Your pocket glossary of EDI terms

Whenever you enter a new territory, such as the one highlighted by the implementation of EDI for your company, you can feel confused and overwhelmed by the dense technical terminology. What do all those terms mean?

You will notice that some terms are similar to words you have heard before, but in the EDI universe, they take on a completely different meaning. So, how can you navigate through the confusion and get a clear picture of what is happening during the EDI implementation process?



To have a better understanding of the specifics in the field, we’ve prepared a pocket glossary for beginners:


Everything starts with EDI. It stands for ‘electronic data interchange’ and refers to the exchange of data between computers that essentially speak the same ‘language.’ They do this using a standardized message format, facilitating communication between computers on an international level.


I mentioned earlier that the only way EDI systems can communicate is through standardized message formats. These are also known as protocols.

The most common protocols used today are FTP/VPN (File Transfer Protocol over a Virtual Private Network), AS2 (Applicability Statement version 2), SFTP (Secure File Transfer Protocol), and FTPS (File Transfer Protocol Secure). They are highly secure, making it impossible for external parties to access the data.

EDI Standards

Although they can be easily confused, standards and protocols are not the same thing. A protocol refers to how data flows on the internet, while the standard is the format that encapsulates this data. Let’s consider a situation where you want to purchase something from the UK, but the person receiving the purchase order doesn’t understand the Romanian language, so they can’t process the order based on their linguistic abilities. This is where EDI comes in: it ensures that the workflow continues as usual, unaffected by any cultural barriers.

As for the use of standards, it’s good to know that in Europe, EDIFACT is primarily used, while North America is more familiar with ANSI ASC X12.

Cloud Technology

Cloud technology has recently gained astonishing popularity, especially because it eliminates the need to build your own network and use your own resources. Instead, it allows you to share IT resources. Excellent examples of cloud technology usage are the web application giants of today, such as Gmail, LinkedIn, and Facebook. These companies rely on cloud computing to deliver their services and run their businesses from servers housed in massive data centers.

If you opt for a cloud-based EDI system for your company, you’ll be spared from colossal investments in expensive software and equipment. The advantages are unmatched, both financially and in terms of time saved.


You’ve probably already heard of value-added networks. Well, in EDI, they are abbreviated as EDI VAN and refer to a secure method of sending documents to anyone, acting as a third party.

A VAN will allow its users to use different standards, ensuring that the translation has been done and that the information is communicated in a universal language accessible to all.

It’s important to debunk the taboo of ‘new and inaccessible technology’ and understand that nowadays, EDI is everywhere. After all, it’s important to know the basics of a technology you want to implement that will propel your company, making it more productive and efficient. If you want to learn more, contact us.