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 à 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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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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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:

• http://b2b-bpo.blogspot.com/2009/06/saving-costs-through-e-invoicing-both.html
• http://b2b-bpo.blogspot.com/2009/03/sap-and-crossgate-collaborate-on-e.html
• http://b2b-bpo.blogspot.com/2009/06/electronic-invoicing-in-mexico.html
• http://b2b-bpo.blogspot.com/2009/04/sap-and-e-invoicing-value-of-time-and.html
• http://ap-optimization.blogspot.com/2009/01/implementing-e-invoicing.html

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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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The Benefits of e-Invoicing

The benefits of e-Invoicing or electronic invoicing are well documented, but worth repeating as e-Invoicing can help companies solve a number of problems and reduce costs quickly and substantially.

• The average time it takes a company to process an invoice to approval is 23 days, however, best-in-class companies that have automated invoice receipt (inbound) and work flow have been able to reduce this time frame to as little as five days.
• The average DSO (days sales outstanding), according to Aberdeen in 2007, was 59 days, laggards was 63 days, leaders were 45 (leaders have automated e-Invoicing among other efficiencies). This shows that the average DSO is significantly reduced when your customers can accept integrated electronic invoicing.

Here are some additional points:

Many companies now seek to implement compliant e-invoicing on the back of existing B2B strategies. Significant benefits are immediately available if done right.

Gartner Group estimates the cost of producing a paper invoice is $5.00, while an electronic invoice is only $2.00, a 60% reduction. They also see a decrease in customer disputes and inbound calls. They estimated that 60% of customer service related calls are related to Invoice dispute. The reduced customer service calls are often not considered in the ROI, but are very real.

Additional benefits of outbound e-Invoicing services are:

• Immediate cost savings as processing time, postage fees, material, printing, enveloping and delivery are eliminated.
• Speed up the invoicing process - customers receive their e-Invoices often in seconds, rather than days through the postal service.
• Predictable ongoing costs thanks to transaction-based fees.
• Increased process transparency and data security due to online archiving.

What does e-Invoicing look like? Electronic invoicing can be in the form of an EDI message, custom B2B electronic file, or as simple as a link in an email that points back to an archived PDF or includes an attached PDF of the invoice. Much of the savings can be accomplished for the sending company using any of these means. However, if the invoice recipient can fully integrate the e-Invoices, then processing is even faster and will have less errors due to re-typing. This will help the invoice sender lower their DSOs (days sales outstanding).

ERP vendors like SAP, have e-Invoicing strategies that utilize applications like Netweaver PI connected to a preferred global e-Invoicing service provider that helps manage all the international tax and legal compliance issues, so the process remains simple for the sender.

Email me if you would like to discuss any of these points in more detail.

OK, so the savings are quick, documented and real. How does a company implement e-Invoicing? Here are a few articles I would encourage you to read.

• http://b2b-bpo.blogspot.com/2009/03/implementing-sap-e-invoicing.html
• http://b2b-bpo.blogspot.com/2009/06/saving-costs-through-e-invoicing-both.html
• http://b2b-bpo.blogspot.com/2009/04/sap-and-e-invoicing-value-of-time-and.html

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Removing Complexity from SAP EDI and B2B Processes

I had a conversation with a large Oil and Gas company today about complexity in the areas of EDI and B2B processes. They have, like many large companies, acquired different subsidiaries which run different ERPs and have different EDI translators. A quick review of their IT infrastructure easily uncovered huge amounts of complexity and costs associated with operating, supporting and maintaining these multiple disparate systems.

Who can fix this complexity? Is it the EDI department? No, the EDI department usually is task oriented and rarely can say NO to the business. Their tasks sound relatively simple. Take the data from an ERP or database application, map it to an EDI translator and send it out to the trading partner in an agreed upon file format and communication protocol.

So where is the complexity, who owns it and who can fix it? The complexity is in the integrations of data with the multitude of database applications and ERPs, and supporting the various file formats that the business units agree to support. The challenge is in developing, managing and documenting all of these integration scripts. This is often outside of the responsibility of the EDI department, but never really embraced by the software development teams in IT either. It is a kind of NO-MANs land. No one wants to own it. Software developers will grudgingly develop an integration script, but only if they are promised it is a short term project. The second it mostly works, the developer moves on to sexier development projects - leaving an undocumented, and poorly supported integration script to be found and deciphered next year by the next unlucky soul. These undocumented integration scripts grow like weeds in July. After a few years, there are hundreds and thousands of these scripts just waiting to be broken by an upgrade or process improvement somewhere which will bring IT to its knees fast.

The complexity involved in supporting all the various business processes and data requirements of dozens of different database applications and ERPs can be enormous. Companies need to either develop specialized database applications to help manage all of the integration scripts or buy some specialized application (I have never seen an application that does exactly this, except one I wrote myself many years ago).

Added to the complexity of managing hundreds and even thousands of internal integration scripts is the data and file format requirements that the business units agree to support with customers and suppliers. One simple electronic purchase order which can easily be mapped and supported by an EDI expert, suddenly becomes a nightmare when the business unit agrees to support a different file format for every customers' purchase order process. These kinds of complexities have a name - "combinatorial explosion!!!!" Multiply all of the different database systems and ERPs that all require different data and processes, with an understaffed EDI department and business units agreeing to support hundreds of different file formats for simple processes. HELP! No wonder EDI departments are often considered slow and unresponsive. They are shell shocked and buried alive in complexity!

SAP's Business Network Transformation strategy and recent investment in an automated business exchange is designed, for the first time, to solve these problems - at least for SAP customers. It is a new and much simplified and standardized paradigm for SAP EDI and B2B.

SAP's Netweaver PI can facilitate the internal enterprise integration of all of the various components of SAP and aggregate the integration of data into one set of standardized interfaces that can be pre-developed and stored in the ESR (enterprise services repository). These standardized sets of business processes and integration points, connected to the automated business exchange, eliminates the need for internal integration scripts, their development, maintenance and support. This greatly simplifies EDI and B2B projects and significantly reduces the costs of implementing EDI.

The automated business exchange, that SAP now co-owns, runs an SAP-centric hub. The automated business exchange utilizes SAP's Netweaver on its network which enables it to integrate with all other SAP customers through a Netweaver PI-to-PI connection. Once an SAP customer is connected to the automated business exchange, they gain access to the 40,000 plus companies that are already connected and supporting a huge library of B2B business processes. The 40,000 are growing expoentially now as the network effect kicks-in.

SAP's new paradigm for EDI and B2B removes the complexity of integrations, standardizes processes, reduces costs, enables rapid on-boarding of large numbers of trading partners and addresses the remaining issue that causes uncontrolled complexity which is supporting large varieties of different EDI standards and trading partner required custom file formats. In SAP's new strategy, once an SAP customer connects to the automated business exchange through Netweaver PI, IDocs or tRFC, the exchange as a managed EDI/B2B service provider takes over the management of the infinite number of different file formats and communication protocols required by trading partner communities.

Let's review - Integration complexity is now resolved as there is a simple and standardized way of integrating with an EDI/B2B system (operated by the automated business exchange co-owned by SAP) via Netweaver PI, IDocs or tRFC. Netweaver PI can also integrate all the back-office applications into an enterprise service bus architecture (eSOA) so data can be shared as well. The automated business exchange (operating in a cloud computing environment) already has over 40,000 connected companies that can be accessed by connecting once to the exchange.

Every new company that connects to the automated business exchange can be available, with permission, to exchange data with all other connected members. This SAP-centric network effect means that for the first time SAP EDI and B2B data exchanges are guaranteed to get easier, faster and simplier each passing month as the network expands and the library of pre-developed and pre-integrated business processes and data exchanges grows.

If you would like to discuss any of these points in more detail please email me.

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Organizational Strategies for EDI and B2B

This week I was onsite with a large multinational company discussing their SAP, supply chain and EDI environments. Participating in these meetings were over 30 people from 5 different parts of the business that were geographically distributed around the globe. In the course of our discussions we learned that many different departments in their organization had their own EDI systems, EDI/B2B staff and unique integrations to their ERPs. Often, the same location even had more than one EDI system. There were different systems for connecting with banks, suppliers, customers, e-Invoicing, transportation and customs. The multitude of EDI systems not only represented an enormous and unnecessary expense, but also a hugely complex integration support and maintenance burden for the company. These kind of EDI and B2B environments can cripple companies in many unexpected ways.

EDI and B2B systems and departments can be complex and expensive. They require many resources across the organization and need continual support, maintenance, upgrades, integration work and 24x7 EDI message monitoring. For more details of the IT and business resources needed to run an EDI system read this article. For details on the information required to implement and support EDI read this article.

It is a best practice, and simply a good business strategy to consolidate, simplify, reduce inefficiencies and avoid redundancies where possible. Companies often experience efficiencies and cost reductions by operating their EDI and B2B systems in a shared services center environment where the EDI systems can be consolidated and utilized by all departments. You can read more of this concept for EDI/B2B here. Sometimes these consolidation efforts involve utilizing a managed EDI/B2B services company that can efficiently provide these services at a lower cost and with a higher service level. SAP has made significant investments in this strategy recently.

To better understand the work required to run an EDI operation follow this link. I wrote this article from personal experience as an EDI Manager for a large electronics manufacturer. This next article link identifies 14 challenges companies should understand about EDI operations and EDI strategies.

It is understood that EDI and B2B connectivity is required in today's business world, and with a good strategy and forward thinking there can be real and measurable cost reductions and competitive advantages realized with a good program in place.

If you would like to discuss EDI strategies you can email me here.
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SAP and Crossgate extend B2B 360 Services to Support SAP® Supply Network Collaboration (SAP SNC)

Today SAP and Crossgate (an EDI/B2B exchange co-owned by SAP) announced a number of new service extensions that support the EDI and B2B requirements of the Supplier Network Collaboration (SNC) solution from SAP. These new solutions and services are the result of the joint-development work between SAP and Crossgate to support a new paradigm of EDI and B2B, and to make the implementations of supply chains and trading partner communities faster, easier and less expensive for SAP customers. This new paradigm takes advantage of several maturing standards, eSOA, ESR (enterprise service oriented architectures) and SAP Netweaver.

SAP and Crossgate streamline the integration and responsiveness of global supply chains by providing pre-configured B2B collaboration for customers using SAP SNC

Crossgate has released a set of core service extensions in support of the SAP® Supply Network Collaboration (SAP SNC) application, eliminating time and material B2B integration projects which have often presented challenges to supply chain managers.

Globalization of industries, the increasing speed of business and growing customer demand have created numerous opportunities for business growth and expansion. To take full advantage of these opportunities, organizations need to overcome the challenges involved in expanding supply chains to accommodate customer demand while maintaining visibility and control.

Crossgate is helping companies succeed in meeting the challenges of managing ever-expanding supply chains by offering them business process outsourcing (BPO) services that have qualified as “Powered by SAP”. These services from Crossgate, called B2B360˚ Services, offer a set of predefined service extensions designed for use with SAP applications. Crossgate’s Business-Ready Network already provides access to more than 40,000 network partners around the world that SAP customers can connect to and collaborate with. With Crossgate, companies can integrate any supplier of any size, anywhere in the world, for a predictable and fixed cost without having to impose new standards or change management procedures.

B2B360˚ Services “Powered by SAP” provide a turnkey integration solution that offers clear benefits in terms of time to value and total cost of ownership for customers. B2B integration with SAP SNC can be realized in a simple and very efficient manner.

“With Crossgate’s service extensions in support of SAP SNC, companies have the ability to electronically integrate suppliers and customers, without having to push mapping standards toward them,” said Lori Mitchell-Keller, senior vice president, Suite Solution Management, SAP. “The result is an increased level of end-to-end integration with global suppliers.”

Developing collaborative relationships is not always easy, since each partner has different technical capabilities and communication standards. Being able to integrate an entire network of suppliers with a single connection to the Crossgate Business-Ready Network gives companies a measurable increase in process excellence and operational efficiency. The Crossgate service extensions allow companies to quickly respond to upcoming business demands to integrate a new supplier or replace an existing trading partner for scenarios such as multi location visibility, forecast collaboration, supplier managed inventory or production progress reporting, without costly and labor-intensive change management or time and material integration projects.

From a technical perspective, the Crossgate service extension designed for use with SAP Supply Network Collaboration features out-of-the-box integration to EDIFACT, X12, industry-specific XML standards and a turnkey integration of trading partner-specific data formats for industries including high tech, consumer products and automotive.

Please email me with any questions or to discuss these service extensions.

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Reducing Costs and Increasing Profits Through e-Invoicing Both Inbound and Outbound

Implementing electronic invoicing is a major trend today. The economic uncertainties have motivated companies to review internal processes for any and all possible cost savings. Converting outbound paper processes that are slow and involve expensive postal fees is an obvious one. Inbound paper invoices sent by suppliers are also very expensive and slow to manually process. Again this is an obvious area to reduce costs and improve efficiencies which improve the bottom line. The remainder of this article discusses these processes in more detail.

Inbound Electronic Invoices

There is a lot of interest these days in AP (accounts payable) optimization initiatives. Many companies that I have spoken with over the past few weeks and months are very interested in reducing the costs of paper processing and data entry that are associated with traditional manual processing of inbound invoices. In addition to cost reduction, CFOs are also seeking ways to speed up the processing of invoices so they can take advantage of early payment discounts with their key vendors. It is worth noting that many companies cannot take advantage of early payment discounts because the manual processing of paper invoices takes too long.

Paper does not easily give up it's information. Somehow the information on the paper invoice must be read, understood, extracted and entered into the AP software application, approved or rejected and payments made. Sometimes this takes 45 days just to complete this process.

I have spoken to a number of CIOs and CFOs recently that were seeking to out-source the entire process of handling inbound paper vendor invoices. They wanted the following:

• Reduce the costs of processing the paper (labor, IT, facilities, etc.)
• Scan/OCR the data on the inbound paper invoices to quickly digitize it, or convert more to EDI and B2B electronic invoices
• Have a human review the scanned data and fill-in any missing or unreadable data from the original paper copy
• Submit and route the digitized invoice for approval
• Convert as many paper invoices to electronic EDI or B2B file transfers as possible to achieve the speed and efficiency of real-time integration
• Electronically archive the scanned documents to reduce storage space

What were these executives wanting to fix?

• Slow paper processing may prevent receiving early payment discounts
• High postage costs
• Mail room and document handling costs
• Document copying costs
• Document storage costs
• High data entry costs to transfer the data on the document into a computer system
• Human data entry introduces additional errors that cause invoice disputes
• Invoice disputes cause supply chain friction
• Lack of visibility because of slow paper processing prevent real time visibility into accounts payable liabilities
• Prevent various business units from manipulating financial reports by slowing down invoice processing

In addition to fixing and improving these processes, the automation and digitizing of the invoice process enables the CFO to have more tools for cash management. When invoices can be processed quickly the CFO has the ability to negotiate different and better payment terms and discounts. Slow processing removes these options.

The CFO's office wants the benefit of all-of-the-above, but not necessarily the headcount and associated IT costs that may come along with an in-house solution. As a result, a number of service companies have developed a BPO (business process outsource) service model that offers these services and solutions on a subscription model. Email me if you would like more information on this.

Once the AP process is optimized, the CFO will have lower costs, faster processing, better visibility, and flexibility to take advantage of various early payment programs.

Outbound Electronic Invoicing

We have all seen it with our own personal invoices and bills. Companies are encouraging their customers to accept electronic invoices/bills and to pay online. There are huge savings that can be realized by companies that can convert their customer base to accepting electronic invoices via email, EDI or other B2B invoice files. Here are a few:

• Reduced or eliminated postal fees
• Eliminate the latency caused by using the postal service
• Customers receive their invoices faster and pay faster
• Reduces Days Sales Outstanding (DSOs)
• Reduce Cash Conversion Cycles
• More accurate electronic data reduces the number of disputes
• Invoice disputes are discovered and resolved quicker
• Reduce Print & Postage costs by as much as 60% –from $5 to $2 (Gartner)
• Lower Call Center Volumes–Up to 60% of calls relate to invoice disputes
• Reduced errors that were previously caused by poor hand writing
• Increase in electronic payment when online invoices and bills are presented with this option
• Reduce call center calls by archiving invoices online and making them available to your customers

The list above details some of the obvious business efficiencies that can be realized, but electronic invoicing can be difficult. Companies that engage in electronic invoicing globally must be compliant with all the laws and regulations that governments and tax authorities require (see Mexico e-Invoicing). This can be a resource intensive task. Often it is easier for a company to engage an expert global service provider that can provide tight ERP integration for electronic invoicing, and let them implement the service and monitor it for compliance with all the governments and tax authorities. Email me if you would like more details on various government requirements.

What does the process look like for implementing electronic invoicing with your business partners?

1. You should first contact your customers and ask them to accept electronic invoices
2. In most countries your customers must sign an agreement stating they will accept electronic invoices. This is typically done via a letter and/or email sent to the accounts payable department that directs them to an online portal where they can agree to accept e-Invoices.
3. Once the online form is completed and the customer agrees to accept invoices electronically, a copy of the agreement should be automatically emailed to the customer for reference.
4. The online form should also include a survey of the customer's electronic data exchange (B2B)capabilities. The online survey form can ask if your customer is able to exchange EDI or other B2B data formats, or do they want to exchange invoice information only via email or a web portal?
5. Once your customer is ready - an email should be sent to them with a link to a secure website where they can login and view current and past archived invoices. This reduces the customer support and accounts payable workload. This portal should also enable the company to see when their customer's read and/or download the invoices. Unread invoices should be flagged and the company alerted that more customer training may be necessary.
6. Electronic invoices must be archived most often for 5-10 years. The length of time that electronic invoices must be archived differs widely depending on local regulations.
7. The portal should also enable both you and your customers to verify the integrity of the digital signature included on the electronic invoice. The portal should have integrated functionality to send a verification request to the digital signature authority and receive a response. This ensures that the invoice on record and in the archive is valid.
8. If your customer is a high volume customer and can support EDI or other B2B data exchanges, then the portal may be useful to check on the status of invoices, but a fully automated B2B process may be more efficient. Electronic invoices may be sent to your customer via email as a PDF attachment, or as a link in the email. The link would take them to the invoice stored on the online archive where it could be viewed and printed.
9. Automating the process of implementing electronic invoicing with your trading partner community is very important for companies with large numbers of customers. Self-service portals where customers can self-register can save enormous time and costs.

Some e-Invoicing service providers focus on either inbound or outbound e-Invoicing only, but a number offer support for both. In addition, some provide complete EDI and B2B managed services as well. Some will try to remain agnostic to any ERPs, but a few such as Crossgate (a company co-owned by SAP) provides a very SAP-centric approach which can offer a tighter integration and additional advantages to SAP customers.

The ROI for e-Invoicing

With many solutions and services finding and documenting the ROI can be complex, difficult, subjective and abstract. That is not the case with implementing electronic invoices. There are well documented costs and savings available and the savings are easy to calculate. Here are some examples from Aberdeen (in 2007) from best-in-class companies that focused on AP optimization and invoice processes:

• Invoice processing costs were 88% lower
• Invoice processing cycle times 52% faster than their peers
• 66% higher rates of on/time payments
• The cost to process a single invoice for the best-in-class companies was 2$, average companies $8.36, and for industry laggards it was $ 29.38 per invoice (OUCH!)
• Time to process a single invoice: best in class 8.6 days; industry average 17.4 days; laggards 20.3 days
• Exception rate: best in class 7.4%; all others 11.6%
• On-time payments: best in class 82%; all others 59%
• On-time payments that earn discounts: best in class 79%; all the rest 48%

In the area of DPO (Days Payment Outstanding):

• Best in class:46 days
• Average: 42 days
• Laggards: 32 days

As these numbers demonstrate, there are a lot of different areas around invoice processing that can be improved to provide cost reductions, process improvements and better cash manage options for CFOs.

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

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SAP's Business ByDesign and Crossgate for EDI and B2B Services

SAP Business ByDesign is a new addition to the SAP solutions for small businesses and midsize companies. It is a complete and adaptable hosted business solution designed to unify and streamline core business operations for growing companies that traditionally have not purchased an integrated business application due to issues of cost and complexity. SAP Business ByDesign is offered on a subscription basis, priced per user per month for the specific functionalities being used.

SAP and Crossgate have now added on-demand EDI and B2B support for SAP Business ByDesign. Users can now communicate directly from their hosted ERP (Business ByDesign) using the efficiencies of various EDI and B2B standards by activating the services provided by Crossgate (Crossgate is co-owned by SAP).

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Supporting Global e-Invoicing

I am currently working on a large number of electronic invoicing projects around the world and am learning a lot. Some countries require that the digital signature on an electronic invoice be provided by a signing organization in the specific country where the invoices are issued. Does that mean that a global electronic invoicing service provider must open a location in each of these countries? No, but the global provider of electronic invoicing services must be integrated with authorized signers in each of these countries.

In effect, global providers of electronic invoicing integrate with a worldwide network of digital signers so they can provide a one-stop shop for multi-national companies needing efficient worldwide support and services.

If you would like to discuss your electronic invoicing needs please email me.

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More on Mexico e-Invoicing

One of the main reasons companies want to use electronic invoices is to eliminate paper, processing and postal expenses. However, some customers don't have reliable internet connections so the receipt of electronic invoices is difficult and unreliable.

How does the sending company eliminate their paper processes if some of their customers can not accept electronic invoices? The electronic invoice service provider (Crossgate) can take all invoices as a data file from the source company and then divide those that can be sent electronically, from those that need to be printed and mailed. This service enables the sending company to eliminate the in-house processing of paper and focus exclusively on sending all invoices electronically.

If you would like to discuss the details of Mexico e-Invoicing please email me.

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Major Online Retailer Integrates Business Partners Using SAP and SAP's EDI and B2B Strategies and Partners

The mail-order company neckermann.de will use SAP and an EDI and B2B managed services company that SAP co-owns to handle all business partner communication in the future. The solution will be integrated seamlessly into the company’s SAP environment.

neckermann.de is investing in the restructuring of its IT environment and will be handling all material management activities with the help of SAP software solutions in future. The company wishes to concentrate on its core competences and is therefore outsourcing EDI and B2B processes to the SAP-centric EDI specialist, Crossgate.

The central partner profile repository forms one of the core elements of the Crossgate network (Crossgate is co-owned by SAP). This is similar to a telephone directory, but instead of isolating phone numbers and addresses, the Crossgate repository contains partner specific integration mappings that have been collected during 3,000 customer projects. Currently, more than 40,000 business partner profiles exist on the network simplifying the onboarding and electronic connectivity of business processes.

More than 400 business partners of neckermann.de will be connected to their internal SAP infrastructure via Crossgate’s platform for the purpose of:

1. processing orders
2. delivery notes
3. invoices
4. performing master data comparisons

During the project, Crossgate will assist neckermann.de in contacting its partners in addition to carrying out all EDI enablement activities. In other words, it will integrate the business partners into the B2B network. The exchange of documents will then take place centrally via Crossgate’s Business-Ready Network. Around five million transactions will be exchanged annually.

Among the key benefits that neckermann.de is expecting from the SAP connection to Crossgate’s Business-Ready Network are a consolidation and acceleration of processes. As the solution is fully-hosted by Crossgate, Neckermann will not have to perform any kind of maintenance or updates and expansions to the solution which will be integrated into the new system architecture of neckermann.de. The result --it will be possible to integrate all processes seamlessly, lower the total cost of operating an EDI infrastructure, and maximize the investment in SAP.

Stefan Beyler, Chief Information Officer (CIO) at neckermann.de, explained the situation: “Our goal is to achieve flexible, fast business processes. This will not be possible without the seamless integration of the respective business partners in all areas, including our SAP systems.”

About neckermann.de GmbH
neckermann.de GmbH, with a turnover of 1.4 billion euros, is one of the leading mail-order companies in Europe. The neckermann.de Group, including its subsidiaries in ten European countries, employs around 5,000 people – 3,500 of these in Germany. Sun Capital Inc., a leading investment company based in Boca Raton, Florida/USA, is the majority shareholder of neckermann.de. As a multi-channel mail-order company, it offers customers numerous possibilities for ordering items from its range of over 250,000 products, including a catalogue, the Internet, the phone and a mobile application. neckermann.de generates around 50 percent of turnover via the online shop and receives regular awards for its innovation, such as best online shop and the concept award for dialog-oriented shopping.

About Crossgate, Inc.
Crossgate (a company that is co-owned by SAP) offers the world's first Business-Ready Network, guaranteeing 100% integration of business partners, clients and suppliers. A single connection to the Network means electronic data exchange with any business partner regardless of their technical capability. In addition, Crossgate's B2B-360 Services powered by SAP provide clients direct access to all integrated business partners in the B2B transaction network via their SAP systems. With its legally compliant e-Invoicing Services, Crossgate also provides an innovative and 100% secure solution to cover the entire process of incoming and outgoing invoices, including signatures, global compliance monitoring, and secure automated long-term archiving. More than 40,000 business partners, representing over 10 industries, currently exchange documents and data via the Business-Ready Network.

Crossgate is represented at four sites in Germany, with operations in Atlanta, London, Milan, Paris, and AsiaPac. For more information, visit http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.crossgate.com&esheet=5979936&lan=en_US&anchor=http%3A%2F%2Fwww.crossgate.com&index=1

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Electronic Invoicing for SAP

Electronic invoicing sounds simple. You set up your ERP to attach a PDF version of any generated invoice to an email and forward it to the email address of your customer. Easy right? Like most things in life, it is not as easy as it sounds.

Many governments and tax authorities around the world have established unique rules and regulations on how electronic invoices must be used. How do you learn, and follow the requirements of 30-50 different regional tax authorities? How many staff or consultants will it take to ensure you are compliant? Let's talk about some of the issues:

1. Customers want to know if the invoice sent from their vendor is authentic and unaltered. Therefore, digital signatures are most often required to verify that the invoice is authentic and uncompromised.
2. Some tax authorities require that all invoices include a government issued unique number (called folio number in Mexico). Who manages this process?
3. Governments and their tax authorities want customers and vendors to archive the electronic invoices for often 5-10 years. How do you automate this archive process and make it compliant with each regional authority?
4. Many countries have specific file formats required for electronic invoices. Who manages these file formats and ensures your in-house formats are correct?
5. Some tax authorities require monthly reports on electronic invoicing. What reports? How do you submit these?

Most businesses select a global managed service provider that can manage global e-Invoicing for them. There are huge efficiency savings from using electronic invoicing, even with the cost of a managed service provider.

SAP users now have the option of using a global e-Invoicing service provider that is co-owned by SAP called Crossgate. If you would like to discuss in more detail just email me.

This article contains more information on the value of using e-Invoicing with your SAP system.

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Electronic Invoicing in Mexico

Last month (May 2009), Mexico's tax authorities (SAT) began requiring a new complex set of rules and requirements for electronic invoicing. The purpose of these rules are to provide SAT with better visibility, for tax purposes, into the sales and revenue streams of businesses in Mexico.

Crossgate (an EDI managed services company that is co-owned by SAP) provides global e-Invoicing, EDI and B2B managed services for many fortune 1000 companies already, but the Mexico requirements are different and unique. They were a challenge to support, but we have now completed these requirements and are in production with a managed services solution.

Here are some of the high level requirements for you to understand:

1. You must be registered with SAT (Mexico Tax Authorities) to exchange electronic invoices
2. You must register and download a list of folio numbers (similar to invoice numbers but provided by SAT)
3. A folio number must be assigned to every invoice. You will likely have your own invoice number with an associated SAT issued folio number
4. On a monthly basis, companies must provide SAT with a list of folios that were used during the month.
5. Companies must archive a special XML file for each folio used during the month and it must be stored on premise

Email me if you would like the rest of the detailed requirements and information on Crossgate's automated e-Invoicing solution for Mexico.

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Crossgate is Extended to Support SAP® Transportation Management (SAP TM) with Netweaver PI

The following article explains the joint development work that SAP and Crossgate are doing in the transportation area. Crossgate is an Automated Business Exchange that is co-owned by SAP and focused on making EDI and B2B easier and more cost effective for SAP customers. Crossgate is powered by SAP technology and utilizes Netweaver PI on their B2B network.

ATLANTA--With the help of Crossgate's Business-Ready Network, it is now possible for businesses in the transport logistics sector, which use the SAP® Transportation Management (SAP TM) application, to benefit from the advantages of comprehensive B2B connectivity. The network comprises preconfigured profiles based on a service-oriented architecture (SOA), which enables businesses to exchange transport-related data with their business partners on an ad-hoc basis. More than 40,000 businesses can already be reached via the B2B platform. Point-to-point connections with business partners, which are commonly used today, are therefore no longer necessary.

Transport management is not an isolated business area; it is one of the fundamental core processes of virtually every business. For this reason, it is especially important to integrate it with the other processes – even extending outside the company – in order to help ensure transparency and efficiency throughout the entire value chain. This strengthens a company's competitive advantage in today's market, which is characterized by open borders and growing globalization. As a result of the economic crisis, cost optimization and export slumps represent new challenges. For those companies that want to be in business and expand their market position, they need a system that can do more than just map all the processes; they need one that helps guarantee connectivity to business partners and logistics providers.

In this market segment, SAP TM has proven itself capable of effectively supporting complex transport networks. Its functionalities include managing transportation requests, planning and subcontracting, tendering of transports and calculating transportation costs for customers and logistic service providers. In short, SAP TM supports SAP customers with the professional execution of the entire transportation process.

An expanded supply chain and the ever-increasing number of business partners make collaboration between partners essential. However, different IT systems, numerous modes of communication and the lack of uniform global B2B standards can often impede smooth communication. SAP TM has a solution for this, which makes individual partner interfaces unnecessary. With just one connection to Crossgate's B2B platform, users of SAP TM can, for example, exchange freight orders directly with transport service providers. Furthermore, booking confirmations for cargo space can be transferred directly into the client's system. Crossgate's Business-Ready Network already provides the possibility to communicate with more than 40,000 business partners in all sectors worldwide.

Bernd Mosbrucker, director of Solution Management SAP SCM at SAP AG, explains the background: "An important part of a solution for planning and carrying out transport orders is forging a network with external service providers and business partners. This establishes cross company value scenarios for efficient and interactive collaboration. Crossgate uses the SAP TM data structures on the B2B platform, which enables them to provide our customers with the connectivity they want."

Connecting to the Business-Ready Network allows customers to communicate with business partners using all ERP systems and communication standards - with just a single interface. The solution conforms to the SAP strategy and utilizes the contents of a service-oriented architecture.

Stefan Tittel, CEO of Crossgate AG, explains: "We enable the flexible, cross-company interconnection of logistics processes between customers using SAP TM and their logistics providers and business partners. This was built on the basis of SOA technology, together with SAP. We have reached a milestone in B2B connectivity, upon which we can build future collaborative projects.

SAP and Crossgate have been collaborating in the area of Business Process Outsourcing (BPO) since October 2007. A further step was SAP’s strategic investment in Crossgate in 2008, with the objective of using Crossgate’s B2B services to enhance its own solutions. SAP TM customers can now benefit from the connection to the Crossgate Network and utilize B2B connectivity “out of the box”.

About Crossgate, Inc.
Crossgate offers the world's first Business-Ready Network, guaranteeing 100% integration of business partners, clients and suppliers. A single connection to the Network means electronic data exchange with any business partner regardless of their technical capability. In addition, Crossgate's B2B-360 Services powered by SAP provide clients direct access to all integrated business partners in the B2B transaction network via their SAP systems. With its legally compliant e-Invoicing Services, Crossgate also provides an innovative and 100% secure solution to cover the entire process of incoming and outgoing invoices, including signatures, global compliance monitoring, and secure automated long-term archiving. More than 40,000 business partners, representing over 10 industries, currently exchange documents and data via the Business-Ready Network.

Crossgate is represented at four sites in Germany, with operations in Atlanta, London, Milan, Paris, and AsiaPac. For more information, visit http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.crossgate.com&esheet=5968341&lan=en_US&anchor=http%3A%2F%2Fwww.crossgate.com&index=1

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Dynamic EDI & B2B in SAP Environments Using Netweaver Integrations

Today's IT environment is not the same as it was 10 years ago. The market place, global supply chains, outsourced IT, 3PLs, distribution models, outsourced manufacturing and a challenging economic climate ensure that everything is different, rapidly changing, dynamic and unpredictable. The only thing you can be sure of is change. Companies can no longer make 5 year plans and invest in IT infrastructures that will work only for today's business model and business plan. Management is unwilling to commit to that future horizon. The business world is changing too fast. The following factors ensure change:

• Deregulation
• Globalization
• Technology evolutions
• Commoditization
• Economic instability

Today's IT environment must be built to rapidly adapt. It must be dynamic in nature or it could quickly be an inhibitor to your business success rather than a benefit. In the world of EDI and B2B the traditional approach involved purchasing expensive software, training, consultants and VANS and beginning slow multi-year integration with trading partners. That approach does not meet the demands and requirements of today's business. Multi-year EDI and B2B implementations that are designed to meet one set of business processes are unlikely to be completed before the business process changes.

In today's world, EDI and B2B must be an extension of your ERP and the associated business processes. Changes demanded by your business must be able to be quickly supported end-to-end from your customers to your suppliers, 3PLs and partners. Maturing technology, business and communication standards now make this vision possible.

In the past, EDI and B2B systems were silos of third-party technology that were difficult, expensive and slow to integrate. They were disassociated with your core ERP. They required their own projects, skill sets, staff, training and hardware. They worked independently from your ERP and business processes and required herculean integration efforts. They were a separate entity with a life and cost of their own. That model will not survive in today's world. Companies that have this environment today are likely researching alternatives that are more ERP-centric.

Changes to your business processes and business models should include the ability to make rapid and dynamic changes to your EDI and B2B messages and communications. SAP calls this strategy, Business Network Transformation and has adopted a strategy of using the SAP Netweaver platform and its eSOA strategy to assist here. They invested in an SAP Netweaver based automated business exchange (EDI/B2B managed services company) that enables rapid and dynamic integrations and EDI and B2B implementations for SAP customers. SAP users can connect to this automated business exchange via Netweaver-to-Netweaver connections, IDocs, and tRFC.

SAP is now creating "service extensions" to the most common business processes:

• SNC - Supplier Network Collaboration
• TMS - Transporation Management
• Orders to Cash
• Procure to Pay
• etc.

These service extensions enable EDI and B2B communications with trading partners to be simply activated in an on-demand model. This is a different paradigm for EDI and B2B that is SAP ERP-centric. This model has many advantages over traditional EDI:

• No hardware required
• No integration scripts
• No integration development projects
• No multi-year EDI roll-out projects
• Quick activation and implementations
• Rapid and dynamic changes
• Fixed fee based manage services

In addition, since this is an SAP centric approach, SAP already knows what data is both consumed and produced by their applications and supported business processes. This enables integrations to often be pre-built in the automated business exchange which saves a great deal of time and money for the company utilizing it.

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SAP and e-Invoicing - The Value of Time and Money

There has been an interesting trend this quarter with companies looking to implement e-invoicing initiatives. In the past, when companies considered converting paper-based invoices to electronic invoices they sought to reduce the costs of manually processing both inbound and outbound paper invoices. The reductions companies were looking for were usually the followings:

• Reduced paper costs


• Reduced printing costs


• Reduced handling costs


• Reduced postal costs


• Reduced DSO - (days sales outstanding) with outbound e-Invoicing


• Reduced payment processing costs


• Reduced data entry costs (entering payment information from paper)


• Reduced data entry errors


• Reduced billing disputes


• Reduced paper storage

Lately, we have seen the following goals added to the above list:

• ensure compliance with regional tax regulations


• simplify the process and reduce the complexity and high costs of supporting e-invoicing globally


• focus internal employees on core business processes, not global EDI compliance

These additions relate to confidence, peace of mind, focus and risk management. It seems that companies are increasing the priority of these issues. I believe that reduced budgets, less staff, and challenging market conditions have forced these issues to the fore front.

These issues are not easily solved internally with today's budgets. I am seeing an increased interest from companies to outsource e-Invoicing initiatives to e-Invoicing experts that operate managed services companies that focus on this area.

It appears that companies are closely evaluating each process and internal department to better understand if the services required and provided can be more cost effectively and efficiently supplied externally by subject matter experts. When there is less staff the value of each member to the company is likely to increase. Companies will want to focus these valuable members on the most productive and strategic projects and initiatives. They can not afford to assign expensive and valuable staff members to routine or non-core projects. For this reason, global e-invoicing seems to be an in-demand service for managed services providers.

SAP users have an advantage in this area. SAP is the co-owner of a managed services company called Crossgate that provides global e-Invoicing services for SAP users utilizing SAP's Netweaver platform.

Multi-national companies that must support e-Invoicing in many different geographies must find ways to ensure compliance with all of the various tax authorities. South America, Mexico and EMEA are very different from each other. Companies must either staff up to support these areas and requirements or find an expert to provide these services.

• Brown Forman, the USA's largest distributor of spirits and wines, describes how they addressed these issues in this article.
• SAP is working with OpenText and Crossgate to provide solutions and managed services for helping companies deal with global e-invoicing requirements as discussed in this article.
• Many countries around the world have evolving requirements for e-Invoicing like the new requirements in Mexico which are described in this article.

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Contract Manufacturing, SAP, EDI and B2B

I am working with a large multi-national high tech manufacturer that has a need to add a large number of EDI and B2B connections to a new and evolving group of trading partners. Their motivation is their increasing use of contract manufacturers and the adoption of new distribution, support and sales models.

Mark Schenecker, with the SAP High Tech Industry Business Unit, speaks about these kinds of environments and issues as needing an "agile" IT model. A business and IT model that enables companies to rapidly address changing business, sales, distribution, support and marketing models.

I am a former EDI Manager. As such, we were involved in lengthy, multi-year EDI implementation projects. Now days, this is not acceptable or workable. A new model is required that can enable companies to add and subtract supply chains, distribution channels and logistics companies in days or weeks.

SAP has developed a new model for SAP customers to implement and support EDI and B2B needs. This new model, is often referred to as "Business Network Transformation" and supports the on-demand implementation of large numbers of EDI and B2B trading partners through an Automated Business Exchange that is co-owned by SAP called Crossgate. This automated business exchange uses Netweaver and other SAP technology to simplify EDI implementations and support for SAP customers.

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EDI, B2B Strategies http://b2b-bpo.blogspot.com/
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SAP Users are Outsourcing EDI/B2B to Crossgate

Last week I spent some time onsite with a large SAP customer discussing their plans for EDI and B2B. They, like everyone else, have had to reduce their IT staff and slow down their IT plans and ambitions over the past year. They were, however, very interested in looking at the new model for supporting EDI and B2B requirements that is being promoted by SAP and Crossgate. Why? They have an increasing number of EDI relationships that need to be implemented and supported, but less budget and staff to dedicate to it.

This model, that SAP often calls "Business Network Transformation" utilizes Netweaver (when available) or IDocs and/or tRFC to connect with Crossgate's EDI and B2B Hub that also utilizes Netweaver. Crossgate then takes care of all EDI and B2B mapping, integration, trading partner implementations, operations and support for a simple one time set-up fee and then low monthly support fees. This managed service frees up the IT staff to focus on core SAP related projects while Crossgate manages all external trading partner communications.



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EDI, B2B Strategies http://b2b-bpo.blogspot.com/
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Business Process Improvements vs. Product Purchases

I had lunch with a team last week that worked for a large commercial truck manufacturer. They said they have been focusing their IT efforts on business process improvements, rather than purchasing new products and services. He said many business process issues had been ignored in favor of throwing more technology and solutions at the problem in the past, however, in today's climate they are looking at actually improving the processes.

This was an interesting discussion and got me thinking. Not every problem needs a new layer in the technology stack to fix it. Many companies that I have been working with lately are looking to consolidate on less technology, not more.

Today I spoke with a company with multiple ERPs and multiple EDI systems. Again, many of their process problems were the result of trying to support too many different complex technology environments. Their goals for 2009 and 2010 were to standardize, simplify and consolidate IT environments and technology stacks.

SAP customers who are looking to consolidate on an SAP instance, often contact SAP to ask how to additionally consolidate B2B and EDI systems and processes at the same time. The following 2 articles discuss this topic.

• SAP-centric EDI/B2B - http://b2b-bpo.blogspot.com/2009/03/what-does-it-mean-to-have-sap-centric.html
• SAP Netweaver Approach to EDI - http://b2b-bpo.blogspot.com/2009/04/new-edi-approach-for-sap-netweaver.html

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EDI, B2B Strategies http://b2b-bpo.blogspot.com/
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New EDI Approach for SAP NetWeaver® Process Integration Users

This is a very interesting article that describes SAP's new strategy for supporting EDI and B2B requirements in a NetWeaver-centric manner through their investment in Crossgate, an EDI and B2B exchange that SAP now co-owns. This network approach and adoption of cloud computing strategies brings a new twist to traditional EDI.

Atlanta, Georgia, April 7, 2009 –Crossgate Inc., the global expert in business-to-business integration (B2B), continues to grow its customer base by offering an alternative deployment strategy through a fixed-cost EDI and B2B managed service.

In light of recent economic uncertainties around the world, many companies are keeping a closer eye on operating expenses and trimming budgets by finding ways to consolidate business processes. For SAP customers, the clear answer to integrating internal and external processes is SAP NetWeaver Process Integration (SAP NetWeaver PI).

More than 3,000 organizations have decided to use the SAP NetWeaver PI offering as their business-oriented SOA middleware to perform application-to-application (A2A) and business-to-business (EDI and B2B) integration across a business network. It includes an Enterprise Services Repository, an enterprise services bus, pre-packaged integration templates, and technical and application adaptors to support end-to-end process integration.

SAP NetWeaver PI goes beyond a pure technology focus with pre-packaged business integration templates such as integration scenarios, process components, interface description and global data types…etc. to reduce organizations’ integration TCO, enabling customers to focus on the integrated business results.

By leveraging SAP’s existing co-ownership and Business Process Outsourcing (BPO) relationship with Crossgate, SAP NetWeaver PI customers can also choose an on demand EDI approach for B2B integration that does not require additional investments in building mappings, software, servers or hiring staff to maintain trading partner connectivity.

Crossgate B2B360 Services Powered by SAP® opens the door to more than 40,000 business partners that are pre-integrated in Crossgate’s Business-Ready Network. For customers dealing with global customer and government requests, this EDI managed service provides the perfect complement to address line of business initiatives while operating under tighter budgets and hiring restrictions.

Most IT executives are tasked with ‘doing more with less.’ This alternative approach to EDI maintains an SAP-compliant strategy while reducing the current and ongoing costs of supporting ever-changing B2B requirements. Crossgate B2B360 Services Powered by SAP addresses the key issues found with traditional in-house EDI and B2B integration development.

Instead of providing only generic B2B data standards such as ANSI X12 and EDIFACT, along with mapping toolsets, this managed services approach to EDI includes partner-specific mappings, communications, and business processes. More importantly, the interface with Crossgate is fully aligned with SAP NetWeaver and Service-oriented Architecture. And unlike in-house B2B solutions where time and materials costs can quickly skyrocket out of control, Crossgate’s business model offers fixed-price predictability.

B2B360 Services Powered by SAP also provides turnkey service extensions for SAP ERP, SAP Business All-In-One, SAP Business ByDesign, SAP Supply Network Collaboration, SAP Transportation Management, and a variety of other SAP solutions. Crossgate’s fully integrated, fixed-cost solution will help customers improve productivity, address global e-business mandates, and increase organizational agility so they can meet business challenges both now and in the future.

To date, 47 customers in various industries and geographical locations have contracted for Crossgate’s B2B360 Services Powered by SAP, and that number continues to grow. “2.7 new customers every working day choose SAP NetWeaver PI to help them integrate their processes across application and business partner network without being mired in technical integration hurdles,” says Ken Tsai, Director, Enterprise Solution Marketing, SAP NetWeaver PI. “With SAP’s relationship with Crossgate (SAP is a co-owner), customers can continue to enjoy the same benefit of business-oriented integration through a managed services approach to EDI that allows them to simplify partner on-boarding and enablementprocess.”

If you would like to discuss any of these subjects in more detail please email me.
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EDI, B2B Strategies http://www.blogger.com/b2b-bpo.blogspot.com/
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