard ultimately depends on a variety of factors, including industry, geographic region, and trading partner requirements.
You can always rely on our Service and our Consulting Team that is happy to assist you with your project.
EDI and communication protocols
In addition to the right standards, suitable transmission paths are also required to ensure that business data can be exchanged securely between systems. The following communication protocols have proven useful for this:
- HTTP/HTTPS: the Hypertext Transfer Protocol (HTTP) and its encrypted version HTTPS are increasingly used for EDI data exchange. They enable the electronic transmission of data over the internet using web services.
- AS2 (Applicability Statement 2): AS2 is a widely used protocol that emerged from the HTTP or HTTPS protocol. It also allows messages to be exchanged securely over the internet. AS2 uses digital certificates for authentication and encryption for enhanced security.
- AS4 (Applicability Statement 4): the advanced version of AS2. AS4 is a communication standard based on web services and ebXML (Electronic Business XML). It was developed to improve interoperability and security, particularly in the B2B area. This standard is also suitable for high-security areas.
- FTP (File Transfer Protocol) and SFTP (SSH File Transfer Protocol): the classic – FTP is an older protocol for file transfer, but it is still frequently used. It enables the transfer of EDI files between systems via the internet or private networks.
- Good to know: SFTP is considered a particularly secure variant of FTP – a protocol based on SSH (Secure Shell). This protocol uses encrypted file transfer to ensure secure information exchange.
- VAN (Value Added Network): A VAN is a third-party service that acts as an intermediary for electronic data exchange between companies. VANs often use their own protocols and also offer additional services such as data transformation and routing.
- SMTP (Simple Mail Transfer Protocol): SMTP is actually a protocol for transmitting e-mails. In some cases, however, SMTP is also used for EDI, especially for smaller transactions or to notify the receipt of electronic messages.
EDI example: the process of a typical EDI transaction
How does the process of electronic data transmission work? We have summarized the six most important steps for you:
- EDI standards and protocols: if business partners, such as suppliers and customers, want to use EDI to exchange messages, it is important to agree in advance on the data formats and transmission protocols to be used. This is the only way to ensure that their respective systems process the data correctly.
- Type of messages: in addition, it is necessary to define which type of messages (e.g. orders, invoices, delivery notes, etc.) are transmitted via EDI and which information they must contain. Identifying the requirements often takes a considerable amount of time.
- Data transformation: in a suitable EDI system, the business data can be transformed into the respective format if necessary.
- Infrastructure and VANs: to transfer messages successfully and securely, you also need a reliable network and communications infrastructure. Various protocols are suitable for exchanging electronic data, e.g. via the internet. However, value added networks (VANs) or direct end-to-end connections are also possible.
- Automated receipt on the partner side: when the EDI messages are received, the recipient's system interprets the incoming data and automatically integrates it into its internal business processes. This step can include order processing, invoicing, inventory management and more.
- Confirmation of the recipient: the recipient usually sends feedback to the sender to confirm receipt and processing of the message or to point out errors.
Note: electronic messages must also be archived in accordance with legal and industry-specific requirements to ensure traceability and compliance.
The great advantage of EDI is that business data can be largely automated because information is exchanged between systems with virtually no manual intervention. This results in increased efficiency and a reduction in human error.
Data interfaces, EDI and APIs
When it comes to EDI, interfaces are essential: you can think of them as a kind of pass-through through which data passes from A to B. The modern version of data interfaces is APIs (Application Programming Interfaces).
With their help, different software applications can communicate with each other. They serve as a link between applications, systems or platforms and enable them to exchange information and work together without having to disclose the underlying details of the implementation.
APIs also often use standardized protocols and formats for exchanging information. Examples include REST (Representational State Transfer), SOAP (Simple Object Access Protocol) and GraphQL.
APIs are flexible and easy to implement. In many cases, they are therefore a much more practical and cost-effective alternative to classic EDI. They are usually designed so that they can be easily expanded to add new functions or data sources. Existing applications are not affected by this. Access to data and functions can also be controlled.
Cloud or on-premises? The different types of EDI
There are three main approaches to using EDI. The best one for your company depends on certain factors, such as your infrastructure and whether you have a stable internet connection. We distinguish between cloud-based EDI, on-premises and web EDI.
Cloud vs. on-premises – a comparison
Location of the EDI infrastructure:- Cloud-based EDI: EDI infrastructure is hosted in the cloud. All EDI software and hardware is managed by a third-party provider, and users access the EDI services over the Internet. This reduces the need for local hardware and maintenance.
- On-premises EDI: EDI infrastructure is hosted and managed locally in the company's data centers. The EDI software and hardware are physically located at the company, and the company is responsible for maintenance and updates.
- Cloud-based EDI: cloud solutions are often scalable and flexible. Companies can adjust the resources as needed and usually only pay for what they actually use. This allows you to quickly and easily respond to changing business needs.
- On-premises EDI: these usually require larger investments in hardware and software. Scaling the infrastructure can be more complicated and usually requires additional investments.
- Cloud-based EDI: maintenance and updates to the EDI infrastructure are carried out by the cloud provider. This relieves the company of this responsibility and allows it to focus on its core business functions.
- On-premises EDI: companies are responsible for maintaining and updating their own EDI infrastructure. This requires qualified IT personnel and can result in additional costs and workload.
- Cloud-based EDI: cloud solutions often have a pay-as-you-go cost structure, where companies pay for the resources they actually use. This reduces the initial investment.
- On-premises EDI: On-premises solutions typically require a higher initial investment in hardware and software, as well as ongoing operating costs for maintenance and support.
The choice between cloud-based EDI and on-premises EDI depends on a company's specific business needs, internal IT expertise, and financial resources. Both approaches have their advantages and disadvantages, and the decision should be made carefully to meet the needs and objectives of the organization.
Would you like to learn more about how you can use Azure Integration Services for your business?
We would be happy to advise you!
Web EDI
Web EDI, also known as Internet EDI or web-based EDI, is a form of Electronic Data Interchange (EDI) that, as the name suggests, takes place over the internet. As with the cloud-based variant, web EDI is a straightforward form of electronic data communication.
Expensive initial investments and the setup of complex EDI systems can be avoided. Instead, companies can access EDI functionality through web-based platforms or portals. Most web EDI platforms are user-friendly and do not require extensive training.
Web EDI is therefore particularly attractive for companies that require EDI functionality but want to avoid the complexity and costs of traditional EDI implementations. It offers a cost-effective and accessible way to exchange electronic data with business partners and improve efficiency in the supply chain.
Challenges and solutions
Complexity and effort
Quickly converting the company to EDI – wishful thinking! However, experience shows that integrating EDI into existing business systems and supply chain processes is often quite complicated and comes with a high financial cost.
One of the most common mistakes is a lack of communication and cooperation between the EDI parties. It starts at the internal level when the IT department is entrusted with the EDI project and the specialist departments – whose processes EDI will affect – are ignored.
Furthermore, the implementation of EDI is often limited to a company's internal processes, without taking sufficient account of the collaboration with business partners and suppliers.
In doing so, certain factors should definitely be clarified, such as: do these partners already have their own EDI systems? What communication and message standards can they support?
If these parameters are neglected or overlooked during the planning, it can come later to a bad awakening, since the implemented EDI system may not achieve the desired benefits and the integration of processes does not work. A lot of money has already been wasted on EDI projects because the homework was not done.
The solution: good preparation is everything – and this means, above all, carefully researching and defining the requirements, both on the part of your own company and on the part of your partners. In some cases, some trading partners are not yet set up for EDI: convincing them to switch to EDI can therefore be time-consuming and may require negotiations and agreements.
It is important that the EDI system not only fits your company's internal processes, but also that it is perfectly aligned with all other players involved in the supply chain, regardless of their geographical location, company structure or area of expertise.
But good communication and collaboration within the company are also essential to successfully master an EDI project. EDI should not be the sole responsibility of the IT department. Instead, it is highly recommended to get employees from each department on board to analyze requirements and processes in advance. But more on that later.
Die erfolgreiche Einführung von EDI erfordert auf jeden Fall eine gründliche Planung, Ressourcenverteilung und Zusammenarbeit – extern mit den Geschäftspartnern und intern, zwischen IT und Fachabteilungen.
Insufficient data quality
Another problem associated with EDI is incorrect or redundant data. These can severely impair the efficiency of the EDI system and lead to a confusing data jungle.
Ebenso kann es sein, dass EDI-relevante Daten in verschiedenen unternehmenseigenen Systemen gespeichert sind, ohne dass bereits eine umfassende Vernetzung stattgefunden hat. Diese Datensilos machen ein EDI-Projekt unnötig kompliziert und umständlich.
The solution: EDI only makes sense if the data is clean, so make sure to scrutinize all data relevant to the supply chain before you start using EDI!
On the one hand, it is sometimes necessary to revise or correct the data.
On the other hand, you should look at where in the company the data important for EDI implementation is localized and whether it has already been sufficiently integrated to make it suitable for electronic data exchange. Ideally, EDI-relevant data is collected in an ERP system – but this is not always the case.
As already mentioned, data is often isolated in multiple data silos. In this case, you should, first of all, a System - and data integration , which will make a subsequent EDI implementation much easier.
Generally speaking, an EDI project is also a good opportunity to review the processes along the supply chain, because a pointless process that is automated is still a pointless process. Be sure to include all the departments concerned in the analysis of your data and processes in order to get a realistic overview.
Clean and organized data is the best basis for order in your business processes. Then EDI and automation are worthwhile and bring your company the desired efficiency.
Security and compliance
Cross-company networking along the supply chain often involves the exchange of sensitive data, which emphasizes the need to consider the issues of Data protection and data security. Compliance and security measures therefore play a crucial role in the introduction of EDI.
In addition, there is always the threat of external dangers such as cyber attacks and similar risks.
If these aspects are neglected, it can have expensive consequences.
The solution: When selecting an EDI system, companies should ensure that the chosen system has comprehensive security mechanisms and can be expanded if necessary. The following points are important to consider:
- Secure message standards and transmission protocols
- Digital signatures
- Message encryption
- Confirmation of sending and receipt
In addition to the technical security mechanisms that should be implemented in the EDI system, it is advisable to create an agreement that precisely regulates the handling of shared data by business partners.
This agreement should specify compliance with measures to ensure data protection and data confidentiality, particularly for sensitive data such as customer data.
The future of EDI
Electronic Data Interchange (EDI) is constantly evolving, and there are some trends and future developments that can be observed:
In addition to cloud-based EDI, API integrations are also increasingly in demand and continue to be successful. Their flexibility, scalability and uncomplicated handling make implementing EDI significantly easier.
Another extremely exciting new development is the integration of Artificial Intelligence and Machine Learning. The combination of these new technologies with EDI will significantly help to improve data quality and integrity, make predictions, and support automated decision-making.
In this context, the topic of big data should also be mentioned: if you have a good grip on your data, you can use it to analyze large amounts of data, gain valuable insights from the information it contains, and make informed business decisions.
The future of EDI means a new level of efficiency, integration and technological innovation. Companies that keep this in mind and integrate these developments into their business strategies will be more competitive in the long term and will benefit from the advantages of new technologies and opportunities.
EN 
DE