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Electronic Data Interchange and Why Your Business Can't Go Without It


Data interchange in some form has been a vital part of business operations since the invention of writing. While the difficulty of transporting documents for transcription was a part of life that companies simply accepted, in 1996 the first onset of electronic data interchange hit markets. Since then, advancements in internet technology and routing practices have made EDI an essential part of any streamlined and efficient business.

Advantages of EDI:

  • Most secure way of implementing a 2-way data transaction.
  • Can accommodate higher volumes of data than with just internet services alone.
  • Multiple options to accommodate any industry from manufacturing, retail, sales, government, and more.
  • Most secure way to distribute large volumes of data towards multiple routing destinations.
  • Can use existing internet plans or phone lines.

While all forms of electronic data interchange enjoy all these benefits to a greater or lesser extent, each one has its advantages that makes it more suited for some industries and processes rather than others.

Peer-to-Peer is the Current Standard:

The most common form of electronic data interchange in the modern business world is peer-to-peer. It can accommodate smaller companies, and even larger companies with the right pre-planning and IT infrastructure. While this form of EDI usually uses the internet to pass data, by manually choosing destination IP addresses, this method of electronic data interchange is safer than internet platforms that utilize software protocols to acquire data exchange partners.

Internet EDI is Easy:

While an internet based or cloud-based electronic data interchange solution is easy to set up and one of the easiest to use, it is also the least safe. Internet based and cloud-based EDI are however, very often utilized in regional branches for keeping data updated in real time about local inventory. While this is often utilized to keep track of parts and labor, it is used less so for accounting and financial data.

Value-Added Networks for Broad Data Destinations:

When there is only one or two data partners involved in a company or process, it can be easy to use serial communications, peer-to-peer, or internet based electronic data interchange; but, what about a company with 5, 10, 30 data destinations across the globe? The answer is value added networks that taken in data from a single point and redistribute it throughout the greater network. When data destined for 30 different destinations comes in from Houston, Hong Kong, and Munich: they will be synthesized into a an easy to pass package of data and then be distributed to all applicable data points. Value-added networks are often found in large companies, or offered by telecom and data companies as a 3rd party EDI service.

Serial Communications, Classic and Safe:

This used to be the main form of EDI at the inception of the technology. It still is utilized today because despite being a little more complicated to operate, serial communications are much harder to intercept as opposed to the other three methods. A little slower than the other methods, serial communications involves utilizing encrypted modems and phone lines to pass the information safely to be decrypted on the other end.

There are many reasons to consider one form of data exchange. No matter which route or solution is chosen, well applied electronic data interchange streamlines business processes in any industry. It has stayed a prevalent option in data exchange as new technologies such as cloud hosting and virtual private networks have terrible security as compared to electronic data interchange. For that reason companies looking to protect their assets, their customers' personal information, and their own data resources trust EDI for regular data exchanges.

If you would like to know more about how we use EDI to your benefit when you select us as your service provider, please fill out the Contact Us form on this page.


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