e-invoicing – the case against interoperability

e-invoicing – the case against interoperability

The European Commission is seeking input from interested parties on interoperability between electronic invoice service providers. (Look here for more information on how to contribute.) This issue has implications that are much wider than the European Union. As businesses and governments increasingly adopt e-invoicing for a range of reasons, the debate will reverberate globally. Given a cursory glance, interoperability is a no brainer. But take a closer look at the business issues and it’s not so obvious.

In a previous post I presented an argument for interoperability and in this second piece, I’m presenting an argument against. If you have strong views on either side of the debate, leave a comment.

e-invoicing – the case against interoperability

Purchasing Insight logoThe interoperation debate often revolves around the comparison with mobile phone networks. It a good metaphor but it’s not really a good comparison. It’s like comparing e-procurement with Amazon. What works in a B2C scenario doesn’t always translate to B2B. Mobile phone calls are not important business documents. They are, generally, not sensitive and they don’t have the same legal compliance issues that invoices have. If a text message goes missing, it’s no biggy. If an invoice goes missing it requires properly controlled business process to rectify the error. It’s not optional. It’s the law!

And this is the point. Invoices are non-trivial documents and a compliance failure by the sender, receiver or service provider is a non-trivial matter. Interoperation, while a good idea on a simplistic level, involves the distribution of accountability to numerous parties. One of the great strengths of the non-interoperable world is that a single third party, the service provider, can be held accountable for the compliance of an electronic invoice – OB10 for example will even guarantee compliance. That simply would not be possible if multiple third parties were involved.

The cost arguments that attempt to support interoperability don’t really stand up to scrutiny. None of the e-invoice service providers achieved a monopoly (despite their best efforts) and competitive market pressures act as an effective price regulator. Some of the pricing models remain a bit weird but this will rectify itself. Interoperability will play no part in that.

Interoperability is a worthy ideal but its most vociferous supporters are those amongst the vendor community who will benefit most – the relatively new, smaller networks who would be able to capitalize on the investments of the more established players. For government bodies to encourage or mandate interoperability would be a naïve gesture pandering to the pleas of the underdogs and would reflect a lack of understanding of the scale of the compliance issue.

Interoperability – the Purchasing Insight view

The debate is coming to a head. Something is going to have to be decided and all stakeholders with an opinion should express there views loudly and clearly.

So what is the Purchasing Insight view? Are we for or against interoperability? Or do we just sit on the fence afraid of offending our friends?

Watch this space.

Pete Loughlin can be found on twitter @peteloughlin