Electronic Data Interchange (EDI) is the
electronic transfer of business documents from one computer application to another
computer application. EDI starts with an agreement between two organizations (or groups of
organizations). Joint decisions are made about the standard to be used during the
interchange of data, the information to be exchanged, the network carrier (called a
value-added network or VAN), and when the information will be sent.
A document, such as an
invoice, is created in the business application of one of the participating organizations.
The document is automatically reformatted by the EDI translator into the agreed-upon EDI
standard. The translator wraps the reformatted document in an electronic envelope that has
an ID for the organization that is to receive the document.
The communications portion of
the system - which could be part of the translation software or a separate application -
contacts the agreed-upon network carrier (VAN). The envelope containing the document is
then transmitted to the VAN, where the ID on the envelope is read and the document is then
placed in the correct mailbox. When the receiving organization calls the network and
retrieves everything in its mailbox, the EDI translator opens the envelope and translates
the data from the standard form to the format read by their application.
The key to efficient EDI is to
input the data only once. The EDI system does the rest of the work. Data moves without
intervention from the business application of the sending organization to the business
application of the receiving organization with no additional steps to slow the process.
How does the data
move from a business application to the EDI translator?
It is very important that business
applications integrate seamlessly with the EDI translation software. After a document is
defined in a business application, an EDI mapper is used to create a map of the business
document. The mapper describes the relationship between the datafields in the business
application and the EDI standards. The mapper is an integral part of the overall EDI
solution.
If both the EDI translator and
business application are on the same type of computer, the data will move faster and more
easily from one to another. For optimum performance, the EDI translation software should
be on the same platform as the business applications. Levels of mapper implementation or
integration vary greatly from translator to translator. Communications software can be a
module to the translator, a programming tool that enables communication protocols to be
written, or a separate application.
Can EDI be
accomplished without translating the data?
A direct computer-to-computer
transfer of documents (uploading and downloading) through a modem requires that both
computers can read the same format, such as ASCII text. If you upload a word processing
file and the recipient tries to open it in a database program, the result is a mess of
characters instead of the expected information.
Attempting to do EDI without
translation runs a great risk of transmitting data that the intended recipient will not be
able to read. Many organizations use different business applications on their computers.
The translator ensures that the data sent can be converted into a format that the
receiving organization can use. There are a few fundamental differences between a customer
EDI translator and one that comes from a software company. A custom translator is very
rigid and is designed for use with one organizational partner, using limited transaction
sets. Most commercial EDI translators are designed for transacting with organizations with
a multitude of documents. A customer translator is difficult to update. If organizational
partners change standards or want additional transaction sets, precious weeks or even
months can be wasted making the changes to the customer translator.
Security issues
It is important that security
procedures be in place for each party in the EDI system. It is equally important to ensure
that these procedures, when taken together, will provide security to the whole system.
Each of the parties contributing to the EDI system will have different priorities -
security is more important to some organizations than to others. Absolute security is an
impossibility - mistakes will happen, machines do break down, software does contain bugs.
Therefore, management needs to determine how an acceptable level of security can be
achieved in a cost-effective way.
