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What Is EDI?

Find out everything you need to know about electronic data interchange (EDI).

1. Executive summary

Learn everything you need to know about EDI. What does EDI mean and how does it work? What software do you need for EDI and how do you choose the right EDI setup? Discover what a typical EDI project looks like and how you can implement an EDI solution in your company. Finally, our FAQs at the end answer the most frequently asked questions about EDI.

2. Definition of EDI

EDI stands for Electronic Data Interchange and refers to the electronic data interchange of business documents such as orders, delivery notes and invoices. These EDI files are exchanged between business partners in the form of structured data with no human intervention.

EDI facilitates seamless communication and data exchange between trading partners, streamlining business processes, enhancing efficiency and reducing errors associated with manual data entry.

EDI is not a specific technology, but a combination of electronic processes, exchange protocols (communication protocols) and established, internationally valid business document standards. For simplicity and security, structured electronic data interchange must use established standards for EDI files regardless of the specific EDI formats or ERP (Enterprise Resource Planning) system used by the business partners involved.

  • Automating your business processes with EDI makes them faster, more efficient and less prone to errors, leading to reduced lead times through faster data transmission
  • Reduced unnecessary task repetition and data entry errors through less manual work
  • Increased information accuracy and less costs through automation
  • Reduced warehousing costs as EDI enables just-in-time or just-in-sequence logistics

EDI also has a host of advantages for  management, since business-relevant information is available faster and in a more structured way. EDI ensures a constantly available, up-to-date stream of readily-available data. Running this through business analytics tools gives you insight to improve process controls.

For planning and decision–making, EDI means:

  • Up-to-date statistical findings through simpler target/actual comparisons and deviation analysis
  • Improved information availability through simulations and new forecasting techniques
  • Improved cash management and a better stock overview through productivity analyses

3. Functional overview of EDI

Messages are exchanged between companies using established business document standards for electronic data interchange (known as EDI message standards), which companies in a specific industry have agreed upon among for exchanging EDI files. For example, the European chemical industry generally uses the EDI standard EDIFACT, including the subset CEFIC (French: Conseil Européen des Fédérations de l'Industrie Chimique), which has been specifically defined for the chemical industry.

Since ERP systems are generally not capable of these message standards, the structured data needs to be converted from its initial format into the defined message standard (EDI format) before it is sent via the agreed communication protocol. Classic EDI capability involves three steps:

  1. Connect to ERP and receive messages in internal format from the SAP system.
  2. Convert and transfer messages from the internal format to the message standard.
  3. Communicate and technically dispatch data via the agreed communication protocol.

The receiver carries out these steps in reverse order starting with confirming the message has been received over the agreed communication protocol, then converting the message to the EDI format they need and then sending the message to the receiving ERP system.

The SEEBURGER BIS Platform B2B/EDI capabilities support you in the comprehensive EDI integration and management of all B2B/EDI partners through the B2B gateway and various portal/cloud applications.

The BIS B2B gateway connects the most important business partners, handling the routing and processing of B2B/EDI messages according to industry standards.

The gateway is complemented by portal applications for efficient management of numerous business partners, such as the Community Management Application and the BIS WebEDI Supplier Portal.

4. EDI message standards

If business partners want to exchange business data electronically, they need to have a clear agreement to ensure they can understand each other's messages. In practice, however, it’s the dominant business partner initiating the EDI process (known as the hub) who usually dictates the standards used by all subsequent partners (the spokes). These are existing industry standards.

The following scenarios illustrate the advantage of these EDI message standards: If several people of different languages try to communicate with each other, they would need an unmanageable number of interpreters.


2 people, speaking two different languages -> 1 interpreter

3 people, speaking three different languages -> 3 interpreters

4 people, speaking 4 different languages -> 6 interpreters

n people, speaking n different languages -> n(n-1)/2 interpreters

If, on the other hand, they decided to use an international standard language, each person would need just one interpreter from their own language to and from English:

2 people, speaking 2 different languages -> 2 interpreters

3 people, speaking 3 different languages -> 3 interpreters

4 people, speaking 4 different languages -> 4 interpreters

n people, speaking n different languages -> n interpreters

Direct and indirect communication

The first scenario is an example of direct communication. The sender transmits each message to each recipient. This type of point-to-point connection is particularly suitable for transferring large amounts of data.

The scenario using one international standard illustrates indirect communication. Here, the message is sent just once, to a VAN (Value Added Network) provider, which manages distribution to the individual receivers. The advantage of this type of mailbox system is that senders can communicate independently of their partner – they just need to connect to their own mailbox.

5. Requirements for EDI in your company

The EDI software essentially consists of three components:

  1. The ERP connector integrates your company’s ERP system, allowing you to you send and receive messages in your ERP system’s native EDI format.

  2. The converter transforms in-house message formats to the industry-standard EDI format needed by your partners.

  3. The communication adapter sends EDI messages through the communication protocols your partners require.

ERP connector to EDI

Many companies rely on an ERP system to manage their in-house business processes. To enable electronic data interchange with external business partners, this ERP system needs to be connected to the EDI system via EDI integration.

An ERP connector links the EDI software with the ERP software, and then automatically transfers messages between the ERP system and the EDI software.

We have EDI connectors for these widely used ERP systems, and more:

SEEBURGER can also build connectors to link up other ERP systems to EDI. Contact us for further details.

6. EDI operating models

Our EDI software is available as a stress-free, fully managed, cloud-based service, as an on-premises package that you can install in the public cloud of your choice or in your own private cloud, or in-house hardware.

Would you like to keep some aspects in house while outsourcing others? Our Integration Platform as a Service (iPaaS) lets you choose what to manage in house and what to outsource to SEEBURGER.

We even offer WebEDI for connecting trading partners new to EDI.

EDI as a fully-managed cloud service

EDI offers many benefits to companies by automating the exchange of documents between trading partners. It reduces manual errors, accelerates transaction processing and fosters stronger relationships with suppliers and customers.

Get the benefits of EDI without the stress. SEEBURGER deals with everything – from setup, onboarding and maintenance to security and compliance. We can even integrate your cloud-based EDI with the business applications of your choice

This not only frees up in-house resources, there is a significantly lower initial outlay and TCO than for on-premises software, and the monthly costs are easier to accommodate in your annual budget.

The SEEBURGER BIS Platform is the engine behind the SEEBURGER B2B/EDI Cloud Integration Services.

EDI as a cloud service is particularly suitable for:

  • Companies who may not have the resources for 24/7 operation of an on-premises EDI solution
  • Companies unable or not wanting to recruit dedicated staff members with EDI experience
  • Companies wanting to offload time-consuming maintenance and security updates to let their people focus on other tasks

Cloud services provide easy access to IT resources, increased flexibility and faster time to market, enable agility, and are increasingly proving to be the source of new, innovative business models.

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7. Success factors of an EDI project

Three factors are decisive for successful implementing EDI in a company: Full managerial support, professional project management and clearly defined objectives.

Management support

A positive attitude from management significantly influences employees’ acceptance of a new system.

The most important success factor for adopting EDI is managerial support. A shared comprehension of the reasons behind the company's adoption of EDI is essential for management at all levels, along with their active support for all relevant departments. Good change management is part of successfully managing a project.

To showcase the significance of your EDI project to your staff, implementing tracking measures and ensuring project progress can be effective. Additionally, communicating progress to different stakeholders within your company in a focused manner is crucial.

Clearly-defined reporting paths and named decision-makers make it easier for everyone involved to understand the new processes and find the right person for their queries.

8. Components of an EDI integration project

The preliminary study

The objective of a preliminary study is to efficiently assess the potential benefits of implementing EDI and determine the required resources involved. What should the preliminary study define?

  • Project size
  • Product strategy
  • Resources required for detailed analyses
  • Planning the implementation and realization stages
  • Potential of the EDI project
  • Interests and needs of current stakeholders

The preliminary study incorporates an evaluation of the existing systems utilized in each department and highlights the potential enhancements that EDI implementation could bring. It serves as the foundation for making the final decision regarding the EDI integration project, assessing the immediate benefits for the organization, and determining the optimal utilization of the new technology. The resulting report should have a financial focus, offering management a solid groundwork for informed decision-making.

Defining your EDI requirements

After formulating the concept for your desired EDI solution, the next step involves delving deeper and generating a comprehensive list of specific EDI integration requirements. These requirements will serve as the foundation for developing detailed specifications at a later stage. Alongside technical requirements, you also need to decide whether to choose an on-premises installation or a SaaS solution.

When contemplating your desired EDI solution, several factors need to be taken into consideration, including the following:

  • The implementation cost associated with your desired EDI solution.
  • Additional expenses related to software and hardware required to operate the EDI solution.
  • Ongoing costs for administration, maintenance and EDI transaction volume.
  • Availability of internal personnel resources to support the EDI implementation.

9. Launching EDI in your company

The EDI proof of concept phase

Prior to the actual installation of your EDI solution, it is beneficial to conduct a proof of concept. This entails testing the parameters in a realistic environment using standard EDI format settings.

The proof of concept phase involves:

  • Installing the EDI solution on a test server,
  • Doing a basic installation and parameterization of the EDI solution,
  • Checking and, if necessary, cleaning up the master data and transaction data,
  • Potentially adapting processes and interfaces,
  • Deciding upon and documenting the ultimate EDI installation,
  • Deciding when to go live with the EDI solution,
  • Creating test scenarios and test plans with corresponding reference data.

During the EDI proof of concept phase, you gain the opportunity to delve into the software and service functionalities at an early stage. This enables you to develop a comprehensive understanding of the EDI solution's functionality and the technical capabilities it offers to you organization.

10. EDI migration

An EDI migration refers to the adoption of a new EDI system within a company. Typically, this process encompasses the seamless transition of data, systems and infrastructure from the existing legacy framework to a new EDI environment. It may also involve re-evaluating partnerships with new service providers or transitioning to a cloud-based solution.

Why do companies choose to switch their EDI integration provider or migrate to the cloud? This decision is driven by a variety of factors, including technological advancements, the need for greater scalability and flexibility in response to a dynamic business or market environment and heightened demands on the technology arising from new EDI integration possibilities.

When a company expands into international markets, it frequently encounters new industry-specific or regional requirements that its current EDI integration provider may no longer satisfy or support. Moreover, there are instances where the existing EDI integration provider discontinues its services, making EDI migration not just an option but a necessity. In such cases, opting for a modern EDI solution from an experienced EDI integration provider establishes a secure foundation for seamless electronic data interchange within a digital ecosystem.

Key characteristics and criteria of an EDI integration provider

When choosing an EDI integration provider, the following key characteristics and criteria play a crucial role in ensuring long-term success:

  • An optimal EDI solution is scalable and adapts to the changing needs of the company.
  • Automated EDI processes enhance repetitive business operations such as partner onboarding, which minimizes manual interventions and mitigates errors associated with them.
  • The new service provider shall guarantee strict compliance with industry-specific regulations and relevant standards, while upholding robust data security measures.
  • An ideal EDI solution provides extensive EDI integration options for effortless connection to the current infrastructure. In cases where a comprehensive cloud migration initiates the need for EDI migration, the design and management of a B2B/EDI integration platform are outsourced to a cloud provider. Ideally, this provider possesses extensive EDI experience and can proficiently assist both migrations with a competent consulting and support team.
  • The provider shall efficiently handle time-consuming, cost-intensive and repetitive tasks, including onboarding, maintenance and matters concerning security and compliance. This allows the user to fully focus on their core business without being burdened by these operational aspects.

Secure replacement of legacy infrastructure

As mentioned, an incentive for EDI migration arises when legacy systems no longer align with the needs of a contemporary and dynamic company. Proactive companies confront this challenge by replacing outdated B2B solutions in a timely manner with a fully digital, secure, reliable and scalable EDI integration platform. The migration tools offered by the SEEBURGER BIS Platform guarantee a secure and smooth migration.

EDI migration strategy follows five phases:

  1. In the first phase, planning and strategy development, transparent and consistent communication within the entire project team with all stakeholders is of the highest importance in order to define the current status, goals and potential risks.
  2. In the analysis and design of the target architecture, the second phase of EDI migration, the focus is on what the future cloud-based EDI ecosystem should look like, including analysis of the data and processes, design of the target architecture, integration into existing systems and security and compliance planning.
  3. The third phase, EDI migration preparation and data assessment, aims to ensure the integrity, security and continuity of the data throughout the migration process. This includes developing the migration plan, test plans and scenarios and training the technical team and users.
  4. The fourth phase of EDI migration execution begins with the initiation of the data migration and implementation of the business processes and ends with tests to verify the live environment.
  5. Post-migration support and continuous optimization as the fifth and final phase ensures functionality even after the EDI migration has been completed.

11. EDI FAQs

Frequently asked questions about implementing EDI

You have decided to implement an EDI solution to automate processes between your business partners and your company. However, how do you start? Here are answers to the most pressing questions about getting started in the world of EDI and EDI integration:

Do you work in a sector with its own specific needs?

Take a look at the SEEBURGER range of industry-specific solutions