Sunday, October 12, 2008

Interorganizational Information Systems and Virtual Corporations

In today's global market, companies operate all over the world. Firms need interorganizational information systems (IOSs) to keep them connected to each other and able to efficiently run their businesses. An interorganizational information system (IOS) is a "communication system that allows routine transaction processing and information flow between two or more organizations." IOSs improve processing efficiency and support both collaboration and communication. By linking the information systems of business partners, IOSs are able to reduce costs, improve information quality, compress cycle time, eliminate paper processing, and make information exchange easier.

Four major IOS infrastructure technologies:
  1. Electronic data interchange (EDI): electronic movement of business documents between business partners
  2. Extranets: extended intranets that connect business partners
  3. XML: a companion or even replacement for EDI systems that is emerging as a B2B standard
  4. Web services: emerging technology for integrating B2B and intrabusinesss applications
A virtual corporation (VC) is an "organization composed of two or more business partners, in different locations, sharing costs and resoures for the purpose of producing a product or service." In a VC, each partner utilizes its core compentencies or special advantages to create a portion of a product or service. The modern VC can be described as a "network of creative people, resources, and ideas conncected via online services and/or the Internet, who band together to produce products or services."

Some of the most prominent types of IOSs include:
  • B2B trading systems: designed to facilitate trading among business partners
  • B2B support systems: nontrading systems that support B2B activities
  • Global systems: connect two or more companies in different countries
  • Electronic funds transfer (EFT): transfer money among financial institutions
  • Groupware: facilitate communication and collaboration between and among organizations
  • Shared databases: reduce communication time
  • Systems that support virtual companies

Source: Information Technology for Management: Transforming Organizations in the Digital Economy 6th Edition (2008) by Efraim Turban, Dorothy Leidner, Ephraim McLean, & James Wetherbe

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