EDI involves the computer-to-computer exchange of standard business documents like purchase orders and invoices. It allows companies to automate routine transactions and exchange data electronically. An EDI transaction set is comparable to a paper business document, with segments representing lines of data and elements as individual fields. EDI messages are sent within a standardized envelope structure, with interchange envelopes enclosing functional groups and transaction sets, similar to how physical documents are packaged in envelopes for mailing. EDI software translates proprietary data formats to recognized EDI standards, allowing automated data exchange between trading partners in a fast and efficient manner.