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Extensible Markup Language (XML) is a markup language which defines a set of rules for encoding documents in a format that is both human and machine readable. It is defined as per the XML 1.0 Specification by the W3C, and other open standards.

With the advent of XML, the EDI is slowly loosing its ground as a de-facto mode of robust communication medium between computer-to-computer communication. XML can play a vital role in integrating the heterogeneous systems among all the trading partners. EDI programs face significant commercial hurdles for implementing as it requires a high level of initial commitment between the personnel of organizations and high capital resources are needed.

Tags are an advantage of XML which in an XML document can be used to give fields meaningful names for easy manual reading. Tags are also used to enforce business rules and data relationships. EDI does not offer any of these advantages. XML files are about 10 times larger than an EDI file for the same data transmission. While the cost of data storage continues to come down, the available storage for a specific installation may be limited.

XML has many standards like CIDX for the chemicals industry, PIDX for the energy industry and SPEC2000 for aerospace. But, EDI has two mature standards of ANSI X-12 (used in North America) and EDIFACT used in Europe, Asia, and the automotive industry in the United States.

XML can be integrated with existing EDI systems by providing application-specific forms that users can complete to generate EDI messages generating EDI message formats for transmission between computers over the Internet, or through existing value-added networks (VANs) allowing data received in EDI format to be interpreted according to sets of predefined rules for display by the receiver on standardized browsers using a user-defined template, rather than having to rely on specially customized display packages.

XML can also extend existing EDI applications by allowing message creators to add application-specific data to standardized message sets allowing message creators or receivers to display contents of each field with explanatory material specific to application and user language preferences thus, allowing developers to customize help information with for each field and allowing field value checking for validity of the data with respect to information stored on local databases.

XML has gained traction for communication within a company. Translation of EDI transactions with external customers into a standard XML format with internal systems continues to grow.

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