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The Adoption of Electronic Invoicing in...

The Adoption of Electronic Invoicing in
Finnish Private and Public Organizations, European Conference on Information Systems (ECIS08)
Esko Penttinen, Helsinki School of Economics
Maria Hyytiäinen, TietoEnator Corporation

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    Ecis 08 Slideshare Ecis 08 Slideshare Presentation Transcript

    • The Adoption of Electronic Invoicing in Finnish Private and Public Organizations European Conference on Information Systems (ECIS08) Esko Penttinen, Helsinki School of Economics Maria Hyytiäinen, TietoEnator Corporation
    • Electronic invoicing, definition
      • As a concept, invoicing in electronic form is nothing new
        • EDIFACT in 1970s
      • Here, electronic invoicing defined as invoices transmitted through open standards in xml-form, e.g. Finvoice or
      • TEAPSSXML in the Finnish context
      • Invoice data directly in structured
      • form to the payment system
      • PDF-files sent as attachments in
      • e-mails not considered as
      • electronic invoicing in our study
    • Why electronic invoicing?
      • One of the most important sources of profitability increases in Europe (European Commission, 2007; Finland's EU Presidency, 2006)
      • Benefits
        • Processing cost savings yearly
          • 238 billion Euros in the EU (EACT)
          • 2.8 billion euros in Finland (Confederation of Finnish Industries)
        • Improved customer service and more meaningful work
          • Less errors and “double payments” (e.g. in health care bills)
        • Environmental effects
          • Getting rid of 20 billion letters: 400,000 tons of paper, 12 million trees, 2,700 tons of ink, 165 million liters of diesel and 1,350 GWh energy
    • Research question
      • What are the factors affecting the rate of adoption of electronic invoicing in Finnish companies and public organizations?
    • Diffusion of innovations and critical success factors
      • Diffusion of innovations (Rogers 1995) studies how, why and at what rate new ideas and technology spread through organizations
        • Individuals possess differing degrees of willingness to adopt innovations
          • innovators, early adopters, early majority, late majority, and laggards
        • Identifies five factors impacting the adoption rate
          • relative advantage, compatibility, trialability, observability, and complexity
      • Critical success factors (Daniel 1961; Rockart 1979) are the focus areas that most contribute to the success of the company and its competitive position
    • Conceptual framework
    • Methodology
      • Multiple case study comprising interview data with key informants in Finnish companies (Lindström, Kuusakoski, Novart, and TietoEnator) and public organizations (Cities of Helsinki and Tampere)
      • Interviews focused on the adoption and implementation of electronic invoicing and its impacts on company performance and buyer-seller relationships
      • All interviews were tape-recorded and transcribed
    • Cases Tampere was founded in 1779 and is the third largest city in Finland. It is also the largest inland centre in the Nordic countries. Currently, there are little over 200,000 inhabitants in Tampere, and almost 300,000 inhabitants in the Tampere sub-region, which comprises Tampere and its neighboring municipalities. City of Tampere Helsinki was founded in 1550 and it is the capital of Finland situated in the south of Finland. Helsinki is the largest city in Finland with a population of 570,000. City of Helsinki TietoEnator is one of the largest information technology (IT) service providers in Europe and specializes in consulting, developing, and hosting its customers’ digital businesses. TietoEnator is organized into six business areas: banking & insurance, telecom & media, healthcare & welfare, government, manufacturing & retail, forest & energy, and processing & network. Personnel 16,000, turnover 1.7 billion Euros. TietoEnator Novart is the largest kitchen and bathroom fixture manufacturer in Finland. The company is part of the Nobia group which is the leading kitchen and fixture company in Europe. Novart has 60 years of expertise in kitchen fixture manufacturing and has four brands: Petra, A la carte, Netto and Parma kitchen. Personnel 500, turnover of 90 million Euros. Novart Lindström is a Finnish textile and cleanliness service company founded in 1848. Lindström’s range of services consists of workwear, mat, protective equipment, hygiene, restaurant textile, and shop towel services. Lindström has operations in 18 countries. Personnel 2,200, turnover 202 million Euros. Lindström Kuusakoski is an international recycling services company. In addition to being the leading recycler of metal-based products in the Northern Europe, Kuusakoski is also recognised as one of the largest suppliers and refiners of recycled metals in the world. Personnel 2,000, turnover 815 million Euros. Kuusakoski Description Company
    • Volumes To be implemented in 2008, 1.4 million invoices to consumers and businesses 34%, 85,000/250,000 2005 incoming 2006 outgoing City of Tampere 25%, 12,500/50,000 (to companies), 0%, 1.2 million (to consumers) 42%, 240,000/570,000 2002 incoming 2006 outgoing (2007 to consumers) City of Helsinki 34%, 34,000/101,300 53%, 49,500/93,000 2005 incoming 2005 outgoing TietoEnator To be implemented in 2008 28%, 9,526/33,475 2006 incoming Novart 36%, 194,400/540,000 25%, 7,200/28,800 2003 incoming 2003 outgoing Lindström 2-3%, 400/30,000 25%, 11,250/45,000 2006 incoming 2006 outgoing Kuusakoski Outgoing invoices Incoming invoices Year of initiation of electronic invoicing Company
    • Results “ Two years ago, when contemplating the adoption of electronic invoicing, we made cold calculations about the costs and benefits of electronic invoicing, just over 30 Euros per incoming paper bill” (Kuusakoski) “ By moving to electronic invoicing, we have been able to reduce the number of errors in invoices considerably.” (Lindström) “ Health care bills are sometimes paid twice by the inhabitants of our municipality by mistake. When they want to get their compensation, it gets messy. Electronic invoicing can fix this problem efficiently.” (City of Helsinki) “ The circulation time of bills has decreased from one week to just two or three days in our company” (Novart, Lindström) ” Technology must be compatible with the work processes, otherwise there will be too much errors.” (TietoEnator) ” It is important that the electronic invoice contains all the information previously available on paper bill.” (City of Helsinki) “ We should be able to centralize our invoicing. For now, we have multiple (7) invoicing departments” (Kuusakoski) “ We cannot get the required XML document from our current system and that is why we have not started the electronic invoicing of outgoing bills” (Novart) “ We found a good pilot company with whom we could test electronic invoicing: it was a travel agency with whom we have a lot of invoicing on regular basis.” (TietoEnator) “ When piloting the electronic invoice to the consumers, we learned that the interface should be easy to use and look like a paper bill” (City of Helsinki) “ Active information flow internally to the employees is very important.” (TietoEnator) “ We want to project a positive, modern image of the public service” (City of Tampere) “ We found that one of the most important factors is being active toward the client/supplier. The availability of the electronic invoicing possibility is stipulated in the contract. Taken up in the discussions with the client/supplier” (Lindström)
    • Results (cont.)
      • Communication
        • Internal communication
        • External communication
        • Communication between operators
      • Technological readiness
        • Conversion issues (transmission from a standard to another)
        • Too many billing systems
      • Management support
        • Grass-root level implementation not enough
        • Project owner needed on some level of the organization
    • Questions? Visit www.realtimeeconomy.net!
    • Topics on Real-Time Economy (RTE)
      • 1. RFID - real-time information?
        • Walmart implementing and making huge savings
        • How to use RFID innovatively?
      • 2. Using social media in business context
        • How to use e.g. Facebook in business?
      • 3. Electronic invoicing
        • How to get the consumers to join? Different incentives than companies?
      • 4. Real-time games
        • Betting in real-time during the matches through digital tv
        • What are the impacts of real-time statistics in sports?
      • 5. Environment and real-time economy
        • How to measure the environmental effects?
      • 6. Mobile RTE
        • Mobile payment
        • E-authentication issues