EIPP (e-invoicing) and StartUp World

ebdex was formed on 25th Nov 2004 with the idea of disrupting the EIPP market dominated by Accountis and OB10. To be fair, OB10 and Accountis had very low market penetration then (and same is true now). But they were the best examples an ambitious startup could look upon. Causeway’s Tradex and Burns e-Commerce’s Bex were ignored due to various reasons. Number of other models were studied including Ariba, Xign, Harbour Payments, Esker, etc.

At the time, the idea was to develop a product that harnessed the best of Accountis and OB10. The key ingredient taken from OB10 was the hub based architecture. From Accountis, it was the purchase-to-pay and supply-to-cash documents with built-in BACStel-IP payment engine. Accountis was really helpful in guiding us to understand how to build the ebdex Document Exchange. And they did not even know they were helping us.

But fundamental to all this is Mr. Mark Morahan of Morahan UK Ltd (plus Morahan International, etc). I bought in to Mark’s vision of the electronic document exchange concept whilst completing my Executive MBA at Manchester Business School. Mark’s vision was to develop an exchange (he called this MI Document Network) that was simple to use and understand. The idea was to charge both parties of a transaction (supplier and buyer) 25p with no set-up fees or annual maintenance fees. Quite the opposite to Accountis and OB10, not to mention the rest of the market! However, whilst it sounds great on paper, delivery was quite a different story. And this remains the fundamental problem with the concept of e-invoicing to date!

Having studied the incumbents’ models, ebdex looked at ways to innovate and therefore differentiate from the rest with the idea of achieving a sustainable competitive advantage over time. I believe we found a way, which I have not yet seen in any of the products in the market today. Unfortunately, just like Morahan UK Ltd, the company I outsourced to developed ebdex Document Exchange, Affno, could not deliver the technology! Whilst nothing good can be said about Suren and his Affno, various software associations in Sri Lanka continue to promote their works by granting them prestigious awards! How ironical is that?

At the end of 2006, it was the crunch time for ebdex. Do I accept £250,000 debt finance and continue to burn cash hoping Affno will eventually deliver or cut the losses and walk away? At the end, I took the wise decision and accepted that its time to stop beating a dead horse.

In 2007, I attempted to turnaround ebdex into a niche consultancy, but found this extremely difficult due to the past finances of ebdex. What I should have done was to terminate ebdex at the end of 2006 and create a new entity to exploit advisory opportunities. I was emotionally attached to the ebdex brand - with the hope that one day, I will be able to rebuild ebdex document exchange. Letting go was hard. But recently, someone has forced me to make this decision. So it is time to say good bye to ebdex. In the short term, ebdex will remain as a dormant company.

Looking back, I learnt a tremendous amount from ebdex, especially to do with outsourcing. It’s time to let go…Goodbye ebdex…

Technorati Tags: Mark Morahan, Ariba, Xign, JP Morgan Chase, American Express, Esker, Accountis, OB10, ebdex Document Exchange, ebdex, Rhys Jones, Affno, Suren Kannangara

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Latest to join the e-invoicing startups to be funded by Venture Capitalists is TBiConnect run by Simon Fox. Both OB10 and Burns e-Commerce top the VC funding tables for attracting the most cash to date. Among other funded companies include Accountis from North Wales, but they still require a significant funding round to enable an European expansion. For some reason, I do not see Accountis conquering the world similar to OB10, so their best hopes remain within the Europe, capitalising their key customer, DHL. UK companies looking for VC funding include United Data, which is yet to launch its e-invoicing solution. United Data’s Founder and I go back a long way, and I hope Mark Morahan will finally launch his much anticipated e-invoicing hub this year with a realistic business model than the last time (conquer UK before the world!).

I have known Simon Fox of TBiConnect for well over a year, and I am delighted to hear the closing of the first round of £330,000 from regional venture capital fund, South West Ventures. According to GrowthBusinessUK, TBiConnect is an online payment specialist. As far as I know, TBiConnect does not handle payments, let alone on-line payments. Their expertise lies in the exchange of Purchase-to-Payment documents between the sender and the recipient (the buyer and the supplier), and provision of procurement solutions.

TBiConnect has a similar model to Accountis, i.e. enterprise licensed based product. Both companies claim to have the ability to offer a hub based solution. Given that Accountis has been trading for more than five years, and continue to offer licensed based solutions, my advice to TBiConnect is that think strategically when deciding on the license vs. hub based model. Whilst licenses might be financially rewarding today, it may be prudent to set-up a hub now rather than later. Perhaps it is better for me to cover hub vs. licensed model in another post.

According to the story, the fund has committed its maximum initial investment of £330,000. There is also the possibility of raising a further £330,000 from the same fund after six months. South West Ventures has invested £6.9 million in 24 companies (an average of £287,500 per company) with £18.1 million left to invest. The fund is managed by YFM Group, which over the years have become a VC powerhouse operating in many regions of the UK. Doug Stellman of YFM Private Equity recently spoke at the Northern StartUp 2.0 event organised by me at KPMG Manchester.

According to Nick Simmonds, investment manager at YFM Group:

“TBiConnect has developed a proven solution to address the business need problems faced by many organisations handling thousands of financial transactions. We have been particularly impressed with the excellent management team and are delighted to back this exciting solution”.

As part of the funding package, former Amstrad CEO David Rogers has become the Chairman of TBiConnect. According to David Rogers:

“TBiConnect’s customer proposition is compelling. It delivers immediate cost benefits and control to financial systems. We’ve had immediate positive reception and industry recommendations from early customers on the strength of the ease, simplicity and operational benefit they’ve experienced. Investment from the South West Ventures Fund enables TBiConnect to make a forceful entrance for a long-term future in this emerging market.”

According to Simon Fox, CEO of TBiConnect:

“We are delighted to have secured the investment from South West Ventures Fund to support our vigorous growth plans. The business rationale for our service grows ever more powerful as corporates struggle to increase performance in every department, while maintaining stability of operations and IT.”

Just like many other players in the market, TBiConnect is no stranger when targeting the large buyers. TBiConnect targets medium and large organisations that generate over 100,000 transactions a year.

Whilst technologies are available, no UK company has emerged to provide a compelling solution to the SME. Accountis clearly has the technology but lacks a substantial business model to take the market by storm. Version One has early stage of technology, but requires significant development, which somehow I do not see happening under the current ownership structure. If Accountis is serious about the SME, it needs to consider setting up an independent company and provide the software under license to target the SME customer. The current set-up will not work. Why? Their matrices will never allow direct targeting of smaller customers, e.g. revenue per customer will be so low for sales team to get too excited. What this means is that the market is wide open for an innovative startup to penetrate the SME sector by storm. Who will rise to this challenge is not clear. I cannot see OB10 taking a punt at this market, as it’s ambitions are more global. What about Causeway Technologies?

What a pity! A lost opportunity! Anyone interested in exploring this opportunity more closely?

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Without a doubt, Bruno is the master of e-invoicing in Europe if not the world. His e-invoicing Quarterly is a much anticipated update of the e-invoicing market. Whilst I have hoped to do something similar for the UK market, I must admit, I am less organised than Bruno. However, I plan to put my e-mail marketing solution from iContact into full swing this year. If you are interested in e-invoicing and have not subscribed to Bruno’s e-invoicing Quarterly, I suggest you do that right away. Here is a review of what Bruno has written.

1. European Market Outlook 2008

The e-invoicing market continues to remain fragmented and small but with potential to be a significant market. Unfortunately, not much has changed since the early 2000’s except for the increasing number of vendors entering the market place, as reported by Bruno. This is obviously a positive side of a maturing market and has led to minor improvements in the overall market share. However, the optimistic predictions of analysts continued to be missed, year after year. We are still addressing the fundamental problem of replacing paper based solutions with electronic systems. We also seems to have forgotten that our key competitor is none other than paper.

Whilst much has been spoken of supply chain finance and the second p (payment) of EIPP, none of these solutions are going to achieve traction until the fundamental problems are sorted out including the significant barriers faced in implementations. This is not to say that the best-in-class companies, as regularly reported by Aberdeen Group, are not enjoying the benefits of e-invoicing. All I am highlighting is that current deployments are a drop in the ocean, when compared to the potential market size, and significant drive from vendors, consultants and governments are needed if this market segment is to be taken seriously. Lack of profits within the service provider organisations continues to dampen the spirit of the enthusiasm.

Niche players such as OB10 has worked tirelessly to promote e-invoicing globally whilst companies such as Ariba has entered the market as part of its product diversification strategy. The scanning and OCR providers, EDI houses and accounts payable specialists all admit that EIPP is the way forward. Many of these companies I have spoken to remain convinced that EIPP is yet to arrive. I do not think they are been ignorant. If a company does not change to satisfy changing market conditions, the survival of the company will be short lived. Their stand is simply based on customer requirements, i.e. none of their customers are asking for EIPP or e-invoicing. So something is missing from the market place. I put this simply down to lack of awareness which can only be addressed by EDUCATION EDUCATION EDUCATION.

Lately, many financial organisations have taken a vested interest in purchase-to-payment or e-invoicing document exchange. Most of the global leading banks are either offering services through partners or currently in discussion with partners to offer these services. At the same time, there are commercial lending organisations such as invoice discounters and factors taking an interest in the segment. This has also created an environment where traditional vendors for the financial sector is taking a closer look at EIPP, e.g. FundTech. Forrester has claimed this is the year for consolidation. No doubt there will be one or two major transactions, but it is more likely 2009 will be the year for consolidation.

What all of above means is that the e-invoicing or EIPP market should start to make progress this year. More work is needed to encourage service providers to collaborate with each other. I would like to see much more activity at Hub Alliance and other initiatives this year. The problem with Hub Alliance is that there is no budget to drive the “alliance” forward. In addition, the members’ aspirations are limited by their own personal needs, rather than offering a “alliance” for everyone interested in e-invoicing. Whilst I remain pessimistic about the market segment, I am hoping that I will be proven wrong this year.

2. European ExPP Summit

Many thanks to Bruno for organising an exceptional event. Also thanks for the X’mas present, which shows what a gentleman Bruno is! I look forward to participating in this years event. However, my personal feelings for the last year’s event was that it missed a trick. As I continue to say EDUCATION EDUCATION EDUCATION, I felt that the last year’s event was very much organised for the vendor community and not for the potential users. I cannot remember meeting a single person who was looking to purchase a solution. This is also down to the marketing of the event. As an admirer of Bruno, My blog is freely available for any promotion activities of ExPP. This year I can also offer edocr free of charge. A real possibility exists where all ExPP documentation could be hosted by edocr including special interest groups for discussion of various topics prior to and after the event, so that this year’s event become a collaborative event instead of a traditional event. Anyone else got any more bright ideas?

3. Accelya

Thanks for the story Bruno. I must admit, ADP Clearing was not a company I tracked before. As I understood from the story, Chequers Capital has acquired ADP Clearing and has renamed the company as Accelya.  Accelya specialises in invoices, travel reservations, airline tickets, payment instructions and credit card collections, and consider themselves as a leading Business Process Outsourcing (BPO) service. This classification put them immediately in competition with large BPO providers and less in competition with niche players such as OB10. With annual revenues of $70 million and over 8 million e-invoicing transactions, further review is necessary to understand their business model and product offering. Level of e-invoicing transactions seems to be low compared to the revenues, suggesting deployment of a less optimum model than the niche players. The web site has a modern feel but significantly lack in information to undertake a quick review. Looks like they have not found out about edocr yet.

4. Partnership between Basware and Crossgate

Ah! This is a story I knew about and planned to cover, but never got the chance. Crossgate is a user of edocr, but Basware has not yet taken the advantage of edocr. Would you believe, I am yet to do an e-mail marketing campaign on edocr to e-invoicing (EIPP) service providers or to anyone else for that matter. All documents related to e-invoicing on edocr can be found from here. I am not going to cover the story now, other than to say that the inter-operator connection allows over 74,000 companies to be reached.

What is uncertain from this press release is that whether this number takes into consideration of companies connected to Burns e-Commerce, Causeway’s Tradex, Asite, Certipost and Laison, who are all members of the hub alliance. Whilst I was providing advisory services to Causeway Technologies in 2007, one of the channel partners I introduced was looking to achieve the same result. Under current arrangements, this company do not qualify to be a Hub Alliance member, as they do not operate a hub.

But if discussions are successful and if they became a partner of Causeway’s Tradex, then they could indirectly exchange purchase-to-payment documents electronically with companies that are connected with any of the Hub Alliance members.

The importance of this realisation is that Hub Alliance should be at the centre of e-invoicing debate and not at the side. You do not need to be a member of the alliance, but simply need to be a partner of one of the members to benefit from the upside. Whilst this sounds all too easy, significant efforts are required to make this successful. I strongly believe its time that Hub Alliance members appoint an independent person to promote and administer the interests of all those concerned. Let’s hope 2008 is the year this happens.

5. Swisscom IT Services with international e-invoicing campaign

Once again, not a story I tracked. Interesting to note is that my friends at TrustWeaver is working with Swisscom to make this transition a success. Trustweaver has significant expertise in the legal requirements of different countries so that their expertise can be leveraged in order to ensure compliance during the launch of services a

cross 20 European companies in the first stage followed by another 20 countries in Europe and the world. Certainly, an ambitious project, and the market needs more of these initiatives to win market share from paper.

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It is good to hear that Basware has formally joined the Hub Alliance, increasing the member companies to six, which includes founding members Asite, Causeway Technologies and Burns e-Commerce from the UK in addition to more recent members CertiPost from Belgium and Liaison Technologies form the USA. During my assignment with Causeway Technologies, I undertook the obligation to bring Accountis on-board. Whilst there is significant interest from Accountis in principle, nothing positive has come out of it to date - which I must declare as a personal disappointment given my close links to Accountis’ Founder Rhys Jones - as well as knowing the most of their Executive Team.

It is my belief that an organisation such as Hub Alliance needs to open up to non EIPP hub operators - the key role should be market education in addition to promoting interoperability between hubs. At present, they see themselves as a closed unit of EIPP hubs. I actually think a vital opportunity has been lost. But I am glad to see the growth of the Members, in this case by one.

There are also competing organisations recently been formed in Europe with the same intentions in mind. Does this mean that there need to be a Super Alliance connecting all the Hub Alliances? It’s just crazy - why not join the Hub Alliance? This will certainly improve resource utilisation as well as market awareness.

References:

• BasWare acquires my neighbour Digital Vision Technologies
• Could Hub Alliance be bigger than OB10 and Ariba Supplier Networks?
• Hub alliance to banks? rescue
• Hub Alliance - My first meeting

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Over the last year, we noticed two key acquisitions in the EIPP and Payments space, these being purchase of Xign by JP Morgan and purchase of Harbor Payments by American Express. Recently, I had lunch with a US Company looking for an acquisition in the UK. And now CheckFree is to be acquired by Fiserv. This clearly shows the importance and the increasing maturity of this segment. So according to the press release:

Fiserv, Inc. (NASDAQ: FISV) will acquire CheckFree Corporation (NASDAQ: CKFR) in an all-cash transaction valued at approximately $4.4 billion, and the CheckFree shareholders will receive $48.00 in cash for each of common stock.  

CheckFree is not strictly an EIPP solutions provider, but a significant player in the Payments space from provision of ACH solutions to transaction process management. On the other hand, Fiserv provides information management services to the financial and insurance industries. The combined organisation is expected to deliver wider range of products and services with the ability to bring new solutions to the market faster.

Few facts from the press release:

1. Fiserv serves almost 6,000 clients and all top 100 banks in the USA.
2. CheckFree serves 21 of the top 25 financial institutions in the USA and process more than 1 billion transactions per year.

According to Jeffery Yabuki, President and Chief Executive Officer of Fiserv:

“CheckFree’s industry-leading payment and Internet banking capabilities will significantly accelerate our strategic transformation, extending our service platform to the largest financial institutions. This combination allows us to deliver the best available solutions to all of our clients to enhance growth today, and into the future. An important objective of the transaction is to tightly integrate electronic bill payment and settlement capabilities with our core account processing and risk management solutions to create a unique value proposition unrivaled in the marketplace today.”

According to Pete Kight, CheckFree Chairman and Chief Executive Officer:

“By joining our complementary technology and capabilities with Fiserv and its unparalleled footprint, this new combined entity will broaden Fiserv’s offerings to customers worldwide. In particular, it will significantly accelerate the delivery of next-generation services to financial institutions and their customers. CheckFree’s broad range of offerings will also enable Fiserv to round out its ability to deliver solutions that address the challenges of an evolving U.S. payments landscape and help facilitate the growth of the managed accounts industry.”

Kight will join Fiserv Board of directors. So what are the synergies of this transaction and the justifications?

1. More than $100 million in annualized cost savings.
2. More than $125 million in annualized revenue synergies.
3. Pro-forma revenues of $6 billion

Who would be the next to be acquired? Could this be a UK company? My views about the “Significant 4″: May be on another day.

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The prominence of this blog with respect to vendors’ own corporate Web sites for few companies operating in the e-invoicing space can be found in the following table. I also included BASDA

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These days most of us use Google for search. These are the results one gets when entering “eipp” as search criteria (time sensitive results, as you very well know):

1. ebilling.org- ah, the NACHA’s Council for Electronic Billing and Payment site. Good starting point for anyone interested in EIPP.
2. Forrester - this is Penny Gillespie’s 14 page report published in 2004. Still relevant. Still selling at US$399.00. I call this daylight robbery. Forrester is a genius at making money. This comes down to brand. Would anyone be interested in purchasing similar quality reports for fraction of the money Forrester is charging?
3. Forrester- Andrew Bartels report on Accounts Payable, EIPP, Q3 2005 - Guess what? Its also priced at US$399.00. Again, a relevant report. Not sure why Basware was chosen as the highest-scoring vendor in Europe.
4. Eastern Interconnect Phasor Project - nothing to do with EIPP as we know
5. Accountis - well done to get this position. Is this simply because of Search Engine Optimisation (SEO)? Or is there more to it than meets the eye?
6. manojranaweera.com- ah, we know about this one, don’t we? Not sure why my chat with Andrew was picked up!
7. webopia - poorly written definition for EIPP. My attempts at coming up with a better explanation on Wikipedia was removed by Wikipedians, as they considered it an unknown subject.
8. webopia - well done to get two places. No better than the previous definition.
9. ZDnet - Written in 2001
10. Spendmatters- ah, Jason Busch’s blog. Nice to see another blog making the top 10.

I ran the same search on another computer at the same time. It produced the same results except for the 10th entry. Both used IE7. Mozilla Firefox produces the same results as above.What happens if we restrict this list to pages from UK?

1. Accountis - well done again
2. Accountis Blog - well done
3. manojranaweera.com - glad to be no. 3 - but for how long?
4. EIPP Conference taking place in September 07 - This is clearly an European event, and not a UK event. Perhaps the site is hosted in UK server.
5. Chief Executive Officer - ah! a paper from Mike Arenth of Ariba advising on accounts payable benefits.
6. ebdex - what can I say?
7. ebdex- I am embarrased!
8. Clerical Med - nothing to do with EIPP as we know
9. ZDNet - white paper on O2C - second article on EIPP. Its not a subject covered by ZDNet
10. TbiConnect - well done Simon - 2nd (ignoring ebdex) vendor on Top 10

So where is OB10, Xign, Bottomline Technologies, Esker, Ariba, Burns e-Commerce, Causeway Technologies, etc? Are they not concerned with web rankings anymore? Is it because most of them only offers EIP (not payment) solutions? Nope! for example, analyse the source code of OB10’s home page and you will find EIPP. Then what? Perhaps, smaller companies are paying much more attention to web rankings than the incumbents. Perhaps there is also the belief that you will not get leads through websites. I disagree. Even in its sorry state, ebdex continues to receive enquiries, from UK as well as from Europe. Is that sufficient to warrant SEO costs? You betcha, it is.

Update 1

Most of these companies seem to optimise their websites on “e-invoicing” rather than on “EIPP”.

Tags: Google rankings, eipp, e-invoicing, accountis, TbiConnect, Spendmatters, Chief Executive Officer, ZDNet, ebdex, webopia, Forrester, Mike Arenth, Ariba

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According to corporate website, Burns e-Commerce has acquired Investmaster Group Ltd from Canadian investment management company AGF Management Ltd for an undisclosed sum.  According to Peter Little, CEO of Burns:

“The synergy between the two companies is technology based. Both organisations support and assist companies operating in environments that are manually intensive, paper-based and heavily regulated. We see great opportunity to combine the expertise and technology in these areas to bring new innovation to the wealth management market.”

I don’t get it! Wealth management, and document exchanges - I cannot see a synergy other than the transactions! First thing to do is understand the capability of Investmaster Group.

Investmaster Group Limited has been providing IT solutions to the wealth management and institutional broking sectors for over 20 years. Investmaster has a well established client base and its technology handles over 25 percent of the London Stock Exchange’s daily private client volumes. The Group employs 62 plus IT professionals in the development of truly integrated front, middle and back office systems and is committed to the provision of genuine straight-through processing solutions. Investmaster’s InVantage product suite covers client management, reporting and the full trade lifecycle from front office decision support through to settlement, ensuring pre- and post-trade compliance and underpinning the clients’ business in an increasingly regulated market.

Looks like Burns is adding B2C capability to existing B2B environment - tricky! Perhaps a telephone call is needed to Neil Baker to better understand the expected synergies.

References:

• Burns e-Commerce, Accountis, OB10 and Causeway get new facelifts in 2006 
• Introducing Burns e-Commerce  

Tags: burns, burns e-commerce

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Andrew Bartolini of Aberdeen Group and I had a phone conversation on past Monday to discuss UK and global trends in EIPP (Electronic Invoice Presentment and Payment). If you do not know, Aberdeen Group regularly carries out research in to number of subjects including sourcing, e-payables and supply chain finance to name a few. Their reports are normally sponsored by number of vendors, and vendors such as Xign, OB10 and Ariba regularly brief Aberdeen Group and other research companies such Forrester about their new products and solutions, market strategies and successes. Given that Aberdeen Group is based in the USA with no presentation in the UK market, there has been less understanding of the development of the UK market. And my objective is to clearly address this inbalance. However, Andrew claims that their regional research effort is split into North America (65%), EMEA - predominantly Europe (25%) and Asia (10%)

According to Andrew, there has been renewed focus on complex categories of sourcing (a subject alien to me) and e-payables driven by CFOs (Chief Financial Officers) and CPOs (Chief Procurement Officers). We both acknowledged that whilst there has been solutions on supply chain finance for a while, especially from vendors such as Xign, the real business need at present is to reduce inefficiencies associated with manual paper based processes. Customers are still looking for simpler solutions that they can easily understand, hence the rapid growth of accounts payable solutions that combine scanning, OCR (Optical Character Recognition) and ICR (Intelligent Character Recognition). They are growing at a much faster pace than e-invoicing and EIPP solutions whilst best tangible and intangible benefits are offered by hub based solutions with full purchase-to-pay capability.

I used the opportunity to inform Andrew of the UK market including solutions offered by OB10, Causeway Technologies‘ Tradex, Accountis and Burns e-Commerce (and none British players such as Ariba, Bottomline Technologies, Esker, Basware, etc) and minor and new players such as Asite and TbiConnect. We also spoke of accounts payable automation vendors briefly, but much of the discussion was around the Hub Alliance. I am very passionate about what hub alliance is trying to achieve.

We also spoke about the forthcoming ExPP Summit that I am looking forward. Andrew will be coming to London at the back end of September 2007, and it no doubt will give me another chance to exchange notes.

Reference(s):

• Aberdeen Group - Survey on e-payables
• e-invoicing revenues predictions from Aberdeen Group

Tags: "Andrew Bartolini", "Aberdeen Group", EIPP, e-invoicing, e-payables, supply chain finance, sourcing, Xign, OB10, Forrester, CFO, CPO, ICR, OCR, scanning, Ariba, Bottomline Technologies, TbiConnect, Asite, Tradex, Causeway Technologies, Basware, Accountis, ExPP Summit, Hub Alliance

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Trade Services Supplement - May 07 published by IBS Publishing questions

Can banks get their act together to offer new services that are aligned to the needs of corporates, large and small, or will specialists emerge to fill the gap?

In response,

It looks as though the part of the supply chain that needs the most help is the small supplier, squeezed by ever longer payment terms from the buyers and struggling with cash flow issues as a result, with their problems perhaps worsened by capital constraints because of Basel II and high factoring rates. However, these are the hardest participants for the big banks to reach and, while large in number, also do not provide an easy source of income.

This is the starting argument for Supply Chain Finance, a service EIPP hubs could provide. In fact, Xign (now JP Morgan) is already involved in this with Burns e-Commerce making noises around a particular UK retail bank. The argument has also led to the creation of a growing invoice finance industry (both discounting and factoring). The question now is how can this industry works with EIPP hubs to cater the needs of suppliers (needed cash yesterday) of all sizes and large buyers (delay payments as long as possible).

The article highlights above need by stating

The banks have also been beating a path to the doors of business exchange providers. The Hub Alliance, a grouping of five business exchanges, has been one port of call (IBS, October 2006). These exchanges comprise: two construction industry specialists, Asite and Causeway; a US-based paper industry specialist, Liaison Technologies; and two cross-industry players, Certipost and Burns. These exchanges link buyers and sellers for the electronic exchange of documents such as invoices, purchase orders and remittance advices.

Whilst the article stress on the point of banks working with EIPP hubs, the real innovation will come from private invoice financiers working with EIPP hubs, e.g. GMAC Commercial Finance using Deskom.

Here’s what Neil Baker from Burns had to say

Burns’ sales director, Neil Baker, says there is a lot of interest and that banks are now more aware of the opportunities but they are coming at this with the wrong approach. First, they are asking the likes of Burns, ‘what can you do for us’, rather than looking at a two-way arrangement. Second, they are still only really engaged when talking about the big companies. ‘But there is no point going to an HP or Office Depot [two companies that Burns is working with] and offering financing.’ Instead, the banks should be interested in the small suppliers, which is where technology can help. ‘We have hundreds of thousands of connectivity points with these people.’ This would be a receptive audience – ‘it is the small guys that want the money’. Banks should be able to grasp this opportunity but too often the approach is, ‘you can have this money if you change your banking arrangement and bank with us’. Baker describes himself as ‘a bit bruised and battered’ from his discussions with the banks.

ebdex’s strategy was partner led, we simply wanted to run the hub and let others share the wealth and accompanying risk. Part of this strategy included working with invoice financiers. One conversation I had with a well known invoice financier went like this ..we like your proposition, but come back when you have a decent size user base. ebdex is pretty much history at the moment (unless there is a white knight in the horizon with right connectivity up and down the value chain), and guess what..Causeway’s Tradex has that vital user base, and the credibility.

The article also highlights Tradocs, which I always found a bit of a mystery, even though their business model resembles ebdex (both are document exchanges and EIPP is just an application). Here is the brief about Tradocs (warrant further investigation for another day)

Another potential partner is Tradocs, set up in 2002 by two ex-Bolero managers. Its emphasis to date has been corporates, for exchanging data with, typically, their smaller suppliers. The one recruit that is in the public domain on the banking side is HSBC (IBS, November 2006) which, with a corporate’s permission, will take a copy of purchase order and invoice data and use this to feed through to Swift’s Trade Services Utility (TSU). Tradocs’ global business development director, Barry Harris, says there is interest from several other banks, either directly or via their Swift service bureaux or via their system providers. That interest is picking up now that the uncertainty surrounding the TSU has abated with the recent commercial availability. A lot of TSU testing has been done, with more now to do on the latest version of the utility for volume processing and the ‘push-through’ facilities. Banks are keen to obtain the data from their clients and could provide the Tradocs system for this, probably on a white label basis. It would then be up to the banks whether they merely took that data and used it internally to reduce risk and offer value-added services or pushed it into the TSU to communicate with other banks. Too often for the banks’ liking, they are left in an open account world with only the payment. ‘They do not have information about the level of trading that a corporate is doing internationally and where they are in the supply chain cycle,’ says Harris. As with Burns, Tradocs is finding that the discussions with banks are not always detailed at the outset. ‘They have thoughts about financing and other value-added services but a lot of the time it is just that, thoughts.’

Its worth reading the full article. NeilB, thanks for the lead

Tags: Neil Baker, Hub Alliance, Burns e-Commerce, Financial Supply Chain, FSC, Causeway Technologies, Tradex, IBS Publishing,  Tradocs, TSU, GMAC Commercial Finance, Deskom

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The next European ExPP Summit will be held on 10th and 11th September in London. According to Bruno Koch who runs the event, solution and service providers attending either as partners and/or exhibitors include:

1. Accountis Europe Ltd - multi-hub solutions with inter-connectivity. DHL is expected help Accountis become a key European supplier.
2. Ariba, Inc - Supplier network hub with 160,000 suppliers providing accounts payable connectivity for large buyers. Good foot hold in Europe in addition to strong US base.
3. ADP - does not seem to be a hub solution.
4. Atos Worldline - Acquisition of Banksys and Bank Card Company (BCC) has given Atos European payment services capability - not a hub solution
5. B2BE - Australian company with growing UK base. Does not seem to be a hub solution - requires client side software installation - perhaps on license basis
6. Basware - Purchase to pay solutions - purchase centric model
7. BizAps - SAP consultancy on purchase to pay solutions
8. Bottomline Technologies - comprehensive solutions provider with strong competency in payments with excellent connectivity to large retail banks including HSBC. EIPP is hotting up - Sprinter from Bottomline Technologies
9. CEGEDIM - A comprehensive solution with origin in the pharmaceutical sector, now handling over 14 million transactions per month.
10. CT TyMetrix - legal e-billing
11. DataCert Europe - legal spend management
12. Data Interconnect - customer-centric model
13. Digital Vision - Kofax based accounts payable automation - A North West company
14. Elemica
15. Ergon Informatik
16. JP Morgan - Now incorporating Xign
17. Influe
18. LogicaCMG - System Integrator combining solutions from providers such as OB10
19. Microgen UK Ltd - B2B and B2E e-billing service - not a hub based solution. Introducing Microgen - eBilling or eInvoicing?
20. OB10 - simple e-invoicing hub going for global dominance
21. ProcServe
22. R&L AG
23. TietoEnator Deutschland GmbH
24. Xyzmo Software GmbH

From UK players, Burns e-Commerce and Causeway Technologies are clearly missing from the confirmed participants.  Minor players, Tradocs and TBiConnect are also missing. There is plenty of time though for others to register for the event, e.g. 170 Systems, AnyDoc, Version One, Esker, etc.

References

• Bruno Koch - the man behind EXPP events

Tags: Accountis, Ariba, ADP, Atos Worldline, B2BE, Basware, BizAps, Bottomline Technologies, CEGEDIM, CT TyMetrix, DataCert Europe, Data Interconnect, Digital Vision, Elemica, Ergon Informatik, JP Morgan, Influe, LogicaCMG, Microgen, OB10, ProcServe, R&L AG, TietoEnator, Xyzmo Software, Causeway Technologies, Burns e-Commerce, Tradocs, TbiConnect, EIPP, e-invoicing, hubs, EDI, payments, XML

Popularity: 22% [?]

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In December 2005, I reported the acquisition of Harbor Payments by American Express. At the time, American Express claimed that Harbor technology would become the basis of its Source-to-Settle (S2S) e-purchasing system, driving greater levels of cost savings while improving control and compliance requirements across its customer base.

Today, American Express (Amex) announced further information about its S2S proposition, S2S(SM) eInvoice&Pay. In their press release, Amex claimed that their proposition is the first fully integrated Electronic Invoice Presentment and Payment (EIPP) solution. Amex needs to explain how they arrived at such conclusion, as there are plenty of other solutions offering similar functionality, e.g. Accountis, Burns e-Commerce, etc.

According to Amex, Nestlé USA will begin implementing S2S eInvoice&Pay solution in its supply chain next month. Functionality within S2S eInvoice&Pay includes:

• Electronic capture of 100% of invoices
• Straight-through electronic processing from purchase order to payment for users of electronic procurement and the American Express® Corporate Purchasing Card (CPC)
• A large and fast-growing e-invoice enabled supplier networks, plus a dedicated enrollment team to provide service and support
• Reduced invoice exceptions and faster pay via automated review and dispute resolution
• Multiple payment options (including the American Express Corporate Purchasing Card and ACH)
• Compatibility with all ERP systems, plus advanced SAP connectivity

How does it works?

Ref source: http://corp.americanexpress.com/gcs/s2s/docs/CSGC24_FactSheet_EM.pdf

Above sketch shows that the solution is able to accept input from paper, electronic upload and web forms. Nothing ground breaking there! Once again, this is an accounts payable solution, which clearly distinguish a company either as a supplier or a purchaser, and drag suppliers to satisfy the need of large purchasers. It is my belief that going forward, whilst recognising the differences between Accounts Payable (A/P) and Accounts Receivables (A/R) and therefore providing additional functionality demanded, the modern EIPP solutions should treat each connected organisation as both a supplier and a purchaser, especially given the "single sign-on" initiative promoted by enterprise software vendors such as Oracle. Those who recognises that all companies buys and sells and therefore cater for both A/P and A/R functions will ultimate win the battle for market share. End of the day, the game is about number of users and transaction volume. Amex has the credibility and capacity to become the overnight market leader. It is also questionable whether Harbor technology is scalable to the extend demanded by Amex’s global payment platform. Given the war chest Amex has, it makes sense for them to acquire others such as Ariba and OB10 for user base if not for functionality provided by these established players. Ariba perhaps offer the widest spend management proposition, whilst OB10 has a niche international network providing e-invoicing solutions, now operating from three time zones (did I mention, I recently met Jamie Gunn, CEO of OB10 as well as Alain Falys, founder and ex-CEO of OB10?). If this is to happen, Oracle will miss an opportunity to purchase Ariba. Looks like beginning of market consolidation is already here, finally!

Enough of speculation! A long standing customer of Harbor Payments, Dean R. Hoffman of $2.3 billion engineered component maker Kennametal Inc, was jubilant at the news.

"This acquisition is good news for us. If we can expand that program outside the U.S., we could see big savings in A/P overhead. American Express is a global organization with the resources to make Harbor Payments a global service, and that’s just what we’re looking for."

References:

• American Express buys Harbor Payments

• American Express Unveils S2s Einvoice&Pay — The First Fully Integrated Electronic Invoicing And Settlement Solution For Corporations

• American Express Launches Source-to-settle Purchasing Solutions
• S2S eInvoice&Pay
• Amex Does EIPP
• American Express Gets Serious About Spend Management
• Amex To The Rescue
• EIPP Expose: Watch This Space

Tags: Procuri, Harbor Payments, Harbor technology, EIPP, e-invoicing, payments, American Express, Amex, Tim Minahan, OB10, Ariba, Oracle, Single sign-on, S2S, S2S eInvoice&Pay, Accountis, Burns e-Commerce,  ACH, Accounts Payable, Accounts Receivables, A/P, A/R

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What came out clearly from my discussions with heads of our competitors is that ebdex is clearly very ambitious when it comes to partnering. ebdex’s strategy is to excel in three areas, these being:

• Understand the market better than anyone else
• Deliver a service better than anyone else
• In this process, manage an extensive partner network from product development, sales to operations with later addition of customer service

The only significant movement I have seen within our competition is the development of hub alliance by Causeway Technologies, Burns e-Commerce and Asite. Well done guys. I know that hub alliance continues to receive enquiries about linking with other hubs, this is only to be encouraged. However, one company has refused to join due to their position in the industry which can only be seen as damaging to the spirit of co-operation and bringing the maximum benefits to customers.

Do you know of any other similar initiatives? If so please do share.

 [Note to myself - blog about future possibility of collusion]

Tags: hub alliance, Burns e-Commerce, Causeway Technologies, Asite, ebdex

Popularity: 14% [?]

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I had the fortune to speak and/or meet number of ebdex’s competitors this week. These include Simon Fox (CEO of TBiConnect), Rhys Jones (CEO of Accountis), Philip Brown (CEO of Causeway) and Mike Gibbard (Chief Solutions Architect of Burns e-Commerce Solutions). I wish I can share what we discussed openly. But alas, I had to honour the confidentiality of each of the conversations I had. What is interesting to note is that:

• We all operate in the same industry
• Yet we have spent different budgets in developing our solutions - trust me, the difference from the lowest to the highest is very very significant
• Most of us use different connectivity methods - all claim to offer a mixture
• Most of us use different hub architecture
• Most of us use different software languages from J2EE to Python to build the solutions
• All agree that the market is challenging and need significant effort to educate customers
• They are all too busy to blog
• All agree that I should continue to blog - come on guys, keep sending your cheques

Now, do you want to know who I am meeting next week? I am afraid you just have to wait.

Clarification 1:

Accountis has a blog and a RSS feed. When I said Accountis is too busy to blog, what I meant was, Rhys Jones is not blogging - I know the reason - its to do with timing, but I am afraid that I do not buy it, Rhys.

Shyness

I know Rhys Jones is a regular reader of my blog and so is some other senior leaders and managers of EIPP industry. They tend to respond to me directly by e-mail instead of through the blog. This shows that peop