Lecture 21: Electronic Commerce #1 - EDI

Electronic Commerce

Some examples from the pre-Internet era (or first generation) are:

• Electronic Data Interchange (EDI)
• Open Document Architecture (ODA)
• OSI (X.400) email services

In the Internet era (ie, the present), the ubiquity of Internet connectivity is changing many aspects of business.

A few examples of these second generation business applications include:

• Web advertising, and product information sites, eg www.sony.com
• Web-based electronic storefronts, facilitating direct purchase of goods and services via the Web. Many of these are now moving to new electronic payment schemes.
• Internet-based (SMTP) email.
• EDI over the Internet.
• many, many more.

EDI - Electronic Data Interchange

What is EDI?

• EDI is direct computer-to-computer^[1] exchange of data normally (or previously) provided on standard business paper documents.
• Can be implemented within a business, but normally used between companies for the following reasons:
  • Cost savings due to elimination of re-keying, printing, courier costs
  • Speed: communications can be essentially instantaneous
  • Reduction of errors
  • Security
  • Integration with other office automation applications
  • Just-in-time deliveries.
• Use of EDI is now regarded as essential in most large manufacturing companies, and is now common in many smaller companies.

^[1] More correctly, of course, we should say "application to application" data transfer.

EDI Standards

There have been two proposed EDI standards:

ANSI X.12

developed in the US and widely adopted, although not an international standard. Will eventually (supposedly) be replaced by:

EDIFACT

(EDI For Administration, Commerce and Transport), originally developed by the U.N. (?) and submitted to ISO for ratification as an international (and hence Australian) standard.

In EDI, an interchange is made up of one or more messages (or possibly functional groups containing messages of the same type), which in turn are composed of segments built up from one or more single or composite data elements.

EDI Data Structures

Typical EDIFACT Messages

CREADV

Credit Advice

CREEXT

Extended Credit Advice

CUSDEC

Customs Declaration

DEBADV

Debit Advice

IFTMAN

Arrival Notice

IFTMBC

Booking Confirmation

IFTMBF

Firm Booking

IFTMFR

International Forwarding & Transport Message Framework

INVOIC

Invoice message

ORDERS

Purchase Order

PAYORD

Payment Order

REMADV

Remittance Advice

and many, many more ...

There are also a larger number of draft and proposed message types awaiting standards approval. It is possible for a group of users to suggest a new message type to meet an unusual business need.

EDI Implementation

1. Use of a commercial EDI provider company. EDI users establish a "leased line" or dial-in link to the provider, usually in the context of a turnkey EDI package. The provider implements a "mail box" where EDI messages are lodged to await delivery to the recipient. There is obviously a problem where trading partners are connected to a different EDI service - EDI users simply have to subscribe to more than one provider.
2. In the past, it has been relatively common for telecommunications companies such as Telstra Australia to offer electronic mail facilities based on the OSI X.400 protocols. Prior to the emergence of the Internet as "the only game in town", an X.400 email service could be used as a carrier for EDI messages. Your lecturer is uncertain as to how much use was ever made of this option, and X.400 is hardly ever used anymore.

EDI System Architecture

Application Software

is where the business information is created and used - eg: order entry and accounts payable systems. Presumably, the company already has this.

Translation Software

is required to convert internal representation of data to and from the standard formats used in EDI. This can usually be supplied by the EDI provider as part of a complete turnkey package. Such packages can be based on many types of equipment, from PCs to mainframes.

EDI Provider

see previous slide

Note: PC-based translation software is regarded as suitable for small businesses starting out with EDI. However:

• maximum gains from the technology are only attainable when the EDI translation software is fully integrated with corporate databases such that information can flow between applications without human intervention.
• This implies development (or purchase) of EDI translation software on the corporate mainframe = big $$

Case Studys and the EDI Industry Group

• All of the motor vehicle manufacturers and most of their component suppliers
• A large proportion of government departments, both state and federal.

The Australian EDI industry body is "Electronic Commerce Australia", now integrated into Tradegate Australia. Their brief also covers other forms of electronic messaging such as:

• Interpersonal (human-human) computer messaging, or electronic mail and forms-based email.
• Human to computer messaging. Typical examples of this include one-way email, or automatic computer generation and transmission of FAX messages, called C-Fax by EDICA.

NB: EDICA also stated (in 1994) Many organisations, particularly those with over $100 million in sales have already begun full scale trading partner initiation programs. Very few have achieved successes which they would consider to be commensurate with the time, effort and money expended

• (From above) Electronic Commerce Australia.
• Data Interchange Standards. USA group, appears to be mainly interested in X.12.
• UN/EDIFACT in Australia, from Standards Australia. Worth checking are the information sheets.
• XML/EDI - a project to implement EDI using the new XML markup language from the World Wide Web Consortium. This looks very interesting.
• EDI Links.
• KPMG EDI Links
• Interesting article from Computerworld, regarding EDI and the Internet.
• Global EDI Community links from Raytheon Systems Company.
• E-Commerce and EDI in APEC.
• A major EDI software vendor. Some useful links here.
• An interesting report from QUT. Warning -- this is a huge download. -- Don't try and read it at the end of a dial-in line, or if you do, turn off images first.
• Monash University's Centre for E Commerce.
• An EDI project at Melbourne Uni.

Some EDI Examples

• EDI in Australian Public Hospitals. Warning -- this page is HUGE. Don't try and read it at the end of a dial-in line, or if you do, turn off images first.
• A project for EDI in managed investments.
• A project between Livermore Labs and the Bank of America.