The E-Invoicing Interoperability Debate

Start a conversation with an e-invoicing solution provider about interoperability and they’re almost guaranteed to get animated and jump on the nearest soapbox. So when we announced a panel debate at e-Invoicing Europe 2011 on this topic with the industry’s most prominent technology providers, we shouldn’t have been surprised that it drew a standing-room-only crowd.

As Ariba, Basware, Certipost, OB10 and Tradeshift, and financial industry forum the Euro Banking Association came together on the stage, many people wondered whether – or indeed how many – sparks would fly.

The nirvana we’re working towards would allow a supplier present on one e-invoicing network to submit invoices to its clients, regardless of which network they use. It’s a challenge the market expects service providers to overcome and a scenario that it hopes will be taken for granted in the future.

The debate’s chair, Simon Dunn, Head of Group Supply Systems at HSBC, had the task of ensuring panel members put competitive differences to one side and stuck to the topic to explore their views on interoperability and, more importantly, how they could work together more openly. And on the most part they kept within these lines.

For end users, interoperability will help drive the adoption of e-invoicing and boost supplier on-boarding. Looking for comparative scenarios, Charles Bryant from the Euro Banking Association drew an analogy with the banking system: as a card holder, you access your money from any ATM without having to think about how the banks make sure the right amount is extracted from the right account. Similarly, as a supplier with an invoice, you should be able to submit it electronically without having to take into account the behind-the-scenes technicalities between two service providers.

The e-invoicing market is still a way off the banking sector’s maturity, but, as the panellists agreed, the challenge of interoperability is surmountable; there are just a few hurdles to tackle first.

Each panellist had a minute to introduce the company’s view on interoperability:

• Charles Bryant, Senior Advisor at the Euro Banking Association, has worked with payment network Swift and was involved in the creation of trade association Single European Payments Area (SEPA). He pointed out that we take interoperability for granted with other networks such as mobile telecommunications and transport, and there’s no reason why we can’t have the same for electronic invoicing
• Anssi Russi, Director – Connectivity, at Basware explained that the company has interoperated since it started. It has 110 agreements and a third of its transaction traffic comes through this extended network
• Christian Lanng, CEO and Co-Founder of Tradeshift, compared the interoperability opportunity to the creation of the mobile GSM network. He also said that service providers’ business cases shaped their views on this subject
• Ian Ronayne, Account Executive at Ariba, said that its platform is based on XML standards to enable interaction
• Ruud van Hilten, VP Sales EMEA at OB10, the e-invoicing network already has 20 interoperability agreements in place, but Ruud says that only 0.4% of its transaction volume comes through these partners.
• Michele de Maeyer, Sales and Marketing Director at Certipost, as a company founded by a telco, Michele explained that interoperability is in Certipost’s background.

Keen to provide a practical discussion, Simon’s chairmanship kept the group focused on the obstacles and potential solutions, giving fair time to each of the participants. Here’s a review of four of the meatier subjects and questions from the audience.

1) Maintaining standards

When implementing e-invoicing, many companies require specific data fields to appear on an invoice, which creates additional challenges for both service providers and suppliers. The suggestion of consistent invoice formats and data requirements came up a number of times with panellists debating varying degrees of working-practice harmonisation.

Michele from Certipost described this as, “e-invoicing crossing the chasm: when we started we offered customised solutions, today we need more standardisation and interconnection.” Tradeshift, on the other hand, suggested that the internet already gives us standards and there’s no reason why e-invoicing should think it has special needs.

While nobody endorsed the idea of a single set of operating practices across Europe, or indeed regulation, a call for pragmatic guidelines to follow received many nodding heads.

2) Cross-border, cross-network legalities

Invoices are legally sensitive documents that are treated differently by each country in terms of tax, compliance, authentication and archiving. While Tradeshift called this “just a data issue”, OB10 highlighted one of the grey areas that needs to be understood: who is responsible for legal compliance when invoices are flowing between suppliers and buyers on different networks? These ambiguities need clarifying before companies will be comfortable interoperating freely.

3) Rethinking the business case

Just as an end user needs to make the business case for electronic invoicing, service providers need to know that their investment into interoperability is justified. Addressing the thorny commercial side of the topic, Charles acknowledged that a service provider that has spent ten years creating a network with thousands of end points would need a compelling business case to convince it to open up to smaller, newer groups that don’t have a well-established supplier base.

The relationship between the e-invoicing companies and suppliers is the key differentiator between new-kid Tradeshift and its fellow technology panellists: Tradeshift doesn’t charge suppliers to use its platform. Causing a bit of a stir, Christian suggested the biggest blocker to interoperating are the solution providers’ operating models that make them unwilling to lose the revenues they get from suppliers once they’re on board.

In response, OB10 and Ariba said their main focus is on adding value to their customers. Ian explained that creating connections with other service providers takes time and investment and doesn’t necessarily add immediate value, whereas building the network does.

Similarly, Ruud told delegates that his prime concern is delivering value and isn’t seeing buyers pushing for interoperability on any scale yet. And with very low transaction volumes through OB10’s interoperability partnerships, he said, “We have an obligation to continue on-boarding to grow the market and offer value to suppliers.”

Finding a middle ground among the panellists, Charles put forward the word co-opetition for solution providers to mull over. He said that governments and the European Commission want to see interoperability and co-opetition, where companies collaborate on non-competitive parts of the business. This would be one way to avoid regulation.

4) Transport versus content

As the only panel member not representing a vendor, Charles took a step back from the detail to point out that interoperability could be addressed at two levels. One is a transport issue - how do invoices get passed between networks? The second is content, which encompasses the legal issues, compliance, invoice format, etc. Charles stressed that they need to be tackled as two separate pieces and highlighted the work European Union is doing to draft bilateral agreements in this way.

Indeed, Charles is doing more than just talking about what e-invoicing vendors should be doing to advance the market. He is supporting the creation of the European e-Invoicing Service Providers Association (EESPA), which already has 40 interested providers and plans to establish working groups examining issues such as interoperability and standards.

Questions and comments from the floor reflected Simon’s opening comments: this is an issue that needs to be resolved. End-users expect the market to interoperate, and be more efficient and transparent in the future.

Even though some companies have been working with e-invoicing for ten years already, this industry is still maturing. Predictions of consolidation indicate that there is a lot of change still to come, which means that representative bodies such as EESPA are critical to maintaining a consistent drive towards a joined-up future for electronic invoicing. We’re already looking forward to next year’s event.