Business Value of Information Technology: A Study of Electronic Data Interchange.

Author List: Mukhopadhyay, Tridas; Kekre, Sunder; Kalathur, Suresh;
MIS Quarterly, 1995, Volume 19, Issue 2, Page 137-156.
A great deal of controversy exists about the impact of information technology on firm performance. While some authors have reported positive impacts, others have found negative or no impacts. This study focuses on Electronic Data Interchange (EDI) technology. Many of the problems in this line of research are overcome in this study by conducting a careful analysis of the performance data of the past decade gathered from the assembly centers of Chrysler Corporation. This study estimates the dollar benefits of improved in formation exchanges between Chrysler and its suppliers that result from using EDI. After controlling for variations in operational complexity arising from mix, volume, parts complexity, model, and engineering changes, the savings per vehicle that result from improved information exchanges are estimated to be about $60. Including the additional savings from electronic document preparation and transmission, the total benefits of EDI per vehicle amount to over $100. System wide, this translates to annual savings of $220 million for the company.
Keywords: Business value; electronic data interchange; information handling costs; information technology; inventory costs; transportation costs
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List of Topics

#101 0.227 edi electronic data interchange b2b exchange exchanges interorganizational partners adoption transaction trading supplier factors business suppliers impact network commerce efficiency
#182 0.128 percent sales average economic growth increasing total using number million percentage evidence analyze approximately does business flow annual book daily
#231 0.093 information management data processing systems corporate article communications organization control distributed department capacity departments major user hardware cost applications expansion
#151 0.091 costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#4 0.082 characteristics experience systems study prior effective complexity deal reveals influenced companies type analyze having basis conducted determine complex comparative drive
#114 0.070 performance firm measures metrics value relationship firms results objective relationships firm's organizational traffic measure market study improve accounting measuring aggregate