EDI: To what do we owe its longevity?
Published on 25 November 2022
The EDI market exceeded $2 billion in 2020. Why are Electronic Data Interchange tools so popular with companies? Below are a few explanations.
Invented in the late 60s, the concept of EDI or Electronic Data Interchange remains at the heart of exchange performance between companies. Much more than a technology for exchanging data between computers, EDI is a dematerialization (DEMAT) approach that is likely to endure for many years to come.
X12, Edifact or Odette, these names are not likely to ring a bell with the younger generation. However, they are key standards at the origin of the exchange dematerialization between companies. From the 1970s onward, every major industrial company sought to dematerialize and, above all, to automate its order exchanges, supplier replenishment requests or customer invoices. The goal was to increase efficiency by eliminating the tons of paper being produced and processed, as well as the delays and potential input errors inherent to this way of operating.
EDI - a standardization process initiated in the 1970s
The origin of EDI dates back to 1968 with the creation of the TDCC (Transportation Data Coordinating Committee). This body was created to define data exchange formats between shipping companies, railway operators and road transport companies. In 1975, the TDCC published its first exchange standard, X12. This led to the development of large Value-Added Networks (VANs). Many industries became interested in this standardization process and adapted X12 to meet their specific needs.
Numerous initiatives were launched across industrialized countries. Among the most notable are UN/EDIFACT (United Nations/Electronic Data Interchange for Administration, Commerce and Transport), EAN for consumer products, ODETTE in the automotive sector and SWIFT for exchanges between banks.
EDI Services, one of the drivers of digital transformation
While EDI is a mature approach, the market remains extremely dynamic and is showing growth rates that many other sectors can only dream of. According to a Dart Consulting study, if we include VANs, cloud services and software sales, EDI is experiencing an annual growth rate of 13.7%, consequently surpassing the $1 billion mark in 2014 and exceeding the $2 billion mark in 2020.
This extraordinary growth rate 50 years after EDI's inception can be explained by many factors. On one hand, EDI has been able to diversify: every industry has implemented messaging and exchange protocols that are specific to their business. Generix, which positioned itself in this market with its EDI Services offer in 1999, now has customers in the banking, industrial, logistics and distribution sectors.
On the other hand, EDI has clearly been established as one of the basic tools of digital transformation. Every company is seeking to improve its process efficiency and to automate low value-added tasks as much as possible. EDI largely contributes to this objective by avoiding a multitude of re-keying tasks and the inevitable errors and related controls. EDI is therefore a powerful tool for dematerializing exchanges and Generix EDI Services is fully involved in this transformation.
The Cloud is exploding the use of EDI
Finally, the rise of Cloud Computing and specifically, of SaaS applications, has had a profound impact. While EDI was once the exclusive domain of large international companies, it is now accessible to all.
Insight Partner estimates that the EDI market will grow by 9.5% per year from 2020 to 2027, namely thanks to the launch of SaaS solutions, which are playing a major role in the democratization of EDI for smaller companies.
EDI Services, the fourth generation of the EDI Services platform launched in 2015 by Generix, was designed to support the digital transformation of businesses in. It is based on the development of the Cloud, web access, APIs and the IoT (Internet of Things), and it can even be accessed with a mobile terminal.
EDI Services is one of the many services which are part of the Generix Group SaaS offer. With 40,000 companies connected to its EDI Services offer and 2 million messages processed every day, Generix Group is participating in the democratization of EDI.
To learn more about EDI solutions, visit the Generix Group EDI Services page.
About Generix Group North America
Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.
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