Information Technology Reference
In-Depth Information
Electronic Data Interchange
Electronic data interchange (EDI)
is a way to communicate data from one company to
another and from one application to another in a standard format, permitting the recipient
to perform a standard business transaction, such as processing purchase orders. Connecting
corporate computers among organizations is the idea behind EDI, which uses network sys-
tems and follows standards and procedures that can process output from one system directly
as input to other systems, without human intervention. EDI can link the computers of cus-
tomers, manufacturers, and suppliers (see Figure 6.17). This technology eliminates the need
for paper documents and substantially cuts down on costly errors. Customer orders and
inquiries are transmitted from the customer's computer to the manufacturer's computer. The
manufacturer's computer determines when new supplies are needed and can place orders by
connecting with the supplier's computer.
electronic data interchange
(EDI)
An intercompany, application-to-
application communication of data
in a standard format, permitting the
recipient to perform a standard
business transaction, such as
processing purchase orders.
Figure 6.17
EDI link
Two Approaches to Electronic
Data Interchange
Many organizations now insist
that their suppliers use EDI
systems. Often, the vendor and
customer (a) have a direct EDI
connection; or (b) the link is
provided by a third-party
clearinghouse that converts data
and performs other services for the
participants.
(a)
Vendor
Customer
EDI link
EDI link
Third-party
clearinghouse
(b)
Customer
Vendor
Among other products, Johnson Controls provides automotive interiors and batteries for
automobiles and hybrid electric vehicles. The firm employs a third-party vendor, Covisint,
to handle EDI transactions with its automotive customers and suppliers to enable collabo-
ration on scheduling, shipping, and orders. Sue Kemp, global vice president and general
manager of information technology at Johnson Controls, believes her firm has reduced its
EDI-related costs by 10 percent because: “Before, we had to build a highway to everyone
else. But now we pretty much have outsourced our whole EDI to them.”
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Public Network Services
Public network services
give personal computer users access to vast databases, the Internet,
and other services, usually for an initial fee plus usage fees. Public network services allow
customers to book airline reservations, check weather forecasts, find information on TV
programs, analyze stock prices and investment information, communicate with others on the
network, play games, and receive articles and government publications. Fees are based on
the services used, and can range from under $15 to over $500 per month. Providers of public
network services include Microsoft, America Online, and Prodigy. These companies provide
an array of services, including news, electronic mail, and investment information. AOL is
the largest provider of public network services.
public network services
Systems that give personal
computer users access to vast
databases and other services,
usually for an initial fee plus
usage fees.
