Magazine article CMA - the Management Accounting Magazine

Managing and Auditing EDI Systems Development

Magazine article CMA - the Management Accounting Magazine

Managing and Auditing EDI Systems Development

Article excerpt

The benefits of electronic data interchange systems are enormous, but such systems are only justified if they are protested by adequate controls.

In today's "information society," the impact of information technology (IT) on business and our everyday life cannot be under-estimated. Electronic data interchange (EDI)--the computer-to-computer exchange of business documents in a standard format between trading partners--is an excellent illustration of IT operating at its best as organizations strive to be more efficient and effective.

While the successful application of EDI technology has been well documented, the risks demand proper management. A proactive mindset to identify and prevent pitfalls, coupled with rigorous analyses of the necessary checks and balances performed in the early stages of systems development, can ensure information accuracy, timeliness and authenticity. This approach to EDI systems development may require managers and auditors to work together in ways perhaps never done before.

From a broad-based perspective, managing an EDI project is no different from managing any major application system under development. We therefore expect that project risks are assessed, development methodologies followed, and project controls exercised to effect an orderly progression towards implementation. Project management issues common to all large-scale development projects are therefore not discussed here. Rather, new areas of control concern from the viewpoint of the project manager and the user coordinator are highlighted. Also illustrated is the expanded role of the information systems auditor as an information systems consultant operating proactively and cooperatively with the rest of the project team.

The emergence of inter-enterprise systems

In a recent report published by the Gartner Group Inc. on EDI software and services vendor evaluation, EDI is seen as a tool to develop "inter-enterprise systems" that are likely to introduce fundamental changes, not just in the way a company operates, but also in the very definition of the company itself. Inter-enterprise systems require the project team to work closely with the systems/user personnel from other companies to form a development platform that will be the basis for mutually beneficial joint systems and project management.

Also known as "cooperative systems," this concept has far-reaching implications for project managers. They must look beyond the traditional systems boundaries of their own organization to search for solutions that benefit all partners, recognizing that any EDI system is only as good as its weakest link.

In dealing with various project groups (development, MIS, user or management), each group is expanded to work with the trading partner's counterpart. Accordingly, EDI project controls must include proper relationship management with the project team from the trading partners' organizations. The appointment of EDI coordinators or representatives from both the business and systems areas is an important success variable in EDI implementation.

Implementation issues

Some frequently-cited implementation roadblocks during the life cycle of an EDI project must be removed or given considerable attention before an EDI project is launched. These include:

* lack of strategic perspective * absence of senior management

commitment * differing levels of sophistication among

trading partners * failure to integrate EDI into existing

application systems and operations within

an organization * fragmented marketing of EDI to

management and potential users.

Until these hurdles are overcome, the implementation phase will be prolonged and expected benefits will not be realized. To ensure a winning EDI implementation, project managers have to concentrate on the new implementation issues attendant on this technology, such as:

* focus on business strategy, not just on

EDI as a system with promising

features or functions; * treat EDI first and foremost as a

product or, even better, as an extension of a

product line; * build relationships with trading

partners; * ensure that EDI receives executive

commitment, management acceptance,

and employee buy-in; * merge EDI with existing information

systems for potential organization-wide

benefits. …

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