Information technology-based interorganizational linkages (IOL) have remained an important area of development for companies since the 1980s, mainly because of the potential of these linkages to create competitive advantage and processing cost savings for the trading partners. Recent developments in technology have enabled companies to move from the EDI (electronic data interchange)-based, highly partner-specific, mainly point-to-point IOL to the open-standard, less partner-specific network models based on XML (extensible Markup Language). The XML-based e-invoicing solutions pave the way for many-to-many models where a company can reach a larger proportion of its trading partners through e-invoicing operators.
What follows from this development of XML-based solutions is a critical need for interoperability between the e-invoicing operators. There are differing views on the benefits of interoperability in the field of IOL. We in the Real-Time Economy actively promote the four corner model where the interoperability between the e-invoicing operators ensures the flow of invoices from operator to operator, reducing the need of customer companies making separate contracts to several operators.
A recent study drawing on responses from 308 Finnish organizations highlight the importance of interoperability. Companies were asked about their criteria they use when selecting their e-invoice operator. End-user usability and Reach turned out to be the two most important criteria, explaining more than 50 percent of the decision making. Both of these criteria reflect the expansion of XML-based e-invoicing to small- and medium-sized enterprises (SMEs). SMEs do not have the resources to implement complex invoicing or invoice handling systems (need for End-user usability), nor do they have possibilities to maintain multiple e-invoicing operator contracts (need for Reach).
According to the study, the ongoing criteria override the implementation-specific criteria in the selection decision. Therefore, it seems, Flexibility in Technology Consolidation, Customer References, Relationship and Project Management Ability are all criteria that should be improved upon only after having developed the future oriented features (such as End-user usability, Reach and Price level).
To summarize, we encourage user companies to select e-invoicing operators that are pursuing the four corner model, and, similarly, we encourage e-invoicing operators to partner with other operators in creating the network. These actions are critical on the way to 100% percent e-invoicing penetration!
Real-Time Economy is all about digitalizing business processes and innovating totally new kinds of solutions to financial administration. You can reach us at esko.penttinen(at)aalto.fi, realtimeeconomy.net and www.hse.fi/rte