As both international and electronic commercial activity escalated dramatically in the closing decades of the 20th century and into the 2000s, businesses, governments, and international economic and trade organizations recognized the growing importance of standardizing the protocols used to transmit electronic data. If such protocols were inconsistent or competing within and across industries and international borders, the overall flow of international commerce could ebb, to the eventual detriment of all players. Thus, the 1980s and 1990s were marked by efforts to harmonize the various standards of electronic data transactions. To facilitate this process, the United Nations Economic Commission for Europe developed the United Nations rules for Electronic Data Interchange For Administration, Commerce, and Transport (UN/EDIFACT).
Electronic data interchange (EDI) systems provide a standardized method for conducting and tracking electronic transactions and business documents structured according to EDI syntax and design rules. Using EDIFACT, businesses are able to engage in transactions on a global basis, using a standard that renders business documents in a global language. EDIFACT aimed to standardize EDI programs used in commercial activities on a worldwide basis so as to ease the transition to both a global and electronic economy. By using EDIFACT, companies and organizations can transmit electronic data with each other regardless of the software or computer used to generate it.
The original impetus toward the development of electronic data interchange was to cut the costs and time spent on the myriad paper documents involved in transactions, including contracts, bills, manifests, letters of credit, and many others. By coalescing all these into a series of standardized electronic protocols, the time spent of each transaction; the costs of each transmission of data; and the propensity for documents to be lost, misfiled, or miscopied all decline considerably. EDI is in fact at the heart of such staples of the information economy as just-in-time manufacturing, supply chain management, and scores of other practices and processes central to the contemporary commercial environment.
THE DEVELOPMENT OF UN/EDIFACT
The Centre for the Facilitation of Administration, Commerce, and Trade (CEFACT) provides the 55 Economic Commission for Europe (ECE) members as well as non-ECE members and the private sector a formal say in the development of EDIFACT and other programs as they relate to worldwide trade protocols. CEFACT is the UN organization coordinating policies and technical development to facilitate trade and electronic business. Working with the International Standards Organization (ISO), CEFACT designed EDIFACT in 1986, and the protocol was formally adopted as a global standard in 1987. UN/EDIFACT is independent of any specific industry, country, or region.
The first organizations to adopt the standard, according to the Journal of Commerce, were those entities with the highest stake in international trade, particularly multinational corporations who were primarily concerned with conducting smooth, international, intra-firm transactions. Over time, the adoption of EDIFACT spread through these companies' supply chains and into their transactions with governmental, insurance, and banking organizations.
CEFACT in 1990 announced its official definition of UN/EDIFACT, which states that its rules for EDI "comprise a set of internationally agreed standards, directories and guidelines for the electronic interchange of structured data, and in particular that related to trade in goods and services between independent, computerized information systems."
EDI COMPETITION AND HARMONIZATION
The late 1990s were characterized by the movement toward harmonization between UN/EDIFACT and the established U.S. EDI standard, the American National Standard Institute's Accredited Standards Committee X12 (ASC X12). ANSI's X12/EDIFACT Alignment Plan, and the subsequent launching of the U.S. X12 Strategic Implementation Task Group, drove efforts to coalesce the two standards into one global standard, and by the late 1990s U.S. firms and governments increasingly adopted the EDIFACT standard. As part of the plan, according to ANSI ASC X12 Chair Kendra L. Martin, where X12 was incom
patible with EDIFACT, X12 transaction sets were rewritten in the international syntax.
Up into the mid-1990s, however, ANSI and ASC were steadfast in their refusal to maintain their X12 standard independent of EDIFACT, opting instead for co-existence with the international standard, even allowing X12 users to continue developing new, specific standards based on the X12 design format and syntax. In other words, rather than simply migrate to the worldwide EDIFACT standard, ASC X12 plans centered on an "administrative alignment," in which ASC would modify X12 standards using EDIFACT's design rules, but remain independent and allow users to develop X12 freely within its established boundaries.
The reluctance of U.S. businesses and standards writers to adopt UN/EDIFACT was based on many reasons. First, critics of EDIFACT contended that it was less flexible in its methods of data definition than was X12. Beyond technical complaints, X12 support—as well as advocacy for convergence to EDIFACT—also drew on cultural and competitive rivalry. Developers and users of the older X12 resented the rapid rise of the upstart EDIFACT, and some U.S. organizations feared a competitive disadvantage stemming from the U.S. investment in converting to the international standard. For years, the convergence of X12 and EDIFACT was furthered by debate over which system would have to bend more.
Thus, by 1999, X12 was still the rule rather than the exception for U.S. companies. But efforts by leading companies to adopt EDIFACT were producing a ripple effect. For instance, General Motors, having adopted EDIFACT, ordered that its suppliers do likewise. U.S. standards organizations, led by ANSI, developed EDIFACT-friendly conversions that would allow companies to maintain their legacy applications while conducting international transactions using the EDIFACT standard. Outside the United States, EDI-FACT was the overwhelming standard, although it often vied with local and regional EDI standards for preeminence.
THE FUTURE OF EDI AND EDIFACT
By the 2000s, Internet-based e-commerce, particularly commerce between businesses, was slowly leading to the replacement of EDI in favor of eXtensible Markup Language (XML), which was poised to become the lingua franca of e-commerce. But while the new standard created a great deal of excitement, and analysts tended to position XML as the basis for future electronic exchange, EDIFACT was still a hot issue in the early 21st century.
Few analysts were willing to pronounce the imminent death of EDIFACT, much less EDI. In fact, the most commonly envisioned scenario involved a layering of XML with the EDI structure, most likely with EDIFACT playing a major role in systematizing the two broad technologies into a seamless and compatible whole. In 2000, for instance, the European Commission called for the design, development, and installation of a bridge between EDIFACT and XML in which communications may be transmitted, received, and read in both formats.
While the development of the Internet as a commercial vehicle prompted some to declare that EDI's days were numbered, EDI transactions were generally Internet friendly. Moreover, until the Internet proves capable of handling the more intensive business-oriented data transmissions for which EDI was created, many firms may feel more comfortable sticking with their EDI systems rather than investing in a full-scale conversion.
On the other hand, for most small and mediumsized businesses, EDI technology can be prohibitively expensive. To remedy this problem, in the late 1990s and early 2000s CEFACT was developing Simpl-EDI and Object-Oriented EDI to upgrade the EDIFACT standards to incorporate the developments in information technology and the sophistication of user interfaces through the 1990s. Simpl-EDI is a less information-heavy version of EDI, in which messages are simplified to their most essential elements. Since most EDI systems were designed for larger businesses with more convoluted dealings, they function to incorporate higher degrees of complexity than was required by the average smaller business. Simpl-EDI, involving less complexity, was thus designed to present smaller firms with a cost-effective opportunity to employ EDI.
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SEE ALSO: Electronic Data Interchange (EDI); XML