REVIEW OF LITERATURE

However, there is also evidence that the level of EDI activity is higher within the United States than in Europe.

It is confirmed that electronic trading requires organization to co-operate, agreeing the form of electronic messages and collectively committing themselves to invest in the technical and organizational adjustments necessary.  EDI thus differs from many other information technologies in that organizations cannot implement it in isolation.  Practically, EDI needs negotiation among enterprises resulting in obliging cooperation.

This report considers in more detail the particular impacts and policy issues elicited by EDI in the area of standards and telecommunications.  The evidence for EDI having direct and indirect impacts on employment is also considered.

The links between public administration and commercial organizations represent a special case.  The state agencies lack the commercial pressures to seek efficiency improvements through IT innovations faced in the private sector.  It is significant that the most highly developed public administration EDI application across Europe is in customs declarations, where information and processes are largely standardized.

One study which directly addressed the organizational impacts was COST 320.  This project studied the impact of EDI on the transport sector in fourteen European countries.  It reveals that most respondents disagreed with the statement that EDI leads to job losses (61 percent), however 26 percent agreed, the majority being large companies and shippers.  Only 13 percent of companies admitted that EDI had led to a reduction in clerical staff, nearly balanced by 10 percent who said they had to take on staff.  However, of the companies who did not admit to making reductions, 20 percent of the total forecast that they would make reductions in the future and 16 percent admitted that turnover had increased without the need to engage additional staff.  It may be deduced from this that the gross employment impacts of EDI may be disguised by EDI being implemented in companies increasing their market share and also postponed as companies gain sufficient experience of EDI and volumes of EDI traffic to adequately assess its impact on workload.  In the early stage of EDI adoption, when electronic and paper-based systems are operating in parallel, labor savings will be small.  These savings may increase as EDI applications become mature.  The paper-based management of inter-organizational relations is still a labor intensive process in many sectors so it is in these organizations with large processing that EDI will have its most significant employment impacts.  The slow build-up and limited extent of labor displacement arising as a direct result of EDI mean that there will be little requirement to adjust employment policies in the light of EDI.

The indirect employment impacts of EDI are very hard to estimate, but will probably be greater than the direct impacts.  The wide span of electronic markets may remove the intermediary’s role, bringing buyers and setters into direct contact.  The reports gives the example of the Easigo electronic market for surplus oil field equipment in which the electronic market allows buyers and setters to interact directly, in contrast to the traditional situation where a broker would buy the surplus equipment and then use his knowledge of the market to find a buyer.

National governments and the European Commission realized the efficiency and effectiveness of a wide range of industries in fostering electronic trading so that the potential of EDI came in their mind.  However, EDI is not a matter of targeting individual firms and persuading them to adopt, it is a network technology identifying groups of organizations which trade intensively and persuading them to collectively implement EDI, and identifying the technical and infrastructural barriers to the formation of active communities.

Early EDI programs, such as the UK Vanguard program, focused on basic awareness, providing information on standards, examples of best-practice and reports on the viability of EDI in a range of communities.  The Vanguard program may have facilitated the diffusion of EDI in Britain by raising awareness, but the low circulation of its outputs raises doubts about this.  It clearly failed to catalyze new EDI trading communities.  More successful have been programs targeted at the formation of communities (e.g. VEDI).  The CEC TEDIS program represents a concerted use of all these tools, ranging from support for message development through the creation of case-studies to the sponsorship of inchoate communities.

Florida Revenue Dept. Gains Vendor Help in Implementing Mandatory EDI

According to ec/edi Insider Volume II Issue 19, this case study is about the Florida Department of Revenue that was gearing up to implement a new state law requiring its largest taxpayers to make monthly sales tax filings via EDI.  Under the program, businesses earning more than 50,000 USD. in sales tax must begin filing their returns via EDI in order to eliminate expensive mathematical, data entry and mailing mistakes.  This required less than 5 percent of Florida’s businesses to file electronically.

According to Mike Estes, lead sales and use tax specialist for Wal-Mart in Bentonville, he admitted that EDI helped them eliminate a lot of errors.

The large retail outlets sent the Department about 40,000 different store reporting locations so it could share that information with local governments.  Previously, they were sending the Department spreadsheets and filling out forms listing the 300 or 400 locations.  Now they can basically import that data from their electronic spreadsheets to an EDI format and send it to the Department of Revenue.  It greatly reduces the chance of a transposition error, a data entry error, where they leave out the location or they put in the wrong dollar amount.  They confirmed that the most significant benefit of the EDI system is that it eliminated a lot of paperwork between the businesses and the state that didn’t add much value.  The second strategic advantage is that the Department already had to pay certain contract costs associated with its Electronic Fund Transfer (EFT) program.  Now the businesses can do EDI and EFT for basically the same amount of money from the state’s perspective which is a cost avoidance for the data entry and the math audit portion of all these things.  The third strategic advantage of the EDI is that taxpayers can now warehouse their payments by filing on the 11^th and instructing payment to actually settle on the 20^th when it’s due resulting in no chance of a late penalty.

From the state’s point of view, it gets 75 percent of its revenue from its largest taxpayers in the bank error-free the next day.  They believed that once EDI is fully implemented, it saves a whole lot of processing time and basically gets error-free distributions to local governments.  If there were errors, clerical error or mathematical errors, basically that money got suspended until that error was resolved.

Besides Florida, there are another 14 states being in the process of implementing EDI (Florida Department of Revenue, 904/487-2747; Baca, Winston, Stein and Associates, 281/342-2646.).

Lawmakers Hope to Give EDI a Shot in the Arm for Government Notices

According to EDI Insider Volume I, Issue 9, Mark Brasher, professional staffer for the House Government Reform and Oversight Committee’s government management subcommittee, an initial draft of “The Electronic Reporting Streamlining Act of 1996” has six primary goals of the effort as follows:

1. Streamline government-wide use of electronic data transmissions in place of paperwork submissions to federal agencies from non-federal persons, including businesses and state and local governments.

2. Ensure that full advantage is taken of private-sector standard-setting for electronic data transmission.

3. Reduce costs to business and government by avoiding further proliferation of incompatible formats and methods for transmitting data in an electronic format.

4. Stimulate government adoption of comprehensive standards for electronic data exchange.

5. Increase effective public access to data and other forms of information transmitted to or from any federal agencies, through electronic means.

6. Minimize costs to the public of reviewing, obtaining, and searching for data and other forms of information that are available in electronic form.

Mark pointed out that the state agencies did not realize the importance of EDI so that they had to determine how best to make EDI a priority for agencies.  The issue has been slow to spark that interest, in part because lawmakers did not realize the impact such legislation could have on government information collection practices and policies.

The Future of Electronic Commerce: Will EDI Make The Cut?

According to ec/edi Insider Volume II, Issue 19, some researchers are predicting that EDI will be faded out and gave way to a more interactive, internet-based technology called Direct Data Interaction (DDI) within the next few years.  However, traditional electronic commerce/EDI vendors still committed to supporting EDI users.  At the same time, they are expanding their focus to additional technology solutions for business customers.

Key vendors disagree with the assessment that EDI is on the way out.  They believe that EDI is certainly going to change in a major way over that time horizon, but will continue to play a key role in the emerging electronic commerce (EC) future.  Some said that EDI is powerful about structured standard.

According to Jim Travers, president and general manager, Harbinger Software Division, they are very committed to EDI while they are doing a lot of things to open their products up that will comprehend giving the customer the flexibility to implement the EC solution in an open environment, even to the extent that they now have products that they are marketing that they allow a customer to securely take a transaction and send it via the Internet or via their VAN and they will provide either service.

As far as EDI itself is concerned, Dave Dodge, president, Commerce Business Division, Sterling Commerce, believes it will continue to be for some time and it is working well and extremely cost effective.  A lot of companies would not commit and invest in a new technology unless they see the payback.

E-Commerce and E-Business

According to IBM Company, E-Commerce is online shopping including wholesale and retail.  It is about conduction business-to-business transactions with customers, suppliers, vendors, and others who are impacted by company's value chain.  It is happening now because more and more people gain access to the Web.  And they are shopping online.  It also provides a level of convenience they want, need, and demand.  We can view E-Commerce as a combined technology between Internet and marketing.   Data will be spreading all around the world within a very short time.  As a result, purchasing and selling can be made anywhere very rapidly and efficiently.   However, since E-Commerce is Internet based, the target group is thus limited to Internet users.

Comparing among  radio audience, television watchers, and Internet surfers, radio has to spend  38 years to have 50 million audience worldwide, while television needs 13 years to have the same audience.   Internet however requires just only 4 years.  According to the research done by I.D.C. Company, the number of Internet subscribers is approximately 150,000  and the number Internet users is approximately 600,000.   The growth rate is around  30 percent, which is considered to be very high.  Therefore, the trend of E-Commerce is auspicious as well.

Internet technology is available and cheaper than EDI.  Moreover, it is efficient because it can support several kinds of communication such as Business to Business, Business to Consumer, Consumer to Consumer, and Business to Government.  It is clear that the suppliers, retailers, wholesalers, distributors, and etc. can make trading transactions among themselves via E-Commerce or even between these groups and government.  This widespread technology status is 33 percent up from 1998 to 1999.

Factors Affecting EDI  

Literature review on technological change indicates that it affects organizational change (Castells, 1996: 169).  One of the most direct expressions of systemic change is the transformation of employment and occupational structure, which have been found effects on EDI.

Policy Evaluation

Policy has been defined as “a purposive course of action followed by an actor or set of actors in dealing with a problem or matter of concern” (Anderson, 1975: 3). 

Thomas R. dye (1981 : 366) stated that “Policy evaluation is the assessment of the overall effectiveness of a national program in meeting its objectives…”

The evaluators have the responsibilities to describe the details of program that will lead to the achievement of its objectives or the effectiveness of the policy.  However, according to Posavac and Carey (1992 : 24), evaluation has variety of models emphasizing a valuable aspect of evaluation.  To construct indicators for effectiveness, Evaluation Studies Review Annual is used for literature review (William, 1975).

Goal-based evaluation will be focused since this evaluation measures the degree to which stated goals are achieved.  Examining goals and objectives seems to be an essential aspect of evaluation.  This is the outcomes evaluation where the actual program outcomes are compared with desired outcomes (goals) (Patton, 1986).  It is represented by pretest versus posttest performance on standardized achievement tests. 

When EDI had been implemented, organizations and many groups interest are involved.  They may be directly affected by or involved in program activities.  Therefore, according to stakeholder-based evaluation, there is the need to incorporate the interests of multiple groups or stakeholder in an evaluation (Mark and Shotland, 1986).

Impact evaluation will be done on

The model to be proposed is based on various sources; review literature on Implementing an EDI in Thailand, policy evaluation, and the EDI feasibility study done by Andersen Consulting.

This formative evaluation included in this proposed model is toward the goal-based model of policy evaluation by Posavac and Carrey.