Interoperability is a characteristic of a product or system to work with other products or systems. While the term was initially defined for information technology or systems engineering services to allow for information exchange, a broader definition takes into account social, political, and organizational factors that impact system-to-system performance.

Types of interoperability include syntactic interoperability, where two systems can communicate with each other, and cross-domain interoperability, where multiple organizations work together and exchange information.

If two or more systems use common data formats and communication protocols then they are capable of communicating with each other and they exhibit syntactic interoperability. XML and SQL are examples of common data formats and protocols. Low-level data formats also contribute to syntactic interoperability, ensuring that alphabetical characters are stored in the same ASCII or a Unicode format in all the communicating systems.

Beyond the ability of two or more computer systems to exchange information, semantic interoperability is the ability to automatically interpret the information exchanged meaningfully and accurately in order to produce useful results as defined by the end users of both systems. To achieve semantic interoperability, both sides must refer to a common information exchange reference model. The content of the information exchange requests are unambiguously defined: what is sent is the same as what is understood.

Cross-domain interoperability involves multiple social, organizational, political, legal entities working together for a common interest or information exchange.

Interoperability implies exchanges between a range of products, or similar products from several different vendors, or even between past and future revisions of the same product. Interoperability may be developed post-facto, as a special measure between two products, while excluding the rest, by using open standards.^{[further explanation needed]} When a vendor is forced to adapt its system to a dominant system that is not based on open standards, it is compatibility, not interoperability.^{[citation needed]}

Open standards rely on a broadly consultative and inclusive group including representatives from vendors, academics and others holding a stake in the development that discusses and debate the technical and economic merits, demerits and feasibility of a proposed common protocol. After the doubts and reservations of all members are addressed, the resulting common document is endorsed as a common standard. This document may be subsequently released to the public, and henceforth becomes an open standard. It is usually published and is available freely or at a nominal cost to any and all comers, with no further encumbrances. Various vendors and individuals (even those who were not part of the original group) can use the standards document to make products that implement the common protocol defined in the standard and are thus interoperable by design, with no specific liability or advantage for customers for choosing one product over another on the basis of standardized features. The vendors' products compete on the quality of their implementation, user interface, ease of use, performance, price, and a host of other factors, while keeping the customer's data intact and transferable even if he chooses to switch to another competing product for business reasons.

Post facto interoperability may be the result of the absolute market dominance of a particular product in contravention of any applicable standards, or if any effective standards were not present at the time of that product's introduction. The vendor behind that product can then choose to ignore any forthcoming standards and not co-operate in any standardization process at all, using its near-monopoly to insist that its product sets the de facto standard by its very market dominance. This is not a problem if the product's implementation is open and minimally encumbered, but it may well be both closed and heavily encumbered (e.g. by patent claims). Because of the network effect, achieving interoperability with such a product is both critical for any other vendor if it wishes to remain relevant in the market, and difficult to accomplish because of lack of cooperation on equal terms with the original vendor, who may well see the new vendor as a potential competitor and threat. The newer implementations often rely on clean-room reverse engineering in the absence of technical data to achieve interoperability. The original vendors may provide such technical data to others, often in the name of encouraging competition, but such data is invariably encumbered, and may be of limited use. Availability of such data is not equivalent to an open standard, because: