11 Mar 2011 When is a standard not a standard?
As many as 40 per cent of larger businesses across Europe are shying away from E-invoicing according to a report published this week by Iron Mountain. This is because of the perceived complexity and lack of standards, according to YouGov who were commissioned to perform the research.
The findings have been published to coincide with the launch of Iron Mountain’s new Business Process Management (BPM) services, details of which can be found here.
A single standard is a great idea. If everyone speaks the same language we can be more efficient right? “If only everyone would just get along!”
When is a standard not a standard? When it one of 80 different standards.
Steve Keifer recently drew attention via twitter to this list of 80 B2B standards. Just think of that – 80 standards! There are more B2B standards than there are languages in Europe. To work in a world of 80 different standards requires over 6,000 translation rules (A to B; B to A; A to C; C to A; B to C; C to B etc for 80 different standards). Doesn’t that tell us something? There is no standard way of conducting B2B transactions because there are 80 standard ways.
The realty is that “one size fits all” works in theory – and only in theory. This is not to say that standards do not have an important place. In cases where there is a very small number of like-minded players, it’s perfect but take as an example an organisation building an inbound e-invoicing programme. The theory will tell you that 80% of invoices are derived from 20% or suppliers. Using a B2B standard in this scenario allows you to convert nearly all of your invoices by engaging with a relatively small number of suppliers. Agreeing and adopting a “standard” way of working is relatively straight forward.
But this is often nowhere near the reality. The reality is often more like 25% of invoices being derived from 2% of suppliers with a very long tail of supplier each of whom send a tiny proportion of invoices. The standards approach in this scenario addresses 25% of your invoices only leaving you to deal with the nightmare world of multiple standards for the remaining 75%.
A hybrid approach is required for e-invoicing
When it comes to a real world e-invoicing implementation, standards don’t resolve a thing. For a few major suppliers yes – perhaps, but the sting is in the tail. Alternative approaches are needed for those suppliers. We should never forget that electronic invoicing is not the goal – cost reduction and efficiency through automation is the goal. The only way to successfully implement e-invoicing is to take a hybrid approach mixing the use of open and proprietary standards, as well as other methods such as intelligent data capture.