8-2-01edi adoption in sa1 electronic data interchange adoption in saudi arabia dr. mohammed a. t....

8-2-01 EDI adoption in SA 1

Electronic Data Interchange Electronic Data Interchange Adoption in Saudi ArabiaAdoption in Saudi Arabia

Dr. Mohammed A. T. Al-SudairyAssistant Professor

Business DepartmentFaculty of Economics & Administration

King Abdul Aziz University, JeddahE-mail MAS@KAAU.EDU.SA

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Presentation LayoutPresentation Layout

IntroductionEC and EDIMethodologyFindingsConclusion

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Inter-Organization SystemsInter-Organization Systems

Electronic Data Interchange (EDI)Electronic Commerce (EC)Electronic Fund Transaction (EFT)Electronic Mail (E-mail)Electronic Form (EF)Integrated Massaging and Shared Database

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Electronic CommerceElectronic Commerce

EC is the handling of business transaction over communication networks.

EC is not enabling technology but it is simply conducting business electronically through enabling technology such as EDI, VANs and Internet.

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Electronic Commerce Electronic Commerce Categories Categories

Business to Business (B2B)Business to Consumer (B2C)Business to Government (B2G)Government to Consumer (G2C)Consumer to Consumer (C2C)

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Electronic Data InterchangeElectronic Data Interchange

EDI is the electronic transmission of business data between or within firms in structured, computer processable data format, which permits information to be transferred without re-key from computer application in one location to computer application in the other location.

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EDI Standards

Communication Standards

EDI Software

EDI Networks

EDI ComponentsEDI Components

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TranslatorTranslator

Application Application

Communication Software

Communication SoftwareVAN

Sender Receiver

EDI Network

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Quantity Unit No. Description Price

1 CSE 6900 CELLULOSE SPONGES 12.75

12 EA P450 PLASTIC PAILS .457

4 EA 1640Y YELLOW DISH DRAINER .95

1 DZ 1507 6” PLASTIC FLOWER POTS 3.00

From:

To: ANSI X12 FORMATIT1*1*1*CSE*12.75**VC*6900IT1*2*12*EA*.457**VC*P450IT1*3*4*EA*.95**VC*1640YIT1*4*1*DZ*3**VC*1507

Translating from a “ Human Readable” to a “Machine Readable Standard Format

Application systemse.g. accounts system

EDI Translator

ANSIX12Invoice

8-2-01 EDI adoption in SA

CommunicationsInterface

EDITranslator

ApplicationInterfaceApplication

System

ApplicationSystem

ApplicationSystem

EDI Interface

8-2-01 EDI adoption in SA

CommunicationsInterface

EDITranslator

ApplicationInterface

ApplicationSystem

ApplicationSystem

ApplicationSystem

EDI Interface

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EDI BenefitsEDI BenefitsReduced overhead costsReduction in labourIncreased accuracy Improved communications and

management controlImproved inventory control Enabled retailers to be more responsive to

consumer needs

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Motivation FactorsMotivation Factors

OperationalQuick response &

access to informationIncrease data accuracy

StrategicBetter communication

with trading partnerRemaining competitiveButter customer serviceReducing stock

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EDI BarriersEDI Barriers

Difficulty of a cost/benefit evaluationThe need to keep in use two information

systemsStandardisationExternalities of EDI applications can overstep

the firm’s boundaries and modify the business and market perspective from competition to collaboration.

Resistance to change.

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The Ned for EDI in SAThe Ned for EDI in SA

To participate in international free trade

To liberalise trade and economicTo become a member of WTO

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Factors influencing the Factors influencing the Decision to use EDIDecision to use EDI

Organization size

External Pressure– Competitors– Local customers or suppliers– Overseas customers or suppliers

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Methodology & SampleMethodology & SampleAn Exploratory Study

– SurveyQuestionnaireThe Sample

– 297– 40

Response – 126 (37%)

34 use EDI 92 None user

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Business Type

0

5

10

15

20D

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Sup

/ mrk

Car

Dai

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Dep

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urni

tur

Pha

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Stat

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Supe

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Cos

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Toy

s

Cot

hing

Oth

ers

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FindingFinding

Job Title– 47% MIS Manger– 17% CEO– 15% MIS Employee

Annual Sale– 42% 25-199 MSAR– 41% >200MSAR– 17% <25 MAR

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Finding / PressureFinding / Pressure

Local Suppliers– 7

Local Customers– 7

Overseas Suppliers– 26

Overseas Customers– 5

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Hypotheses ResultsHypotheses Results

Variables Chi-Q Sig

Organization size 2.27 0.32

Competitors use EDI 7.26 0.02**

Pressure local sup 3.25 0.07

Pressure overseas sup 12.3 0.00***

Pressure local custm. 20.88 0.00***

Pressure overseas custm. 3.00 0.08

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EDI Barriers in SAEDI Barriers in SA

The lack of MIS staffAn inadequate training programAn unsatisfactory communication linesPoor awareness about EDIStandardized business operating

procedure

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IT BarriersIT Barriers

Lack of technical expertise either by– Service providers or– Organizations the users

Shortage of technical skilled employeeLack of technical support by IT

suppliersLack of Knowledge about IT

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ClosingClosing

Government – Education– Promoting – Employment– Leading

Private – Need to be computerized – Treat IT as a competitive weapon – Joint venture and strategic alliances