Do the Planets Really Have to Align in Order for Me to Get Rid of This Paper Invoice?
The topic of e-invoicing has most of us in some kind of neck lock. The very term has an uncomfortable power over us, and no matter where we look, there is some semblance of a reminder that one day it will get us all. It’s inevitable that some time in the not too distant future all companies globally will be exchanging invoice transactions electronically and a paper invoice will be considered some kind of embarrassing joke. So much so that people in AP will say ‘What do we do with this?’. So when 70 individuals met in Paris last month for E-Invoicing Europe conference, it was with the intention to understand how multi-nationals could get to this ‘place’ a little quicker and a little more elegantly.
The mix of companies was very interesting. All were multi-nationals receiving between 100,000 and 5 million invoices per annum, and all ran shared services or centralised accounts payable. The interesting point was the maturity of P2P organisations at the conference. Hewlett Packard were there and have been rolling out e-invoicing since 2003, and now have about 6000 suppliers connected to OB10. Kellogg’s was also there and they now consider their e-invoicing initiative as operational rather than ‘in project’, even though they started the implementation relatively recently in 2006 (with OB10 dropping electronic data files into Kellogg’s Ebydos Cockpit where the transactions automatch at line level). Over 80% of their invoices are now received electronically. Conversely though, there were companies like E Bay, Carlsberg, and Procter and Gamble who are between 6 months and 24 months away from going live with their solution.
The time it can take between seriously evaluating the idea of e-invoicing, and being operational and fully rolled out, can be 5 to 10 years depending on the number of suppliers, number of invoices and number of countries included in scope. Can you imagine therefore how hard it is to actually sell to this market? Sales people at Basware, OB10, Ariba and Certipost must be bionic in their tolerance levels as they wait for this market to catch up with their ‘still-deemed-to-be-pioneering’ technology. This is why Duncan Jones from Forrester talked about how, if you are looking for a solution provider, make sure it already has a strong customer base, as it takes ages for service providers (SPs) to actually make money in the e invoicing market and you want to ensure your SP is financially secure and future proof. According to Bruno Koch there are 350 SPs in Europe and another 150 technology providers selling some kind of e invoicing functionality. There are too many SPs for a market which is too young. Duncan Jones’ view was ‘do the market a favour and avoid the little players – in five to 10 years time there will be seven dominant global players, and at some level they will interoperate’. Your gamble, other than on calculating your ROI and managing everything within your circle of influence, is ensuring you back one of the seven.
So what does interoperability actually mean? The roaming topic was a constant at E Invoicing Europe. Basware is very open to connecting to other service providers through roaming agreements as they do with Finnair and Metso. As this market matures roaming may become more and more prevalent as an e invoicing model, but right now you have to ask yourself how many of your suppliers (of sizeable volume) are currently connected to an SP that your own SP of choice may have to interoperate with? Furthermore, would a supplier that’s already connected to an SP have a real issue connecting with ANOTHER SP? Maybe, but have you investigated? My view is that if you are evaluating SPs right now it is advisable to get their view on interconnecting with other SPs. I don’t believe many actually are completely closed to the idea of interoperating, they are just somewhere on the spectrum of actively promoting it or quietly accepting it. And then ask yourself how big a factor their response really needs to be in your decision making process. This may be determined by the number of your suppliers already connected to, say, a Certipost.
The maddening thing is that everyone sees e-invoicing as inevitable, and positive in terms of cost reduction and improved controls. So why are companies still coming up with reasons to put it off? We talked about Perceived and Real Objections in last month’s newsletter but one theme that came through at the conference was that 80 to 90 percent of European invoices came from 10 to 20% of suppliers and from only 1 to 4 countries. This shrinks an e invoicing project from unmanageable (say 10,000 suppliers across 15 countries) to relatively nugget-sized (1000 suppliers across 4 countries).
One massive reason for nervousness to pursue with e-invoicing, I believe, is all the factors sitting outside Accounts Payable’s control – like Procurement, Suppliers, VAT Legislation, and the performance and success of your appointed SP. To see my Top Ten Things to Do to Get E Invoicing Right click here . The planets don’t need to align to get e invoicing right, but there are critical success factors which, if followed properly, will aid you in your heroic quest for touchless invoicing.
