CHAPTER 8 INTERORGANIZATIONAL AND GLOBAL INFORMATION SYSTEMS 1/9

Interorganizational information system An IOS involves information flow among 2 or more organizations. An IOS improves the timeliness and effectiveness of business procedures as well as to reduce costs. 2/9

Types of Interorganizational Systems –Global systems - information systems connecting two or more companies in two or more countries –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 IOS (continued …) 3/9

EDI It’s a process of electronically moving specially formatted shared business documents, such as orders, bills, payments and confirmations, between business partners. EDI is used primarily to electronically transfer repetitive business messages like: approvals of credit, invoices, shipping notices and so on. 4/9

Benefits of EDI BenefitsHow 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 Accuracy There are very few errors in the transformed data as a result of computer-to-computer data transfer. Information is also consistent 5/9 Collaboration Companies can access partners databases to retrieve and store standard transactions

Benefits of EDI (continued …) BenefitsHow to Benefit is Achieved? 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 6/9

Electronic Funds Transfer (EFT) transfer of money to and from financial institutions using telecommunication networks Examples: Direct Deposit, Paying mortgages, phone bills through monthly bank account deductions. fast - reduces delays associated with sending hard-copy documents and it eliminates returned checks 7/9

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 Main goal is to foster collaboration between business partners. An extranet is open to selected suppliers, customers, and other business partners. 8/9

Basically they expedite information flow Cut communication costs Expedite communication Expedite collaboration along supply chain Improve customer service Extranet (continued) 9/9