Week 5 -Traditional Integration - EDI

Electronic Data Interchange (EDI) is the exchange of businesses, organizations, government entities and other group’s transactions/information from one company to another using a computer network to transfer the data.
EDI can be traced back all the way to 1948 in Berlin Airlift, where the task of coordinating air freighted consignments of food and consumables was addressed by devising a standard manifest. It then became electronic and standard in the1960s, with the rail and road transport industries. Finally in 1968 the United States Transportation Data Coordinating Committee (TDCC) was formed, to coordinate the development of translation rules among four existing sets of industry-specific standards. At about the same time, the U.K. Department of Customs and Excise was developing its own standards for documents used in international trade, called Tradacoms. These were later extended by the United Nations Economic Commission for Europe (UNECE). Problems created by the trans-Atlantic use of two different (and largely incompatible) sets of standardized documents have been addressed by the formation of a United Nations Joint European and North American working party (UN-JEDI), which began the development of the Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT) document translation standards.
Many different types of data are sent over the network such as invoices, orders, confirmations and other business documents. There is a big misconception that EDI consists of the entire electronic data interchange paradigm, including the transmission, message flow, document format, and software used to interpret the documents. But in reality EDI is just the set of standards for structuring information to be electronically exchanged internally or externally. The American National Standards Institute (ANSI) has approved a set of EDI standards known as the X12 standards.
EDI is very important because it effects cost savings and improves efficiency because it minimizes the errors that can occur if the same information has to be typed into computers more than once. Another advantage is that EDI provides an easily accessible mechanism for companies to buy, sell, and trade information. Many corporate giants are now demanding that their suppliers convert their sales and purchasing operations into EDI systems as well. In the retail market, the use of EDI systems allows the retailer to implement quick response strategies that can reduce the time they must hold merchandise in inventory, which can result in substantial cost savings for the retailer.
Different networks can be used such as VANs and the Internet. The rise of the internet gave EDI quite a boost. . As more and more companies get connected to the Internet, EDI is becoming increasingly important as an easy mechanism for companies to buy, sell, and trade information. Although interactive access may be a part of it, EDI implies direct computer-to-computer transactions into vendors' databases and ordering systems. That was done using privately owned networks and the traditional EDI data formats (X12, EDIFACT and TRADACOMS). These days many business transactions are formatted in XML and transported over the Internet using the HTTP Web protocol.

As for the future of EDI I feel it will continue to grow. One reason it is expected to grow is that business-to-business e-commerce overall has been growing rapidly since the early 2000s. In 2000 alone, business-to-business sales were estimated to be $5.2 trillion by 2004, according to Corporate EFT Report. Also the use of EDI also is expected to grow right along with international trade agreements like the North American Free Trade Agreement (NAFTA).

Even though EDI is growing there is a chance that something else will come along and take it’s place. New technology is being introduced such as internet channels—including hybrid EDI/Internet electronic trading networks, Internet e-marketplaces, extranets, Internet company-to-company links, and private emarkets. Companies are relying on a variety of channels to conduct business with suppliers, depending on the nature of their business goals. SoVANs have not gone away completly, but the demands of businesses and their trading partners have changed dramatically. Internet-based transport, broader and more robust sets of information and real-time connectivity are just a few of the items that have been appended to the connectivity wish lists of most companies. It seems as though the basic language of data movement has suddenly become XML, despite the presence of decades-old EDI standards. XML, while incredibly exciting as an application and data-neutralizing standard, is still in its infancy. Therefore EDI isn't going away any time soon.
One example is a software company that launched a new patient billing management solution to streamline billing and collections back in October of 2006. The system works by capturing billing, claim and payment information and delivers it in a unified view to speed up the billing cycle. In other words the users is looking at a virtual view of a patient's complete financial history, helping accounting staff accelerate collections, improve billing efficiency and reduce billing costs. This system is great for any hospital that which faces an increasing economic, competitive and regulatory demands, as well as pressure to bill sooner, generate claims faster and increase overall operational efficiencies within the business office. The system can also automate the claims payment posting process through support for automated work flow and ANSI EDI 835 formatted befits explanations. It integrates with existing claims systems, provides role-based access to ensure security and compliance, organizes and charts a view of all patient information including claims, benefits explanations, secondary claims and correspondence.