Racheal,
I don't doubt that the cost savings are a product of process
re-engineering, but it still stands to reason that if EDI is the enabler
or facilitator of that change then it most certainly stands to reason that
the cost savings are a benefit of EDI. If not for EDI, why change the
business process. That's the way we've done it for many years. I say
this tongue in check because innovation is the mothers milk of cost
savings, competition and change.
I've said this before and I'll say it again. Most organizations do not
couple process re-engineering with the implementation of EDI with mixed
results. I liken it to putting a jet engine on a biplane. They take it
up and let it rip and then stand there wondering why they ripped the wings
off of it. It's costly, clumsy and just about any other adjective you can
think of. I have never in my ten+ years of doing EDI and working in the
field seen any business couple the two in a manner that would lead to
innovation. Most of the time EDI forces process change on them and it
ends up being done on the fly. I cant think of any other scenario which
could be more costly to a business then this mix.
Bottom line, integration of any technology EDI, XML or any other massive
change in how you operate will inherently bring with it a process change.
It can be planed where costs can be managed and the most bang for the
dollar can be achieved or it can be forced where you end up pumping
dollars down a bottomless hole. I think that most businesses fall into
the later category.
----------
From: Rachel Foerster[SMTP:[EMAIL PROTECTED]]
Sent: Wednesday, June 14, 2000 5:33 PM
To: [EMAIL PROTECTED]
Subject: Re: Request for Cost Justification Studies To Support The
Adoption of EDI
William,
Notwithstanding the rosy picture painted in the article you referenced
below....nor other cost/benefit projections that have been published over
the years, one cannot cost justify EDI. The benefits are achieved ONLY
when
you integrate data interchanges at every step of the supply chain COUPLED
with business process improvements. My personal opinion is that what
oftentimes are pointed to as benefits of EDI are actually benefits
realized
as a result of business process improvements.
This topic has been discussed ad nauseum over the past several years with
no
hard, documented, substantive data being brought forth. Everything is
based
on projections, estimates, and "what we plan to achieve."
Rachel
> Adoption of EDI
> --------------------------------------------------------------
> -----------------
>
> Matt Jillings, of PaperFree, is preparing "a cost
> justification document
> detailing the cost savings to be realized from the adoption
> of X12 EDI."
> He wants "some actual case studies, including the statistics on cost
> savings, and which factor in and detail the associated costs of
> hardware, EDI translation software, consulting, VAN charges,
> etc, etc.."
> He wants more detail than the typical "Executive Summary" provides.
>
> Dear Matt:
>
> By coincidence, Dave Darnell, of Systrends, Inc., asked
> pretty much the
> same question last month. But I've seen no answers on EDI-L. Are
> cost-justification studies something that people always talk about but
> never do?
>
> You might be able to find meaty detail on EDI cost justification by
> looking at past issues of the Journal of Electronic Commerce (formerly
> EDI Forum), at http://www.faulknergray.com/ecommerc/jec.htm. Every
> self-respecting EDI professional should have at least one or
> two issues
> of this journal on their desk, even if they've never cracked it open.
> It demonstrates seriousness and depth. You can find article
> samples at
> http://www.faulknergray.com/ecommerc/re2000.htm, and a
> complete list of
> all Journal articles at http://www.faulknergray.com/ecommerc/ebks.xls.
>
> Also, the article "Business-to-Business EC Activity in Small
> Manufacturers," by Jonathan A. Morell, Ph.D. and Mark E. Brown, Ph.D.
> reprinted from The Journal of Electronic Commerce Volume 12, Number 2,
> 1999, is available at http://jamorell.com/ECOTS_article/article.html.
> Of special interest will be the section entitled "Cost
> justification for
> integrated EDI."
>
> But cost justifying EDI involves a lot of work, what with
> estimating the
> costs of business process integration and VANS and translators and
> staffing and training, balanced against the expected benefits
> of on-time
> delivery and greater customer satisfaction. Why not take
> the easy way
> out? Get the CEO on a plane. He (and I say "he" only because men are
> more gullible than women) is sure to read the in-house
> airplane magazine
> which has all the answers to EC. It will certainly hype XML.
> Then when
> he comes back from his trip, he'll demand that XML be implemented
> because it is free over the Internet, doesn't require
> translators and is
> easy to read and understand. And do this now, costs be damned.
>
> CEOs suspend their usual bean-counting conservatism and
> skepticism when
> it comes to XML. These are the same folks who'll toil countless hours
> poring over spreadsheets working out how many working men and
> women need
> to be laid off in order to justify the next round of
> management bonuses.
> Regardless how this offends your notion of how the world should work,
> get over it: you should use XML hysteria to your advantage. Agree to
> move the company to XML and put any price tag you want on the
> project -
> it will be approved in any case.
>
> Then do what you needed to do in the first place: buy a
> translator (but
> call it a "B2B exchange system"), productivity tools, negotiate with
> trading partners, map documents, reengineer processes, contract with a
> VAN (but remember - it's now called an "eBusiness Hub"), etc. etc. I
> know this sounds like hard work and is a money sink, but remember: you
> have an unlimited budget.
>
> The only thing left is to gussy up this real business solution in XML:
> take the EDI that we all know and love, and place it in something like
> XEDI wrappers, described at http://www.xedi.org/, and voilą,
> you're XML
> enabled! If you don't like XEDI, there are other wrapper
> proposals - it
> doesn't really matter which one you use. If you think this is a silly
> and roundabout way of implementing EC automation, remember that it
> worked for RosettaNet on their first go-round.
>
> William J. Kammerer
> FORESIGHT Corp.
> 4950 Blazer Memorial Pkwy.
> Dublin, OH USA 43017-3305
> (614) 791-1600
>
> Visit FORESIGHT Corp. at http://www.foresightcorp.com/
> "Commerce for a New World"
>
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