The case for interoperable process digitization platforms
Published on 6 June 2019
Discussions about Brexit and the trade war led by the US might make it seem that we are entering a time of deglobalization. These issues, however, are likely temporary, and shouldn’t call into question the importance of cross-border trade. Amidst an acceleration in international electronic communication, the interoperability of process digitization platforms has become preponderant. Is this cause for concern? And, more importantly, what can be done to improve system interoperability? In this article, we go over the challenges in system interoperability.
Towards process digitization platforms
Today’s companies are increasingly going digital, propelled forward by efficiency and profitability objectives. To get there, they’re signing up for process digitization platforms to make their purchasing, supply chain, legal, and payroll processes electronic. Generix Group is a prominent digitization solution for supply chain and invoicing processes.
Some solutions in the digitization market today are running platforms that handle high volumes of information related to operational company processes. In the realm of electronic invoicing, these industry players record a barrage of financial transactions that have sparked the interest of the US tax authorities. These solutions could become future government agencies or may be subject to heightened surveillance. The model is already quite present in countries like Russia, Mexico, and China.
Interoperability, what for?
Interoperability is the ability of a system or a platform to receive data from an independent partner or another platform, such as a competitor’s. It is required for electronic invoicing systems to function correctly.
This principle of free information exchange between operators also helps guarantee cost reduction and greater management efficiency. Executives interviewed for the fifth European Digitized Finance Barometer Report were well aware of it, ranking it among their top worries.
Interoperability issues and challenges
Each day, millions of professional documents pass from one operator and one country to another via more than 2,000 networks spread out around the world. According to current regulation, exchange must occur directly between sales partners or must be directly connected with tax and customs authorities.
Depending on specific needs, each party can have specific requirements that relate to invoicing and sales document distribution. Over time, networks have changed according to individual needs, often at a national, proprietary level. In fact, it has become quite difficult to send messages between networks while also remaining totally interoperable.
Interoperability is also hindered by data models, transport methods, or diverging professional regulations. And even though service providers tend to accept interoperability, many of them ask for payment in exchange... which can be prohibitive in many cases.
To send invoices to their clients, some suppliers are required to use an external provider who requires subscription. Such practices prevent free circulation of information, thus limiting productivity and indirectly obstructing service digitization.
The subject is still being discussed at the level of national and European public authorities, who want to formalize regulation. The goal is to homogenize practices and let all operators play the interoperability game without any economic barriers.
The standardization organization GS1 is leading the charge in this field. The structure authored a charter on the interoperability of electronic invoicing solutions, which was signed in 2013 by 35 operators.
Initiatives to promote process digitization platforms interoperability
At both a national and international level, network operators have formed associations in order to work together on the interoperability of digitization platforms. The organizations that contribute to improving interoperability include:
Market operators such as Alatipac in South America, US Business Payments Coalition and ConnectONCE;
A-NZ Digital Business Council;
The European E-invoicing Service Providers Association (EESPA);
Open Pan-European Public Procurement On-Line (OpenPEPPOL).
It is also worth noting the works in progress led by the European Union on transmission interoperability between operators (EMSFFEI, sub-group 4).
Interoperability also requires that the standard be respected. As such, The European Normalization Center proposes an interoperable data model for public e-procurement as well as a transport protocol. It also adheres to the eIDAS regulation that strives for identification and digital trust.
A closer look at OpenPEPPOL
OpenPEPPOL is an association founded in 2012 to continue the work of the PEPPOL project. As a European initiative, it sought to facilitate sales transactions within the European Union through the implementation of an “open network.”
Under this system, certified OpenPEPPOL players became certified “providers” in the PEPPOL network. By calling on certified providers, companies can use open network services to exchange information with clients located in around twenty European countries.
The system is easy to use. Upload your files to the PEPPOL network, which will distribute them free of charge to recipients. This should cover the entire purchase chain (product references, orders, shipments), but it is particularly useful for electronic invoicing.
Blockchain, an interoperability solution
There certainly wouldn’t be any interoperability problems if all operations were managed via a single Blockchain. Today, governments are considering what position to take in response to this issue.
Namely, should operators be allowed to remain independent or should a public Blockchain be instituted? Should the market be opened up to private entities? How could such a Blockchain be administered? And lastly, could a Blockchain whose miners are mainly Chinese or Russian be considered truly independent?
Even though the technology could potentially resolve the problem, the financial risk is substantial. The debate is still open, with no overwhelming consensus.
As companies continue to digitize, information system interoperability is taking on a highly strategic dimension, particularly with regard to invoicing. It’s also why governments and some digitization industry players are striving to make systems fully interoperable, both at a European and an international level. These solutions will remain somewhat temporary while the Blockchain issue is being addressed. Whatever the method chosen, interoperability of process digitization platforms seems to have calm seas ahead.