Accounting Information Systems: The Processes and Controls, 2nd Edition

INTRODUCTION TO E-COMMERCE AND E-BUSINESS (STUDY OBJECTIVE 1)

THE REAL WORLD

A few years ago, Walmart effected a huge change in the EDI (Electronic Data Interchange) approach to business-to-business transactions. Although EDI had been around for many years, the technology had advanced to allow it to be conducted for free over the Internet. Yet many were concerned about the lack of secure transmission over the Internet. By 2002, Walmart felt the new security standards, called AS2, were adequate. It announced to its 10,000 small and mid-size suppliers that the suppliers had one year to begin using Internet EDI (EDIINT AS2). This was a tremendous change from its traditional EDI and value-added networks, and it had a dramatic impact not only on Walmart's suppliers but on many other large companies and their suppliers worldwide. Some call Walmart the market maker for Internet EDI. Its change to EDIINT led to a revolution of adoption of Internet EDI around the world. Since the buyer and seller have to use the same EDIINT AS2 protocol, Walmart forced a huge number of companies to switch to EDIINT, and in turn, those suppliers used EDIINT with other business customers.

Organizations use information technology to improve efficiency and effectiveness of their operations. Walmart transitioned to Internet EDI to save costs and to take advantage of the new EDI technology. In many cases this ...