Electronic Data Interchange Adoption in Saudi Arabia

1
Electronic Data Interchange Adoption in Saudi
Arabia

• Dr. Mohammed A. T. Al-Sudairy
• Assistant Professor
• Business Department
• Faculty of Economics Administration
• King Abdul Aziz University, Jeddah
• E-mail MAS_at_KAAU.EDU.SA

2
Presentation Layout

• Introduction
• EC and EDI
• Methodology
• Findings
• Conclusion

3
Inter-Organization Systems

• Electronic Data Interchange (EDI)
• Electronic Commerce (EC)
• Electronic Fund Transaction (EFT)
• Electronic Mail (E-mail)
• Electronic Form (EF)
• Integrated Massaging and
• Shared Database

4
Electronic Commerce

• EC is the handling of business transaction over
  communication networks.
• EC is not enabling technology but it is simply
  conducting business electronically through
  enabling technology such as EDI, VANs and
  Internet.

5
Electronic Commerce Categories

• Business to Business (B2B)
• Business to Consumer (B2C)
• Business to Government (B2G)
• Government to Consumer (G2C)
• Consumer to Consumer (C2C)

6
Electronic Data Interchange

• EDI is the electronic transmission of business
  data between or within firms in structured,
  computer processable data format, which permits
  information to be transferred without re-key from
  computer application in one location to computer
  application in the other location.

7
EDI Components

• EDI Standards
• Communication Standards
• EDI Software
• EDI Networks

8
Sender
Receiver
Application
Application
Translator
Translator
Communication Software
Communication Software
VAN
EDI Network
9
Translating from a Human Readable to a
Machine Readable Standard Format
Quantity Unit No. Description
Price 1 CSE 6900 CELLULOSE
SPONGES 12.75 12 EA P450
PLASTIC PAILS .457
4 EA 1640Y YELLOW DISH DRAINER
.95 1 DZ 1507 6 PLASTIC FLOWER
POTS 3.00
From
ANSI X12 FORMAT IT111CSE12.75VC6900 IT12
12EA.457VCP450 IT134EA.95VC1640Y IT1
41DZ3VC1507
To
Application systems e.g. accounts system
EDI Translator
ANSIX12 Invoice
10
EDI Interface
Application System
Application Interface
Application System
EDI Translator
Application System
Communications Interface
11
Communications Interface
EDI Interface
Application System
EDI Translator
Application Interface
Application System
Application System
12
EDI Benefits

• Reduced overhead costs
• Reduction in labour
• Increased accuracy
• Improved communications and management control
• Improved inventory control
• Enabled retailers to be more responsive to
  consumer needs

13
Motivation Factors

• Strategic
• Better communication with trading partner
• Remaining competitive
• Butter customer service
• Reducing stock

• Operational
• Quick response access to information
• Increase data accuracy

14
EDI Barriers

• Difficulty of a cost/benefit evaluation
• The need to keep in use two information systems
• Standardisation
• Externalities of EDI applications can overstep
  the firms boundaries and modify the business and
  market perspective from competition to
  collaboration.
• Resistance to change.

15
The Ned for EDI in SA

• To participate in international free trade
• To liberalise trade and economic
• To become a member of WTO

16
Factors influencing the Decision to use EDI

• Organization size
• External Pressure
• Competitors
• Local customers or suppliers
• Overseas customers or suppliers

17
Methodology Sample

• An Exploratory Study
• Survey
• Questionnaire
• The Sample
• 297
• 40
• Response
• 126 (37)
• 34 use EDI
• 92 None user

18
(No Transcript)
19
Finding

• Job Title
• 47 MIS Manger
• 17 CEO
• 15 MIS Employee
• Annual Sale
• 42 25-199 MSAR
• 41 gt200MSAR
• 17 lt25 MAR

20
Finding / Pressure

• Local Suppliers
• 7
• Local Customers
• 7
• Overseas Suppliers
• 26
• Overseas Customers
• 5

21
Hypotheses Results

• Variables Chi-Q Sig
• Organization size 2.27 0.32
• Competitors use EDI 7.26 0.02
• Pressure local sup 3.25 0.07
• Pressure overseas sup 12.3 0.00
• Pressure local custm. 20.88 0.00
• Pressure overseas custm. 3.00 0.08

22
EDI Barriers in SA

• The lack of MIS staff
• An inadequate training program
• An unsatisfactory communication lines
• Poor awareness about EDI
• Standardized business operating procedure

23
IT Barriers

• Lack of technical expertise either by
• Service providers or
• Organizations the users
• Shortage of technical skilled employee
• Lack of technical support by IT suppliers
• Lack of Knowledge about IT

24
Closing

• Government
• Education
• Promoting
• Employment
• Leading
• Private
• Need to be computerized
• Treat IT as a competitive weapon
• Joint venture and strategic alliances