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Electronic Commerce and EDI - What`s the Difference?

Although the terms Electronic Commerce (EC) and Electronic Data Interchange (EDI) are frequently used interchangeably, they are in fact quite different. Gary de Menezes, electronic business manager at Infovan (a company within the Ariel Technologies group), explains.
By Gary De Menezes
Johannesburg, 19 Mar 1998

EDI is a messaging standard formulated by standards committees to facilitate the exchange of electronic data in specific formats, frequently economic, such as price and sales catalogues, requests and responses for quotations, purchase orders and various acknowledgments. Each message follows a specific format, making integration into automated IT systems easy to accomplish. On the other hand, EC is a far more generic term. Usually discussed in the context of Internet technologies, it involves various mechanisms and concepts under which commerce is performed, including business-to-business transactions, Web marketing, sales, financial transactions, order tracking and a host of related activities. While the core services are predominantly based around business-to-business matters such as credit card transactions, the peripheral activities are equally important and are a vital part of any EC environment. EDI products have traditionally been out of reach of small and medium-sized enterprises due to the high entry costs involved. Consequently, electronic automation in the value chain has been widely viewed as a failure in the business world. Emerging Internet Technologies changes that by offering an extremely cost-effective transport mechanism and essentially free access tools (Web browsers), making EC services easily accessible to those concerned, as well as being relatively simple to develop and implement. EC transactions between business and consumer are more difficult due to security and integration hurdles, but business-to-business transactions can be readily facilitated on virtual private networks (VPNs). EDI concepts form an integral part of electronic commerce, but in the wider context, EC involves a far broader scope of products, services and applications. Numerous software vendors such as IBM, Sun and Lotus have electronic commerce products available, allowing cost-effective integration of Internet technologies into business methods, as well as providing seamless integration with existing EDI systems. Thus, not all links in the chain need EDI facilities, but those using such services need not alter their approach to match new trends. EDI is far from dead, with new message formats offering vertical market solutions in rail and air industries, for example, and providing standards for high-level financial transactions, usually on value added networks (VANs). Although we are currently witnessing the emergence of EC and the revival of EDI as a strategic direction that business will follow in the near future, it is vital that businesses employ companies which have the correct skill sets and products to enable their operations to become EC enabled.


Editorial contacts

Bernard Binns
3rd Wave Communications
(011) 804-5271
Gary De Menezes (Infovan)
(011) 233-0800
Ariel Network Solutions