Chapter 11 Interorganizational and International Information Systems.
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Transcript of Chapter 11 Interorganizational and International Information Systems.
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Management Information Systems, Second EditionEffy Oz
Chapter 11Chapter 11Interorganizational and Interorganizational and International International Information SystemsInformation Systems
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Learning ObjectivesLearning Objectives
When you finish this chapter, you will Understand the importance of
interorganizational and international ISs.
Recognize the role EDI plays in saving costs in business operations.
Be able to describe the vertical and horizontal information integration among companies.
Know the legal, cultural, and other challenges to implementing informational exchange systems.
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Sharing Information SystemsSharing Information Systems
Interorganizational Information Systems
Systems shared by two or more organizations Built and owned by one organization Increases efficiency and effectiveness Organizations use similar systems to serve
international sites
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Vertical Information ExchangeVertical Information Exchange
Vertically related
Output of one organization used in processes of another
Integrating ISs between vertically related organizations highly beneficial Saves time and money Better serves customers
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Vertical Information InterchangeVertical Information Interchange
Figure 11.1 Vertical relationships among organizations
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Electronic Data InterchangeElectronic Data Interchange
What is EDI?
Exchange of electronic data using interorganizational information systems
Set of hardware, software, and standards that accommodate the EDI process
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Electronic Data InterchangeElectronic Data Interchange
Benefits of EDI
Cost Savings
Speed
Accuracy
Security
System Integration
Just-in-time Support
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Figure 11.2 Benefits of EDI
Electronic Data InterchangeElectronic Data Interchange
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Electronic Data InterchangeElectronic Data Interchange
Figure 11.3 Suppliers, manufacturers, and retailers cooperate in some of the most successful applications of EDI.
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Electronic Data ExchangeElectronic Data Exchange
How does EDI work? (Figure 11.4)
Supplier’s proposal sent electronically to purchasing organization.
Electronic contract approved over network.
Supplier manufactures and packages goods, attaching shipping data recorded on a bar code.
Quantities shipped and prices entered in system and flowed to invoicing program; invoices transmitted to purchasing organization
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Electronic Data ExchangeElectronic Data Exchange
Manufacturer ships order.
Purchasing organization receives packages, scans bar code, and compares data to invoices actual items received.
Payment approval transferred electronically.
Bank transfers funds from purchaser to supplier’s account using electronic fund transfer (EFT).
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Electronic Data InterchangeElectronic Data Interchange
Figure 11.4How EDI works
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Electronic Data InterchangeElectronic Data InterchangeEDI Standards
EDI requires companies to agree on standards Compatible hardware and software Agreed upon electronic form format
Established EDI standards Automotive Industry Action Group (AIAG) X.12 de facto umbrella standard in U.S. and
Canada EDI for Administration, Commerce, and Trade
(EDIFACT) umbrella of standards in Europe
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Electronic Data InterchangeElectronic Data Interchange
How to Subscribe to EDI
Larger companies purchase hardware and software
Medium and small companies seek third-party service Value-added networking (VAN) Managed network services available for a fee
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Electronic Data InterchangeElectronic Data Interchange
EDI on the Web
Advantages of Web EDI Lower cost More familiar software Worldwide connectivity
Disadvantages of Web EDI Low speed Poor security
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Electronic Data InterchangeElectronic Data Interchange
Legal Problems of EDI
Increased risk of unauthorized interception
Contractual responsibility for incomplete or corrupted telecommunications
Questionable validity of digital contracts
Protection against the ease of collaborative pricing and other activities that may violate antitrust laws
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Electronic Data InterchangeElectronic Data Interchange
Figure 11.5 Legal issues that arise from the use of EDI
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Electronic Data InterchangeElectronic Data Interchange
The Importance of EDI
Need for timely, reliable data exchange in response to rapidly changing markets
Emergence of standards and guidelines
Spread of information into many organizational units
Greater reliability of information technology
Globalization of organizations
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Horizontal Information Horizontal Information InterchangeInterchange
Horizontal Information Interchange
Organizations performing similar activities share information Real estate agencies maintain multiple listing
service Financial institutions share financial
information Airlines share reservation systems
Legal implications and risks similar to those of EDI
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Horizontal Horizontal Information InterchangeInformation Interchange
Figure 11.6 Horizontal information interchange
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International and International and Multinational OrganizationsMultinational Organizations
Multinational organizations need integrated ISs
Flow of information across borders essential
Managers increasing attention to international IS integration
Some large companies build their own international ISs
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Figure 11.7 The importance of international integration to companies with international operations
International and International and Multinational OrganizationsMultinational Organizations
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Using the Web for Using the Web for International CommerceInternational Commerce
International Web Commerce Benefits
Increased revenues Increased international Web participation Potential Web participation
Cost savings Printing and shipping costs Customer service costs
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Using the Web for Using the Web for International CommerceInternational Commerce
Figure 11.8 Worldwide distribution of people regularly online, 1999
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Using the Web for Using the Web for International CommerceInternational Commerce
Figure 11.9 Countries projected to lead in Internet use by 2005
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Challenges to Global Challenges to Global Information SystemsInformation Systems
Technological Challenges
Non-uniform information infrastructures
Payment Mechanisms
Non-uniform preferred payment method
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Challenges to Global Challenges to Global Information SystemsInformation Systems
Language Differences
Translation delays
Laws forbid foreign language accounting and other systems
Cultural Differences
Cultural imperialism
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Challenges to Global Challenges to Global Information SystemsInformation Systems
Economic, Scientific, and Security Interests Government restriction on sharing sensitive
information Varying treatment of trade secrets, patents,
and copyrights
Political Challenges Fear that access to information threatens
sovereignty Government pressure to buy only national
software
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Challenges to Global Challenges to Global Information SystemsInformation Systems
Standards
Varying standards for date format, measurements, etc.
Legal Barriers to International Data Transfer
Incompatible data privacy laws in U.S. and Europe
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Ethical and Societal IssuesEthical and Societal IssuesThe Electronic ImmigrantThe Electronic Immigrant
Electronic Immigrant Telecommutes to company in another country
Competes with local workers in foreign countries Often can work for less
Drawbacks Reduced government control of foreign labor Pockets of unemployment in host country
Advantages Ultimately benefits consumer by lowering costs Helps limit ‘physical immigration’ Satisfies unmet demand for developers