Interoperability. Fence? What fence!

Interoperability. Fence? What fence!

Posted by Pete Loughlin in e-invoicing, Electronic Invoicing 03 Jan 2012

We started the new year with a conversation with Christian Lanng, CEO of Tradeshift who explained his grievances with OB10. They are numerous but they all boil down to one thing – interoperability. The arguments can become complex but at a simplistic level, there are e-invoicing vendors that embrace and encourage interoperability and openness between networks claiming it is best for customers and there are those that prefer not to having invested substantial sums on the infrastructure of their own networks.

As an objective observer, what do we think? Which side of the interoperability fence would Purchasing Insight sit on? Actually, neither, because there isn’t a fence.

Purchasing Insight logoI don’t agree with some of Christian Lanng’s views expressed in this article and I certainly don’t agree that it’s all about OB10. His grievances about protectionism and anti-competitive behavior could equally be expressed toward Ariba or GXS. The dominant players have carved out their turf. They’ve all made substantial investments in infrastructure and support capability and they’re neither going to give it up for free nor will they allow new players to dictate the pace or direction of change.

What I can agree on though is that change is necessary. But the argument about interoperability is futile – at least for the time being.

The interoperability argument claims to be about what is best for the customer but it’s an argument in a private club. By and large, the only people paying attention right now are the vendors, analysts and industry experts and it’s not the players within the industry that will determine what is best it is the customers. It will be customer demand that will determine whether interoperability is important. And at the moment, there isn’t enough customers demanding it.

Let’s just zoom out a little and look at the e-invoicing landscape from the customers’ view point. From this perspective, this is no David and Goliath contest – an honorable fight between the big corporate bully and the righteous little guy. This is a commercial fight for the spoils of a growing market that we all expect to see grow and grow.

But let’s look at it through yet another lens and take a government view. Amidst economic turmoil and austerity measures, governments are still insisting on a business world weighed down by bureaucracy. Where is the sense in this?

What will really make the difference is if governments begin to make more effort and to more aggressively encourage the use of electronic invoicing. They should force resolutions to issues that block growth, establish a regulatory governance structure that supports the growth in automation of business processes rather than constraining it and by mandating the use of electronic invoicing, move the balance of power from the vendor community to the business community. When that is achieved, the case for interoperability can be decided.

  • Juha Häkämies January 4, 2012 at 8:04 am /

    Pete,
    I agree with you that there is still a lot to do with raising the awareness of interoperability for customers – how does it help the customer in connected to their suppliers / buyers.

    However there is a good number of customers that selecting their vendors just because on how do their support the interoperability – not forcing their partners / customers to select the ‘one chosen’ operator but leaving them a freedom to choose any operator in the market like is done in any free market economy. Customers certainly have where to choose from. I personally spoke to some 166 operators in 2011 and can claim that the non-interoperating vendors are less than 4% of the operators.

    But absolutely – we must continue providing more info for the customers so that they do understand on what options are available with interoperability in building up their share of e-invoices.

    Juha

  • Christian Lanng (CEO Tradeshift) January 4, 2012 at 10:02 am /

    Hi Pete,

    Great to get the dialogue going here.

    I agree very much with Juha’s comment above, but more than that I think you are missing two important things:

    1) OB10 themselves obviously feel that interoperability is becoming important, why else spend so many resources on initiatives like EESPA? My main grudge is they are not playing with open cards, you can’t be a patent troll and interoperability champion at the same time, then you have to choose which side of the fence you are on.
    2) So far 89% of companies are not on e-invoicing, the biggest force demanding interoperability will not be buyers, but suppliers – the alternative is suppliers that will have to pay for 4-5 different solutions at the same time, just to invoice 5 customers.
    3) We are rapidly approaching the same network size as OB10 (70.000 suppliers vs. 95.000), so I agree it’s no David Vs. Goliath fight – but even when we are the largest network out there we will stick to our principles of openess and interoperability, the reason being it’s simply better business to do so, and both our customers and their suppliers recognize this.

    Br

    Christian

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