Magazine article CMA - the Management Accounting Magazine

Understanding Electronic Commerce

Magazine article CMA - the Management Accounting Magazine

Understanding Electronic Commerce

Article excerpt

Most organizations are still using business systems that are severely out-of-date because they are paper-driven. They are using organizational structures designed to handle paper going up and down the hierarchical pyramid. More and more businesses, as well as governments, are being forced to re-engineer the way they conduct their day-to-day business as paper systems are converted to electronic.

The wide-spread use of PCs and electronic mail has meant that we can communicate more easily, and more efficiently. Electronic messages have other advantages, too. They don't have to pass through customs or immigration or postal services, and best of all, they avoid all the bureaucratic intermediaries in an organization.

The idea of electronic data interchange (EDI) is the transmittal of data from computer application to computer application by electronic means, including translation and communications, using a commonly accepted standard. The key is the last part of this statement. Without a standard, an accepted standard, recognized by an accepted standards body, it is not EDI. Standards are the primary condition for EDI. Less clear, however, is how EDI fits into the concept of electronic commerce.

Electronic commerce is so new that it defies precise definition. It is still a concept. It is both a technological concept and a business concept.

Electronic commerce may be thought of as a horizontal assembly line, or an electronic assembly line, where EDI is but one part of that line. An important question centres on how to get the data on to that assembly line.

One of the more puzzling aspects of electronic commerce today is the amount of information keyed manually. EDI is only the electronic transmission of data from computer to computer.

More and more companies and government departments are getting away from the manual keying of data to an electronic form of entry. Instead of manual data capture, they are making use of automated data capture, which in itself is defined as a means of capturing data without the hand encoding of keyboard entry. Bar coding, scanning and imaging are some of the methods employed in automated data capture.

Roger Cadaret, a respected EDI/electronic commerce expert, has a fuller definition of electronic commerce. He calls it "the application of advanced information technology to increase the effectiveness of commercial practices between trading partners. …

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