EDI (Electronic Data Interchange) and ETL (Extract, Transform, Load) are two concepts for data communication and integration. Some may confuse them as they both deal with data. However, they are different in many terms like purpose, intent, technical requirements, and more.
If someone has a query: Is EDI the same as ETL? Then the answer is NO. But what exactly are they? How do they differ? How do they overlap and complement each other? And does a business need EDI? ETL? Or both? This article aims to explain that and more.
Let us dive in.
In simple words, EDI means exchanging documents electronically. In large-scale transactions between businesses and government, many important documents must be exchanged and communicated electronically.
EDI facilitates this by making a standard format for many business documents like purchase orders, invoices, inventory updates, etc. used in retail, warehousing, manufacturing, healthcare, and other business domains.
Since all documents follow the rules of the standard format, they can then be exchanged swiftly and efficiently between two or more parties, enabling smooth communication, and optimizing processes like inventory control, payments and invoicing, and order fulfillment.
Hence, we can say that EDI deals with the exchange of documents in a standard format between trading partners in a supply chain network.
ETL means Extract, Transform, and Load. It comprises 3 steps: extracting data from multiple sources, transforming that data into a specific format, and then loading that transformed data into an application for storage, processing, and analytics.
A business has various data sources and streams. Data coming from customer feedback, data from inventory controls, data from internal meeting minutes, data from accounting and payment systems, data from ERP systems, etc.
All these data need to be consolidated and processed into a readable format for the business to make decisions. As data-driven analytics are becoming increasingly popular, the need for an efficient way to gather, refine, organize, and store data is becoming more important, especially in the modern commerce landscape where efficiency matters.
By applying ETL, raw business data can be transformed into actionable data that can be used for analytics and strategic decisions. This can help businesses identify fault points in their operations, decide how to improve business processes, and eventually increase the bottom line.
So, ETL deals with data consolidation, transformation, and loading into a database or a data warehouse for storage and analysis.
EDI and ETL differ in many aspects. The name itself gives context to different implications and purposes. EDI means data interchange, while ETL means extraction, transformation, and loading of the data.
Still, here is a detailed explanation of the differences between EDI and ETL viewed from different perspectives.
EDI: Data Exchange and Communication
ETL: Data Consolidation, Transformation, and Loading
The purpose of EDI is to facilitate data exchange and communication between different organizations.
To this end, EDI uses a format set by the trading partners or publicly available standards like X12 and EDIFACT followed by all organizations to continuously implement data exchanges.
The purpose of ETL is data gathering, consolidation, transformation, and loading. The process is used for the storage and analysis of the gathered data.
To this end, ETL uses tools and software programs to aggregate the business data, and then translate the gathered raw data into a format readable by the system where it loads and stores the data.
EDI: Used in external communication from one business to another.
ETL: Used for data processing with both internal and external data sources.
EDI is used mostly for external communications between businesses. A company also uses EDI for the exchange of data with government agencies. Other use cases of EDI include catalog uploads on online marketplaces and storefronts, inventory control, invoices and payment processing for B2B and B2G transactions, etc.
Businesses rely on EDI when they primarily have to exchange information with each other, making the exchanges outside their organizational bounds.
ETL on the other hand, is used mostly in cases of internal data processing and not specifically in terms of communication. A business gathers data from many different sources (both internal and external) using ETL. The ETL system then transforms the data before loading it into a destination system.
This prepares the data for eventual analysis, so the ETL system differs from EDI in the traditional sense of communication where there are exchanges.
The scope of the use case regarding ETL is processing, integrating, and transforming data that comes from both internal and external sources.
EDI: Uses two-way communication with data exchanged back and forth between two parties.
ETL: Used mostly for one-way communication where the data is gathered and sent to a specific destination for final analysis.
EDI is primarily used for exchanges, so it is a two-way communication of data. Businesses send EDI documents, receive acknowledgments, and also reply with other EDI documents.
For example, a retailer asking to purchase items will send a purchase order to the supplier, who will send a functional acknowledgment EDI. If the retailer wants to make changes to the order, he can send a purchase order change EDI and then the supplier will send the revised items for purchase. Invoices and shipping notices will also be exchanged during the transaction, making it a two-way communication method.
ETL is used mainly for gathering and analysis of data. So, once the data is gathered and sent for final analytics, there is typically no going back to the consolidation process.
There might be some back and forth during the consolidation (like the validation of logs), but the process of exchange of data is largely a one-way uni-directional data flow process (Extract - Transform - Load).
For example, a business needs to gather data from ERP, Accounting, Inventory, CRM, and HR sections. Now the data will be gathered, transformed into the proper readable format, and then sent for analysis, involving only the sending process as the ETL system generally does not receive any feedback from the decision makers after their data is used in analysis.
EDI: Complex due to many different trading partners and differing standards.
ETL: Relatively less complex to operate as the system only needs to meet the internal needs of the company.
EDI is relatively more complex to operate as it needs to cater to the data standards of multiple trading partners.
In a large-scale data exchange, where there are hundreds, potentially thousands of parties, it is extremely complex to map data fields, set mechanisms, and translate protocols for EDI exchanges.
ETL system consolidates, transforms, and loads data within the business. While ETI is complex in its own right and there will be complexities in making a standard that effectively cleans out all the raw data from different business processes (ERP, CRM, historical data, etc.), it is still relatively less operationally complex.
This is because the organization’s internal structure can be modified as per the need and businesses do not need to communicate with multiple trading partners for operating the ETL mechanism.
EDI: Uses Business Analysts and EDI developers
ETL: Uses Data Mining Experts and Data engineers
EDI is used mostly by business analysts who arrange and maintain the structure of business exchanges with trading partners.
According to the specification of the business analysts and operation managers, the EDI developers will be responsible for specific implementation of EDI protocols like mapping, translation, etc.
A company can also opt to use an EDI provider like Commerce Network for a simple and efficient EDI exchange.
ETL on the other hand, is largely carried out by the data miners who mine the necessary data for transformation as well as data engineers and technical experts who transform and load the data into a destination system for further use.
So, the ETL process uses database experts, data miners, data scientists, and data engineers who use the ETL tools for extraction, transformation, and loading of the data.
There are several similarities between EDI and ETL, which is often the cause of confusion among many business operators. Let us talk about some similarities between these two systems and how they create misunderstandings.
History
Both EDI and ETL are old concepts. However, there are slight differences in history between them. EDI dates back to the 1960s and originated to facilitate electronic data exchanges, ETL started in 1970 when databases, data analysis, and data-driven decisions became popular, making it a decade younger than EDI.
But for many business individuals, both EDI and ETL are legacy concepts of data operations. This can confuse some individuals who are not that tech-savvy and are relatively new to the concept of EDI and ETL.
Data Transformation
Both EDI and ETL deal with transforming data from one format to another. EDI transforms the data from a human-readable format into a standard format like X12 and EDIFACT for the exchange.
Sometimes, EDI data are also transformed into XML and JSON formats for use in APIs.
However, the primary mode of data transformation is through mapping and translating the unorganized data into a standard (e.g. EDI: 850 PO for X12) format accepted by all external collaborators.
On the other hand, ETL transforms data gathered from different departments of an organization into a set format that can be stored and analyzed.
The cleaning up of data also takes place in this process.
For example, the date format from two different sets of data can be different (e.g. customer data may use DD/MM/YYYY format while warehouse data may use YYYY/MM.DD format). These two dates can be pointed out on the same day, e.g. 30 January 2025. However, since they are in different formats, they can confuse loading, storage, and analysis. So, cleaning and standardization are necessary.
However, the transformation of the data is done in both EDI and ETL. This can be a source of confusion as individuals may not understand the kind and purpose of the transformation of the data.
It may be difficult to explain these complex mechanisms to simple business owners who are not acquainted with data mapping, transformation, and exchange.
Data exchange and communication
Both EDI and ETL use omni-channel communication.
EDI uses communication from both internal channels like ERP and accounting systems, as well as external channels like B2B/B2G marketplace catalog uploads, invoices, and ASNs from trading partners, etc.
ETL typically uses data extraction and transformation from multiple channels for analytical purposes. The exchange of data between different internal and external departments of a business for extraction means different data channels and different types of documents consisting of different sets of data. However, it is still an exchange and communication of data, albeit in a different way to an exchange.
As both EDI and ETL exchange data and perform communication with that data, it can be somewhat difficult to distinguish between the two, causing misunderstandings. However, one should remember that the data exchange and communication of EDI and ETL are completely different from one another,
From the above explanation of the similarities between EDI and ETL, it can be seen that they overlap in several areas. This overlap helps complement each other. This means that EDi and ETL can both be used together to perform data integration, and analysis and make strategic decisions.
EDI can be a part of the ETL process as the data gathered through EDI exchanges can be used for analytics and reporting through the use of the ETL platform.
For example, a business can extract the EDI documents and the data stored in those documents before consolidating them with data gathered from other (non-EDI) sources, then transform them into a single unique format before loading and storing. Then the data loaded on the application (database or data warehouse) can be used for analysis.
On the flip side of the coin, ETL can have a good impact on EDI as responses after data analytics from ETL processes can be used to improve the EDI process between a business and its trading partners.
For example, after analyzing the data obtained through the ETL process, a business may be able to figure out which EDI transactions are used more and which are used less. The ETL data can also showcase historical EDI exchanges as well as the cost of operations.
In this way, the business can formulate a different EDI mechanism (e.g. removing the less used EDI document from the EDI infrastructure), and improve upon their EDI protocols to save costs and improve efficiency.
Ideally, the answer would be both. The implementation of EDI and ETL does not have to be one or the other. They can be used together to complement each other.
However, several factors need to be taken into consideration before implementing any, or both of these solutions, especially for SMBs with limited resources/
Businesses with fewer resources can first adapt one solution and then gradually employ another as time goes by.
It is important to note that EDI implementation is a costly and complex process. The case with ETL is also similar. So as a business owner, you need to be careful in implementing both at the same time which may create unnecessary complications and hamper the business’s ability to make a profit.
Another important factor to evaluate is the organization's existing systems and infrastructure.
EDI solutions often require specific protocols and standards to be established among trading partners, which can necessitate adjustments to current systems.
Conversely, ETL processes may necessitate the implementation of a data warehouse or analytics platform, requiring additional investments and resources.
You must assess your business’s readiness and capacity to implement either solution, taking into account factors such as budget, technical expertise, and available resources.
For large-scale enterprises, using both would be ideal, however, if the focus of the business leans heavily towards one side (e.g. data exchange and communication favoring EDI) and does not favor another side at all, then using both would be a mistake.
But such a scenario is rare. As many businesses need to exchange data electronically, especially for B2B and B2G exchanges and need to make decisions based on actual data, the use of both EDI and ETL as a single integrated solution is the most preferred method for data integration, exchange, and decision making.
EDI and ETL play key roles in data integration, each serving different purposes. EDI automates the transactions, improving speed, accuracy, and cost efficiency, making it essential for supply chain management. ETL consolidates diverse data sources, ensuring high-quality analytics and reporting for better decision-making. The right choice depends on your business needs, use cases, and strategic goals to optimize efficiency and data-driven success. Understanding both can help you unlock the full potential of your business data ecosystem.
Is EDI the same as ETL?
No, EDI is not the same as ETL.EDI focuses on data exchange and communication externally with other parties while ETL focuses on data consolidation, transformation, and storage as an internal part of the company process for decision-making and analysis.
What is ELT?
ELT is a newer concept called Extract, Load, and Transform where the data are extracted and loaded before transformation. This is true for modern systems where there is extensive use of cloud computing, automation, AI, and machine learning, and a hyper-emphasis on efficiency and data analysis.
Is EDI part of ETL?
EDI can be a part of the ETL process as the documents exchanged through EDI can be used during the extraction, transformation, and loading ETL process for making data-driven decisions.
Is ETL part of EDI?
ETL cannot be called a part of EDI as it differs in function from Electronic Data Interchange. However, after the data is consolidated, transformed, and loaded through ETL processes, it can be used to enhance the EDI systems of businesses.
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