Summary Report:
Survey of the EDI Capability of

July-November 1993
Roger Clarke and Kevin Jeffery
Department of Commerce
Australian National University
23 April 1995

Electronic Data Interchange

Electronic Data Interchange (EDI) may be most easily understood as the replacement of paper-based purchase orders with electronic equivalents. A more careful definition of EDI is 'the exchange of documents in standardised electronic form, between organisations, in an automated manner, directly from a computer application in one organisation to an application in another'.

EDI's direct impacts are to reduce the amount of data capture and transcription and the delay between despatch and receipt of messages. These generally result in a decreased incidence of errors, less time spent on exception-handling, and fewer data-caused delays in the business process. Benefits can be obtained in such areas as inventory management, transport and distribution, administration and cash management. It offers the prospect of easy and cheap communication of structured information throughout the corporate community, and is capable of facilitating much closer integration among hitherto remote organisations.

The GPIE Surveys

In late 1989, a team from the Australian National University's Business Information Systems group, with financial support from the Bruce Fund, conducted a survey of all agencies of the Federal Government. The resulting report was published in September 1990 as the 'Survey of the Practices and Intentions of Commonwealth Government Agencies in Relation to EFTS, EFT/POS and EDI'. The survey concluded that "in technical terms EDI is still maturing, but has now been demonstrated insufficient settings that few people would doubt that it will grow dramatically over the next few years". Agencies were generally expectant of fast growth in volumes, and fast development of new systems. The primary barriers preventing or retarding the application of EDI were shown by the survey to be internal, with external factors cited in only a very few cases.

Using the funds generated from the first survey, the Group conducted a further survey in late 1991, focussed on EDI alone (GPIE II). The resulting report was published in September 1992, and concluded that "There has been considerable growth in EDI use by Commonwealth agencies during the last two years. This has been in a variety of different classes of EDI, but there has been only a limited growth in purchasing-related schemes. Unsurprisingly, however, the growth has not been as dramatic as responses to the previous survey suggested it might be". Those organisations which had implemented EDI, generally considered that the systems had produced sufficient and in some cases significant benefits. The primary constraints on faster growth were once again internal, especially the technology legacy, but also slow organisational adaptation to exploit the technology. A moderate number of organisations did, however, consider that the lack of EDI- capable business partners was a significant constraint.

In 1993, the group conducted a third survey of EDI Practices and Intentions of Agencies of the Commonwealth Government (GPIE III). This found that there had been disappointingly little progress during the previous two years, with only a couple of genuinely new schemes having been launched and only a few new participants won over to existing schemes.

A moderate number of organisations nominated that they intended to implement EDI schemes, particularly in the purchasing area. Many of these, however, were medium- rather than short-term plans, and some were clearly presaged on the assumption that a strategic impetus would be forthcoming from the Commonwealth Government. In addition, fully 40% of respondent agencies intended spending precisely nothing on EDI during the next two years. It was apparent that the key barrier to the take-up of existing schemes had become the lack of critical mass. It was a classic case of an initiative which was in everyone's interest, but no-one's interest; that is to say that individual agencies can gain little from EDI unless a sufficient number of business partners also commit.

Design of the SECSAGA Survey

In 1993, the Commonwealth policy agency, Purchasing Australia, sought information on the use of EDI by major suppliers to Commonwealth government agencies. It therefore commissioned the Research Programme in Supra-Organisational Systems to undertake a Survey of the EDI Capability of Suppliers to Australian Government Agencies (SECSAGA). This is the report on that survey.

The supplier population was defined as the top 250 suppliers to the Commonwealth Government, as identified by contracts published in the Commonwealth Government Gazette during the financial year 1992/93. This number was chosen on the basis that it was a manageable size, was likely to result in sufficient responses to provide a clear picture of the current situation in the marketplace, and because the number and value of contracts per company below the top 250 was not great. The Electronic Yellow Pages directory was used to locate the companies' addresses. Several further companies whose addresses could not be identified with any confidence were removed. This resulted in a total of 243 suppliers.

The instrument was developed with reference to questionnaires previously used by Electronic Trading Concepts Pty Ltd (ETC) for several State Government surveys, and by the Research Programme for the GPIE surveys. A series of discussions was held with Purchasing Australia. The questionnaire was tested with colleagues at the A.N.U., and piloted with a major Sydney-based corporation which was not on the list of suppliers, but was known to be actively using EDI with several of its customers. The questionnaire-based survey was supplemented by structured interviews with six of the respondents, who were users of EDI.

Conduct of the Survey

The questionnaires were despatched on 9 September 1993, and a single reminder was mailed to non-respondents on 27 September 1993. A total of 110 of the 243 questionnaires were returned, for a response-rate of 45%. This is a very high response rate for a mailed questionnaire survey, reflecting awareness of and interest in the topic, and credibility of the instrument in the eyes of the recipients. The complementary structured interviews were conducted during the third quarter of 1993.

The quality of responses was variable. Some respondents gave every appearance of understanding, and having answers to, all questions. Other questionnaires showed evidence of comprehension difficulties, and internal inconsistencies. It was apparent, however, both from the high response rate and the nature of the replies, that the questionnaire was taken very seriously by the managers who completed them and the executives who took responsibility for the replies.

On the basis of response rate, informal analysis of the respondent and non- respondent groups, and the structured interviews subsequently undertaken, the research team beleives that a reasonable degree of confidence can be felt in the representativeness of the findings in this report.

Current EDI Practices

Of the 110 responding suppliers, 40 stated they were using EDI for some purpose. Of those 40 respondents, 38 nominated a Network Service Provider (NSP), which suggests that there was little misunderstanding of the meaning of an EDI system.

The respondents were asked to nominate which organisation was the major sponsor of the EDI scheme they were involved in. Their own company was nominated (22 times), industry associations (10), and an EDI NSP (9). There appears to be no single existing scheme upon which the Commonwealth could readily build a critical mass of usage. This reinforced the judgement already made by the Department of Administrative Services that a gateway was needed, in order to facilitate connections to multiple schemes operating through multiple NSPs.

The use of EDI document standards was promising, with 35 of the 40 respondents stating that they used document standards. By far the most common were EDIFACT and ANSI X12, each nominated by 25 respondents. Also used were NEDIX/NEIS and proprietary standards.

Cost savings were only identified by 8 of the respondents, with the others stating that cost savings had not yet been made. Of these, 5 stated that costs savings were expected in the near future, especially when EDI was integrated into other applications, and 7 organisations noted that they didn't actually know whether or not cost savings had been achieved.

Around half of the respondents provided evidence of receiving other benefits from using EDI, especially better data or communications, improvements in service, reductions in leadtimes, and improvements in customer relations.

Current EDI Practices with Customers

A total of 33 of the 110 respondents used EDI with their customers. Of these respondents, 21 had fewer than 10 customers using EDI, 5 had between 10 and 100, and 3 had more than 100 customers using EDI. The only clusters appearing among the responses were the customers Alcoa and Pacific Power (5 suppliers each), and the health and hospital area.

Respondents were asked how many sales-related EDI transactions they had sent to customers during the financial year 1992/93, and how many they had received. The distribution of their responses was as shown below:

	Number of Transactions	Sent	Received
	No Response	15	7
	Zero	7	1
	1 - 99	1	7
	100 - 999	4	11
	> 1000	6	7
This table confirms that respondents received more transactions from their customers using EDI than they sent, reflecting the fact that the purchase order was the most-used EDI document type. Interesting responses deserving of separate mention were: The major reasons provided for not receiving benefits were that few of their custromers are EDI-capable, EDI has not been integrated with applications, application software was not EDI capable, and the EDI NSPs were not sufficiently well interconnected.

Non-Use of EDI

At least as important as the questions as to who is using EDI and why, is "who is not using EDI", and "why not"? The dominant reasons given for non-use were that few of the respondents' customers were EDI-capable, EDI did not offer sufficient benefits to the organisation, their application software did not support EDI, and the organisation's current technology could not support EDI.

Respondents were asked whether and when they intended to implement EDI. Of the 70 respondents to the question, over half had plans to implement an EDI system, most of those within the following two years. Only five of the respondents had no intention of implementing EDI.

EDI and Electronic Commerce Generally

For current users to benefit from EDI, a critical mass of users is needed, and promotional measures are required to raise awareness and encourage new users. Respondents were asked what measures the Commonwealth Government or other organisations should take to promote EDI. The most frequent areas in which respondents wanted encouragement to be provided were: Respondents were asked whether the organisation used any of a range of coding and product description schemes. Around half of the respondents used the original manufacturer's identifier, with some use of APNA/EAN codes, and of the NATO Defence Suppliers catalogue number. There does not yet appear to be any significant convergence onto common standards, except within specific industries (in particular APNA / EAN/ bar-coding in the retail sector), and in sectors dominated by a single supplier or customer.

A number of ways of making database, directory and sales catalogue data available to customers are possible, and respondents were asked which methods the organisation was using or seriously considering. A number of suppliers nominated using on-line databases, downloadable databases, and CD-ROMS, with many more considering them. Many were also considering using electronic bulletin boards.

Implications for Government Policy

The following considerations are indicative that the Commonwealth Government must play a significant role in stimulating growth in EDI traffic: It is apparent that the Commonwealth could gain the greatest return, and for a moderate investment, if it were to concentrate its efforts on a small number of focussed projects. In this way, it can build on existing clusters of EDI capability, enable those schemes to achieve critical mass, and generate an aura of success around the technology. Hence both aims can be achieved, viz. the specific aim of improvements in the effectiveness and efficiency of government procurement, and the more general aim, of improvements in the effectiveness and efficiency of Australian business as a whole.


Of the 243 largest suppliers to the Commonwealth Government, 110 replied to the survey. A 45% reply is very high for such a survey, indicating a considerable level of interest among these companies in dealing electronically with the Commonwealth. Of the 110 respondents, 40 are EDI-capable (37%). Of these, 33 (30%) are exchanging EDI messages with some of their customers (the remainder only with their suppliers).

The schemes in which these companies are participating are many and varied. So too are the standards being used, and the EDI network services suppliers to which they are connected. Almost half of the EDI-capable companies are connected to more than one EDI network services supplier. Multiple standards and networks are a fact of commercial life.

There is evidence of different companies and sectors perceiving EDI as making different strategic contributions. On the basis of the responses to this survey, purchasing dominates (14 clear references), with logistics second (8) and financial settlement third (6). The opportunity exists for the Commonwealth to build upon this preparedness to conduct business transactions electronically.

The SECSAGA project, in combination with previous surveys, has:

Roger Clarke is Reader in Information Systems at the Australian National University, and has directed the Research Programme in Supra-Organisational Systems since its inception in 1988.

Kevin Jeffery is a consultant with Electronic Trading Concepts Pty Ltd of Sydney, having completed undergraduate and graduate studies in accounting and information systems at the Australian National University.

Short Bibliography

Clarke R.A., Pedler M., Swatman P.M.C. & Campbell P.C. [GPIEEE] 'Commonwealth Government Practices and Intentions Relating to EFTS, EFT/POS and EDI: Survey Report' 100pp., Department of Commerce, A.N.U., September 1990

Clarke R.A., Campbell P.J. & Telfer S.G. [GPIE II] 'EDI: The Practices and Intentions of Agencies of the Commonwealth Government: 2nd Survey Report, 1991/92' 140pp., Department of Commerce, A.N.U., September 1992

Clarke R.A. & Jeffery K. 'GPIE III: Government Practices and Intentions in Relation to EDI: 3rd Survey Report, September-December 1993' 90pp., Department of Commerce, A.N.U., December 1993

Clarke R.A. & Jeffery K. 'SECSAGA: Survey of the EDI Capability of Suppliers to Australian Government Agencies: July-November 1993' 70pp., Department of Commerce, A.N.U., December 1993, rev. May 1994

Clarke R.A. 'EDI in Australian International Trade and Transportation' Proc. Conf. 7th Int'l EDI-IOS Conference, Bled, Slovenia, June 1994

Clarke R. 'EDI Adoption and Usage in Australian Government Agencies - 1989-1994' Proc. Conf. 5th World Congress of EDI Users, Brighton, United Kingdom, 14-17 June 1994


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