How can we beat the growing complexity of electronic business and procurement ?

For many years the main obstacles and impediments to the uptake of e-procurement, e-business and e-invoicing were divergent legislation and technical complexity. Although the European Commission devoted much effort to increase legal certainty and reduce technical complexity, companies are still reluctant to implement. Many decision-makers are concerned about the multiplicity of solutions available on the market, the cost of implementation and the number of business partners that can be connected. But most of all, they are overwhelmed by the data and process integration complexity.

Despite all standardization initiatives - this complexity is increasing, mainly due to:
- the growing number of platforms and networks which are not interoperable

- the existence and growth of more non-interoperable proprietary and national standards

- ERP systems that do not have a standardized process-aware interface

In my view - the lack of interoperability across the multitude of networks and the inability of providers to fully relieve clients from the complexity of implementation are to be regarded the main reasons for the loss of trust and confidence.

The main challenges to fight complexity are: more openness and insight; and more safeguards and guarantees for implementers.

- More openness and insight

Selecting the right solution and service provider from the variety of options available on the market is hard. Companies when asking providers, are told everything, - technology platform, data standards, network connections, integration tools and other resources - needed to establish these kind of services is readily available. In general providers estimate the cost and complexity of integration to be low and promise to fully relieve organizations from the burden of connecting trading partners. They often forget to indicate what precisely is understood and how much effort is required from the organization itself and its trading partners.

Moreover, we all know, the success of establishing inter-firm communication and collaboration processes depends a lot on the readiness of the industry or market sector in which a company operates and on the maturity of information processes and systems of enterprises. But providers neglect this critical aspect in their estimations and proposals, because their commitment does not cover repetitive effort to contact and convince partners nor does it include solving integration challenges.

It is my belief that companies should not rush into adventures without proper preparation and consultation of experts in the field. If you want a fair and unbiased opinion, start with executing a readiness assessment, get a clear view on the capabilities of your enterprise information system (ERP or CRM) and determine your short and long term business goals and strategy. Do not forget to develop your business case and remember it is not only about costs, but also sustainability, customer intimacy, competitive advantage, compliance with governmental regulations are factors to consider. Last but not least, consult your trading partners and investigate what is being done in the industry.

Providers, to prepare for success, should provide better and more detailed information about the characteristics of their systems such as: number of already connected partners, information flows and processes; number of operational network connections; and the required involvement of internal technical and business specialists. Too often communicated figures drop to lower levels after contracts are signed, which results in a lot of questions, frustration and disappointment.

More openness from both sides and insight in strengths and weaknesses are boundary conditions for making the right choices and realizing defined goals.

- Establishing more guarantees:

Interoperability is not about Interoperability Agreements between service providers but about delivering quality solutions and services. Nowadays the availability of Interoperability Agreements is the main argument to attest interoperability abilities. However demonstrated proof is the only key for a qualitative judgement about a given solution or service. When implementing e-procurement or e-business it is not about what is possible or supported in the (near) future but about what is available from the start.

In my opinion it is time to install a "European Standards and Interoperability Conformity Assessment System" to assure that solutions and services deliver what providers claim and to give confidence to decision-makers. Besides, conformity promotes fair competition and stimulates quality improvement.

The conformity assessment system should be managed by a European Organization for Technical Assessment of e-Procurement and e-Business systems.

This organization has to develop
- a set of clear principles that will allow interested parties to have confidence in the process of providing conformity assessment [USCAP 2011]

- a document describing the process of performing conformity assessment

- a technical specification describing interoperability requirements

- an operational infrastructure for performing interoperability tests

Much work has already been done within the first and second phases of the Global e-Business Interoperability Test Bed project (GITB).

The Global e-Business Interoperability Test Bed project (GITB) focuses on methodologies and architectures that support e-business standards assessment and testing activities from early stages of eBusiness standards implementation, to proof-of-concept demonstrations, to conformance and interoperability testing.

The main and long term objective of GITB is to develop, under EU support and guidance, a set up of a comprehensive and global eBusiness interoperability test bed system in a global collaboration of European, North American and Asian partners. GITB is a global initiative hosted by CEN and supported by ETSI, EIC, NIST, KorBIT and the industry associations AIAG and IAI.

It would be great if in the third phase time could be spent on establishing an assessment and certification system for interoperability. This would drive up confidence of decision-makers in the solutions and services available on the market.

Tags: e-Business, e-Procurement, e-Invoicing

Finally all European Stakeholders stepped on board of the European train launching the new e-Invoicing awareness journey

With the launch of the European Multi-Stakeholder Forum during the first meeting on 13 September 2011 in Brussels the European e-Invoicing train moves again. Personally I really hope that the people on board are going to heat up the discussion and force a breakthrough on the adoption and diffusion of e-Invoicing. It is time for a positive sound from people who are not making money of e-Invoicing but care about economical and environmental sustainability of Europe.

The European Commission made the development of e-Invoicing an objective in the eEurope Actions plans of 2002 and 2005, as well as in the i2010 strategy and in the Competitive and Innovation Framework Programme (CIP). To realize these goals the European Commission, at the end of 2006, formed an informal Task Force of industry experts with the objective to pave the way for future work on a European e-Invoicing Framework (E.E.I.F.).

In July 2007 the Informal Task Force reported that Electronic Invoicing could significantly reduce supply chain costs across Europe, help streamline business processes and drive innovation. The Task Force recommended the creation of a European e-Invoicing Framework that encourages/fosters the development of interoperable e-Invoicing solutions/services and forms the basis for realizing legislative and procedural change. They concluded with recommending the formation of a European e-Invoicing Steering Committee that should take overall responsibility for designing the European e-Invoicing Framework by the end of 2009 and should act as the focal point for consolidating European business practices.

In a follow-up to the recommendations of the Task Force the European Commission in October 2007 decided to set up an Expert Group on e-Invoicing with the goal to deliver the E.E.I.F. The Expert Group started their work in February 2008 with identifying the scope and nature of the E.E.I.F. After due considerations of all viewpoints – positions and opinions – the Expert Group concluded that the E.E.I.F. should take the form of a set of coherent recommendations – actionable recommendations and proposals – designed to promote the uptake of e-Invoicing. Moreover the Expert Group stated that these recommendations required immediate action from all interested parties.

On 30 November 2009 the Expert Group presented their Final Report wherein they included their recommendations and proposed the establishment of an EU-level Multi-Stakeholder Forum. In the opinion of the Expert Group recommendations opposed to regulations and directives are not binding for Member States. The EU-level Multi Stakeholder Forum should promote the implementation of the recommendations, guide standardization efforts and champion the further development of e-invoicing into a Single Market practice.

After the decision of the European Commission to set up a European Multi Stakeholder Forum on e-Invoicing at the end of 2010 (see IP/10/1645) it became a bit quiet. But finally after a long period of silence the establishment of the European e-Invoicing Multi Stakeholder Forum is a fact.

The first meeting of the Forum members took place on 13 September 2011 in Brussels. The Forum brings together key actors from the private and public sector of all Member States. It provides a unique platform to exchange experiences and best practices which can pave the way to the broad-scale adoption of e-invoicing at both national and EU level. The Forum is going to monitor the uptake of e-invoicing in all Member States and should help the Commission in identifying further measures to facilitate the mass adoption of e-invoicing across borders.

It is time to make some progress towards realizing the previously expressed recommendations, instead of issuing new recommendations. Apart from encouraging the Member States to implement the Council Directive 2010/45/EU the focus should be on intensifying the word-of-mouth communication to key decision makers of companies and enterprises in Europe. During the past years most organizations have become numb and overwhelmed by the numerous promotional campaigns of solution and service providers. These types of promotion and advertisement reached such a level of repetition and saturation that decision-makers have lost focus - the wear-out of e-Invoicing has started.

To boost e-Invoicing there is a need for more interpersonal word-of-mouth communication and face-to-face interaction with early adopters of e-Invoicing demonstrating the real results and benefits they achieved.

Looking at the list of participants I feel confident this new Stakeholder Forum is going to succeed in getting e-Invoicing on the right track in Europe. The majority of participants stems from national and European organizations not focused at selling e-Invoicing solutions or services.

Tags: e-Invoicing

Last update: 26-11-2011

Using the power of OOXML for bringing electronic invoicing to SME's

During the past years Albalia Interactiva, a Spanish consulting firm, has developed solutions for managing XML-based invoices using Microsoft Office. Albalia Interactiva is a company specialized in systems that provide legal certainty for electronic transactions.

In 2009 Albalia has developed an add-in for Microsoft Word 2007, called FactOffice, that enables the management (issuing, receiving and visualizing) of electronic invoices based on the Spanish XML format Facturae.

In 2010 Albalia upgraded the functionality to Microsoft Office 2010 (Word and Excel), rebranded the name to OffInvoice and extended the supported XML formats. Now the solution supports Facturae V3.1 and V3.2, UBL (Universal Business Language) and the UN/CEFACT Cross Industry Invoice, commonly known as CII.

Both solutions are developed as an extension to the Ribbon User Interface, the task-oriented Graphical User Interface (GUI) introduced in Office 2007, and the solutions are available as open source projects on CodePlex (the Open Source Project Community site hosted by Microsoft).

There are three licenses involved:

- For the Add-in there is a Dual licensing approach:
Microsoft Public License (Ms - PL)
European Union Public Licence (EU-PL)

- For the bouncycastle library: The Legion of Bouncycastle http://www.bouncycastle.org/licence.html

- For the Backtrust signature library developed by Albalia Interactiva S.L.: http://www.backtrust.net/index.php?page=backtrust-for-offinvoice-license

The solutions use Word or Excel as a template for capturing data in the case of issuing and visualizing in the case of receiving. Additionally they enable the validation of and signing with electronic signatures in XAdES-EPES (Explicit Policy Electronic Signatures) and XAdES-X-L (Extended Long-term Signatures) formats (XAdES).

For installing the add-in download the installer for FactOffice or OffInvoice from the CodePlex site, choose FactOffice.Codeplex.com or OffInvoice.CodePlex.com. But first check the requirements to find out what software is required to run the solution.

The approach taken by Albalia uses the power of the Microsoft Office Open XML (OOXML) format and complies with the multi-purpose exchange format I described in a bloart of October 2009. In this weblog article I present the multi-purpose exchange standard as a solution for opening Electronic Invoicing on a larger scale to all companies.

Tags: Adobe XML Data Package (XDP), Open Document Format (ODF), Office Open XML (OOXML), UBL, e-Invoicing, UN/CEFACT

Last update: 24-11-2011

Start saving the climate by using e-Invoicing !

While analysts and investors have always focused on the financial position of companies, today environmental aspects are becoming of greater interest and importance. Financial investors are increasingly assessing the contribution that environmental issues have on intangible corporate value, such as brand value, customer loyalty and retention, and corporate reputation.

With the growing attention for the principles of sustainability many companies started publishing their annual Corporate Social Responsibility (CSR) achievements and/or include relevant environmental key performance indicators in their annual reports. Stakeholders want companies to disclose information about how they have performed in their value creation process, how they have maximized the value of their intangible assets and how they have / will contribute to the environmental theme of climate change.

Studies of several Research Organizations and Institutions in the past years show the environmental impact of switching from paper-based invoicing to electronic invoicing is high. One way for companies to present their commitment to the preservation of the natural environment is by implementing electronic means of doing business such as electronic invoicing and procurement.

A recent study (April 2010) of TNO - the Netherlands Organization for Applied Scientific Research - reveals that paper invoicing has an energy consumption that is almost twice as much and a CO2 emission approximately 1.5 times higher as for digital invoicing. TNO investigated the direct and indirect effects of dematerialization on the usage of energy and the emission of CO2.

To most of us the concept of dematerialization is ‘Less clear than it seems’ and that is precisely the title of a thematic exploration study executed for the Dutch Ministry of VROM (Ministry of Housing, Spatial Planning and the Environment) in September 2000 (published in January 2001). The authors of the document sided with the view that ‘the aim of dematerialization is the reduction of environmental impact of material flows’ and provided a number of definitions, visions and policy suggestions. Their dematerialization policy is aimed towards influencing the development of economic systems in such a way that the environmental impact of the material flow caused by those systems is significantly, and in absolute terms, reduced.

TNO calculated that ten million electronic invoices sent by businesses to governments (B2G) amount to energy savings of 3TJ (terajoule) and almost 200 tonne (tonne) CO2. In their report ‘Energie- en CO2-besparing door elektronisch factureren’ they concluded that switching to digital invoicing for all invoicing types (B2G, B2B and B2C) would result into energy savings of approximately 1PJ (petajoule) and a CO2 emission savings of almost 70 Kt (kilotonne).

In a similar study from 2008 by the Department of Environmental Strategies Research at the Royal Institute of Technology in Sweden, the whole paper invoice life cycle was assessed from the forestry up to and including the recycling of the paper after the legal archive period. In the report ‘Effects of the total change from paper invoicing to electronic invoicing in Sweden’ the authors present their Life Cycle Assessment approach and the results of their analysis.

The study examined the consequences of changing 1,4 billion invoices from distribution on paper to electronic distribution and concluded that this change would be beneficial. If all invoices in Sweden were to be changed from paper to electronic, a total energy saving of around 1.400 TJ-equivalents/year and reductions of greenhouse gas emissions corresponding to 39.000 to 41.000 tonne CO2-equivalents/year would be made.

A study of Methis Environmental in Belgium shows that a saving of 15.000 tonne paper and a reduction of CO2 emission between 24.500 - 33.000 tonne can be achieved by using e-Invoicing instead of printed invoices. Their calculation takes as average 900 millions of invoices printed by year and a use of 50 % recycled paper.

Before the environmental benefits will become visible to everyone a serious uptake of electronic invoicing in Europe is needed. In 2009 the number of businesses using electronic invoicing was 1,4 million and the total volume of processed e-invoices in the B2B segment was 860 million (Source: DB Research & Billintis) . With over 490 million businesses in Europe and a total of 32 billion invoices the percentage of e-invoice users is only 0,2% and the percentage of e-invoices is just 2,7%.

With such low diffusion and penetration of electronic invoicing in Europe Social and Environmental Responsibility requirements can become a perfect instrument for motivating and stimulating decision-makers to start using electronic invoicing.

Tags: e-Invoicing

Last update: 27-11-2011

SAP steaming up to become an all-round player in the cloud computing market

On 30 March 2010 SAP presented the availability of their on-demand, collaborative decision-making software called SAP StreamWork, formerly known as 12sprints. SAP StreamWork is transforming the way people work together, share information, make clear decisions and develop strategies.

Most businesses today use a range of applications, including e-mail, collaboration products, business systems and Web 2.0 applications to accomplish their work. In such chaotic and constantly changing work environments where information flows at an overwhelming pace it becomes hard to establish a clear decision-making foundation and get the proper results.

SAP addresses this challenge with SAP StreamWork, which brings together people, information and proven business methodologies to help teams naturally and fluidly work toward goals and outcomes. Teams can assess situations together, develop strategies and make clear decisions, with a full record of what transpired.

With customers looking for low-cost and easy-to consume pricing models that are flexible and can be altered to meet changing business needs, SAP is offering SAP StreamWork through a tiered subscription model that includes a free version.

To learn more about the functionality of SAP StreamWork visit the Tutorials section or watch the SAP StreamWork YouTube channel at YouTube SAP StreamWork.

Breaking down the barriers to adoption of Cloud Computing is not an easy task. It requires vision, years of technology innovation and the financial capabilities - the power - to transform vision into practice.

In the last few years SAP has worked hard to become an all-round Cloud Computing company, by acquiring and developing innovative Cloud-oriented technologies.

February 2009 - Acquisition of Coghead
On 19 February 2009, SAP acquired the intellectual property assets of Coghead, the next generation platform for building web applications.

Read more about Coghead on SAP Web 2.0 by Timo Elliot at SAP Cloud Platform.

May 2009 - Acquisition of Skydata
On 25 May 2009, SAP acquired the innovative start-up company Skydata, a new type of business mobile “Mashup” application provider, that enables fast and easy access to all enterprise business data on RIM, Windows Mobile and Apple iPhone devices.

Read more about SkyData on SAP Web 2.0 by Timo Elliot at SAP acquires Skydata for agility and mobility.

September 2009 - SAP Gravity
End of September 2009 SAP Research in Brisbane, Australia and SAP Netweaver Development presented SAP Gravity, a Business Processing Modeling Tool for Google Wave. SAP Gravity is a prototype providing real-time, cloud-based collaborative business process modeling within Google Wave.

Google Wave is Google’s new real-time collaboration platform that combines features of e-mail, social networking, wikis and instant messaging in one integrated browser-based client. Google Wave offers rich developer APIs to extend the core functionality with custom components.

SAP Gravity has been embedded as a Google Wave “gadget” that can be added within the Google Wave client. Leveraging the collaborative features of Google Wave, all business process modeling activities get propagated in near real-time to all other participants of the Wave. In addition, participants of the Wave can use all other features provided by Google and its developer community to enrich the collaborative modeling experience.

Read more about Gravity on SAP Web 2.0 by Timo Elliot at SAP Gravity Collaboration using Google Wave.

Meanwhile SAP is integrating the Gravity prototype into SAP StreamWork.

SAP Research RoofTop Marketplace
A new kind of Web-based application, known as Enterprise Mashups, has gained momentum in the last years: Business users with no or limited programming skills are empowered to leverage in a collaborative manner user friendly building blocks and to combine and reuse existing Web-based resources within minutes to new value added applications in order to solve an individual and ad-hoc business problem.

SAP Research St. Gallen in Switzerland build the SAP Research RoofTop Marketplace prototype as part of their participation in the European Framework Programme 7 project Fast Morfeo. FAST aims at providing an innovative visual programming environment that will facilitate the development of next-generation composite user interfaces. It constitutes a novel approach to application composition and business process definition from a top-down user-centric perspective.

The SAP Research RoofTop Marketplace prototype is a Web-based application based on AJAX (Asynchronous JavaScript and XML) that demonstrates the power of Mashups and presents an intuitive environment to create Enterprise Mashups without any programming skills.

Read the paper Towards A Reference Model for Grassroots Enterprise Mashup Environments.

Read more about SAP Research Rooftop Marketplace on SAP Web 2.0 by Timo Elliot at SAP Innovation Enterprise Mashup prototype RoofTop Marketplace.

SAP launched the beta release of StreamWork in February 2010 under the codename 12Sprints and managed to attract the attention of some well-known providers of web-based on-demand solutions, such as Box.net, Evernote and Scribd. These companies teamed up with SAP and embraced the software’s open architecture. They established integration with their solutions within a few weeks time.

- Box.net
Box.net, based in Palo Alto, California, was founded on a simple, powerful idea: people should be able to access and share their content from anywhere.

The Box’s cloud content management platform makes it simple for businesses to share, access and manage content online. The integration with SAP StreamWork enables users to easily add their Box content, such as research reports, marketing and creative assets, or project plans to an SAP StreamWork activity, so that relevant content can be present in the decision-making process.

Additionally SAP StreamWork users can also create Box folders directly within SAP StreamWork and associate them with a specific activity.

The integration with SAP StreamWork demonstrates - is another example of - how the cloud continues to be a viable platform for businesses of all sizes, said Karen Appleton, vice president of business development at Box.net.

Most people will know Box.net from the LinkedIn Files application that enables LinkedIn users to:
* upload, organize and manage files to share with other members
* share documents, presentations, photos, videos and audio on their profile page
* send files stored on Box.net seamlessly with other users through LinkedIn messaging system
* collaborate and connect with LinkedIn members through project files and folders

Want to learn how to use Box.net on LinkedIn watch the YouTube video LinkedIn’s Box.net Application.

- Evernote.com
Evernote is an independent, privately held company headquartered in Mountain View, California.

The goal of Evernote is to give everyone the ability to easily capture any moment, idea, inspiration, or experience whenever they want using whichever device or platform they find most convenient, and then to make all of that information easy to find.

Evernote provides a multi-platform content capture and organization service, that works across the computers and phones people are using on a daily basis. Evernote is integrated into SAP StreamWork, allowing users to pull information from Evernote directly into an SAP StreamWork activity.

“Successful teamwork requires that all stakeholders easily share their thoughts and information in order to make the right decisions,” said Phil Libin, CEO of Evernote. “From collecting research to sharing ideas, every aspect of a project needs to be well handled to ensure the best results. Evernote and SAP StreamWork make this possible.

Evernote allows individuals to take notes, save research and capture ideas anywhere using their computers and phones. That content is then automatically sent into their SAP StreamWork projects, where team members can collaborate and use the data to inform their decisions. Together, Evernote and SAP StreamWork get users from idea to decision fast.”

- Scribd.com
Scribd is headquartered in San Francisco, California, and launched in 2007. Meanwhile Scribd became the largest social publishing and reading site in the world.

On Scribd, people can easily turn any file - such as PDF, Word and PowerPoint - into a web document and immediately connect with passionate readers and information-seekers on the thriving community, through connected sites such as Facebook or Twitter and search engines such as Google.

Scribd has contributed document reader technology to SAP StreamWork allowing users to read documents in formats such as Microsoft Word and Microsoft Excel directly within the SAP StreamWork environment, without having to download or open the file in a new window. “Integrating Scribd technology into SAP StreamWork gives people access to all of the documentation they need to make informed decisions,” said Jared Friedman, CTO and co-founder, Scribd.

Read the news announcement SAP® StreamWork™ Helps Companies of All Sizes Transform the Way People Work on the website of SAP.

Tags: ERP, CRM, cloud computing, mashups

Last updated: 27-06-2010

Is Europe in the ban of the VAT Directive simplification on e-Invoicing ?

Update on the adoption of the proposed changes of the VAT Directive:

On 2 December 2010 the European Commission published their communication “Reaping the benefits of electronic invoicing for Europe” (COM(2010) 712 final) and their decision “Setting up the European Multi-Stakeholder Forum on Electronic Invoicing (e-invoicing)”(C(2010) 8467 final).

The Communication identifies a set of actions to support the uptake of e-invoicing by ensuring legal certainty and promoting the development of interoperable e-invoicing solutions based on a common standard, paying particular attention to the needs of SMEs. The Communication also invites the Member States to take action and promote e-invoicing at national level. All actions aim at making e-invoicing the predominant method of invoicing by 2020.

Reference(s):
2010/C 326/0 of 2 November 2010

COM(2010) 712 final of 2 December 2010

C(2010) 8467 final of 2 December 2010

On 13 July 2010 the Economic and Financial Affairs Council accepted the new revised VAT Directive 2010/45/EU amending the Directive 2006/112/EC on the common system of value added tax as regards the rules on invoicing. Changes issued with the proposal COM/2009/0021 final - CNS 2009/0009 from 28 January 2009 were only for a small part taken over. The most important change proposed with COM/2009/21 on removing the article 233 has been rejected. However the rules for ensuring the authenticity of the origin and integrity of the content are now extended with the use of business controls as the primary way.

Each taxable person shall determine the way to ensure the authenticity of the origin, the integrity of the content and the legibility of the invoice. This may be achieved by any business controls which create a reliable audit trail between an invoice and a supply of goods or services.

Also a proper and clear definition of what is understood with the terms authenticity and integrity are presented.

‘Authenticity of the origin’ means the assurance of the identity of the supplier or the issuer of the invoice.

‘Integrity of the content’ means that the content required according to this Directive has not been altered.

Reference(s):
CNS/2009/0009 Procedure File

VAT Directive 2010/45/EU

End Update

The European Commission on 28 January 2009 adopted a proposal to change the VAT Directive 2006/112/EC (from 28 November 2006) with respect to invoicing rules. The main objectives are to reduce burden on business, increase the use of e-Invoicing, support small and medium sized enterprises (SMEs) and help Member States tackle fraud.

The foundation of the proposal is based on “equal treatment of paper and electronic invoices” in a technology neutral way by removing the conditions for an Advanced Electronic Signature (AES) and Electronic Data Interchange (EDI). The reasoning is that e-Invoicing is part of a larger process where every process step contributes to authenticity and integrity of the trade transaction.

Several Member States and Solution Providers believe these guarantees can only be provided by electronically signed e-invoices. Removing the requirement to guarantee the authenticity of origin and integrity of content by means of pre-defined technological solutions, such as EDI and Electronic Signatures, is therefore the most challenging from a political and governmental perspective for the coming years. It requires a “paradigm shift” in thinking about audit management processes and strategies by all parties involved, whether that be Tax Authorities, Solution Providers or Small, Medium-sized and Large Companies.

Since 2006 stakeholders in Europe have been working hard on developing measures and establishing procedures for simplifying, modernising and harmonising the VAT Invoicing Rules. All the reports of experts in the field, opinion statements and position papers issued by Federations, Associations, Member-Based Communities, Government Authorities and Public Administrations indicate that a majority of stakeholders supports the simplification of e-Invoicing by establishing equal treatment of paper and electronic invoices.

The Expert Group on e-Invoicing installed by the European Commission on 31 October 2007, tasked to propose a European e-Invoicing Framework (EEI Framework), has issued their Final Report on November 2009. The recommendations of the Expert Group and the reactions from stakeholders in Europe will be taken into account by the European Commission in developing its further position on e-Invoicing.

See the final report and the consultation document: http://ec.europa.eu/enterprise/newsroom/cf/itemshortdetail.cfm?lang=nl&item_id=3875

See the final report: http://ec.europa.eu/internal_market/consultations/docs/2009/e-invoicing/report_en.pdf

The Expert Group on e-Invoicing in their Final Report ascertain that there are two key issues:
- The present European landscape of e-invoicing legislation is disharmonised. The methods set out in Article 233 of Directive 2006/112/EC have been implemented in Member States’ national legislation in widely different ways. This leaves trading parties experiencing difficulties in finding the right degree of clarity and legal certainty to encourage adoption of e-Invoicing.

- Internal business controls did not receive appropriate attention in the current legislative framework and its implementation. This is unfortunate because such controls are essential to all invoicing processes and, for most, whose systems are mature and robustly auditable, can actually provide the necessary assurance and without creating technical and operational complexity.

Based on the principles of equal treatment between paper and electronic invoices, technology neutrality and internal business controls, the Expert Group issued their recommendations. With regard to article 233 they recommend that “No legislative or other requirements should be imposed on electronic invoices above those that exist for paper invoices today”.

They furthermore state that “The Commission’s January 2009 proposal for a new VAT Directive (COM(2009) 21 final), should be adopted by all Member States and transposed into national legislation. In particular the provisions of Articles 232–237 of the current Directive on the Common System of Value Added Tax (2006/112/EC) should be removed so as to shift from technology based requirements to requirements based on equal treatment, technology neutrality and internal business process controls”.

Additionally they state “In the short term, pending the adoption of the new VAT Directive, those Member States who have not yet done so, should be encouraged to implement the option of ‘other means’ as provided for in the current VAT directive (Directive 2006/112/EC) so as to enable the practical implementation of the Expert Group’s Code of Practice”.

Despite the efforts of all those people some stakeholders start raising their concerns on the recommendations of the Expert Group and on the measures announced by the European Commission. The contributions of these stakeholders in normalisation and standardisation committees aimed at crafting meaningful and long-term simplification and harmonisation of e-Invoicing have been intense and fruitful.

Although the European Commission has not yet decided on the final outcome of the Regulatory Requirements for Electronic Invoicing recent announcements of stakeholders are jeopardizing the viability and sustainability of the hard work done and the future position of e-Invoicing.

In my opinion Europe needs an intermediate state to overcome all the discussions and enable all stakeholders to leverage technological, functional and legal innovations in the domain of e-Invoicing, e-Archiving and e-Procurement. In that respect the best European leaders can do now is to reinstate Article 233 in the proposed VAT Directive and add to it as the first option the use of a Business Control and Tax Control Framework as extensively described in the CWA 16047 - CEN / ISSS eInvoicing Compliance Guidelines or CEN / Fiscalis e-Invoicing Good Practice Guidelines.

See first version:
http://www.epractice.eu/files/media/media2331.pdf

Latest version can be found on:
http://www.e-invoice-gateway.net/knowledgebase/documents/

The consultation on the Final Report of the Expert Group on e-Invoicing will definitely shed some lights on the visions and standpoints of the different parties.

Today [16 March 2010] the European Ministers of Finance apparently decided not to await the outcome of the consultation and during the ECOFIN Meeting adopted a revised version of the VAT Directive containing changes reinstating the article 233 adding to it the option of the Business and Tax Control Process Framework.

Looking at the evolution of Electronic Invoicing in Europe one can conclude a lot has happened since the European Commission started in 2001 with amending the regulatory requirements for Electronic Invoicing in Europe. In general almost all stakeholders called upon to support the principle of equal treatment of paper and e-invoicing on authenticity and integrity.

Let us have a look at the developments that took place in the past years:

Understanding the factors driving adoption of e-Business

When companies consider implementing e-Business they need to understand that there are several factors steering the adoption of e-Business. Adoption is the process during which an enterprise becomes capable of transacting electronically.

The adoption process starts with acquiring knowledge of e-Business concepts and exploring the solutions available on the market. During an interactive awareness workshop stakeholders will learn more about e-Business models and trends.

In the next step organizations form an attitude toward the behavioral intent to pursue or reject e-Business. This requires understanding the factors that influence the “Intent to Adopt” of companies and their trading partners. Gaining more insights in the magnitude and impact of these factors improves decision-making.

The most significant factors driving and inhibiting the intent to pursue or reject adoption of e-Business are perceived benefits, external pressure, perceived costs and organizational readiness. These factors emerge from the internal and external business environments of organizations and have different effects on decision-making.

Perceived benefits and perceived costs relate to the anticipated economic and strategic advantages and disadvantages. The more the perceived benefits outweigh the perceived costs the more likely decision-makers are willing to consider adoption. Likewise, the more perceived costs outweigh perceived benefits, the less likely decision-makers will pursue adoption.

Moreover, even though there is a considerable amount of evidence that benefits exceed costs, companies may still be reluctant to adopt due to an apparent lack of organizational readiness.

On the other hand when decision-makers face extreme external pressure that may affect the well-being of the company they become increasingly vulnerable to adopt.

When overlooking these considerations there are good reasons for organizations to examine and evaluate the characteristics of drivers and inhibitors more in depth.

Perceived Benefits

Perceived Benefits are the perceptions of managers and the level of recognition by decision-makers of the relative advantages that e-Business can provide their organization. These relative advantages are considered predictors of the intent to adopt. They represent the degree to which an organization believes that value can be created. Value creation takes place on strategic and operational level.

There are two main types of Perceived Benefits, which can be categorized as direct and indirect advantages or benefits.

1) Direct advantages refer to immediate and tangible benefits that companies would enjoy by using e-Business such as reduced transaction costs and efficiency improvements.

Examples:
- Reducing manual paper handling and data entry leads to time savings.

- Reducing postage and storage needs leads to cost savings.

2) Indirect Advantages refer to less tangible (intangible) benefits that are difficult to justify and measure. These are mostly opportunities that result from the impact of changing business processes and relationships, such as improved interfirm relationships, better business control and increased ability to compete.

Examples:
- Strengthening of customer relations leads to long-term partnerships.

- Closer collaboration between supplier and buyer leads to improved customer loyalty.

Perceived Costs

Perceived Costs are the perceptions of managers regarding the relative disadvantages of e-Business for the organization. These relative disadvantages are inhibitors of the intent to adopt. They strengthen the concerns of decision-makers about the value e-Business brings on short term.

There are two main types of Perceived Costs, which can be categorized as direct and indirect disadvantages or costs.

1) Direct disadvantages refer to immediate and tangible costs that companies would incur when adopting e-Business. The tangible costs address the parts of an investment which decision-makers can easily identify and attach a quantifiable value to such as implementation and operation costs.

Examples
- Installation and integration costs.

- Cost of trading partner on-boarding management.

2) Indirect disadvantages refer to less tangible (intangible) costs that are difficult to identify and measure, such as the cost of unexpected downtimes and the cost of non-compliance with government legislations and industry regulations. These intangible costs are often closely related to actions that should be taken to ensure business continuity and to rapidly respond to changing conditions.

Examples
- Demand for increased effort and resources to support both new and existing practices.

- Risks of constantly having to adapt to changing business needs and technological requirements.

External Pressure

Over the last years External Pressure has become a significant determinant for the intent to adopt. Beyond the walls of an organization there are several types of pressure that encourage companies to achieve adoption. These types of pressure are competitive pressure, governmental enforcement and pressure from trading partners.

Competitive pressure is

Organizational Readiness

When looking at readiness organizations should realize it is not quite as simple as just being able to receive and send business documents electronically.

Organizations have to research and understand what motivates and de-motivates companies and decision-makers. Making informed decisions based on a foundation of knowledge and sound reasoning will determine the success of the business.

Organizations must learn and understand the enabling and restraining forces behind the adoption of e-Business.

The impact of Interrelationships between drivers and inhibitors on adoption

Apart from understanding the influence of these factors on the intent to adopt it is important to assess the nature and extent of the interrelationships between drivers and inhibitors.

These interrelationships and their effects on decision-making are the most significant determinants for adoption of e-Business. They dictate how the key drivers and inhibitors influence the attitude of decision-makers. When assessing the interrelationships companies will discover their main drivers and inhibitors.

The two most important relations to evaluate are Readiness - Costs - Benefits and Pressure - Costs - Benefits.

1) Readiness - Costs – Benefits

Companies that have a high level of Organizational Readiness in terms of information technology need only low investments to gain high benefits.

2) Pressure - Costs – Benefits

Companies that experience high competitive pressure and/or pressure from trading partners are more likely to invest to obtain or maintain high indirect advantages - benefits - opposed to other firms.

These interrelations show that Readiness and Pressure are key drivers and impediments of the intent to adopt while Costs and Benefits form the main constraints to decision-making behavior.

This analysis leads to the conclusion that without pressure companies feel no need to look at implementing e-Business and without some degree of Enterprise Maturity organizations will not be able to respond to pressure. As such a minimum level of pressure and readiness is needed and required to establish a positive attitude to pursue or reject adoption.

Determine the maturity of the Enterprise Architecture of the firm

Upon exploring the effects of interrelationships on decision-making organizations will find Organizational Readiness the main factor influencing the intent to adopt. Organizational Readiness refers to the level of technology currently incorporated into business processes.

For determining the readiness of an organization companies need to assess the maturity of their current Enterprise Architecture. The Enterprise Architecture provides the framework for achieving interoperability within the enterprise and across enterprises.

Interoperability is the ability of information systems to seamlessly exchange data between enterprises, to process and understand the meaning and purpose of exchanged data, and to enable business processes and software applications to interact.

There are different forms (types) of interoperability that strengthen the capabilities of the Enterprise Architecture elements. Two such types of interoperability are directly related to elements of the Enterprise Architecture:
* Information Interoperability – Information Architecture – is the ability to exchange information in a uniform manner across multiple organizations as such that the precise meaning of exchanged information is understandable by separately developed applications.

* Business Interoperability – Business Architecture – is concerned with establishing business relationships, aligning and streamlining business processes, reviewing and revising working procedures, and setting up and formalizing cooperation agreements.

The other type of interoperability, Technical Interoperability, relates to the system and integration architectures. Technical Interoperability is concerned with the connectivity of systems and applications for the purpose of exchanging information with focus on the conveyance of data, not on its meaning.

These key Enterprise Architecture elements and Interoperability types form the base criteria for the maturity level classification scheme, called the e-Business maturity ladder. The maturity ladder contains five maturity levels and provides insights as well as guidance on the future direction in e-Business, including realization of benefits.

technological and business domain of their Enterprise Architecture. These domains encompass three main types of interoperability which determine for the greater part how ready the organization is:
* Business processes - process interoperability relates to the Business Architecture.

* Information - data and semantic interoperability relates to the Information Architecture.

* Systems and applications - technical interoperability relates to the Application Architecture.

Additionally there is the level of integration already supported by the enterprise - the Integration Architecture - consisting of Enterprise Application Integration and Inter-Enterprise Integration. Integration describes to what extent connections are implemented internally between different systems and externally with trading partners, suppliers and customers.

Together these types of interoperability and levels of integration form the base criteria for the maturity level classification scheme, the e-Business Maturity Ladder. The e-Business Maturity Ladder contains five maturity levels and provides insights as well as guidance on the future direction in e-Business, including realization of benefits.

Again the maturity of the Enterprise Architecture provides the foundation for Organizational Readiness and forms the basis for responding to External Pressure.

The base criteria for classifying the maturity are:
1. Business Architecture
2. Information Architecture
3. Application (System) Architecture
4. (Internal) Integration Architecture
5. (External) Integration Architecture

Guidance on future direction

Organizations looking for guidance need to understand that firms on different maturity positions deal differently with adopting e-Business given that some strategies lead to full enablement of their trading partner community reaping high benefits whilst others do not.

The Organizational Readiness of the enterprise forms the starting point for determining the appropriate approach to adopting e-Business. Organizations should prepare to understand the opportunities and challenges arising from the strengths, weaknesses and shortcomings of their technological maturity. Companies should also assess the organizational readiness and willingness of their trading partners.

The positions of organizations on the e-Business Maturity Ladder holds implications and possibilities for targeting e-Business. Most important aspects are the level of technology currently incorporated into business and administrative processes and the adaptive power of the enterprise architecture.

Companies with greater technological maturity and sophistication are better prepared than less mature enterprises. Normally these companies can reap higher benefits – lower investments and faster savings – as they have a larger number of trading partners in reach. Often they only need to strengthen their ability to communicate and collaborate by leveraging the interoperability and integration capabilities of their systems and applications. These companies should strive to attain full enablement of their trading partners by providing multiple communication and collaboration channels as part of a multi-channel approach.

A typical multi-channel approach builds on the logic that electronic business documents – structured files containing data – can be transformed into any format and presented / communicated via several means, including paper and mail, whilst processing of unstructured files is also supported via scanning and OCR techniques.

Companies that have a high technological readiness and adhere a multi-channel strategy are better prepared to reach all of their trading partners as can be seen hereafter.

These companies are ready to enable e-Business with all of their trading partners also those who still work with paper.

The state of technological readiness of firms depends on the maturity of their enterprise architecture. Higher maturity levels have significant and positive impact on adoption of e-Business since they require none or low investment to engage in cross-enterprise communication and collaboration.

Yet the adaptive power of enterprise architectures may enable less mature companies to achieve positive results at reasonable costs. An adaptive dynamic enterprise architecture builds on design principles such as modularity, componentization, reusability and standardization that permit firms to rapidly increase their maturity level.

However companies not necessarily need to invest in increasing their maturity if all of their trading partners have a lower maturity level. Depending on the maturity of their trading partners companies could even sustain

The Organizational Readiness level of the enterprise forms the starting point for determining the most appropriate and cost-effective approach to adopting e-Business.

Organizations should prepare to understand the opportunities and challenges arising from the strengths and weaknesses of their current technological maturity when determining their future direction. The current position on the e-Business Maturity Ladder incorporates certain implications and possibilities.

Apart from their own internal technological readiness companies should carefully evaluate their external environment and take into account the technological capabilities of their trading partners.

In general companies with greater technological maturity and sophistication can reap higher benefits for they have a larger number of trading partners in reach than the less mature enterprises. These companies should leverage the interoperability and integration elements of their systems and applications to enable multi-channel network connectivity and interaction.

The multi-channel approach builds on the concept that electronic documents – structured files containing data – can be transformed into any format and presented or communicated via several means, including paper and mail, while processing of unstructured data is also supported using scanning and OCR techniques.

When customers or suppliers are able to send and receive business documents in any format using any means they can reach all of their trading partners almost in real-time.

Understanding the factors driving and inhibiting infusion

In that respect companies should take into account the readiness of their trading partners.

While adoption refers to the actions taking by a single firm it is important to realize that adoption by several firms, customers or suppliers, brings real value. Greater diffusion or “wide-spread adoption” of e-Business delivers higher benefits and a better Return on Investment.

Forming an attitude toward adoption

Once decision-makers understand the position of their company and their partners they are able to define their goals and ambitions.

“Awareness of what is and understanding of what is possible leads to envisioning where to be!”

Tags van Technorati: e-Invoicing,e-Business

Last update: 26-11-2011