1. www.osservatori.net
Conference – Electronic Invoicing in Europe
Electronic invoicing: models,
integration level and benefits
Alessandro Perego
Politecnico di Milano School of Management
Madrid - 27th April 2010

2. ICT & Management Observatories
Observatory on eInvoicing and Dematerialization
ICT & Management Observatories
q31 Observatories
qMore than 60 individuals involved
(researchers + staff)
qOver 3,000 companies analyzed
(by both case studies and surveys)
q87,000 unique contacts on CRM database
q2 newsletters: Knowledge (approx. 20,000
members); “PMI” (approx. 30,000 members)
Observatory on eInvoicing and Dematerialization
Origin
“Spin-off” of the B2b Observatory, analyzing the impact of ICT on
customer-supplier relationships since 2001
Mission
Deeply analyze themes related to electronic invoicing and more in
general the integration and dematerialization of company processes
Main objective
Identify and assess real potential of solutions in terms of Value
creation for user companies
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

3. The new perspective:
electronic invoicing as “a competitiveness lever”
Electronic invoicing is not first and foremost a question of compliance
with fiscal rules and regulations…
Fornitore
Viewed mainly as a set of Sistema
Allineamento dati
Bancario
Ordine Consegna Fatturazione Pagamento
rules & regulations, Cliente
Value
standards, Benefits
constraints, Technology
and costs Change management
Contracts
Standards
Costs
Legal constraints
Rules & regulations
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

4. The new perspective:
electronic invoicing as a “competitiveness lever”
…but rather a tremendous opportunity to optimize both company and
inter-company business processes
Fornitore
Sistema
Allineamento dati
Bancario
Ordine Consegna Fatturazione Pagamento
Viewed mainly as a set Cliente
Viewed as
of rules & regulations, Value Constraints
true value
standards, Benefits Technology
constraints, Technology Rules & regulations
and costs Change management Costs
Contracts Standards
Standards Contracts
Costs Change management
Legal constraints Benefits
Rules & regulations Understanding value
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

5. The mathematical model -
The structure
We developed a mathematical model to assess costs, benefits and
profitability ...and validated it with dozens of companies in many sectors
Context Elementary Elementary Output
data times costs
Perfect
cycle
Benefits
Non-conformity
Profitability
Profitability indexes
assessment
model Investments
Effectiveness
indexes
Current
costs
Adoption Service
paradigm + fruition mode
View by player
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

6. The scope of the analysis
The B2b trade process
Invoicing is the pivotal phase of a more extended process starting with
business data alignment and ending with payment reconciliation
Supplier
Banking
System
Data alignment
Order Delivery Invoice Payment
Customer
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

7. The main adoption paradigms considered
Substitute archiving
Supplier
Storage of receivables – Electronic storage of invoices issued to
clients, substituting paper storage in accordance with fiscal norms
Banking
Digitalisation and storage of payables - Electronic storage of
Data alignment
system
Order Delivery Invoice Payment
invoices issued by suppliers, substituting paper storage in
accordance with fiscal norms
Customer
Electronic invoicing Electronic invoicing – Agreement between trade partners for the
Supplier
exchange of invoices generated, send and stored exclusively in
Banking
electronic format
Data alignment
systems q Unstructured format: invoices are image files (TIFF, JPEG) and
Order Delivery Invoice Payment
cannot be directly altered
q Structured format: the invoices contain data able to be altered
through computer applications
Customer
Full trade process integration Exchange of documents between clients and suppliers taking place
Supplier in structured electronic format
q Integration of the order-to-invoice cycle – exchange of logistics-
Banking trade cycle documents
Data alignment
System
Order Delivery Invoice Payment
q Integration of the invoice-to-payment cycle – exchange of
administrative-financial document cycle
q Complete integration and dematerialization – integration of all
Customer phases of the cycle + electronic invoicing
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

8. The benefits
The models of substitute archiving
From net benefits of 2-3 € per invoice – with less than one year as the
average payback time – in the case of adoption of the substitute
archiving solutions…
Accounts receivable archiving
• Gross benefits between 2.3 and 3.2 €/cycle
• Net benefits: between 1 and 2 €/ cycle
Supplier • Payback time: generally < 1 year
• Source of benefit: space, transmission
Banking
Data alignment
system
Order Delivery Invoice Payment
Accounts payable digitalization and archiving
Customer • Gross benefits between 1,6 and 2.4 €/ cycle
• Net benefits : between 0.5 and 1.2 €/ cycle
• Payback time : generally< 2 years
• Source of benefit : space
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

9. The benefits
The models of electronic invoicing VAT-compliant
…to net benefits between 4 and 12 € per invoice in the case of
VAT-compliant electronic invoicing…
Supplier Structured electronic invoicing
• Gross benefits between 9 e 12 €/cycle
Banking • Net benefits : between 5.5 and 8.5 €/cycle
Data alignment
systems • Payback time : generally< 1 year
• Source of benefit : productivity of personnel
Order Delivery Invoice Payment
Un-structured electronic invoicing
• Gross benefits : between 3.6 and 5 €/cycle
Customer
• Net benefits : between 0.6 and 4 €/cycle
• Payback time : generally< 2 years
• Source of benefit : space, transmission
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

10. The benefits
The model of full integration and dematerialization
…to net benefits of up to 65 € per cycle in the case of the full integration
of the trade process
Supplier
Banking
Data alignment
System Full integration of the trade process
Order Delivery Invoice Payment
• Gross benefits between 30 and 80 €/cycle
• Net benefits : between 25 and 65 €/cycle
• Payback time : generally< 1 year
• Source of benefit : productivity of personnel
Customer
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

11. The super-additional rule
The benefits related to the improvement in accuracy
Full integration of
the trade process
Integration of
the order-to-payment cycle
Integration of
the order-to-invoice cycle
Integration of Consumer goods
the invoice-to-payment cycle
The choice of the most advantageous service
VAT-compliant fruition mode for each scenario is considered
electronic invoicing
Costs reduction of:
Perfect cycle Non conformities
Accounts receivable
archiving
In collaboration with:
Indicod-ECR
Accounts payable
digitalisation and archiving
[€/cycle]
0 10 20 30 40 50 60
The super-additional rule is due mainly to the reduction in non-
conformities coupled with the reduction in cost of the interface
activities between the phases (e.g. settlements)
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

12. The benefits
Specific industry differences
The “maximum” benefits in the different sectors can vary from 30 to 80
€/cycle and can represent from 1 al 3% of turnover
High
High
Pharmaceutical
0.6%
Electrical equipment -67%
Document chain efficiency
Document chain efficiency
2.8%
-82%
Building materials
1.7%
-82%
-84% 3%
-80%
Consumer goods
2.1%
Low
Low
Home appliances
Low
Low High
High
Initial accuracy of the project
Initial accuracy of the project
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

13. The barriers
A classification of the perceived barriers
The barriers (actual or perceived) which hinder the spread of electronic
invoicing and integration of the order cycle projects, can be traced back
to 5 main types
Lack of clarity of the regulatory
Regulatory
confusion framework leads to a high perception of
reacting in a “non-confirmative” manner
External
The difficulty in developing B2b
Lack of standards integration projects, due to lack of
interoperability tools
Barriers to
The obstacle preventing immediate
adoption Poor awareness
of value consideration of the topic with the
proper attention and perspective
Fragmentation of the
The presence of parcelization both in the
Internal organisation as well as in the supporting
order-to-payment cycle
information systems
Difficulty collaborating
The difficulty in collaborating with other
with “the Outside” companies – the competition or just
suppliers, client and service providers
A. Perego – Electronic invoicing: models, integration level and benefits 27th April 2010 www.osservatori.net

14. www.osservatori.net
Conference – Electronic Invoicing in Europe
Electronic invoicing: models,
integration level and benefits
Alessandro Perego
Politecnico di Milano School of Management
Madrid - 27th April 2010