IPS Blog

The Future of EDI

Dec 15, 2015 9:55:00 AM

By Greg Bartels, President/CEO

Is EDI "Electronic Data Interchange" going the way of a dinosaur or chameleon?

Recently I came across the following definition for chameleon, "A small slow-moving Old World lizard..., with a highly developed ability to change..." www.memidex.com

Later, while working on an EDI project, I remembered the definition of a chameleon and it made me wonder.  Is EDI going the way of a dinosaur, headed for extinction, or is it just a slow moving technology with the ability to change and match its current environment?

With so many changes in technology, it is often very difficult to know when to adopt and when to pass. With all the twists and turns that EDI has taken, it still survives as the holy grail of invoice automation. That is why I've decided to share my thoughts with you on the direction of EDI and the relationship it has to the underlining transactions that EDI supports.

Let me start with the definition of EDI to set the stage.

According to Wikipedia EDI is: “Electronic data interchange (EDI) is an electronic communication method that provides standards for exchanging data via any electronic means.” Other definitions focus on the exchange of documents in a very specific data format. For those of you who would like to understand the bits and bytes you will find a wealth of information on Wikipedia and many other commercial sites. Many of which contain far more information about EDI than I would dare to list.

EDI has been around for well over 30 years and yet it still does not have a widespread adoption rate. The current adoption rate of EDI is just over 50%. Even US Government initiatives to drive EDI (the Federal Acquisition Streamlining Act of 1994, the Health Insurance Portability and Accountability Act of 1996 and the Patient Protection and Affordable Care Act of 2010 HIPPA) have not significantly increased adoption. The original premise for EDI was to replace paper based information exchanges with data exchanges. While this is still a key driver of the technology, paper is now rapidly going away and being replaced with a new challenge to businesses. As the postal services and overnight couriers continue to be disrupted by email and document sharing technology, EDI faces another challenge in its evolution.

Will EDI adapt to Invoice Automation technologies?

Our take, EDI needs to adapt to all the new evolutions in technology to overcome the challenges it faces today. If things continue to stay the same EDI may be forced to extinction. It will be interesting to see if EDI can adapt and address the current needs for innovative invoice automation solutions. Only time will tell, like the concept in the Darwinian Theory of Evolution, Survival of the Fittest says that only those organisms that best adapt to their environment will have continued existence.

In the world of technology and business, the same rules apply!

If you have questions you can email me at gbartels@ipsmailbox.com or post your comments on the IPS LinkedIn page.

 

 

Topics: AP Processing, AP Workflow, EDI, Electronic Data Interchange