Thursday, August 27, 2009

Going Green with SAP EDI and Electronic Invoicing

Many companies including SAP now have executives that are responsible for helping the company go green and to lead sustainability efforts. Here is an excerpt from a recent SAP announcement.

SAP named Peter Graf its first chief sustainability officer Monday. He’ll oversee development of so-called sustainable software for customers, as well as lead the vendor’s own ambitious sustainability efforts....SAP has pledged to cut its carbon footprint in half (currently 513,000t CO2) by 2020. Among other things, the company will focus on virtualization in the data center, and cut back on business travel.


EDI, B2B and e-Invoicing are also three very obvious ways of supporting these sustainability initiatives. Many companies could not only reduce costs, but also reduce huge quantities of paper by converting outbound and inbound invoices to electronic invoices.

Medium to large size suppliers are often willing to support these initiatives by accepting EDI purchase orders and sending back EDI or B2B electronic invoices. Smaller suppliers will often be willing to receive purchase orders via email and to use a Supplier Self Service portal to submit invoices.

All of these activities have a benefit for the business and the green/sustainability initiatives. Let's take a look at each:
  • Outbound electronic invoices - reduce DSO with real-time e-invoicing via EDI, B2B or email. Also, save on paper, envelopes, stamps, printing and processing time.
  • Inbound electronic invoices - process and approve inbound electronic invoices (EDI or B2B) quickly and take advantage of early payment discounts from suppliers for better Financial Supply Chain management. Save on paper storage and archiving, save on paper processing in the mail room, save on OCR and scanning activities, etc.
  • Replace potentially hundreds of other business processes that are paper based with automated data exchanges using EDI and B2B. Data can begin to be used and analyzed in real time as data previously printed and stored only on paper begins to flow electronically and is subject to analysis and management by business analytic software applications that provide management visibility.
Going green and supporting sustainability initiatives can mean a lot of things, however, a very obvious move that can offer cost savings, sustainability and business value is converting from paper exchanges to electronic data exchanges. This does not need to cost a lot of money or be complex. Recently SAP has invested in and become a co-owner of an e-Invoicing, EDI and B2B exchange for this purpose. This is an SAP-centric exchange, that utilizes NetWeaver PI offering an on-demand e-Invoicing, EDI and B2B managed service for SAP users.

If you would like to discuss this subject in more detail please email me.

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Wednesday, August 26, 2009

Ariba or SAP for EDI, B2B and e-Invoicing

I spent a few minutes this morning reviewing Ariba's website. It shows that the services they offer are the following:
  • Spend Management
  • Sourcing
  • Contract Management
  • Procurement
  • Invoicing and payment
  • Supplier Management
  • Working Capital Management
  • Supplier Network
  • Order Collaboration

I was very intrigued by this list. The services offered are quite similar to many offered by SAP. Here are a few of SAP's offerings:

  • Procurement
  • Supplier Network Collaboration
  • Sales Order Management
  • Invoice Management
  • Financial Supply Chain
  • e-Invoicing
  • Orders to Cash
  • Procure to Pay

SAP recently became a co-owner of an EDI, e-Invoicing and B2B exchange that is SAP-centric and utilizes SAP technologies such as NetWeaver PI to make the integration with SAP users simple and efficient. Ariba also promotes itself as an e-Invoicing and EDI/B2B hub. It appears that SAP and Ariba are on a collision course. It will be interesting to see the results.

When SAP invested in their own EDI, B2B and e-Invoicing exchange, it clearly demonstrated a desire to help SAP users with EDI, B2B and e-Invoicing services and remove the need for external third party hubs like Ariba.

Friends of mine that work at SAP have shared that they are increasingly competing with Ariba. This is an interesting dilemma for companies that are wanting to reduce the number of third party applications used, in favor of a simplified and consolidated environment. To that end SAP is including many of the same features and functionality that Ariba offers, but within an SAP environment.

I wrote an article recently that posed the question, "What is your core system?" Is it a third party EDI or e-Invoicing solution, or is it your internal SAP ERP? This is an important question as software vendors continue to expand their offerings so there is more and more overlap. Your IT strategist must determine what is the core system and expand from there.

In the case of Ariba, companies must quickly determine if Ariba is going to be their core system or is SAP since both parties are offering many of the same features and functionality. It is highly likely that both SAP and Ariba will continue to extend and expand features for years, so the choices companies make today about where to invest will have significant long term impacts on their business.

This article discusses what is meant by an SAP-centric approach to EDI/B2B and e-Invoicing, and provides a good contrast to an Ariba strategy.

If you would like to discuss in more detail email me.

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Monday, August 24, 2009

Breakdown of e-Invoicing Benefits

Recently e-Invoicing seems to be on many CFO's minds. The ROI from converting in-bound paper invoices to electronic invoices is solid and reliable. There are many reports, but let me just share one today.

I came across a report by Author B. Little on in-bound electronic invoices that broke down the cost benefits of e-Invoicing and thought it would be valuable to share. The report was in Euros, but the points remain valid.

Costs of in-bound paper invoices:

  • Mail processing - Euro 0.90
  • Data input - Euro 1.40
  • Approval - Euro 5.40
  • Payment - Euro 2.80
  • Archiving - Euro 1.50
  • Handling disputes - Euro 1.80
Costs for in-bound electronic invoices:

  • Mail processing - Euro 0
  • Data input - Euro 0
  • Approval - Euro 2.0
  • Payment - Euro 1.1
  • Archiving - Euro 0
  • Handling disputes - Euro 0.90
According to Arthur, paper invoices average Euro 13.80 to process, while electronic invoices only cost Euro 4.0. I question the Archiving numbers as even electronic invoices must be archived according to specific rules in order to be compliant with government mandates and that always involves some costs, but never the less, there is substantial savings.

If your company processed 1 million in-bound invoices yearly the savings from converting from paper to e-invoices would be Euro 9.8 million per year according to Mr. Little. Of course there are costs and investments to be made in order to convert from paper to electronic, but there is certainly room for investments in that 12 month ROI.

Last year SAP invested in Crossgate, an EDI, B2B and e-Invoicing exchange for SAP users that operates on NetWeaver PI. Using NetWeaver PI, SAP users can now integrate and activate an on-demand e-Invoicing service that is SAP-centric and utilizes NetWeaver PI on both ends..

If you would like to discuss this topic in more detail please email me.

For more information on e-Invoicing read here:

Friday, August 21, 2009

Technology Blogger Kevin Benedict Receives Top Contributor Award from SAP

I guess a couple of folks have read the blog I write on SAP's SCN.

It was announced today that prolific technology blogger, Kevin Benedict was awarded the rank of Top Contributor by SAP SCN. This award was for the "contest year" which ran from August 1st to July 31st and was based on the participants rank within one of the specific categories on the SAP Community Network (forums, blogs, wikis, eLearning, downloads, etc.).

As a result of this award, Benedict joins a select group of alumnus in the greatest contributors "Community Hall of Fame" which includes a dedicated "wiki profile" on SAP's SCN. In addition, Benedict is invited to join the "Top Contributor" forum, a place for alumni to provide feedback and suggestions for making SCN a better and stronger community. Benedict will also be receiving the "Top Contributor Quarterly" a newsletter reserved for Top Contributors that will provide advanced notices of new technologies and programs.

As a Top Contributor, Benedict has also been invited to SAP TechEd Phoenix and Vienna, and to attend an invitation-only get-together for SAP TechEd Speakers, SAP Mentors, SAP Community Top Contributors, Bloggers, SAP Executives and ASUG Leadership.

Benedict has also been invited, as a member of a select group of technical gurus and business process thought leaders at SAP TechEd, to host a meeting at the Experts Networking Lounge in Phoenix & Vienna. He will also be awarded preferred seating in the Keynote Theater and recognition onstage during the popular Demo Jam.

Benedict is an industry thought leader in the areas of EDI, B2B, mobile computing and business process automation and maintains a popular enterprise technology blog at http://b2b-bpo.blogspot.com/. He is the Business Development and SAP Relationship Manager at Crossgate, an SAP-centric and SAP co-owned EDI and B2B exchange.

Benedict works closely with SAP customers and SAP sales teams to architect world class EDI and B2B strategies.

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Thursday, August 20, 2009

Core Systems - EDI or SAP?

The title of this article might seem strange as things I write often are, but the question this time is valid. Many traditional third party EDI vendors are now competing with the large ERP vendors like SAP, Oracle, Lawson, SAGE, MS Dynamics and others. These EDI vendors are extending their offerings to include Supply Chain management, Transportation management, Supplier Portals, Customer Portals, Catalog management, e-Invoicing etc.

The question for the CIO is - What is the company's IT strategy? Is it to use their traditional EDI solution as the center of their IT universe and to extend applications off of it, or is SAP ERP the core? If the answer is SAP is the center of the universe, then extending SAP ERP with additional new SAP components makes sense.

Today it is common for SAP users to seek ways of reducing or eliminating non-core software applications and to standardize on their ERP when possible. This simplifies the IT infrastructure and reduces maintenance and support costs as well as hopefully providing better business solutions. Traditional EDI vendors are being impacted by this trend. They are not part of the SAP ecosystem. They are third party plug-ins that provided a valuable function for a limited time. Once SAP announced their own SAP-centric approach to EDI called Business Network Transformation through their co-owned EDI exchange called Crossgate the value of third party EDI solutions to SAP users significantly diminished.

SAP now has their own EDI/B2B strategy and solution that provides powerful advantages for SAP users. Third party EDI vendors are not capable of providing SAP-centric solutions as they must be generic in order to provide any-to-any data movements for all brands of ERP. Crossgate utilizes SAP NetWeaver PI and many other SAP technologies to provide a deep SAP integration at the business process and data levels. The costs are significantly lower than traditional EDI solutions as Crossgate utilitizes NetWeaver PI and other technologies in a cloud computing environment.

If you would like more details on this subject please email me.

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SAP-Centric EDI and B2B - What the CIO Needs to Know

SAP's new paradigm and model for EDI and B2B is called Business Network Transformation. This is the idea that the SAP user community and their associated network of trading partners can benefit by reusing and leveraging each other's EDI and B2B connections. This concept requires a central repository of all connected companies, EDI and B2B maps, a centralized canonical database model, a world class data center for managing billions of transactions per year, a powerful set of software applications designed to simplify the on-boarding of trading partners for SAP users, all integrated into an SAP-centric technology stack. SAP's investment in Crossgate has now made this goal a reality for SAP customers.

In addition to simplifying EDI and B2B for all SAP users, SAP's investment in Crossgate was also motivated by the realization that SAP solutions like SNC (Supplier Network Collaboration), TM (Transportation Management) and e-Invoicing are dependent upon cost effective communications with large networks of trading partners. The B2B communication component becomes a critical part of the success and ROI of these solutions and is best served by being tightly integrated with the rest of SAP's products and strategies.

SAP's Business Network Transformation strategy is an interesting and different paradigm because it takes an SAP-centric approach to EDI and B2B. What does EDI and B2B look like from an SAP-centric view?

  1. SAP made a significant investment in a rapidly growing company that owns and operates Europe's largest managed EDI and B2B services HUB called Crossgate.
  2. Crossgate's services are developed for and operated on SAP's NetWeaver platform.
  3. This is now SAP's recommended EDI and B2B managed services (BPO) solution globally today.
  4. SAP/Crossgate are now developing multi-year roadmaps for EDI and B2B integration solutions for all SAP components that consume and produce EDI and B2B messages.
  5. Pre-configured EDI and B2B services are being uploaded and published to SAP's ESR (Enterprise Services Repository) for reusability and customization.
  6. SAP users can implement new business processes and associated EDI and B2B services in an on-demand SaaS or IaaS model by simply requesting the Crossgate EDI/B2B service and designating messages and trading partners to activate.
  7. SAP's Global Data Types are being used to normalize the semantics and syntax of data across the SAP environment and they are also being incorporated into the SAP/Crossgate EDI and B2B Automated Business Exchange. This will become an increasingly important feature for SAP users.
  8. As new Enhancement Packages are released by SAP, the SAP/Crossgate EDI/B2B services will be released to support them. For example, Transportation Management (TM) and Supplier Network Collaboration (SNC) have full SAP/Crossgate EDI/B2B message roadmaps. These defined EDI and B2B messages will be available for TMS and SNC customers on-demand in the ESR.
  9. Electronic Invoicing is in big demand as a way to lower the processing costs of invoices and improve the speed of invoice approvals so early payment discounts can be captured. SAP utilizes Crossgate's EDI and B2B integrations and on-boarding services to convert paper based invoices to electronic invoices globally.
  10. SAP and Crossgate are developing methodologies and services to simplify the implementation and on-boarding of trading partners. Knowing that the connected back office application is SAP, enables many integrations to be pre-built and stored in the Enterprise Services Repository.
  11. SAP users will benefit from the EDI/B2B connections made by other SAP users on the network. Each new trading partner connection added to the SAP/Crossgate network will then be available for reuse by other SAP users connected to the network(with permission of course). The benefits and economies of scale presented by this model are powerful.
  12. SAP customers that want to consolidate and simplify their IT environments around SAP solutions will want to carefully consider the Business Network Transformation strategy articulated by Jim Hagemann Snabe, a member of SAP Executive Board at last years Sapphire and in 2009.
If you would like to discuss the Business Network Transformation strategy in more detail please email me.

For more information see read these articles:

Tuesday, August 18, 2009

SAP Users and EDI - A New Paradigm

The traditional approach to EDI is for every company to invest in and develop their own EDI infrastructure and then to individually contact each trading partner and begin a long, painful and expensive on-boarding effort. When SAP announced they had invested in and become a co-owner of Crossgate, an EDI and B2B exchange, they also introduced a new paradigm for EDI.

SAP users can now connect once into the Crossgate exchange using a NetWeaver PI-to-NetWeaver PI connection and connect to any other company that is on the exchange. What is special about this? There are 40,000 companies on the exchange and this number is growing very rapidly. Each time an SAP user adds a new trading partner to the exchange, that connection and EDI or B2B message can become available to every other member on the exchange. Here is an example:

A large national trucking company connects to the Crossgate exchange with 7 different EDI messages. Those EDI/B2B connections are now available to every SAP user on the planet. When you have 3,000 companies adding new trading partners to the Crossgate network monthly you can see how the "network" effect can grow quickly and dramatically.

Again, the traditional model of EDI is to do all the work yourself and make all the investment yourself and to not share the benefits with anyone. However, when your competition can connect once to the Crossgate exchange and start with 40,000 possible EDI and B2B connected trading partners already available and tested, you can recognize the advantages.

SAP is creating significant competitive advantages for their customers with the Crossgate network. In addition to simply providing a quick and cost effective way to connect with thousands of other companies, they have invested in sophisticated software tools to help companies quickly create ERP profiles, which are interfaces between the SAP user and the Crossgate network, that will cover all the data requirements for entire supply chains and trading partner communities with one interface.

The features described above are just a few of the many SAP community benefits that are being developed for SAP users through the Crossgate EDI/B2B exchange.

If you would like more information on SAP's investment and strategy for the Crossgate EDI/B2B exchange please email me or contact your SAP sales team.
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Monday, August 17, 2009

Consolidating SAP EDI B2B Connectivity Through Crossgate

SAP is the co-owner of an EDI / B2B exchange called Crossgate. Crossgate operates the exchange using SAP's technology stack including NetWeaver PI, and offers a SAP-centric option to maintaining an expensive internal EDI infrastructure. The use of NetWeaver PI on the exchange enables SAP users to connect to the Crossgate exchange using a NetWeaver-to-NetWeaver integration or the traditional IDoc or tRFC connections. You can learn more by talking with your SAP sales teams.

All of the above is interesting, but one of the features that make this exchange completely different is the ability to provide SAP users with tens of thousands of pre-integrated B2B connections with other SAP and other non-SAP users. You cannot get that operating your own EDI department and expensive internal EDI system. The only connections you can get are one at a time and by your own hard work and effort.

Let's compare:
  1. Companies can invest in an expensive EDI infrastructure and team. Spend months getting everything ready, hardware in place, people trained and you still have no B2B connections with your trading partner community. Once you have completed a multi-year trading partner on-boarding project your costs do not go down, rather they often go up as the burden of operating, supporting, maintaining and on-boarding new partners continues to grow.
  2. In contrast - An SAP user connects to the Crossgate EDI/B2B exchange using a NetWeaver PI-to-NetWeaver PI connection and instantly has access to over 40,000 other SAP and non-SAP users already connected. Once your trading partner community is activated through the exchange, your costs drop dramatically to a low monthly service fee.

Many SAP users are in the process of consolidating both their instances of SAP ERP and their multiple EDI/B2B departments around the company. They want to simplify, reduce costs and standardize processes. SAP's investment in and joint development work with the Crossgate EDI/B2B exchange is designed to help all SAP users simplify and reduce the costs of EDI and B2B development, implementation, operations, support and maintenance.

If you have any requirements for EDI or B2B on-boarding projects, or you want to reconsider the traditional and expensive way EDI and B2B is operated and maintained internally today, please send me an email and we can brainstorm.

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Tuesday, August 11, 2009

Converting Paper Invoices to Electronic Invoices is Required for Global E-Commerce

Paper invoices have been at the core of financial transactions for hundreds of years. Manually preparing an invoice and mailing it to a customer is second nature to most companies. The business world has been moving along for centuries using these processes, but in the last few decades as business operations have spread out to cross geographical borders and time zones, companies have begun to realize that manual and paper based operations – particularly in regard to financial transactions – are problematic and impacting the business in a negative manner.

Rapid advances in technology over the past few decades have forever changed the way companies do business. Globalization has opened the door to expanded markets and created fierce competition. The amount of data required to conduct business and to be compliant with many different governments and tax authorities has grown exponentially. As a result, technologies have emerged to make communication between business partners simpler and faster, and companies have changed many of their standard processes to keep up with the speed of business.

Suppliers and producers have implemented strategies to streamline operational efficiency by reducing or eliminating manual processes that are time-consuming and costly. But despite many impressive strides toward automation, the vast majority of financial transactions for most businesses are still paper-based. These manual processes and a lack of integration among trading partners make it difficult to convert sales into cash like the best of class companies do.

Financial supply chains clogged with large amounts of paper and aging and uncollected receivables can cause business operations to slow to a crawl or be forced to seek expensive loans to deal with cashflow challenges. In a global economy where many other business processes are being transitioned from paper-based to electronic, inefficient financial processes can put a company at a significant competitive disadvantage. To succeed in today’s fast-paced global marketplace, companies need to take advantage of technological advances to optimize their financial supply chains.

Firms with top financial performance earn best-in-class status from business analysts because they are able to convert sales into cash quickly and efficiently. The average days sales outstanding (DSO) for these top performers is 45 days, and the average cash conversion cycle is 15 days. But for firms with inefficient financial supply chains, the average DSO is 63 days and the average cash conversion cycle is 100 days.*

Large amounts of aging and uncollected accounts receivables cause troublesome fluctuations in a company’s cash on hand, which results in a significant competitive disadvantage and a negative impact to their bottomline. Manual paper based processes that are not electronically integrated with business partners are responsible for many roadblocks to top financial performance. Paper invoices are not only expensive, slow and time-consuming to process, but they are also burdensome to archive and store.

Reconciling invoicing disputes puts heavy burdens on company resources, increasing costs while delaying payment. Because accounts receivables are tied up indefinitely, predicting cash flow is difficult. And the problems caused by continuing to handle financial transactions manually are not limited to time and money. Without an efficient financial management solution, companies have difficulty preparing audit trails for closing books and European VAT audits.

Companies seeking to remain competitive in today’s fast-paced global economy need to streamline their financial supply chain. Electronic invoicing helps them meet that objective. Removing manual paper based processes speeds up invoicing, thereby reducing DSO and shortening cash conversion cycles. Companies can quickly free up cash and use it to repurchase stock, expand business operations, and reduce or pay off outstanding debts.

The simplicity of e-invoicing(especially if using an experienced global service provider) allows companies to dispatch digitally signed PDFs or EDI documents immediately, which often reduces DSO and increases cash flow. Because of transparent processes and online archives, invoice loss is eliminated, thereby reducing the need for processing duplicates. Accounting processes are simpler and less time-consuming. All of these improved cash management benefits can help boost a company’s stock price and performance.

Cost-Saving Benefits of E-Invoicing

One of the most attractive benefits of e-invoicing is also one of the most obvious. By eliminating
creating, printing, enveloping, consignment, and expenses for material and postage, companies can realize greater than 50% cost savings in the invoice process. Paper invoices cost a company an average of $5 per invoice to process, while electronic invoices cost an average of $2 to generate. Cost savings are not limited to paper products. Approximately 60% of all inbound customer service calls are related to invoice disputes, which translates to hundreds of hours of human intervention. By greatly reducing the human component required for processing manual invoices and reconciling invoicing disputes, a company can reduce the number of its full-time employees.

Compliance Benefits

Digital signatures, security certificates, and e-invoice archiving regulations guarantee the integrity and authenticity of transmissions, thereby helping companies meet national and legal invoicing regulations in EU countries. E-invoicing solutions produce project-specific documentation including a process description and compliance map. With these templates, companies can create documentation jointly with their customer, including the requirements recommended by the customer’s tax authorities, depending on the country. Compliance regulations are very specific in terms of how invoices must be signed, sent, and archived, and a comprehensive e-invoicing solution makes it easier and more affordable for companies to meet those regulations.

Top 14 Misconceptions of EU e-Invoicing
  1. e-Invoicing means simply sending an invoice via email -True - emailing an invoice is considered as e-invoicing in most countries, but since email is not secure, additional measures are required like e-Signing (compliant to local tax laws) the invoice before sending it
  2. e-Invoicing is just about exchanging invoice data -Not true -A secure transmission is required to ensure integrity and authenticity is guaranteed with an audit trail. Long term storage in the original format is required in most countries for sender and receiver.
  3. To archive an e-Invoice I just need to print it - Not True -Most countries require that you archive the invoice in the original format it was received. For e-Signed invoices also the verification of the signature must be archived. The archive must guarantee that documents cannot be changed, deleted, stay consistent and be retrievable via online access.
  4. Invoices received by fax are always considered as paper invoices - Not True -At least for Germany two different types exist: a) a “standard” fax that can only be fed by entering paper documents and b) a “computer” fax -only in case of A it is considered as a paper invoice in case of B it is an e-Invoice and requires an e-Signature
  5. Invoice laws are not changing - Not True -A good example for a change is the recent (1.1. 2009) removed requirement for a summary invoice in case of EDI invoices in Germany
  6. In Germany: after removing the invoice summary requirement for EDI invoices it is now enough to simply send EDI invoices in any format -True - in that the summary invoice is not required, but like before, an EDI Partner agreement must be in place and a secure transport mechanisms must be used that guarantees integrity and authenticity and archiving of the invoice is required including log files that prove transmission and translation
  7. The EU-Directive guarantees equal requirements throughout Europe - False -As EU directives are implemented on country level, additional requirements exist and directives can also include optional parts, e.g. the 3 invoicing methods that are only implemented in some countries (like UK or Finland). In addition other requirements like SOX compliance can apply for European companies that are listed in the US stock market.
  8. Since 28.1.2009 a new e-invoice EU Directive was implement and is now applicable - False -It is just a suggestion to change the existing directive and first it needs to be discussed, approved and later implemented by all 27 member states Ă  no change till ~2013
  9. The planned equal treatment of paper and electronic invoices will make everything easier - Undecided -It is likely that parts of the legislation will be less prescriptive for e-Invoice, but still the requirement for authenticity and integrity will exist; especially in regards to electronic storage.
  10. With a single rollout all trading partners can be on-boarded - False -The reality is different: as some countries do not accept signed PDF invoices as legal or require specific formats. On-boarding requires a country by country approach. Using a solution provider with out of the box approaches to cover these requirements will help address each countries requirements and ensure the e-Invoice projects does not bog down in complexity.
  11. Onboarding of Trading partners is normally simple - True/False - The solutions from e-Invoicing service providers can make the process much simplier, but there remains work to be done with your trading partner community. Various challenges actually need to be solved like: basic resistance to e-Invoices, benefits to the trading partner must be communicated, the selection of an e-Invoicing solution should provide all required components also for the trading partner (e.g. verification and/or archiving) at a reasonable price, strict rules to only accept e-Invoice should be applied whenever possible (including penalties if still paper invoices are received or requested).
  12. All trading partners are connected in the same way - False -Different sizes of companies or invoice volumes requires different level of IT integration or languages requirements. A solution provider can handle these requirements by leveraging its shared platform and providing a variety of connections options.
  13. Global/International requirements for e-Invoicing are almost the same - False - It is true that consensus exists in regards to the definition of e-Invoices as being the paperless exchange of invoices, but requirements differ per country – in general 3 approaches exists a) e-Invoicing is allowed and rules are defined b) e-Invoices are only allowed after request and approval by the tax authorities (e.g. Japan or Brazil) c) e-invoice is not allowed at all (e.g. Russia or India)
  14. With e-Invoicing nothing can go wrong and errors have little impact - False-Country specific e-invoicing rules exist and must be followed. The invoice receiver can lose its right to deduct Tax in countries with VAT programs, and some countries have per document penalties for incompliant invoices.

Most large companies that I know seem to engage a global third party electronic invoice service provider to manage their e-Invoicing program and to ensure compliance with all of the regional regulations and tax compliance rules are followed. In fact, SAP has recently announced an investment in Crossgate, a company that provides e-Invoicing for SAP customers. Companies using SAP's NetWeaver PI can connect directly into Crossgate's NetWeaver PI and then activate global e-Invoicing. SAP users not currently using NetWeaver PI can also connect using a variety of other integration technologies.

If you have additional questions please feel free to email me.
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Monday, August 10, 2009

Finding New ROIs in Old Technology and Adding Intelligence

Over the weekend I read an interview with Thomas Siebel, the founder of Siebel software. He stated something like, "all the exciting times in IT ended by the year 2000." Since that time changes have been incremental and small. I have been pondering that statement and I just can't agree.

I spent nearly 5 years in the mobile computing space and can tell you that mobility is still in its infancy. I am working in the EDI/B2B space now and can tell you that this old technology is in the midst of an exciting revolution. I will provide details in a moment.

Let me provide an analogy - A naked man puts on a robe. Later he learns the benefits of wearing under garments. He is now clothed. It is good. However, soon he realizes that the robe is not the ideal outfit to wear when climbing a tree, riding a horse, running a race or skiing down a mountain. He soon finds, that different shirts, pants, shoes, hats and socks seem to work better for different activities. Yes, each involves the basic concept of being clothed, but once being clothed is accepted, improvements are sought and the original robe may even be discarded. I best leave that analogy now before it gets any sillier.

Companies have all made the decision that ERPs are good and serve to provide a standardized framework in which to operate a company. However, the original IT strategies, architectures and ERPs purchased and implemented 20 years ago may be ill suited for today's activities. There remains the constant need to re-evaluate the decisions you made in the past for their relevance today. In addition, many important aspects of a company's business processes still remain to be automated.

  • Event management
  • Business Intelligence
  • Mobilization of software applications and remote business processes
  • Real-time dashboards that provide minute-by-minute and long range views into operations
  • e-Invoicing
  • AP optimization
  • Financial supply chain optimization
  • Conversion of inbound and outbound paper documents to electronic documents
  • EDI/B2B connectivity with the remaining 80% of their trading partners
  • Standardizing disparate systems onto one global instance of an ERP
  • Standardizing data syntax and semantics across the enterprise to ease integrations
  • Integrating the benefits of social networking to capture, store and and distribute enterprise's intellectual assets

Companies today must analyze their current IT inventory and strategic direction and ask themselves if their current IT infrastructure is good, flexible and extensible and is it able to promote future growth and efficiency. In these times of limited IT budgets, it is a good time to look at current IT inventory and maximize and optimize its use. We all know that often only the minimum functionality of an application has been used. Often 80% of the ROI still remains to be captured by extending and expanding the use of existing systems.

Many decisions that were made in the past were good and wise based upon the state of the enterprise and technology at the time. However, it may not be the best decision today. Let me provide an example from the world of EDI/B2B.

Ten years ago, a large manufacturer needed to connect via EDI to their suppliers. They quickly came to the conclusion that they needed to support EDI and the way to do that was to hire the following people:

1 EDI Manager (full-time)
5 EDI specialists (full-time)
1 Database Administrator (part-time)
1 IT standards team (part-time)
2 IT software engineers working on integration projects (part-time)
3 SAP solutions specialist defining business process and data integration requirements (part-time)
1 Communication/Security specialists (part-time)
1 IT Business Analyst (full-time)
1 IT Systems Analysts (part-time)
6 Business Process Specialists (part-time owners of business processes and different database applications)
1 IT Help Desk person (part-time)
3 IT Managers (part-time)
1 IT Network Administrator (part-time)
1 IT Data Center/Server Manager (part-time)
1 IT Web Portal Specialists (part-time)
2 IT Project Managers (part-time)
3 Directors of Business Units (part-time)

Now that the company had the required resources in place, they invested large amounts of money into internal EDI applications, mapping tools, EDI standards libraries, communication servers, hardware, etc. Once that was in place they began EDI implementation projects. First they needed to gather a great deal of information:

  • Who is this EDI/B2B message for and when does it need to be in production?
  • What is the data exchange testing schedule
  • What is the data exchange production schedule
  • What is your Trading Partner's contact information -EDI Manager, Phone, Email, EDI Technical Lead, Phone, Email , Business Unit Project Owner, Phone, Email
  • EDI Transaction Set / Name Information,Inbound or Outbound, EDI Standard and Version
  • EDI Implementation Guide
  • EDI test data file to match the Implementation Guide
  • Communications/Transmission Information
  • VAN Name,VAN Phone, Email, VAN account information, Duns ID, ISA ID, GS ID
  • Transactions schedule - batch, scheduled or real-time
  • Production Qualifiers, Test Qualifiers
  • FTP Site information, user names, passwords
  • IP Address (Production) -User ID, Password, Directory
  • Timing of transaction (batch, scheduled or real-time)
  • IP Address (Test) -User ID, Password, Directory
  • Frame Relay Subscription Information
  • SAP IDoc used, is the IDoc standard or custom
  • SAP Database Administrator, Name, Phone, Email
  • Is there a separate Application Interface for different non-SAP solutions in the system
  • Application Interface Location
  • Application Interface Contact and Contact Manager - Name, Phone, Email
  • Application data file location
  • Inbound application data mapping specification
  • Application Data format (delimited, fixed length?)
  • Outbound application data mapping specification
  • Application test data source
  • Application Implementation Guideline
  • Transaction Set/Name, Inbound/Outbound, Standard/Version
  • Implementation Guide Location and owner
  • XML Schema/DTD Location and owner
  • Acknowledgments required y/n - Are 997 functional acknowledgments required?
Ten years ago that was the process. Today, EDI and B2B connectivity is available as a SaaS/IaaS or cloud computing utility. If you are an SAP customer, you can simply subscribe and plug into their EDI/B2B exchange. There is no longer the need to pay the huge VAN fees, purchase expensive EDI software tools, mapping tools, EDI standards libraries, hire specialized EDI staff, pay large maintenance fees. In the new world of IT, these functions are available to be activated on-demand. Often the service levels will be much higher and the on-going costs much lower. If you would like to discuss in more detail send me an email.

In summary - In today's world, IT strategists need to be reviewing their existing inventory of software applications and systems to see if there are uncaptured ROIs. They need to be reviewing every aspect of their IT infrastructure to see if old and expensive models can be replaced by less expensive, faster and better solutions in cloud computing environments that may even provide higher service levels and far less on-going costs.

Mr. Siebel's days of excitement may have ended by the year 2000, but innovation is very much alive and well. Now that much of the basic IT infrastructure and databases are in place, the future is all about using systems more intelligently and building intelligence into existing business processes.

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Friday, August 7, 2009

Mexico e-Invoicing, Beyond the Basics

I have been working on several implementations of Mexico e-Invoicing for large companies this week and wanted to share some beyond the basic information. Often when companies first consider supporting e-Invoicing in-house, especially in locations like Mexico where there are complex requirements, they don't realize how comprehensive the solution needs to be. Let me share some aspects of the solution that are not always obvious.

  1. Companies must generate a specific SAT report each month, showing all Folios (similar to invoices) and relevant details, in SAT's designated format, and manually upload it to a specific SAT portal.
  2. All Folio numbers are provided by the Mexican SAT. Someone must request a range of Folio numbers from SAT for the company to use. These Folio numbers must be assigned to every invoice generated in Mexico. How are you going to do that with your ERP?
  3. You need to get each Folio digitally signed by a certified service provider in Mexico. This validates the authenticity of the Folio. Which service provider will you use? How will you choose?
  4. Each digitally signed Folio must be archived on premise in Mexico. Where are you going to archive them? Which location, building, computer and software application will archive it?
  5. How are you going to manage Folio numbers? How do you know when you need to order more Folio numbers? You can use Folios with electronic invoices and paper. How will you keep track of this? How do you know where every Folio number is archived? How do you search on Folio numbers? What application will you use to manage it?
  6. How do you associate the Mexico SAT issued Folio numbers with your SAP or other ERP issued invoice numbers?
  7. How do you take the Folio number and associated Invoice numbers and update your ERP with this association? Does your ERP have a location where this association can be stored?
  8. How do you distribute the final invoice with the digitally signed Folio number and compliant format to your Mexico customers? Do you use pre-printed Mexico SAT issued Folio paper and mail it, EDI/XML or do you send a digitally signed PDF version as a link or attachment in an email?
  9. If you send an email with a link to a PDF version of the digitally signed Folio to avoid any email attachments issues, then you need a portal to store the PDFs and make them accessible to your customers. How do you develop and secure this system?
  10. If you want EDI or B2B integration using the Mexico SAT XML format how will you support it?
  11. You must archive the required SAT XML format with digital signature. How will you make it human readable ans searchable?
  12. The Mexico SAT Folio format does not include all the line item information that companies typically need on an invoice. How do you provide both the SAT compliant XML Folio and all of your invoice details to your customers? This is a key point that needs careful consideration.
  13. If using email - How do you ensure your customers actually received and opened the invoice/Folio? Your accounts payable department will want to know this soon.

These are just a few of the many different questions companies must ponder as they seek to support compliance with the Mexico SAT requirements. There is definitely complexity, resources and systems involved, unless you choose to work with a global e-Invoicing service provider.

Many global companies must figure out how to support e-Invoicing globally. Each country seems to have their own unique requirements. If you would like to brainstorm or ask questions please contact me.

For more information on e-Invoicing read these articles:


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Tuesday, August 4, 2009

Crossgate is SAP's Answer to EDI and B2B Requirements

SAP and Crossgate (Crossgate is co-owned by SAP) have been jointly developing some very interesting EDI and B2B solutions in the form of "service extensions" to SAP applications including SNC (Supplier Network Collaboration), TM (Transportation Management), e-Invoicing and many other areas. This is a new strategy for EDI and B2B that is SAP-centric and very intriguing for SAP users seeking to integrate with a powerful global exchange that can provide higher service levels and reduced costs.

Crossgate provides an EDI/B2B managed services hub in a cloud computing environment that utilizes SAP technology including Netweaver PI. They specialize in operating and supporting EDI and B2B systems for SAP customers. They also support a wide range of other ERPs and software applications that may also be present in an SAP customer's IT environment.

Crossgate develops the SAP integrations, tests, and supports the production environments. During project planning, the Crossgate Support team works with the customer to collect the design materials required for development. This includes format descriptions for the ERP message layouts, guidelines for each trading partner, and sample test data and test scenarios for each back-end business process.

This is how an SAP user is set-up - Crossgate configures an ERP profile (interface) which integrates the SAP ERP (or other SAP applications) to Crossgate's EDI/B2B exchange. Once the ERP profile is connected, the data can be moved in and out of the Crossgate exchange and translated into all the various EDI and B2B standards and custom B2B file formats required within your trading partner community. Crossgate manages the deployment and trading partner implementations as part of their managed services.

The SAP user no longer needs to purchase and maintain third party EDI translators, mapping tools, point to point mappings, integration scripts, communication servers, EDI staff, EDI consultants, EDI helpdesks, etc. They can simply interface with the Crossgate EDI/B2B exchange and the EDI/B2B processes are then managed and supported at a considerable cost savings.

If you have any questions email me and I will do my best to answer them.

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