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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Last week, I learned that Tim Cole, R&D Director of Causeway Technologies and Founder of Tradex has been given the task of growing Tradex into a mainstream e-invoicing hub. During the last year, the responsibility for Tradex changed many hands internally, causing immense confusion. Tim never gave up his involvement, but at the time, his main task was to manage the development centre in India, which was no easy task.

In addition to realignment of resources, some of the existing staff has moved on, creating opportunities for new recruits to join and strengthen the team. Tim is a likeable chap, admired by many (highly regarded by Causeway’s CEO, Phil Brown), and one of the three founders of the Hub Alliance.

During my short tenure at Causeway Technologies, I attempted to introduce web 2.0 to Causeway. Part of this was setting up an internal Wiki and Blog. Whilst the management thought it was a good idea in general, it never had the active support it needed to succeed. Having agreed to blog here sometime back, with his new responsibilities, we saw last week the first blog posting by Tim. Perhaps, this is a dawn of a new era at Causeway. At last!

Tim has a wealth of experience to share. He was an innovator at the time of founding Tradex, and no doubt will re-innovate Tradex to become a prominent hub in the UK and anywhere else Causeway wishes to trade. So, please take a moment of your time to welcome Tim to blogsphere.

Technorati Tags: Tim Cole, Causeway Technologies, Tradex Product Road map, Phil Brown, India, e-invoicing

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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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Do you think you know?  As I enter my 14th year working to reduce the folly of computers talking to computers via paper, there are still many questions to be answered.  Ah, you may say, don’t I even read my own presentation slides!  Sure, I have answered this question many times and am clear as to why compenies “should” - just less clear as to what would makes a company actually “do it”? 

The two key ingredients are that there is a clear “value proposition” to justify the change and a “critical event” to ensure the change is actually made.  As I see it, the truth is that the value and motivation are both variables in the decision making chain and clearly mean different things to different people.  As a solution provider we look to increase adoption rates by improving our functionality and offering flexible deployment and roll out options.   But, 14 years down the road I still remain firmly wedded to the notion of simplicity.  Most companies accept that eInvoicing, eOrders, etc., is the future for their business.  However, many have yet to take the first step. 

I somehow doubt there is anything close to a single answer, but it would be good to get a consensus as to what tickles the fancy sufficiently to get a business started:  For example, in what order would you rank the following as incentives likely to result in a company taking the plunge … and don’t be swayed by what you thinks the answer “should” be!:

(a) My customers want me to do this.

(b) My suppliers want me to do this.

(c) My competitors are trading electronically.

(d) My company wants to achieve some cost savings.

(e) We have found a simple way to connect our application to the eWorld

(f)  I have found a solution that allows me to maintain my existing processes

(g)  Something else.

 All answers on a “blog” please … perhaps there will be a clear consensus that emerges over time.

 Here’s hoping …. and if we can’t nail the answer, perhaps we could at least share ways this has been attempted. 

Thanks!

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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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My current contract with Causeway Technologies will soon come to an end. By then, I would have spent four months with Causeway’s Tradex, asking awkward questions and getting people out of the comfort zone. Tradex now has a tactical team as well as a strategic team. The tactical team is led by Dave Gilchrist, Managing Director of the BuildingRegister, whilst the strategic team is led by Phil Brown, CEO of Causeway with support coming from Tim Cole, R&D Director. Tradex is the brain child of Tim, and he was influential in securing the partnership with Lloyds TSB in earlier days. Tradex has an exciting time ahead with Dave’s telesales team kicking in to expedite trading partner roll outs. Sales effort will continue to be driven by Duncan Speight.

Hopefully, some of the partnerships I initiated would come to fruition in the near future. One thing I failed to achieve is to get the Tradex website up and running. It has taken significant resources, yet no closer to going live than when I started. Such a subjective exercise!

I wish the team the success they deserve!

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Congratulations to Causeway Technologies for becoming the No. 1 software house in the UK Construction industry with the acquisition of Elstree Computing Ltd (ECL). According to Phil Brown, Causeway has achieved No. 1 position in three fronts, these being: headcount (circa 130), revenues (pro-forma �13m) and customers (over 2000). With this acquisition, the split in terms of acquisitions vs. organic growth is circa 50:50. When Phil and I met in early Jan 07, I learnt the revenue targets the company was trying to achieve. By the rate the company is growing, thanks to Phil Brown and Peter Nagle, it is hard to see how this target can be missed. I won’t be surprised if one or two further acquisitions are announced before end of this calendar year. That will truly be a remarkable achievement.

According to the press release, the acquisition creates the industry’s first end-to-end supply chain platform that helps manage every process from design to build to facilities management. ECL is a specialist supplier of cost advice and management software for cost consultants, and model based 3-D design software for infrastructure design professionals. According to Philip Brown, Causeway?s CEO comments:

?We are delighted to announce the acquisition of ECL. With their long history of supplying software and services to construction professionals, ECL?s solutions provide a highly complementary fit with our existing offerings to contractors and their supply chains. We now have 150 people in the Causeway family dedicated to creating the first end-to-end supply chain ?platform? for the construction process that will embrace all stakeholders?.

Charles Barber, Founder and Chairman of ECL comments:

“The combination with Causeway is good news for ECL and our customers. We?ve long felt that the leading software providers need to pool their respective innovations and energy to the betterment of the construction industry, and we are therefore very excited about the possibilities presented by the combination of Causeway and ECL?.

If Causeway is No. 1, where is Coins (Construction Industry Solutions Ltd)? And more specifically, what are they up to? Coins reported revenues of �11.7m in 2005 with 112 staff, declining from their highest in 2003 (�12.8m and 99 staff). Coins has clearly spread their business outside of the UK with notable presence in the USA. Their recent acquisitions include US based Shaker Computer and Management, Inc.

Lack of up to date publicly available detailed financial accounting makes the comparison more difficult!

References

• Causeway Technologies # 5 - Alfred McAlpine?s Supplier Roll Out Programme

• Causeway Technologies #4 - Tradex Product Roadmap

• Causeway Technologies #4 - Tradex Product Roadmap

• Causeway Technologies # 3 - Register for forthcoming trade shows

• Creating a web 2.0 buzz inside Causeway Technologies

• Manoj and Causeway Technologies

• 2012 London Olympics - Accenture wins back-office contract - what about Document Exchange?

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

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Causeway Technologies is currently running a programme to roll out Tradex, their e-invoicing presentment (EIP) platform to Alfred McAlpine’s supply chain. Whilst the benefits of products such as Tradex is well documented, running a supply chain roll out is not as easy as one makes it out to be. This is a long drawn out process and need to be implemented in bite size chunks, so that clear progress can be demonstrated. Ideally, you need to start with a clear idea of who your suppliers are. You might think this is a silly statement. I can guarantee you it isn’t. Many organisations operate number of databases with very little idea of how clean their records are. Few steps (not exhaustive) to consider in any roll out:

1. Clean the existing data
2. Segment suppliers. This may be by transaction volume, level of importance or any other criteria as determined by the client taking advise from the Vendor.
3. Agree supplier on-boarding milestones:
   • Pilot with handful of suppliers
   • Roll out to suppliers who are already users of the product
   • Roll out to next group (based on selection criteria) and so on
4. In above process, it is vital to engage with suppliers to brief the changes taking place at their customer end, as well as brief the benefits and roll out programme
5. Provide a web site with information and FAQs - also a telephone number will greatly help
6. Hold information sessions - an opportunity to have face to face meetings
7. Ensure supplier enrollment is an enjoyable experience - Get feedback, so that you can improve your rollout programme on a continuous basis

On behalf of Alfred McAlpine, three options are presented to suppliers (many options are available for suppliers to choose from), these being:

1. A Tradex Active User - Free on-line entry of invoices.
2. A Single Connection Tradex Member. Low cost solution with direct interface to supplier’s back-office system. Restricts communications to/from Alfred McAlpine.
3. A full Tradex Member. Can communicate with any other Member of Tradex.

A point to bear in mind: Whilst the vendor may have implemented many supplier roll out programmes in the past, it is important to remember that this may be the first time that the client may be undergoing a similar process. While it may not be visible to the Vendor, the client has to consider the internal impact due to the potential outcome of the project, e.g. headcount reduction. This can cause delays to the programme. At the same time, the vendor is expected to meet project milestones. A degree of understanding is required from both parties. It is also vital for the client to assign a project co-ordinator/manager to make the process a success - leaving everything to the vendor does not always produce the intended outcome.

References

• Causeway Technologies #4 - Tradex Product Roadmap

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All of us are in business (with respect to B2B) to provide a product and/or service to satisfy a business need and in most cases to relieve a pain suffered by a business customer. In doing so, we all have two broader options that could be followed, these being:

1. Provide a solution combining product and/or services to meet the customer need near to 100%.
2. Offer a standard product and/or services with minimum or near zero customisation.

The above two approaches attract many different challenges for the supplying organisation.

Fully Customised Offering:

1. Your ability to standardise your offering becomes a near impossibility.
2. You would need to maintain a broader skill base attracting a higher wage cost.
3. Maintaining up to date technology and knowledge becomes a costly exercise.
4. Suddenly the overheads start to go up.
5. Your offering becomes expensive for the customer.
6. Your offering becomes affordable by only the largest customers.

Standard Offering:

1. Convincing customers to change their business processes to meet you standard offering is prone with challenges.
2. Your standard offering must work in most circumstances. Simplification becomes the key to success.
3. Overheads can be kept low.
4. Therefore, it becomes affordable by large number of customers.
5. Becomes an affordable solution for smaller companies as entry price can be kept low.
6. Possibility of the competition getting an upper hand overtime diminishing any current market share becomes higher.

I acknowledge above is not an exhaustive list, but I hope you get my point. Now bring the e-invoicing/EIPP hubs into this environment. Let’s look at those that falls into the customisable and standardise offerings (two examples for each to keep this article short):

Customised hubs

1. Accountis - I picked them not because of their customisable functionality, but because of their offering of dedicated hub for each large purchaser. This approach is certainly not one preferred by me, but if it generates revenues and profits for Accountis, then who am I to object. The problem with this approach is that it involves hardware installation (ok, Accountis may offer a partition within an existing server bank and/or may house it in the same rack in the data centre) as well as multiple entry points for companies that wants to trade with number of Accountis’s customers. I know they have a solution to reduce this nightmare. But I simply think that they have made their life difficult by taking this approach - perhaps driven by the first customer. This has also influenced their strategy to an extent that this has become their de facto offering, i.e. they would not dream of offering a single hub for multiple customers. So it has become one-to-many offering with possibility of many customisation requests.
2. Causeway’s Tradex - Over the last few months, the platform has evolved to be one with a rich list of connectivity options, incorporating paper to data as well as data to paper options. Yes, you heard me right! In addition, Tradex Active will give it that extra edge in convincing SME/SMBs to join. Being a founder of the Hub Alliance, it can exchange documents with businesses connected to 4 other hubs, 4 Europeans (2 British) and 1 American. It already exchange documents through the two British hubs. I have also been instrumental in collaborating with another competitor to explore the possibility of offering even more ambitious SME/SMB offering. The outcome is a single hub with many connectivity options as well as increasing number of value adding functions, e.g. receiver side business rules. This is great for the customers, as it provides a large number of priced options, to meet ever increasing customer needs. However, this approach makes the life difficult in terms of maintenance and support as well as sales and project execution. For example, for one particular option, I believe there is only one customer. I am not commenting here on profitability of each option, but the difficulty in managing them going forward whilst spreading the scarce resources too thinly. Without adding further human resources will continue to challenge them going forward.

Standard hubs

1. OB10 - Runs a single hub similar to Causeway’s Tradex. Up to now, they have catered for invoices only. Target has always been the larger customer that could generate high transaction volumes. As part of their bid strategy, they continue to give guarantees for trading partner roll out, e.g. bringing x% of transactions electronically within y number of months. Difficulty of giving such guarantees is that if you keep missing these, OB10 will end up paying significant penalties as well as loosing credibility in the industry. To overcome these, they need to have a standard proposition (i.e. product and services) that could be applied each time with minimum or near zero customisation. Otherwise, these projects will face significant difficulties to complete on time. OB10 takes a global view of the market unlike Accountis (global wannabe!) and Causeway’s Tradex (UK). With this in mind, they have set-up offices in the USA, UK and Malaysia covering the three time zones. So, their challenge is more of meeting multinationals’ global expectations. I always questioned their strategy with respect to single product. I believe they are now developing additional products with value adding functionality to meet customer requests and perhaps reposition the company. While this is great news for customers, this approach will no doubt create further challenges internally - managing multiple expectations. Will OB10 raise further funding to support growing resource requirements?
2. Transcepta - ah! the new kid in the block. Senior guys seem to know where their market ends, leaving specialists to undertake accounts payable automation. They are going after transaction volumes, which is directly proportional to revenues. If that is the case, their proposition must be simple and standard. At present, just like OB10, they cater exclusively for the invoice. Uses printer driver technology to extract and push the invoice to their portal (they do not favour the term, hub due to historical reasons). This has allowed them to bring customers (A/R side) on board within hours, leaving the harder work to their partners, i.e. A/P side. As a young company, this is a very sensible approach. In addition, they offer payment solutions through ACH, thereby offering an easy solution to settle payments. The challenge will come when customers’ demand more, and they will need to find ways to add new functionality whilst increasing the number of partners for A/P integration. Expansion outside US will present another set of challenges. On this regard, their closer association with Esker no doubt will be very helpful.

As your business continues to grow, you need to take a step back and identify potential business process failures or set-backs. This could be in sales as well as project execution (over sales is a nightmare!). Offering additional functionality without understanding their impact on your business will result in creating additional bottle-necks. A clear step by step approach to global domination ought to help ease these difficulties.

Longer post than I anticipated. Please let me know whether above makes any sense.

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Differentiation

Very rarely you find a company that wants to provide a value proposition for the small guy, especially in the e-invoicing and EIPP space. I believe Transcepta is one of these companies, who understands and has found a way to overcome the barriers faced by SME’s joining the e-invoicing evolution. ebdex also understood that without helping the small guy, the level of market penetration by e-invoicing and EIPP vendors with respect to paper will remain negligent. ebdex was about upsetting the status quo. It seems Transcepta is thinking in the same lines. Therefore bringing a breath of fresh air to the industry.

The trick is in getting SMEs to participate in the e-invoicing and EIPP evolution. You need a secret weapon for this. ebdex called it “ebdex ePrinter”, which our development team struggled to develop. Accountis calls this “ebPrinter”, which Rhys Jones developed whilst on holiday. Transcepta does not call this by any name, but have simply built their business around it. At Causeway Technologies, we are also working on a solution, perhaps plug in an existing product! In ebdex’s case, it was just another tool, but was expected to be an early winner. In Accountis’ case, this is a bid winner (e.g. DHL). But Accountis’ model still seems to be about targeting large companies (don’t get me wrong, everyone wants high transaction volumes), therefore without a clear marketing strategy for the small guy. I for one applied for Accountis ebPrinter account and yet to hear from them (perhaps they know me too much to create me an account). In summary, it is no point having the functionality if your sales and marketing plan does not support it. It’s down to either creating a buzz or just been a “me too”. As I said always, a new comer could easily overtake the market incumbents with a clear value proposition for the small and the large guy.

Another closer similarity between Transcepta and ebdex is that they are both partner led. Transcepta is busily adding partners to its network, especially from the accounts payable integration side, e.g. 170 Systems. But still to date, I do not believe anyone has thought about this to the extent ebdex had. ebdex built (or tried to built!) its product from the ground up with partner led sales and marketing model in mind. We created a partner module that allowed our trusted partners to undertake projects from a thought to trading partner roll out to operations and maintenance without ebdex ever been involved. Only a startup could come up with a strategy as simple and yet convincing as this is. Enough said about how great ebdex was! As Phil Brown said once, on paper it is easy, delivery is another ball game all together!

References:

• Paper is still King!

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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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One of the key differentiators of ebdex was that it would have been partner-led (essential ingredient to become high volume transaction business), leaving ebdex to concentrate on developing and operating the ebdex Document Exchange. This is one of the issues I discussed when I met Accountis’s senior management in Q1 2007 in Bangor. Ifor Williams, Sales Director of Accountis pinged me yesterday to advice their partnership with Billportal of Germany. According to the press release:

Werner Schneider, founder, owner and managing director of Billportal, explains: ?To take advantage of the fast growing European e-invoicing market, we looked for a product that could add value to our existing activities. We were impressed with the Accountis system - especially its technology and range of services. By partnering with Accountis, which already operates in most European countries, we’ll be able to develop and strengthen our customer focus, and position ourselves as a premier provider of EIPP services in Germany.?

According to Ulrich Tiegel, senior vice president of Commerzbank AG, Germany’s SME sector is one of the most thriving in Europe, powering Europe?s biggest economy.

Ifor Williams, Sales Director at Accountis, adds: ?The e-invoicing market in Germany is expanding rapidly, and it is quickly catching up with other European countries. We recognised Billportal?s reputation for electronic billing in Germany, and saw an opportunity to work together, catering for the e-invoicing needs of corporates and SMEs. For Accountis, working with Billportal provides a depth of knowledge and understanding of the local market requirements; and strong and powerful platform for VAT compliant e-invoicing in Germany.”

Billportal will resell Accountis service under its own branding. This is an essential ingredient of partnerships. Causeway’s Tradex was once sold by Lloyds TSB under its own branding as part of their Vantage offering. But none of these are revolutionary - ebdex built partner capability from ground up, giving partners full access to run their part of the operations without ever having to liaise with ebdex.

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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,