Banking is easy..

• You just accept deposits and make loans with high margins.
• If you are a start-up bank you just pay more for the deposits and then place the money in high-earning but still quite secure loans and interesting new papers some call hybrids.
• If you think this is risky you just place the money in a good number of papers - all will not go bankrupt - at least not at the same time.
• Heavy advertising and marketing is a sure way to build image, brand and trust. Unfortunately it is expensive so volume growth has to be quadrupled - which is easy.
• Simple solutions make you look simple so it is important to make the "products" at least appear extra complicated.
• Triple A papers are totally secure - even for perpetual loans - but really boring and lowyielding - so do not recommend it to your investment customers.
• Payment service is boring and should be left as basic as possible.
• Regulators are stupid and political enemies - give them a finger and they will not only take your hand but the whole body. Keep them at bay with all possible methods.

Just follow these rules and you cannot avoid getting rich..

It is not the invoice...

Slap any number of digital signatures on an electronic invoice and still you cannot guarantee any integrity and authenticity. The legal harmonization debate in EU is unfortunately still wrongly focusing on this one document.

The answer is in the holistic business process - when the (any form of) invoice has arrived and VAT auditors understandably from time to time want to check that less and less fraud is taking place (which will happen with migration to the e-version) - the supporting elements like order, delivery and payment documents related to it need to be checked. As simple as that - as well documented in the Code of Practise adopted by the EC Expert Group on e-Invoicing.

Additional supplementary tools will be used by some enterprises to improve processes - but technology neutrality should be the base for the much needed pan-EU harmonization.

Factories $16.3billion - IT $1.1 trillion

Services took over from manufacturing of goods already in 1987.

Measured by jobs: some 30% of US jobs where in manufacturing in 1975 - it is now only 10% - and actually on 5% manufacture products.

Measured by investments in 2004: new factories $16.3 bn - investment in IT $1.1 trn. Server farms and mainframes are the new industrial complex!

My question is if those who decide to keep traditional manufacturing going at high cost to tax payers - have realized the magnitude of the change.

Want to save 1 billion litres of gasoline?

Well that is easy - just ask the average European to act so that 2 litres less is used - a year. Should not be difficult - and one could in the same go throw in other fossile fuels and CO2 generation (80% of energy being fossile based in the world) - again not meaning much to the average person.

But that is also the dilemma - as so little money and CO2 is saved per person or per SME.  "My contribution is so small - I might as well go on as before..." And when almost everyone is reasoning in this way nothing is achieved.

As our challenges are so serious and cannot be solved without virtually everyone changing their behavior it should be very obvious that we now need resolute leadership. We cannot afford powerplay with populism or empty political promises - we can only afford clear powerful messages and easily impopular acts to achieve real changes in the mass markets. Clinging to the past has never been a good strategy anyway.

Listening - just now - to Swedish Prime Minister Fredrik Reinfeldt speaking at Almedal I feel that at least he is very clear - basically promising blood, sweat and tears - but also potential for new economic growth - on the road to a sustainable environment policy. Sweden has a lot on on their EU Presidency plate. Let us hope that their efforts will be brave and widely supported.

Illiterates in Sweden

The Swedish IT-association estimates that some 2 million Swedes are not part of the IT-based society. One million of these are said to be more or less IT-illiterate. That is well above 10% and not acceptable as so much of public and private services have moved to the net.

As a step to mitigate the problem an education package has been created. Annika Bergman CEO states that the progress must happen step by step - starting from the simple.

What about your country? More illiterates? Even more reason for education packages?

See beyond the core

Many enterprises have seen that focusing only on the core may be detrimental as there are few examples that this has created innovation based growth.

This does not mean that routine tasks, that can be outsourced, should not increasingly be. Outsourcing has been an early and is in the context of the networked economy an even more natural step. Once done it should for its part free up management to look for growth and game-changing innovations at the edges of the core. Sometimes it however seems that more and more attention is focused on less and less. This may lead to loss of very natural near-field businesses to others who later can use this as a bridgehead when attacking the core.

The challenge is that the corporation is not really organized for growth by change (innovation) - but for execution, control and problemsolving - further driven by sometimes value-destroying short-sighted quarterly capitalism. Real quotes from real companies:

" Our innovation process turns BIG ideas into small ones:"

" We are beyond risk aware."

" Of course we thought of it. We just didn't do anything with it."

" We are so smart individually, but so dumb collectively."

Will the right balance be found - between focused management and earliest possible exploration of how the radical changes in the socio-technical landscape at the edges of the core should become growth engines? The jury is still out in many corporates.

Game-changing Innovation

" The role of the innovator is to meet customers on their terms as human beings.The goal of the innovator is to empower your customers to realize the change they want to see in the world."

Paco Underhill

I like the statement - especially "on terms as human beings" - which I interpret as holistic but simple answers to practises in  their everyday contexts. But with some reservation - as customers rather seldom have asked for the change they afterwards liked so much. Maybe it should say "help your customer to understand that they want change"..

As consumers mostly ask for incremental improvements and do not know what radically different might be offered, there is a danger - especially during recessions -  that game-changing innovation is not getting enough resources - except in exceptional companies.

Decisionmaking in the ordinary company is a challenge as architectural and discontinuos - game changing innovations are easier to kill (running against business models, ROI potential - if big - uncertain) and harder to conceive as they are often found at the margins of core business and may need discovery-oriented activities.

Still they are the way to the future - but business lines have to co-operate, companies have to network and public private partnerships become the norm,  if we want to be competitive and keep the base for welfare solid.

Authenticity and integrity - give me a break

The target for the EU Commission is to cut the costs of SMEs caused by complicating legislation with 25% before 2012. As SMEs generate 60- 70% of all turnover in EU, this is the obvious thing to do to improve competitiveness.

The most important productivity area to address is now fast and easy migration from inefficient and sometimes insecure paper and e-mail and this is also where administrative burdens should be lowered - not increased. DG Taxud has launched a VAT-directive aiming at just that. The EU Expert Group on e-Invoicing is naturally asking for and supporting the equal treatment of paper and e-invoicing and other simplifying harmonization suggested.

But the debate goes on - authenticity and integrity has been lifted up to a mystic level - and few legislators or even business organization representatives seem to have the guts to say that they do not really understand what this is all about - even if the emperor looks quite naked.

The only way to solve this is to think small. Take the case of a micro-enterprise receiving most invoices in paper envelopes, some from other SMEs in e-mail and increasingly being asked by his possible accounting service and invoicing partners to accept real e-invoices (in structured form) to automate accounting and procurement processes. How can he say that he is receiving authentic invoices and integral invoices to VAT auditors? Well, by checking that it corresponds to the order he made - on the phone maybe - and that it seems to come from the right sender and then pay it to agreed account.

Should there be any additional mandatory regulation if the invoice is electronic? Certainly not - rather the other way around - especially when invoices arrive through managed networks and directly to the e-banking service. And the same goes when asked to send e-invoices. It is close to absurd try to cut burdens for SMEs and at the same time make it mandatory for them to digitally sign e-invoices.

The simple fact is that transport is irrelevant and that the same simple technology neutral procedures should apply for all invoices sent, received, paid and filed. Anything else will subsidize the least cost efficient and least secure old way.

If integrity and authenticity is difficult to understand - think small - then it is easy. Legislators in fact have the this duty - to understand the effects on SMEs - before legislating.

Are we that different?

Read column by Joakim de Leeuw - innovation manager at SEB in Sweden.

Reflections:

Digital natives and digital immigrants are said to be virtually different races. As a rapidly growing proportion of customers and employees are born into the digital world it is important to understand the possibly even fundamental difference.

How different are we? 

It is true that us immigrants have a need for metaphoras to make the digital world more tangible. We store documents in files in digital cupboards. If the document is needed in several places we copy it and store in several files. This does not make sense according to the natives - the information is all over the place - just tag it and search!

Another metaphor is the e-mail - a lettermetaphor for communicating. This does not make sense according to the natives - do not send - publish instead!

There are many more - but this is not new of course - the first car was called a horseless waggon, e-banks were designed as bank branches etc. And maybe it is just the necessary way to make the immigrants move on.

May be we are that different - and it is not a question of technology - but of culture..

What is a friend worth?

Interesting article in Business Week. Not much new perhaps - but crystallizing. Goes as follows:

- digital friendship speak volumes about us as consumers and workers

- defining the value of these relationships has become a "defining" cahllenge for businesses..

- marketers are finding that if your friend buys something there is a better-than average chance that also you will buy it

It all relates to the sea change in media businesses. Not long ago there was a captive audience sitting through the TV news just to get to know how their favorite sports person made it or what the weather is likely to be tomorrow. Now we are swimming in an ocean of information. Every bit of news, information, music, picture, video - any time - any where - any way available. Filters needed instead of aggregators...

Result as put by Bernardo A Huberman at HP: "The value of most information has collapsed to zero. The only scarce resource is attention."

Challenging place for marketers using north of 500 billion of corporate budgets for still mostly traditional advertising - but also mostly surfed by and unclicked net advertising. So how can friendship networks help them help potential customers to find what they "really" need?

- statistically friends tend to behave alike - 3-4 times more likely to click on the same message (they do share interests)

- example mentioned where offer is tailored on friends' responses lift the average click rate from 0,9 to 2,7%.

Still an inexact science - but surely a trend worth watching. And today,s immense networks will time after time surprise us by creating phenomena that may even look logical in retrospect - but too few in big companies had time to look for because there is so much focus on the present quarter.

Half baked efforts..

We live in an increasingly fragmented reality and often enough it is difficult to see the full picture when trying to turn inventions into innovations. Very strong focus can be put on the many aspects needed to make new services take off - like general utility, clinically simple user interfaces, reusing excisting user experience and stressing environmental and other societal importance.

Still - far to often - the most important aspect - transparent pricing showing users that present practises are expensive -  is not implemented. This happens despite us knowing that this "negative carrot" is needed to make users move - act logically in their own interest. My own experience is that we would never have been able to move fast into e-banking without charging more for manual processes in branches. The result was that total cost of banks (not really costs for banks - but costs for bank customers - who pay every cent..)  in Finland was cut in half.

Why is it so difficult to add the most effective tool - transparent pricing? It takes some bravery - as media and most consumer organisations (sic!) oppose visible pricing and politicians thus do not have the guts to protect consumers real interest and further more dimensions in competition.

But we are seeing a new trend now as invoice senders in many countries already are starting to charge extra for paper invoices. For every logical reason the best thing for the customers - also for those who are prepared to pay for the privilage as the lower total cost will give space for lower service charges.

Santa delivering...

I wrote a letter to Santa last December and he seems to have taken it seriously at least with the most demanding present:

"The second wish is a standard - more precisely a common and global standard that will fulfill both the needs of SMEs (being easy to use) and their frequently very large and sometimes bully trading partners who have a need for lots and lots of data elements...."

CII-V2 delivered by UNCEFACT TGB1 was discussed at the EC Expert Group meeting yesterday and we all agreed that this looks very promising indeed. Much work and resourcing is naturally remaining to refine and create the user guides - but the spirit could hardly be better.

"The first wish is a book - more precisely a handbook. We namely wrote a letter to the EU Commission in July and asked for Equal Treatment of paper and e-invoicing (from VAT-angle) and a bit to our surprise but certainly to our joy we did get it. Now it is naturally up to all the member states to join in with transposition. We do feel that you can help the local VAT authoritative to do it and us Experts with wise guidance so that our Code of Practice in the coming EEI-recommendation (kind of a handbook) will describe how enterprises real easily can move to e-invoicing and not loose sleep over fear of not getting VAT refunds. ..."

In light of the above it is even more important to get the equal treatment with paper invoices in place in accordance with the VAT directive proposal. It would be rather sad to see that a global x-border network (step1) standard is created -  but adoption hindered by regulation - in what should be a common market. 

Santa alone cannot do this. Strong and analytical argumentation from enterprises and their organizations is needed in those countries where supplemental tools (to business controls) are still mandatory. For tax authorities it should be clear that every move towards structured e-invoicing and especially in managed network is an improvement from present practises. Many tool-vendors have already seen the light - e-invoicing will grow fast with equal treatment - laying the ground for selling value-creating supplemental tools. By making it simple it will happen - and vice versa.

"The third wish is good will - more precisely to service providers - so that there will be lots of them (also banks - despite them having hard times now) - and that they will form networks and provide the interoperability with help of reformatting and verification services..."

Santa will have to work hard with our third wish - especially in the banking sector in some member states:

The fourth wish is bravery - more precisely to invoice receivers - so that more of them will join the rapidly growing elite who have declared e-invoicing mandatory (in markets where service providers have ramped up their tools and networks) and charge transparently for more expensive paper or invoices otherwise in unstructured form.

We have seen good evidence that this bravery is a must - and that deadlines and transparent pricing spread the message widely. For example here in Finland many large invoice receivers (including the state sector)  have set deadlines for paper or e-mail invoices for 2009 and this has helped all invoice receivers - for example a big factor like the City of Helsinki has exceeded 50% penetration - without having set a deadline itself - yet.

Too complicated - a no-brainer

We are now also reading in the press what we already knew before - bank "products" have been made so complicated and have versioned into so many nearly-but-not-quite-the-same offerings - that the staff cannot handle them any longer.

This sad fact is not unique to the banking sector - many other sectors suffer from the same results of too many head office departments having to show their level of activity and ingenuity to be allowed to keep their budgets. The tragedy is that very few organizations are equipped to control the volume of overall flow of propositions to customers and make the communication simple enough for front line customer services to understand and remember.

In addition to causing irritation among customers and frustration among face losing staff this disease is also costing a lot of money. One estimate I saw from Boston Consulting was stating that unnecessary complications cause up to 25% of total costs.

There is a social subscription to make radical changes here. But it takes strong leadership.

What will our children say...

We are now in the process of expanding the public debt - in our childrens name -  beyond previously imagined boundaries. Apart from being a questionable practise to use much more money than you earn - it is also by definition leading to over-consumption.

And what are we borrowing for? Is it for creating more sustainable structures and way of life? Is it for the better productivity in face of rapidly dwindling workforce? Or is it panicky - preserving old structures and protectionism - soon obsolete factories and not needed heavy physical infrastructure?

What will our children say if the will face:

1. very high debt levels > scant space to borrow more if needed

2. high taxes to serve the debt and the higher share of old age population > limited opportunities to decide how their earnings are being used

3. old and increasingly obsolete structures still there > productivity heading south as smaller workforce will be available for value adding work

4. saving the globe stayed at lip service level too long - until there was no investment resources left..

We need brave political leaders - and a new attitude amongst us business executives: driving so much needed re-orientation and co-regulation instead of resisting necessary regulation to the degree that it becomes useless - as it turned out to be in the investment banking case. Quarterly capitalism has turned out to become too much of an uncontrollable beast - destroying shareholder value by taking too much of the short view and preventing too many to see that we have to take responsibility together with democratic institutions.

There are no "corporate customers"..

There are no "private customers" either.. Only human customers in different roles. And they surely deserve to be served with similar tools, logic and language irrespective of the role. Anything else is bad service and slowing up adoption of more productive practises in both roles.

This is especially important for SMEs - 23 million of them in EU. It is well known that the bureacratic and reporting demands put on them is continuing to grow at the same time as their customers and suppliers ask them to change behavior in many - and too often disparate ways. This is just adding up to too much - as the EU commission has well taken note of.

We should all support making life easier for them. Again banks are in an important role - how similar are your "corporate" e-banks compared to "private" e-banks? Do you offer simple enough tools? Is your communicatin written by experts on products or experts on simplification? Now is the time to take a hard look.

Consumer e-invoicing making great progress

Finland went for b2b first (2,8 bn savings potential according to Federation of Industry) - and b2c - where savings are smaller (no value put on work done when citizens key in invoice data for payment in e-banking) - was delayed - compared to for example Norway and Sweden.

But the ice-hockey stick effect is there now - and will be aided by a nationwide campaign started last week.

Some debate

Some debate on blogposts published here can be found on Finextra http://www.finextra.com/community/blogs.aspx

e-banking and payments in Finland

Not bad for population of 5,3 million - but then we started in 1982..This will naturally happen everywhere. Also the 3rd party services - "connecting customers" - with services like e-id, e-signing contracts, e-commerce payments, e-invoicing, e-salary, e-pension etc

 

First you sign them up..

Then the transaction growth will come - not the other way around. Banks have done their part of e-invoicing well in Finland - every second enterprise signed up.

e-id making great progress

So sensemaking to let citizens log in to public sector with e-bank log-on tools. Saving both tax payer's money and speeding up e-government as tools are familiar, trusted and much more convenient than any public-sector-only tool would be. Anybody knowing one reason for why this option should not be possible all over EU.

E-commerce payments (real time) are also growing steadily (5,3 million inhabitants..).

By compliments of Federation of Finnish Financial Services

Questions European tax payers should ask

We are at critical point in our economy - businesses are struggling,  public debt is soaring, many banks need support,tax increases are threatening, unemployment is on the rise, budget cuts eat into product development and innovations - just to mention a few.

But even worse problems are waiting around the corner - aging population, smaller workforce, low productivity (as a result of today's low innovation appetite) and a massive public debt to serve (we have borrowed in our childrens' name - too often not to renew but to preserve old politically correct structures..)

Knowing that only successful enterprises can make the tide turn it is time for today's and especially tomorrow's tax payers to start asking questions - like:

1. Is your government helping SMEs to cut costs and improve their services? Today this means digitilizing away routines and digitalizing up services. The most important routine is invoicing and e-invoicing serves both purposes. How big is the cost saving potential in your country if it is estimated to 2,8 billions for b2b in Finland (population 5,3m)?

2. When will your government implement the EU directive for equal treatment of paper and electronic invoicing? Paving the way also for pan-european services and easier access to new markets for domestic enterprises.

3. Is your government in favour of public-private partnerships? Using private sector e-tools for public sector needs. A prime example here is e-id - in many countries it already possible to log in to public sector services also with bank login passwords. This obviously saves tax payers' money massively and speeds up adoption of e-services as these tools are trusted, often used and thus familiar. What could be a reason for not making this move in your country?

4. Is your goverment in favour of transparent pricing - charging for costs itself with modern cost-efficient e-payment and e-invoicing - instead of through taxation. Letting the citizens make logical choices in their own interest.

5. Is your government helping consumer organizations to understand that charging visibly for example for paper invoices is in the interest of both consumers and the environment.

6. Has your government sector and your municipality set a deadline for incoming paper or otherwise unstructured invoices? How much would the saving be if these cost 20€ more to process than the modern alternative?

But maybe your government is ready to make all these moves - but the banking sector is not? So you should ask the banks - collectively - as this is a network business:

1. do you offer e-invoicing as service - together (a network of one or a few does not work) - b2b and b2c - preferably with the same tool?

2. have you offered the public sector e-id services?

3. is it possible to sign loan agreements with e-bank log-in codes?

4. is it possible to use the same loan-signing tool also for 3rd party agreements?

5. have you offered the public sector e-payments as cost-efficient charging tool for public sector services

6. are you offering e-salary services - bringing the salary statement to the e-bank?

Many bank communities have come together to do this already - but too many have still not moved into 3rd generation e-banking. Now it is time to mobilize the finance sector - extended payments tools are a must-have in the networked economy.

Think small

We have in the EU Commission Expert Group on e-Invoicing seen a constant need to stress that the migration away from manual invoicing can only happen if it based on the simplest possible concepts - otherwise the vast SME sector (63% of turnover) will have real counterarguments - to the detriment both for their larger counterparts (including the public sector) and themselves.

A major step in the right direction here is the equal treatment of paper and e-invoices proposed by the EU Commission in the VAT-directive. Mandatory digital signatures for e-invoices have been a major stumbling block both in national markets and for cross border transactions.  Removing this obstacle should be should be of highest priority for anyone having the interest of SMEs at heart. Especially as the present state has managed to mystify e-invoicing to a very high degree. Holland already demonstrated that there is no need to postpone transposition of equal treatment - it can be done very fast.

What do you - the SME -  then need to do in the many countries where equal treatment is - and in those where it very soon will  be - the rule? For the incoming invoice - be it on paper, in e-mail or e-invoice:

1. make reasonably sure that it matches what you have purchased

2. make sure that you pay it to the right account

3. store your accounting documents for 6 years as stipulated by your national legislation. Many alternatives:  on paper, on hard disks, burn cds, ask a service provider to do it...so that you can retrieve the material if - in this context - VAT auditors would need it.

When sending invoices - be it on paper, by e-mail or as e-invoice:

1. make sure that it matches your customer's purchase order

2. send the invoice (many receivers already now demand it in structured format - e-mail is not leading to the cost savings needed)

3. store accounting documents as above

Business controls - as described above - are the simple, tested, problemfree and thus sensemaking way to handle integrity and authenticity - the last tax authorities should agree by now. The Code of Pracise - unanimously adopted by the Expert Group - is stating this very clearly - and also that it is natural that service providers will offer additional supplementary non-mandatory tools like digital signatures - for example to protect stored material.

By thinking small we can find a shortcut to economic solutions also for the larger enterprises.

Crossed wires

The April issue of  Wired Magazin had an interesting article about one aspect of president Obama's energy challenges - the grid.

- 40% of all the energy used in the US  (coal, oil, gas, wind,nuclear) is converted into electrons that travel the grid

- "considering how wasteful, unresponsive and just plain stupid the grid is" it not surprising that outages cost 150 billion a year. "The real shock is that the damn thing works at all."

- demand for electricity is expected to increase with as much as 40% in the next two decades - more than twice the population growth rate - another 214 gigawatts needed (equals 357 large coal plants).

Sobering - especially when we know that the energy consumption = equalling CO2 mostly is so much higher in the US than elsewhere already now. So fixing the grid is needed  - and politically more challenging nuclear power.

But also using less. From Megawatts to Negawatts - measuring usage, feeding solar power to the net, cutting the peaks (10% of generating capacity exists to meet the last 1% of peak demand...). Much space for sense-making investments.

Innovator's new dilemma

I have lately been busy with a new focus on innovations. We now have more ingredients for doing more new things and old things differently with technology than ever before. Recessions are often the time for better reflection and new approaches. This recession may even form the base for a mental shift - away from mindless consumerism, blind quarterly capitalism, sensation-searching media and stupid politcal populism  - to quality thinking, reflecting questioning critical media, brave not-media-led politicians and enterprises driving co-regulation with democratic institions. Tall order to say the least - but do we want to be critized for not having tried?

Then we come to the innovator's new dilemma: too many options - in relation to trying-out and implementation resources and end-users capability (time really). It is striking to meet the mass of good sense-making ideas that new technology allow. Many of these have actually been implemented and work quite well - but have not been taken up by a critical mass of potential users. The sheer multitude of options actually prevents take-up - because it fragements time into so small units that nothing but the perfect (or fashion) finds the way forward. And forward today means fast-forward. The normal slow-forward is far too often discarded as a failure - instead of being put on a near-shelf as the first valuable attempt that soon enough should be re-tested.

So what should we do? Accept the fragmentation-fact to begin with - and always ask questions like:

1. is this often needed by many? Not seldom by few..

2. is it building on existing experience and habis - economy of repetition - or starting from nowhere?

3. has it been refined to the clinically simple - or as far too often understood only by those creating it?

4. is it an isolated "product" - or a concept adressing the user's holistic every-day needs

5. has it been created by the several partners needed - building on experience and ingenuity of many - or far too typical silo-work?

And many more. By re-thinking innovation work we will  surely be able to create new dimensions of value for all involved.

Innovation will continue

Google was developed through the bust. Facebook was developed through the bust. And they are not the last ones - good ideas will be bottled up and released with vigor very soon.  Interesting interview.

Time travel - back in 1994..

Very interesting time travel. Many relevant  messages (for example  the distribution cost aspect). Some worries - like who makes the multimedia content - did not turn out as expected as user created content took over - all the way to producing videos themselves - once technology improved the equipment and made it cheap. Google - the biggest change engine for the media sector - was not on the radar screen.

All in all - the Future cannot be planned or predicted - it has to be created..

Everything is Miscellaneous

Fantastic video inking to Weinberger's eminent book. I gave it 5 stars.

Standard feature in any e-bank

By now it should be clear that any e-bank for consumers should receive e-invoices for one-click approval.  Before that the service is just a typewriter - to fill in lots of details and lenghty reference numbers.  Salary/pension/direct debit advices etc statements should also be just one click away from the credit transaction.

Any SME-e-banking should have the send-e-invoice form and as soon as possible also support sending invoices as exel- or printfile as a minimum.

Many banks have it - most will have it rather soon. Have you asked your bank for their timetable?

Take the easy way - the only way

There is still some debate going on in relation to the implementation of easier VAT-rules for invoicing in EU. It is difficult to see any valid counter-arguments to equal-treatment implementation (no additional regulatory demands on e-invoices) especially as:

1. move from paper to e-invoices improves auditability

2. equal treatment (no mandatory digital signatures) has not increased fraud

3. a fast migration from paper must thus also from these angles be a key target for anybody interested in national and EU productivity

4. too steep steps - mandatory digital signatures for example - have slowed down progress - preserved old practises and worse - led to erosion in rule of law

5. by making the step-in easy - just like sending and receiving paper - will lead to enterprises finding it easy to move to the next steps - using ready and coming technologies for automating processes further and improve document storage and retrievability. This must for all logical reasons be both the logical and only realistic roadmap - both for enterprises, tax authorities and technology vendors.

As tax payers we are all interested in better conditions for business in EU - with worse conditions taxation will rise - with better conditions we have more resources to finance both welfare and the immense challenge ahead of us - the structural change in work life - demanded by the rapidly aging population.

It is clear to most - even in media today - that digitalization is the key to the structural change lock - it can make all work more productive, it can eliminate much work (that we will not have the workforce for) and it will be much greener. Here e-invoicing is the next step  - anybody delaying it should have really good reasons.

Using Social Technologies to Run Better Events

Check out this SlideShare Presentation:

Using Social Technologies to Run Better Events

View more presentations from Teemu Arina. (tags: web2.0 media)

Banks - how about focusing on new value?

Banks - especially Investment banks - are now being squeezed from all sides - revaluation of securitized papers to unrealistically low market price levels, losses from credit books as economies nosedive, new costs from all sorts of more or less needed regulation, restructuring costs etc - all also leading to higher funding costs.

On the other hand there is clear evidence that customers are prepared to pay for reliable house banking relationship (only to forget it again when times get better..) - in good times you can manage with bad bankers but in bad times you cannot manage without good ones (I have been through a couple of downturns in 30 years as a commercial banker - and dare to say that we managed to keep virtually all enterprises afloat that were worth the effort). The normal behavior also then was that higher risks called for higher margins, more securities and stricter covenants and as long as the owners chipped in their part,  financing was reorganized and even increased to bridge over the troubled waters.

Despite most bankers having done a proper job then and now - media at large was and is again resorting to lynching mentality - "a banker cannot be good - hang them all..". With nobody questioning this, it is to expected that elections will be won with this kind of slogans (even if media credibility is systematically being eroded - by media itself). Then it has to be said, that the case of stupid extravaganzas in a few instances - after having had to resort ot taxpayers' support - makes it easy for the populists.

But what should banks do now to start to rebuild their scattered images? Back to profitability and basics is for sure one route - simple robust real services - less marketeer driven gimmicks and "products" nobody really understand. But more than that, there is a big area where banks are now needed more than ever before. This is the what we call extended payments services. All the way from potentially doubling the payment volumes by moving into networked sourcing, routing and presenting e-invoices, e-orders, e-confirmations, e-salaries, e-pensions etc to e-id, e-signatures and real time payments - services needed in the networked and increasingly real-time economy. Only banks have the possibility to handle this in a cost-efficient way for the largest sector - the SMEs and the consumers. As the investment needs are minimal and the sales force is there anyway it should not be difficult to reach profitability as soon as the transaction volume tipping point is achieved. The downside is in any case minimal.

Lowering of costs > better productivity > stronger competitive position in a global economy is now badly needed in the entire corporate customer base. Will banks take their responsibility? 

Mission: Real Time Economy

Progress can be followed here.  Feel free to join real time economy - it will be fun - for many years to come.

Well worth watching

digital etnography

On video

Rather ok

Nobody in their right mind..

Nobody in their right mind would do crossborder e-invoicing - if you listen to the seemingly endless listing of different legal, tax and even fraud risks - said DHL's speaker at an e-invoicing conference recently. "But we do it - and it is quite successful" (freely quoted). This is not surprising for us from Nordic countries where (more secure and easier to trace..) e-invoices have been treated in the same way as less secure paper invoices from the outset. Transport mode is irrelevant. This has - not surprisingly - led to faster uptake and less fraud.

EU now: equal treatment

With DG Taxud's Equal Treatment initiative - as requested by enterprises also via the Expert Group - we should now be able to speed up the migration from expensive manual processes both in-country and x-regions faster. It shows the way, removes mental roadblocks and lowers risks from the outset.

Expert Group mission - highest level

The EG mission is very much to make it possible for 24m SMEs to join the networked economy - ahead of their global competitors. When it is easy join, they will also help large enterprises to massively increase producitivity, the public sector to save tax payers' money and all of us together reduce CO2 substantially. Not to talk about the shrinking-workforce-dilemma - huge need for fast "learning-by-doing-digitally" - up to 30 billion pieces of invoices being ideal tool. All this the necessary step to next levels in the Real Time Economy. How can there be any future for manual invoicing?

Make it easier than paper - not more difficult!

With equal treatment we now have the keys to make invoicing easier - it looked like going the other way with technology-specific legislation. The EG will for its part work hard on describing that this will actually be the case in a Code of Practice document.

"E-invoice or NO invoice - you choose."

SME: "I have been told by several of my customers to stop sending paper or e-mail invoices. What should I do?"

Typical answer: "Contact the nearest e-invoicing service provider (any e-bank should also offer it) - and you will have a feed-in portal right away - key in invoice there, or send simple exel file, use simple print-file or ask your accounting service to do it for you - not difficult."

SME: "Butbut - we have heard that VAT and other tax people ask for a lot more - in some countries digital signatures are even in the law -( still most tend to keep sending e-mail invoices just like paper mail before....)."

Answer: "Please be active in your organisations and via politicians who increasingly understand that more competitive  business is the base for European wellbeing and sustainable growth. This means - among other things - that the EU directive for equal treatment should now be understood as a fundamental simplification and adopted all over the place right away. It is really important to have laws that actually can be followed in practice."

Now even my suppliers..

SME: "Now even my regular suppliers have started to suggest e-invoices! I usually just call them (just across the border) and the goods arrive and the invoice in the snailmail soon after. Do I now need to change my behavior?

Answer: "No. Just like before you check the invoice (now coming to your e-bank or e-invoice service) - and make up your mind if it is correct - and then you pay it. And just like you (or your accounting service) today store your paper invoices together with the rest of your accounting (in accordance with local legislation),  you store your electronic documents. There are several good and cost-efficient methods for storing electronic documents."

Demystify the whole thing - enhance productivity now - futureproof

By demystifying e-invoicing we can take further productivity steps on the widest scale. Investments in the current downturn need to both help enterprises survive - but equally much be directed towards the structural challenges - mainly demographic - awaiting around the corner. If we fail to realize that then we have not only borrowed billions for our children to repay - but consumed the seed potatoes..

complíments from Czeck Republic

RETURN to SENDER

Serious message to senders of paper - or otherwise unstructured - invoices - and in the next stage orders, confirmations, rfis - you name it...

EU Expert Group work proceeding well

The midterm report was approved yesterday. It should - in addition to provide the state of the art reading on the subject - make it very clear that the work is open, nonpartisan, inclusive, technology neutral and in all aspect aiming at making e-invoicing easy and economical for all parties. The overriding goal is to make it possible for SMEs to join the business networks without having to invest, know IT or have any legal or tax risks.

The EG recommended in July that EU should move towards equal treatment of paper and e-invoices in relation to VAT. This has now happened with the recommendation published by EU today. There cannot be any rational reasons for not moving fast in this direction. It does not mean that digital signatures cannot be used - only that they are not a precondition.

Now there should not be any reasons for old and new service providers to move in and form national and panEU networks - to make it possible for invoice receivers to state "e-invoice or no-invoice" - the only fast way forward.

EU made it!

Equal treat of paper and e-invoicing - should be self-evident now.

Action is ALL

Tom Peters:

"I have learned only three things in forty years. One, he or she who has the best relationships takes home the price. Two, all effective leaders are full-time sales people. And three, he or she who tries the most stuff wins; action beats talk ten times out of ten."

This fits very well in with the success stories we have seen for example in e-invoicing...

Is reacting enough?

No. We have to be proactive. Quoting (freely) Christoffer Taxell:

" It is not enough to adjust to change. We have to create the change. Sometimes it appears that, as some kids do not understand that milk comes from the udders of cows, grownups do not understand that social wellbeing is coming from competitive enterprises."

2009 - the e-invoicing year

This announcement will hopefully be issued in many countries - the many reasons for doing it are so very obvious - for anyone wanting to look at the good-for-society-at-large aspects.

But even when the simple and cheap tools are there we will need resolute action to get to the tipping point. Change resistance is massive in this particular area and nobody should expect a breakthrough in less than two years. But if we start now we will have made good progress 2010 and by 2012 invoices will stay digital throughout the processes in many - if not most EU countries. This is a competition where everybody will win..

Resolute actions start by the service providers linking up to each others and providing so simple and cheap tools that no SME using internet can refuse to use. We have the right to expect that banks take their part of the responsibility - collectively to get the network effect.

Resolute action continues by invoice receivers using their natural right - e-invoice as a precondition for a trading relation. We have done so for our part and it has been even astonishing to hear from SME subsuppliers how easy it has been for them to migrate. Only a little pushing needed...

It so reminds me of e-banking in the 80s and early 90s - change resistance all over the place - now 1% of customers use branches for bill payment. But e-banking is not really ready before the whole practise of making a bill payment can be automated - approval with one click - also producing standing order (defacto direct debit). Massive savings - consumers always winning as this produces space for more price competition and service investments. I am sure we can see also consumer organizations to strongly support the efforts (they do know that customers pay every cent of costs).

So 2009 - the e-invoicing year - let us make it happen - on all fronts.

Greener Electronics

Scanning paper invoices makes it even less green. Staying with structured data is not consuming much of storage and bandwidth - compared to pictures.

Nokia is showing the way elsewhere..

 

Scanning - not a good idea...

Scanning of paper invoices is not a good idea in markets where there is a decent supply of simple e-invoice portals for SMEs and multiformat service providers for larger enterprises. Why?

1. It is rather costly

2. It is not always easy to get good results

3. It does not take away the CO2

4. It is an interim solution anyway (may of course still have a business case) - but may also delay the move to e-invoicing

5. It is not shortening cycles - may actually prolong as demonstrated in a real case:  12 days on average for e-invoice and 26!!! for scanned invoices (calender days including nonworking days)

So once there is a network of interconnected service providers (or a promise that there will be soon) there must be real good reasons for not going directly for the real thing. Paper invoices have NO future namely.

Identity 2.0

Identity 2.0 presentation. Fascinating style - useful content indeed. We need to address both sides of the coin: 1. the tool, 2. the process how this is attached - when we talk about coming federated strong id for banking, many public and private sector services. If these will become easy and cheap enough - they can also bring security and convenience to places where simpler ID would be sufficient.

It is all about getting the personal critical mass of usage in place. By serving that, the rest will follow - as we have seen in the Nordics - where frequently used Bank ID can be used in other sectors as well.

Upswing closer every day

Letter to Santa Claus

Europe

17.12.2008

Dear Santa,

We have been really nice, technology-neutral and hardworking Experts this year and look forward to you bringing us a few presents to play around with in 2009.

The first wish is a book - more precisely a handbook. We namely wrote a letter to the EU Commission in July and asked for Equal Treatment of paper and e-invoicing (from VAT-angle) and a bit to our surprise but certainly to our joy we did get it. Now it is naturally up to all the member states to join in with transposition. We do feel that you can help the local VAT authoritative to do it and us Experts with wise guidance so that our Code of Practice in the coming EEI-recommendation (kind of a handbook) will describe how enterprises real easily can move to e-invoicing and not loose sleep over fear of not getting VAT refunds. We may have some challenges in passing the SME-test when we depict how they can make Tax Authorities and others happy by either reassuringly describing business processes or use a range of tools to store and protect their financial data. You may have heard about digital signatures - it is one of those tools.

The second wish is a standard - more precisely a common and global standard that will fulfill both the needs of SMEs (being easy to use) and their frequently very large and sometimes bully trading partners who have a need for lots and lots of data elements. Santa's helpers in UNCEFACT's TBGs have been working hard on CII2.0 but we have not yet seen the full results and are a little anxious. We do realize that we have a pile of standards already, but this one we would really promise to use especially in relation SME-traffic and between service providers.

The third wish is good will - more precisely to service providers - so that there will be lots of them (also banks - despite them having hard times now) - and that they will form networks and provide the interoperability with help of reformatting and verification services. This to make our vision that one contract is enough for sending to and receiving e-invoices from everyone will become real.

The fourth wish is bravery - more precisely to invoice receivers - so that more of them will join the rapidly growing elite who have declared e-invoicing mandatory (in markets where service providers have ramped up their tools and networks) and charge transparently for more expensive paper or invoices otherwise in unstructured form.

We have heard from your native country that it was easy to get most of the enterprises to sign up for e-invoicing - but that the steep rise in usage did not start to happen until recently - much aided by aforementioned actions by progressive invoice receivers. You can always make it clear that there will not be any presents to those in finance departments who resort to change resistance.

We really look forward to your presents - not so much for ourselves really - but for our brothers and sisters in European enterprises who have to fight so hard for their daily bread these days.

Many thanks in advance.

Bo Harald

On behalf of the EU Expert Group on E-invoicing

PS

You are of course not yourself, due to the nature of your activities, sending any invoices. You do not receive any invoices either - we are sure - as your business case would then appear challenging. But as paper invoices have no future anywhere there is a good chance that the supply of wrapping paper can be further improved.

Innopay spot on in e-id

From fresh paper. Emphasis mine:

"E-Identity in a network perspective: re-use what’s already there

A new paradigm for identity verification services (1 December 2008)
Authors: Leendert Bottelberghs MSc, Senior Consultant at Innopay
Douwe Lycklama MSc, Partner at Innopay

Introduction
The online verification of identities (of both person and entities) has been one of the paramount issues since the conception of e-business. It is fundamental for online transactional services such as payment, e-invoicing and other exchanges of ‘value
messages’. In the numerous conferences on e-identity, defining the meaning of identification, authentication and privacy forms a substantial part of the as of yet unresolved
discussion. This ambiguity is heightened further when decision makers meet technology experts. It is clear that in order to proceed, different aspects of identity services have to be aligned before anything will happen.

Current authentication mechanisms have low relevance for citizens

So far the main solution focus for identity verification (authentication) has been on technology and privacy. The main initiatives are dominated by governments for egovernment
solutions and by banks who give out authentication mechanisms for accessing current accounts. This leads to multiple isolated and monolithic solutions for online identification with higher costs and more fraud. Further, the usability for users is very low since they have to maintain various authentication mechanisms, which is difficult when the interaction with the service provider has a low frequency (e.g. access to egovernment in The Netherlands is 1,2 times per year on average). The many parallel solutions lead to low usability and bad experiences for users, leading to ever lower
usage. All in all a vicious circle which is limiting the growth of e-business and egovernment.

Re-use what is already out there

Re-use of existing identity verification solutions in different applications is essential for converting this ‘vicious circle’ into a ‘virtuous circle’. Adoption is only accelerated when the habits of users are formed by different online services reusing the same
authentication mechanism. For example, online banking would benefit if every bank would offer the same authentication mechanism. E-government would take off if citizens could re-use authentication mechanisms they already have. In order to start re-using authentication mechanisms we have to redefine authentication into a service model with its own business case, making it attractive for market players. Existing solutions have to cooperate. Last but not least: the commercial sector can also benefit and might prove to
be an essential catalyst in a potential new industry.

Solution: network paradigm

Instead of looking at identity verification as a type of service, or a security problem, we consider it as a two-sided network. This new paradigm reveals some essential characteristics, of which one of the most important is the cross-sided network effect1. By
applying a four-party model to this network, we can define different roles as well as two domains: a ‘cooperative domain’ and a ‘competitive domain’. The cooperative domain is the minimal set of agreements for parties to cooperate in the areas of infrastructure,
applications and business. The competitive domain is the market that is created by the introduction of this common ‘network’ based on the set of agreements. .."

...more

Needless to say that we fully agree - several Nordic and Baltic states are already public-private partnership success stories. Outlined in this blog earlier if-you-really-want-to-save-tax-payers' money

Advertising trends

 Commercial messaging is truly changing (thanks Eero). A testing time for traditional print media. And a worry for all of us who believe that high quality analyzis and a critical nonpartisan view is needed more than ever.

The obvious risk is that sensationalism will rule the waves - even more.

How we consume

Handy way to demonstrate. Both total and on average. Thanks Antti.

It is not getting better - without real action

Cash - expensive - also for the environment..

EU published some figures on cost of handling cash - 50bn per year - and the consumer pays every cent of it - without knowing how much we would all save by keeping money in digital form all the way with the help of plastic cards (which of course will disappear when their functionality moves to mobile phones in due course).

It would be interesting to also know how much the environment is loaded down by the 50bn/pa circus of heavily protected daily convoys of armoured cars transporting cash to ATMs and bank branches to be taken to shops and deposited by them to banks in the evening and from there back to central banks in the night and back again...

How many robbeires, counterfeit, black economy and other crime is caused by too much use of cash? What is the cost of this for EU citizens. Does he know? Does media inform?  Why is there a 500€ bill btw? What is it used for?

What about the consumer ombudsmen - do they have time for the really big cost savers?

Some can do more..

To take seriously...

Moving forward - on many fronts

SWIFT story

but it still up to you and me - to change our own behavior - to realize that we pay every cent for expensive old fashioned ways of doing things. And that this behavior is not at all environmental friendly.

E-banking enabled rationalization of branch networks in Finland - saving half of the cost for the sector - while the number of transactions grew - 4-5 fold. Where did the saved costs go? Mostly back to customers through fierce price competition. But this would never have happened without transparent and honest pricing = charging extra for services involving manual work.

Now this platform is ready to take on the next layer - e-invoicing working just like payments. This time the savings will not be in banks - but in society at large.

Mr Somebody Else will not do it

We know that the best possible thing we can do right now in the area of digitalization and productivity is to get rid of paper based invoicing - move to structured formats (not e-mail). Savings are massive - to say the least, the environment needs it (2,8m tons of CO2 to be eliminated), learning needs it, the real time internet logic needs it, customer service needs it, the ladder needs the step to the next document layers and so forth.

We also know that EU will - when we get out of the starting economic downturn - have a rapidly worsening problem: shortage of people in the working age - and much more old people to care for.

We also know that EU is now seriously committed to remove obstacles - tax (equal treatment as for paper ruling coming), varying rules for accounting, archiving etc to be addressed. So the landscape is getting much better.

A growing number of service providers - also from the banking sector are moving in - to bring more capability, sales power, wider networks, competition, interoperability, standardization and innovations. So there will be a lot of activities.

But - as we know from our "laboratory" here in Finland it is really up to you and me - as any progress depends on us changing our own and our service provider's behavior. We should - in our private and job roles demand e-invoices, send e-invoices, charge for paper invoices and spread the message that paper invoices have NO future.

Mr Somebody Else will not do it for us.

 

Keep spreading the message http://apps.facebook.com/causes/60512?m=01954bcf&recruiter_id=6249930

Banks taking responsibility - SWIFT committed

It has been said many times that only if banks come together and join force also with traditional service providers will we get a real take-up of e-invoicing.

SWIFT has now published a report saying in essence that 28 out of 29 banks replying to questionnaire have already launched e-invoicing or plan to do so. Networking model naturally needed - to get volumes.

The banks are also expecting SWIFT to give the solid support needed for high quality operations and standardization. Especially as:

"With such potential massive cost savings and increased economic competitiveness on offer, it’s no surprise that many governments are strongly advocating change in this area. There are currently 18 countries in Europe, Asia and South America with initiatives and support for e–invoicing. It is expected that by 2010 most EU countries will have mandated the use of electronic invoicing in public administration."

Transport mode IS irrelevant

We now know that most EU-countries support Equal Treatment - of paper and e-invoices - from a VAT-auditing angle. This is great progress. 

Some may still need clarification - what does ET mean? In all essence it means that: Transport IS irrelevant. From this follows that auditing can treat all invoicing in the same way.

Of course it makes common sense - VAT audit is taking place in the corporate environment today and tomorrow - and it will be easier and finding less fraud, the faster we move away from paper. That is the only difference - and the very reason why ET is in everybody's interest as it makes it easy to migrate - not difficult as for example mandatory digital signatures do.

Will this lead to a slower harmonization of VAT auditing? I do not think so - on the contrary it will be possible to move faster also in this field - as ET will bring volumes, pressure on roaming, interoperability and use of common standards.

Any format in...

Protecting costs OR consumers?

Had a discussion last week with a representative of a consumer organization at a conference in Brussels. It did strike me - again - how little interest these organizations have to further cost cutting in enterprises - in this case by moving to e-invoicing.

The cost of paper invoicing to the consumer segment in EU can be estimated to over 40bn€ a year.  Consumers are of course paying every cent - and should understand,  that by helping the invoice sender to save cost, there will be at least a fair chance to get lower prices for the services they buy. Without saving costs there is hardly any chance for it.

Now the counterargument is that these cost savings do not go to customers, but to shareholders. My own experience from e-banking has told me that if there is competition most of the savings go to the customers. The part that goes to shareholders as improved dividend is mostly benefitting the largest capitalist in the world - pension schemes - where most citizens are the end-beneficiaries.

Then there is the counterargument that all do not use internet. Agree - but for those who use - it should be made clear that they benefit by moving away from paper - and should be encouraged to do so by being charged separately for paper invoices - as is the case in many countries already.

And we should naturally all of us understand that the potential to cut  2,8 million tons of CO2 should be done asap.

When will consumer organizations start to fight unnecessary process costs? Start to really protect consumers - not old fashioned high costs. Start to realize that each demand put on service providers - be they private or public is causing a cost - to be paid by the consumer. Become progressive and thus encourage business to join in much needed co-regulation and furthering of level playfield competition.

The best innovation

The best innovation from a user point of view (and what can be more important..) is when he/she can use a familiar tool for new purposes.

A prime example of this is when the the public sector accepts log-in to their services with e-bank login codes. Have citizens voted for it with their feet? Oh yes! Has it saved and can it save further tax payer's money? Big time! Is it a good example of public-private partnership? One of the best! Is it secure enough? For sure - strong security reused - is a precondition in banking! Can it be the local bases for cross-eu e-id networks? Surely the only realistic one!

Another one is when SMEs can use their e-banking service to send e-invoices - just like payments. While nobody is saying that e-invoicing should be dominated by bank solutions it is more than obvious that their ready payment systems for transport, e-banks for input, output, security and selling power is a must for a take off in the SME sector. Over 40% of 23m SMEs in EU are one-man shows and they for one sector need a tool that does not need any investments or IT-skills. Only then can they serve their own customers procurement value chains. Far too many initiatives seem to forget that the SME needs one tool that works with all - not different tools/standards/procedures/instructions/software/contracts/passwords etc with his often many customers. This is the very core of the EU vision for a common e-invoicing market.

Compliments from Holland - ING-bank

SMEs are giants

They represent:

- 99,8% of all European enterprises

- 67,1% of private sector jobs

What can we do to support their success - Europe's success?

1. ease their number 1 problem - administrative burden

2. create a better single market - space to grow in

3. create 0-investment and 0-ITskill-demanding digital tools (like e-invoicing)

Two sides of the same coin - invoice>payment

Payments certainly have gone electronic - as seen from this example from Finland. The other side of the coin - the invoice will do the same.

Big campaign starting today

Enterprises sending invoices to consumers, the public sectors, banks and other service providers are today launching a big campaign to help consumers to move away from accepting costly and environment unfriendly paper invoices in Finland. We all know that customers are paying every cent of costs incurred - only by lowering them will there be proper space for lowering prices.

This is important also for business to business invoicing as the same practise and tools can be used everywhere. What you adopt as a private customer you will easily also accept as a corporate customer - you are after all one person.