EDI is more than just a technology. It represents a business arrangement between the buyer and seller in which they agree, in advance, to the terms of their relationship. For example, they agree to the selling price, the quantities to be sold, guaranteed delivery times, payment terms, and methods of handling disputes. These terms are specified in a trading partner agreement and are legally binding. Once the agreement is in place, no individual in either the buying or selling company actually authorizes or approves a particular EDI transaction. In its purest form, the exchange is completely automated.
EDI poses unique control problems for an organization. One problem is ensuring that, in the absence of explicit authorization, only valid transactions are processed. Another risk is that a trading partner, or someone masquerading as a trading partner, will access the firm’s accounting records in a way that is unauthorized by the trading partner agreement. Chapter 12 presents the key features of EDI and its implications for business. EDI control issues are discussed in Chapter 16.
RE ENGINEERING USING THE INTERNET
Doing Business on the Internet
Thousands of organizations worldwide are establishing home pages on the Internet to promote their products and solicit sales. By entering the seller’s home page address into the Internet communication pro- gram from a PC, a potential customer can ac