EDI and edi

Electronic commerce is completely concerned with  electronic data interchange. This can cause confusion with Electronic Data Interchange, which is the particular sub-set of electronic commerce that uses standardised, agreed formats for electronic "messages" to create extremely cost-efficient handling of transactions such as, for example, product re-ordering by individual shops in retail supermarket chains.

Such electronic communication between business partners is nothing new. For the past 20 years numerous companies have taken advantage of EDI communication networks to facilitate inter-business transactions. The benefits, for those who could participate, were obvious: costs reduction for access to the network and the transmission of data; and more important, large decrease in very costly errors. Unfortunately, such benefits came at a heavy price. Participating in EDI relationships required a private or value added network infrastructure (VANs) of which both parties (sender and receiver) had to be a part. These networks are not only expensive from a hardware and software point of view, but also from a data transmission or communication standpoint, where charges are on a per transaction or communication basis.

As a result, SMEs tended to only be involved if participation was more or less forced on them by a major client or customer.

However, in 1996 the London consultancy Ovum found that the growth of EDI, which to date has been driven in the main by large organisations, it is now extending to small and medium-sized enterprises (SMEs), because the larger 'hub' organisations are demanding that their SME suppliers employ EDI and because awareness is increasing among all parties in the supply chain of the importance of communication between themselves, their suppliers and customers.

Gary Lynch former chief executive of the EDI Association says, "Suggestions that the Internet will wipe out EDI are ill-conceived; the Internet is an infrastructure, while EDI is a means of doing business. Certainly, the issues of EDI versus electronic commerce on the Internet are frequently confused; EDI concerns the exchange of standard commercial information (typically invoices and orders) in a pre-set format between businesses or large public organisations, such as the National Health Service and its suppliers."

Interestingly, the indications are that EDI users would like to see a broadening of EDI's applications. Specialist consultancy PFA cites its latest annual survey of large users as evidence that the growth in take-up is declining as the user base saturates at around five to 10 per cent annually, falling from 10 to 20 per cent over the last three or four years. At the same time, that user-base is declaring itself happy with the benefits of EDI and, claims PFA's operations manager Robert Rush, "would now, for example, like it to accommodate the payment cycle such as delivery information and remittance advice which are still mailed out on paper".

Intranets and the Internet

The wider generality of electronic data interchange has been given an enormous boost to prominence by the growth in use of the Internet, which itself has been largely due to the development of the World Wide Web. WWW technology is easy to use, understandable, and transparent to the user.

Internet use is growing rapidly, although it is possible to become over-excited by the degree of press and media attention. Motorola, surveying the UK market in January 1997, found :

• Despite 85% of respondents having heard of the Internet, more than three quarters of them do not know how to get connected
  Internet and EDI

• Only 9% of respondents use the Internet on a regular basis

• The main reason people who have heard of the Internet are not using it is that they do not have access to a computer (42%) at home or at work

• Broadly half of those surveyed said they would feel comfortable using on-line facilities to conduct the following activities :
  -Access information on government or company services 49%
  -Home Banking                 46%

• Only one-third (36%) of respondents currently have a PC at home but the majority of them (56%) expect to own one by the year 2000 - an increase of over 50%

• 79% of people in work have carried out at least one activity to develop their career in the last two years. More than half believe they will receive IT-related training in the next two years.

• The myth that "IT is for men" can finally be laid to rest. Only 6% of the general public, and only 1% of top executives, agree with this statemenT

• There is a clear divide between the IT 'Haves' and 'Have Nots' which mirrors current social divides. The 'Haves' fall into the categories of 16-44 year old ABC1s in full-time employment, the 'Have Nots' fall into the 45+, C2DE classifications with part-time employmenT

• 16-24 year olds are the highest users of IT products with almost a third saying they regularly use at least three IT items

The necessary human factors clearly exist to allow e-commerce to flourish on the Internet. The following case studies highlight:

• transaction cost savings

• the migration from EDI to edi

• absorbing "heritage system" in non Internet methods

• dealing in "immaterial" services intellectual property issues

Case Studies