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176 Part 1 Introduction

Like a common telephone network, the standards [software] components and better interfaces – which
should make it easier to create connections, but they equals better inter-operability’, says Mr Barrenechea.
can do nothing if the people on either end of the line are As with any sales pitch from the technology industry,
talking a different language. however, it is as well to be wary of the hype.
If different companies in the same industry, or
Source: Richard Waters, New architecture or just new hype? Financial
different business partners, adopt different software Times, 8 March 2006
platforms, there will still be a need for the expensive
manual work to link the systems together.
‘You will have to spend the same amount of money on Question
systems integrators that you spend today’, says Mr Graf. Discuss the extent to which SOA will reduce
Despite that, the new service-oriented technology reliance on a single provider of enterprise software
should still represent a leap forward from today’s mono- and increase flexibility in deploying new applications
lithic IT systems. Even the sceptics concede that the and functionality.
gains could be substantial. It should lead to ‘better

EDI

Transactional e-commerce predates the World Wide Web and service-oriented architecture
Electronic data by some margin. In the 1960s, electronic data interchange (EDI), financial EDI and elec-
interchange (EDI)
tronic funds transfer (EFT) over secure private networks became established modes of
The exchange, using
digital media, of intra- and inter-company transaction. In this section, we briefly cover EDI to give a histori-
structured business cal context. The idea of standardized document exchange can be traced back to the 1948
information, particularly
for sales transactions Berlin Airlift, where a standard form was required for efficient management of items flown
such as purchase orders to Berlin from many locations. This was followed by electronic transmission in the 1960s in
and invoices between the US transport industries. The EDIFACT (Electronic Data Interchange for Administration,
buyers and sellers.
Commerce and Transport) standard was later produced by a joint United Nations/European
Financial EDI committee to enable international trading. There is also a similar X12 EDI standard devel-
Aspect of electronic oped by the ANSI Accredited Standards Committee.
payment mechanism
involving transfer of funds Clarke (1998) considers that EDI is best understood as the replacement of paper-based
from the bank of a buyer purchase orders with electronic equivalents, but its applications are wider than this. The
to the bank of a seller.
types of documents exchanged by EDI include business transactions such as orders, invoices,
Electronic funds delivery advice and payment instructions as part of EFT. There may also be pure information
transfer (EFT) transactions such as a product specification, for example engineering drawings or price lists.
Automated digital

transmission of money Clarke (1998) defines EDI as:
between organizations
and banks. the exchange of documents in standardised electronic form, between organisations, in an
automated manner, directly from a computer application in one organisation to an appli-
cation in another.
DTI (2000) describes EDI as follows:
Electronic data interchange (EDI) is the computer-to-computer exchange of structured
data, sent in a form that allows for automatic processing with no manual intervention. This
is usually carried out over specialist EDI networks.
It is apparent from these definitions that EDI is one form, or a subset of, electronic com-
merce. A key point is that direct communication occurs between applications (rather than
between computers). This requires information systems to achieve the data processing and
data management associated with EDI and integration with associated information systems
Internet EDI such as sales order processing and inventory control systems.
Use of EDI data standards According to IDC (1999), revenues for EDI network services were already at $1.1 billion
delivered across
non-proprietary IP in 1999 and forecast to reach over $2 billion by 2003. EDI is developing through new stan-
networks. dards and integration with Internet technologies to achieve Internet EDI. IDC (1999)