The Impact of EDI Controls on EDI Implementation

Abstract

Electronic data interchange (EDI) has significantly changed business practices by eliminating paper and relatd audit trails and by allowing transactions to be processed at high speed without human intervention. The dependence of an organization on its trading parters and value-added network (VAN) increases with the number of partners and allows the possibility of sharing technology. As EDI is integrated with internal application systems and the speed of processing increases, errors in programming and data input can seriously affect the system's performance. The introduction of paperless transaction processing and procedures with external trading partners raises some serious information system control concerns. Controls must be in place to ensure that EDI systems operate efficiently and effectively. These controls are also needed to overcome potential risks and exposures inherent with integration and utilization of the system. Management must divert more resources to EDI controls to successfully integrate and utilize EDI systems. A research model proposes that EDI controls affect EDI implementation. EDI controls are classified largely into three dimensions: formal, informal, and automated controls, each of which has specific objectives and characteristics. EDI implementation has two dimensions: integration and utilization. The data was compiled from structured interviews with 110 companies in South Korea. The results empirically support the hypotheses that EDI controls affect EDI implementation.