chapter 8 interorganizational and global information systems
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CHAPTER 8 INTERORGANIZATIONAL AND GLOBAL INFORMATION SYSTEMS. Learning Objectives. Describe the role, benefits and structure of interorganizational systems Distinguish between interorganizational and global information systems - PowerPoint PPT PresentationTRANSCRIPT
1 Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 8 Interorganizational and Global Information Systems
CHAPTER 8INTERORGANIZATIONAL
AND GLOBALINFORMATION SYSTEMS
2 Introduction to Information TechnologyTurban, Rainer and Potter
Chapter 8 Interorganizational and Global Information Systems
Learning Objectives Describe the role, benefits and structure of
interorganizational systems Distinguish between interorganizational and global
information systems Describe EDI and compare a traditional EDI with an
Internet-base EDI Define extranets and explain their infrastructure, types and
benefits Describe planning and other issues related to
interorganizational and global systems
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Chapter Overview
Interorganizational Information Systems• Response to Business Pressures• Types of Interorganizational systems
Global Information Systems• Who Needs Global Systems?• Benefits of Global IS• Issues in Electronic Global Trading• Global E-Commerce
Electronic Data Inerchange and Electronic Funds Transfer• EDI and IOS• EFT and IOS
Extranets• Components and Structure• Types• Benefits
Implementing IOS• Security• Ethical and Social Issues• Planning
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The Problem
Case: The Harper Group Collaborates With Honda in International Trade
highly competitive environment where hundreds of freight moving companies in the United States and abroad operate
large amounts of information flow among several trading partners and support services
HOW TO EFFECTIVELY MANAGE THE INFORMATION?
HOW TO DO IT AT COMPETITIVE PRICES?
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Case (continued…)
Use information technology that links the computers of involved organizations, resulting in a paperless flow of routine information
The Solution
The Results allows cheaper, faster, and more reliable information to flow among all business partners supports Harper’s global business maintains the company’s position as the second largest trading facilitator in the United States operates the company with thin profit margins adopted an intranet for improving the internal operations in 1997
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What have we learned from this case??
Case (continued…)
Global information system - EDI» enables efficient flow of large amounts of transactional
information among several business partners around the globe
» keeps current customers» attracts new customers
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Interorganizational Information Systems (IOS)
Objective efficient processing of transactions, such as transmitting orders,
bills, and payments
Major Characteristics determine customer-supplier relationship in advance built around privately or publicly accessible networks
» employ value-added networks (VANs) when use telecommunications companies for communication
use the Internet with either an electronic data interchange (EDI), with extranets, or with EDI/Internet
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IOS (continued …)
IOS Response to Business Pressures reduce the costs of routine business transactions improve the quality of the information flow by reducing or
eliminating errors compress cycle time in the fulfilment of business
transactions, regardless of geographical distance eliminate paper processing and its associated inefficiencies
and costs make the transfer and processing of information easy for
users
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Types of Interorganizational Systems Global systems - information systems connecting two or more companies in two
or more countries
Electronic data interchange (EDI) - the electronic movement of standard business documents between business partners
Electronic funds transfer (EFT) - the transfer of money using telecommunication networks
Extranets - link the intranets of business partners
Shared databases - databases that can be shared by trading partners, often used to reduce time in communicating information between parties as well as arranging cooperative activities
Integrated messaging - delivery of electronic mail and fax documents through a single transmission system that can combine electronic mail and electronic business documents
IOS (continued …)
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Global Information System
Global Information System connect companies located in two or more countries
Who Uses Global Systems? Multinational Companies
» companies that operate in several countries
International Companies» companies that do business with other companies in different
countries
Virtual Global Corporations» joint ventures whose partners are form different countries
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Effective communication at a reasonable cost Effective collaboration with groupware
software, Group DSS, extranets, and teleconferencing devices
Organizations access each other’s databases and frequently work on the same projects while their members are in different locations
Benefits ofGlobal Information System
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Issues in ElectronicGlobal Information System
Cultural Differences many different aspects ranging from legal and ethical
issues to what information is considered offensive localization - use different names, colors, sizes, and
packaging for overseas products and services Economic and Legal Differences
differ considerably in their economical and legal environments
Transfer of Data Across International Borders cross-border data transfer - several countries impose
strict laws to control the flow of corporate data across their borders; to protect the privacy of their citizens
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Access to larger markets, the possibility of saving on taxes, and the flexibility to employ workers and manufacture products anywhere using a world telecommuting workforce
Benefits the Internet and the extranets resulted in an
inexpensive and flexible infrastructure can do business anytime and from anywhere can do it rapidly at a reasonable cost
Global Electronic Commerce
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Barriers Legal barriers
» jurisdiction issues, export/import regulations and compliance; contacts
» Intellectual property (enforcement of ), privacy, and content issues» Cryptography (encryption), security, authentication procedures,
and notarized documents» Cross-border transactions, as described earlier» Consumer protection (e.g. liability for wrong transactions)
Market access barriers» building a telecommunications infrastructure capable of
accommodating all users and all types of data is a necessity
Global Electronic Commerce (continued …)
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Global Electronic Commerce (continued …)
Barriers Financial barriers
» including taxation, customs and electronic payment systems, different currencies
Others» need to match buyers and sellers across international borders and
establish trust between them» existence of cultural diversity» lack of sufficient international agreements» deciding on the collection of sales and other taxes» compliance with diversified export/import regulations and fees» need for language translation (the Web page, transactions)
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Electronic Data Interchange (EDI) Elements of EDI
Data formatting standards» to shorten the length of the messages, reducing long distance telephone
charges and eliminating data entry errors EDI translators
» conversion of data into standard format
Private line (VANs) versus the Internet VANs-based EDI - expensive, high security and capacity, incompatible
hardware and software of the telecommunication companies Internet-based EDI - less security and capacity as compare to VAN-
based EDI, but cheaper; requires coordination and integration with the company’s back-end processing systems
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Order-delivery CycleWith and Without EDI
Without EDI
With EDI
Start
Specifier
Purchasing
Accounting
Mailroom
ShippingReceiving
Buyer
P.O. delivery
Order confirmationBill delivery
Sales
Accounting
Mailroom
ShippingReceiving
Seller
Receiving
Buyer Seller
Start
Specifier
POStandardized PO Form
PO
Invo
ice
Flas
hre
port
Shipping
EDI transmissions Computer Generates Standardized P.O. Form
Instant data to :•Sales•Manufacturing•Engineering
Automatic billing
Automatic order confirmation• Approval• Prices• Availability
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Benefits of EDIBenefits How the Benefit is Achieved?
Speed, volume EDI enables companies to send and receive large amounts of routine transaction information quickly around the globe in a paperless environment
Sales and other information is delivered to manufacturers, shippers, and warehouse almost in real time
Once EDI documents are received ,they are automatically forwarded to the appropriate department for processing
Accuracy There are very few errors in the transformed data as a result of computer-to-computer data transfer. Information is also consistent
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Benefits of EDI (continued …)Benefits How to Benefit is Achieved?Collaboration Companies can access partners databases to retrieve and store
standard transactions
Commitment EDI fosters true (and strategic) partnership relationships, since it involves a commitment to a long-term investment and the refinement of the system over time
Profit The time for collecting payments can be shortened by several weeks, benefiting the recipients of payments
Cost saving EDI creates a complete paperless transfer processing environment, saving money and increasing efficiency
EDI enables a just-in-time environment, which means lower (or no) inventories for manufacturers
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Manufacturing - to communicate with suppliers, customers, and other business partners
Retailing - to streamline deliveries of goods from the suppliers to the stores and reduce inventories
Global trade - to shorten the elapse time by 70% or more and to reduce administrative expenses by 30%
Service Industry - used EDI and its companion, electronic funds transfer, for a long time
Large trading networks - provide efficient and effective trading environments (e.g. TradeNet)
EDI Applications
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Electronic Funds Transfer (EFT) transfer of money to and from financial institutions using
telecommunication networks used as an IOS, a global system, and a communication system
among organizations and to individuals fast - reduces delays associated with sending hard-copy
documents and it eliminates returned checks security issues - how can a business ensure that a hacker is
not bilking corporate accounts by electronically transferring funds to his account, or that competitive snoops are not gaining a complete picture of corporate financial assets?
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TradeNet (Singapore)(1) Trader fills up Inward declaration form on the terminal.
(2) TDB retrieves and approves Inward declaration (It is an import permit).
TDB
(3) TradeNet automatically forwards approved Inward declaration to Customers
Tradenet
(4) Customers retrieves and approves Inward declaration (It is a customs permit).
(5) Trader prints a form for Customs clearance (trader may inquire status of declaration at any time).
(6) Port Authority retrieves data required for delivery of cargo.
Port Authority
Trader
Customers
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Extranet A network that links business partners to one
another over the Internet by providing access to certain areas of each other’s corporate intranets
Components Servers
TCP/IP protocols E-mail Web browsers as
the Internet
StructureExtranet
Company A
Intranetcorporate data, e-mail,orders, customer data,inventory, documents
Company B
Intranet
Other userscustomers, suppliers,
contractors, distributors, government
Corporate employees
travelling or at home
Internet
Internet InternetInternet
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A company and its dealers, customers, or suppliers centered around one company
An industry’s extranet (Trading Network) teamed up and created by the major players in an
industry (e.g. the automotive industry)
Joint ventures and other business partnerships used as a vehicle for communications and collaboration
among several companies partnering in a joint venture
Types of Extranet
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Benefits of Extranets (continues …)
Fewer help-desk employees are needed Improved quality Lower communications and travel costs Lower administrative and other overhead costs Faster processes and information flow Reductions in paperwork and delivery of accurate
information in a timely manner Improved order entry and customer service Better communication
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Implementing Interorganizational Information System
Security protection mechanisms : firewalls and VPNs
Ethical and Societal Issues takes a great risk for its trade secrets, the privacy of the
employees and the controlling of some processes
Planning complex IT planning when involving several organizations several IT planning teams should be created and supported
by e-mail, extranets,and groupware
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What’s in IT for Me?
For Accounting procedures in multinational corporations and issues in
taxation include data collection and transfer and auditing For Finance
EDI and EFT have been the pioneering systems for over 20 years; now global financial services and trading
For Human Resource Management recruitment, HR development and training in a local and
multinational corporations can be improved by using IT
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For Marketing marketing and sales in global markets can be
enhanced by appropriate information systems For Production/Operations Management
the logistics systems can be greatly improved by using IOSs
For Non-Business everyone will encounter interorganizational systems
in almost any organization, public or private
What’s in IT for Me?(continued …)