Electronic Data Interchange (An in depth Analysis of Technological and Security Issues) Presented by Vinod Kumar Jain Student, M. Tech (CS by Research) SCSIT, DAVV, Indore Presentation Overview Conceptual Framework of EDI Historical Background of EDI Generations of EDI EDI Process EDI Standards Advantages of EDI Applications of EDI Limitations of EDI EDI System Planning Life Cycle Analysis of IS Environment Determination of EDI Opportunities EDI Issues Cost/Benefit Analysis Risk Assessment EDI Technology Infrastructure Considerations Development of EDI Implementation Plan Conclusion Objectives To study the technological Aspects of EDI To Propose system Planning for EDI implementations on the basis of available literature and case studies. To study data security and EDI messaging Security To Propose best security algorithm for EDI data Security Electronic Data Interchange EDI is the electronic transfer of information between two trading partner’s systems using a set of transactions that have been adopted as a national or international standard for the particular business function. EDI is the computer-to-computer exchange of standardized business documents, such as purchase orders, product information and invoices or EFT. Historical Development Developed in 1960's to help organizations to interact more economically with channel partners. Reduced time, reduced errors, reduced labor was expected. In 1968,a small group of shippers and carriers gathered and formed Transportation Data Coordinating Committee (TDCC ). In 1979, several Industry groups led by credit research foundation (CRF ), petitioned the ANSI and formed Accredited Standard Committee X12 Standards to exchange the information. In 1987, a world wide accepted UN/EDIFACT standard for exchanging electronic data was developed. Less than 5% businesses implemented EDI during 90's. Even Today, world wide only 12% of the business houses have implemented EDI. Generations of EDI Time Intensive People Intensive First Generation Paper documents were prepared, mailed through postal system, then opened, sorted and key punched by the recipient. This process requires more HR. Resulting into more errors due to re-keying of data. Most of the businesses were telephone dependent. The Transcript Trail Print Transcript Re-key Data Receive Mail Transcript Student Information System Recipient’s Student Request Information Transcript System Second Generation EMAIL HUMAN INTERFACE FAX Email, Fax and Voice mails were used as the means of information exchange. But all of these requires Human Intervention which leads to inefficiency, error introduction, loss of time. Third Generation MACHINE -TO-MACHINE INTEGRATED DATA TRANSFER AUTOMATED BUSINESS CYCLE Third Generation Agreement for usage of same data formats resulted onto a significant reduction in errors and re-work expenses. For exchange of data TRANSPORTATION DATA COORDNATING COMMITTEE (TDCC) was created and due to early success of this various other standards like Uniform Communications Standards (UCS), Warehouse Network Standards (WNS) were created. The Transcript Trail with EDI Print Transcript Re-key Data Receive U.S. Mail Transcript Student Information System EDI Recipient’s Student Request Information Transcript System The EDI Process EDI is a multi-directional, electronic transmission of information, using standardized formats, and typically involves the following processes: The sender creates internal information of a data file for transmission. The data file then is entered into a software program called an EDI translator, which transforms the message into an EDI standard message, known as an EDI document. The EDI Process (cont..) • The resulting document is then transmitted by the sender to the receiver over the Internet or private network. – The process is reversed at the receiving end. – The EDI document is inputted into the EDI translator that translates the data from its current EDI format into a file that can be assembled or mapped into the receiver’s computer system. – It also creates a functional acknowledgment, which is transmitted back to the sender. A functional acknowledgment only represents the Trading Partners Interchange Standards Value Added Networks Translation Software Telecommunication Computer System access - modem & Applications EDI Standards There are four major sets of EDI standards: The UN recommended UN/EDIFACT is the only international standard and is predominant outside of North America. The US standard ANSI ASC X12 (X12) is predominant in North America. The TRADACOMS standard developed by the ANA (Article Numbering Association) is predominant in the UK retail industry. The ODETTE standard used within the European automotive industry Advantages Of EDI Quick access to Information. Better customer service. Reduced paper work. Better communication. Increased productivity. Cost efficiency. Accurate and improved billing. Faster order placement. Reduction in error. Limitations of EDI Firms have to incur extra cost for hiring and training staff. Needs highly structured protocols. Added security cost to safe guard confidential information from unauthorized access. It does not allows consumers to communicate or transact with vendors in an easy way. Applications Of EDI Companies continually reviews and adds new EDI transactions based on the business initiatives, market needs and recommendations from business partners. Currently, Companies uses EDI for the following business applications and much more... Administration - product catalogs and price lists Sales Analysis - sales and inventory information Purchasing/Order Management - orders, acknowledgments, order status, and changes Shipping and Receiving - shipping, notification, proof of delivery, and customs information Billing - invoicing and statements Payment Applications - payment remittance EDI System Planning Life Cycle Determine Business and Information Needs Analyze Business Environment Determine EDI planning Scope and Objectives Analyze IS environment Define EDI Targets Determination of EDI Opportunities Define EDI Target Application Define and Select EDI Strategies Develop EDI Strategies Develop Implementation Plan System Planning for EDI Implementations Analysis of IS Environment Developing an understanding of Existing IS Environment which includes Application Systems, Technology Infrastructure and Organizational Structure Assessment of Current IS Environment to form a basis for Identification of EDI opportunities, Development of EDI Strategy and Formulation of Migration Approach. System Planning for EDI Implementations… Determination of EDI Opportunities Development of detailed understanding of organization’s business environment at business process level Defining Business process uses of Data Identification of Opportunities in Using EDI to support Organization’s business needs and Strategic Initiatives which includes: Understanding organization’s core business functions Optimization and coordination of information flows between the organization and its trading partners through external linkage analysis. System Planning for EDI Implementations… EDI Issues Integration of EDI in Application Software A modification of the processing logic of some existing applications together with development of Some new applications A complete redesign and development of an organization’s application portfolio. System Planning for EDI Implementations… Cost/Benefit Analysis A proper understanding and estimation of beefit is to be carried against the cost of EDI Implementation Tactical Benefits Strategic Benefits Better Product Awareness Product ior service differentiation Improved Customer Support Competitive Corporate Cost Structure Efficient Information Delivery Penetration of new Markets Shortened Product development time Increased responsiveness to customers Improved Quality Control Improved customer relations and loyalty Reduced inventories Reduced bargaining powers of buyers and suppliers Improved relationships with suppliers Strengthen supplier alliance System Planning for EDI Implementations… Risk Assesment The following types of Risks need to be assessed before EDI Implementations Market Concept Risk (Judged by Customer acceptance) Technology Risk Economic Risk Organizational Risk Regulatory Risk (Govt Interference) System Planning for EDI Implementations… EDI Technology Infrastructure Considerations 1. Positioning Increasing No of trading Partners Increasing no of EDI Applications Projected business growth Changing IS Infrastructure (of the orgn or trading partner) Electronic integration with business partners such as JIT Manufacturing Changing EDI technology (Event driven EDI or real time/Interactive EDI) 2. Transmission of EDI Data Direct or Point to point Transmission (Suitable to interact with limited partners) Third Party or Value Added Network (VAN) 3. Centralization of EDI System Functions A single and centralized installation of translation and communication software avoids duplication of development and maintenance efforts Development of EDI Implementation Plan Firstly, Organizations should start with the pilot project which act as a vehicle for organizational learning, focus on making the technology work and determining impact on organization, securing the senior management support for EDI Program based on understanding of implementation process and business implications. Its success depends upon the following Factors: Identification of EDI Opportunities Selection of EDI Transaction, standards, and trading partners Selection of VAN supplier Analysis of procedural and information flow of selected transactions. Assessment of impact of EDI implementation on existing business process. Issues related to operational staff affected by implementation Providing training and promoting EDI program internally and externally Acquiring necessary resources such as Skilled staff, hardware and software. Conclusion Organization have adopted EDI to expand the automation of business processes beyond traditional corporate boundaries. EDI has become the tool to streamline business activities. It also facilitates the cooperation and coordination between customers and vendors. EDI is the facilitator for achieving improvement in overall quality by fewer errors, reduction in processing time, less human intervention and minimized unproductive time. Thank You..!!!