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.

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 debates 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 they choose to switch to another competing product for business reasons.

However, while "open" is a necessary condition for an interoperabilty standard, it is not a sufficient condition. For example, the standard-setting processes for the Fortran, C, and C++ languages are open, with a broadly-inclusive consultative group. But the resulting standards are not interoperability standards.

Speaking from an e-government perspective, interoperability refers to the collaboration ability of cross-border services for citizens, businesses and public administrations. Exchanging data can be a challenge due to language barriers, different specifications of formats, varieties of categorizations and other hindrances.

If data is interpreted differently, collaboration is limited, takes longer and is inefficient. For instance, if a citizen of country A wants to purchase land in country B, the person will be asked to submit the proper address data. Address data in both countries includes full name details, street name and number, as well as a postal code. The order of the address details might vary. In the same language, it is not an obstacle to order the provided address data, but across language barriers, it becomes difficult.

If the language uses a different writing system it is almost impossible if no translation tools are available.