Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners. By moving from a paper-based exchange of business document to one that is electronic, businesses enjoy major benefits such as reduced cost, increased processing speed, reduced errors and improved relationships with business partners. Computer-to-computer EDI replaces postal mail, fax and email. While email is also an electronic approach, the documents exchanged via email must still be handled by people rather than computers. Having people involved slows down the processing of the documents and also introduces errors. Instead, EDI documents can flow straight through to the appropriate application on the receiver’s computer (e.g., the Order Management System) and processing can begin
immediately. A typical manual process looks like this, with lots of paper and people involvement: The EDI process looks like this — no paper, no people involved: Business documentsThese are any of the documents that are typically exchanged between businesses. The most common documents exchanged via EDI are purchase orders, invoices and advance ship notices. But there are many, many others such as bill of lading, customs documents, inventory documents, shipping status documents and payment documents Standard formatBecause EDI documents must be processed by computers rather than humans, a standard format must be used so that the computer will be able to read and understand the documents. A standard format describes what each piece of information is and in what format (e.g., integer, decimal, mmddyy). Without a standard format, each company would send documents using its company-specific format and, much as an English-speaking person probably doesn’t understand Japanese, the receiver’s computer system doesn’t understand the company-specific format of the sender’s format.
Business partnersThe exchange of EDI documents is typically between two different companies, referred to as business partners or trading partners. For example, Company A may buy goods from Company B. Company A sends orders to Company B. Company A and Company B are business partners. Continue ReadingAbstract Electronic data interchange (EDI) is the movement of information electronically between a buyer and seller for purposes of facilitating a business transaction. EDI represents a powerful application of computer-communications technology. Its value includes such benefits as reduced paperwork, elimination of data entry overheads, improved accuracy, timely information receipt, accelerated cash flow, and reduced inventories. EDI brings with it, however, new and important control considerations. This article discusses, in a non-technical fashion, the control architectures and concerns associated with EDI. Audit considerations in the EDI environment, as well as related audit tools, are also outlined. Journal Information The editorial objective of the MIS Quarterly is the enhancement and communication of knowledge concerning the development of IT-based services, the management of IT resources, and the use, impact, and economics of IT with managerial, organizational, and societal implications. Professional issues affecting the IS field as a whole are also in the purview of the journal. Publisher Information Established in 1968, the University of Minnesota Management Information Systems Research Center promotes research in MIS topics by bridging the gap between the corporate and academic MIS worlds through the events in the MISRC Associates Program. While Electronic Data Interchange (EDI) has been in use since the late 1960s, there are still many organizations that use their existing legacy systems for processing B2B transactions. Traditional B2B transactions like Purchase Order, Sales Order, Invoice, Advance Ship Notice, and Functional Acknowledgement often involve a series of steps to process. And processing these transactions involves many paper documents and a great deal of human intervention, which makes them prone to mistakes and human errors. But with the use of EDI, paper documents are eliminated and human intervention is minimized. EDI enables organizations to automate the exchange of data between applications across a supply chain. This process ensures that business-critical data is sent on time. According to a market report by Dart Consulting, the estimated market size of EDI is expected to reach $1.68 billion by 2018, with projections reaching as high as $2.1 billion by 2020. But what are the advantages of EDI over traditional forms of business communication and information exchange? To better understand these benefits, let’s take a look at some of them: Lower operating costs
Improve business cycle speeds
Reduce human error and improve record accuracy
Increase business efficiency
Enhance transaction security
Paperless and environmentally friendly
While many businesses are enjoying the advantages of EDI, some companies are still hesitant to try it because of a few limitations. Limitations of EDIPerceived high upfront costs
Initial setup is time consuming
Too many standards
Investing in system protection
Robust data backups of systems
Despite being a decades-old technology, EDI continues to be the dominant protocol in the B2B world. EDI hasn’t changed much over the years, but the systems that exchange EDI documents between businesses have mostly moved to the cloud, become cheaper, easier to use, and more feature-rich. When considering EDI for the first time, it is important to weigh the advantages and disadvantages. But even more important is choosing the right provider that can help you get started and scale up as your business grows, while always committing to providing the most up-to-date features and security measures. If you would like to leverage EDI to streamline your operations, OpenText offers EDI solutions that let you efficiently, reliably, and securely share data across a wide variety of EDI message types and communications protocols. Connect with us to learn more.
OpenText, The Information Company, enables organizations to gain insight through market-leading information management solutions, powered by OpenText Cloud Editions. Which of the following is an accepted example of electronic data interchange?Electronic data interchange (EDI). Which of the following is an accepted example of electronic data interchange (EDI)? Placement of order entry transactions from a customer to its supplier.
Which improvement in IT control specifically addresses the authentication issue?Which improvement in IT control specifically addresses the authentication issue? A digital certificate.
Which of the following statements is most accurate regarding the differences between LANs and WANs?Which of the following statements is most accurate regarding the differences between LANs and WANs? WANs are more difficult to secure than LANs.
|