A Method to Assess Expected Net Benefits of EDI Investments

Martijn R. Hoogeweegen and René W. Wagenaar
International Journal of Electronic Commerce
Volume 1, Number 1, Fall, 1996, pp. 73 – 94.

Abstract: In this paper we analyze how small and medium-sized enterprises (SMEs) operating in the Port of Rotterdam can be supported in the assessment of electronic data interchange (EDI) investments in terms of expected net benefits. In contrast to many other industry sectors, where a dominant hub actor is able to enforce wide-scale adoption of EDI by spoke SMEs, port communities need more ex-ante insights into the benefits that may accrue from EDI before they decide to allocate part of their scarce monetary resources to investments in this technology. There is a need for a cheap method of quantifying bottom-line savings from EDI in a traceable way.

A literature survey shows that none of the existing IT evaluation methods satisfies these criteria. Therefore, we developed a new tool, called Edialysis, which aids in the decision-making process in terms of whether investments in EDI may yield a positive net present value, given a context-specific set of interorganizational communication scenarios.

This paper discusses the method’s scope, design, and underlying plan. In addition, a case study conducted at a forwarder operating in the Port of Rotterdam illustrates the results one may obtain from the Edialysis application.

Key Words and Phrases
: benefits of information technology, cost-benefit analysis, electronic data interchange.