Tuesday, May 11, 2010

Eight Issues to Consider When Selecting an E-Invoicing Service Provider

There are a variety of different business models for global e-invoicing networks and network operators.  Some are more advantageous than others to the companies connected.  Let's take a look at some of the different models and understand what they mean to the companies that connect to them.

1.  Network Ownership

With many e-invoicing networks the goal of the network operator is to control the relationship of all participants and the pricing. If the network operator wants to increase their fees, they can do it.  The participants do not have a voice in the fee structure.  This does not sit well with many companies that invited their business partners to all join a particular network operator that then had their fees raised and their relationships exploited.  Understand your risks and vulnerabilities in these kinds of relationships before inviting your trading partner community to join them.

Some e-invoicing networks like Crossgate, which is co-owned by SAP, understand this concern and do not attempt to own the Trading Partner Agreements or trading partner relationships.  They simply provide a managed e-invoicing service on behalf of their client.

2. Trading Partner Fees

Many e-invoicing network operators require both the sender and receiver of the e-invoice to pay fees.  This is unacceptable to many trading partners, and it inhibits e-invoicing participation and diminishes the ROI.  Alternatively, other e-invoicing network operators only charge their clients for the managed e-invoicing service not their trading partner communities. This is a very attractive model for trading partner communities and encourages participation and rapid adoption.  Consider how the various fee structures can impact your implementations and community participation before agreeing to them.

3. Security

A number of industry groups have encouraged their members to give up their autonomy and commit their e-invoicing efforts to the industry standard and shared e-invoicing system.  Because these services are shared by your industry peers and competitors, you are often limited to only the services used by all members.  This prevents you from implementing new processes and business practices that may in fact provide competitive advantages.  At what point do the limitations imposed by the industry group limit the individual member's ability to customize, innovate and exploit new business opportunities?  The managed e-invoicing services provided by SAP/Crossgate is developed around your SAP system not your industry peers' systems.  This enables you to exploit business opportunities and customize your services in a manner that maximizes the benefit to your organization.

4. Supported Processes

Many e-invoicing network operators provide only a basic PO-Flip service or other limited process support.  What if your organization would benefit from automating a wide range of business processes like ASNs, PO Changes, Partial Line Item Acceptance, etc. It is important to consider the full range of processes supported by your managed e-invoicing service provider before committing to the implementation effort.

5. Service Level Agreement

What is the Service Level Agreement provided by your e-invoicing network operator?  Have you read the fine print? Often the response time in the SLAs is 48 hours.  Is that sufficient to meet your goals?  Often a motivation for implementing e-invoicing is to improve invoice processing speeds so companies can take advantage of early payment discounts.  Ensure your SLA is acceptable and supports your plans and purposes.

6.  Global Coverage

Do you conduct business in Latin America?  Latin America involves some of the most complex and challenging e-invoicing requirements in the world.  Many e-invoicing network operators do not support these requirements.  Ensure the countries where you operate are covered by your service provider before committing to the effort.

7. ERP Integration

Many e-invoicing network operators pride themselves on being ERP agnostic.  They do not care what back-end ERP you use, because they simply pass on a file.  The problem of course, is that many countries have e-invoicing requirements that impact the ERP and require editing your ERP to be compliant.  Using an e-invoicing network operator with deep ERP knowledge and experience helps you meet all of the processes and data requirements needed to be fully compliant with each country.

8.  Language Support

Many e-invoicing network operators may have the technology knowledge to send and receive invoices, but do not have the language support required to implement with trading partners in specific countries.  This is an important consideration.  SAP/Crossgate have native Spanish and Portuguese language specialists to help with implementations.

These are eight issues for you to consider.  If you can think of more, please comment below, and I will add them to the list.

Author: Kevin Benedict, SAP Mentor
Principal Consultant/Founder Netcentric Strategies LLC
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant www.linkedin.com/in/kevinbenedict
***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.

1 comment:

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