Evento 21 settembre 2012

Daniele Marazzi
Osservatori ICT & Management
School of Management – Politecnico di Milano
Digital Italy: it is possible!
Dematerialization: a snapshot
Osservatorio Fatturazione Elettronica
e Dematerializzazione
Customer conference 2012
Modena - 21 Settembre 2012

www.osservatori.netDANIELE MARAZZI | Digital Italy: it is possible! 21st September 2012
Agenda
The Observatory on Electronic Invoicing and Dematerialisation
The state of the art of Digitalization in Italy
Digitalization opportunities in some specific areas

Observatory on
Electronic Invoicing and Dematerialization
Mission
q  Deeply analyze the themes related to the integration and dematerialization of the company
processes:
q  Analyze the main opportunities stemming from the Digitalization of both company and inter-
company processes
§  Electronic Invoicing
§  Substitute Archiving
§  Integration and Dematerialization of the Trade Process
Benefits of the Dematerialization
Electronic Invoicing: benefits not
just on the paper
Systemic Initiatives and Diffusion
of Dematerialization projects
Joint collaboration_a powerful driver
for Electronic Invoicing in Italy
ROI Assessment of
Dematerialization projects
Electronic Invoicing as a keystone
in the collaboration between
companies, banks and PA
Dematerialization, eSupply Chain
Collaboration and Financial Value Chain
Beyond the Invoice
Stressing the Communication of
our results and development of
self assessment tool
Electronic Invoicing in Italy:
reporting from the field
2008 2009 2010 20112007 2012

q  approx. 600 billion pages of business
documents dematerializable in a year
q  approx. 45 billion dematerializable
business documents
Digitization Opportunities in Italy
Over €200
billion
could be saved each year
almost 10 billion
Man-hours
“convertible” into higher
value activities
24,000,000 trees
4 Million tonnes of CO2
1.5 times the circumference of
the Earth
6,780 times Everest

Digitization is possible
What does it mean?
…nature of the document
Public official is required
Attention must be paid to the electronic
document’s “non reproducible” elements
resulting from its dematerialization
Document must be digitized
Document must be “crystallized” by affixing a
digital signature
Digital «substitute» archivingEuropean
Directives
Enabling rules…
CAD
[ . . . ]
“Native” electronic
document
(with digital signature)
Digital document
“Printed”
paper document
Paper document with
holographic elements
Original unique analogue
“Ease”ofdematerialization
Dematerialization is easier when starting with
digital or electronic documents
Technical
rules
DigitPA
(ex CNIPA)
Revenue
Agency
Resolutions

The spread of
Substitute Archiving
Businesses in Italy that practice Substitute Archiving
of
Over 90,000 businesses in Italy
Substitute Archive accounting
books and records
The 2009 and 2010 data are from the Revenue Agency,
ricostruiti attraverso il conteggio delle impronte, submitted at
the beginning of 2012, in accordance with regulatory
requirements
*
The number of businesses with active and passive invoice Substitute Archiving
projects continues to grow ...
... and many businesses archive accounting books and records electronically
+ 28%
+ 35% 3,400
201120102009
1,965 *
2,510 *
Significant growth trend in companies
that use Substitute Archiving for active
invoices (over 90%) and passive
invoices (about 35%)
The number of companies that use
Substitute Archiving of invoices, both
active and passive,is also growing
Market penetration
36% at Large companies (over 250
employees)
1% at PMIs (10 to 250 employees)

The spread of
Electronic Invoicing
(in most cases, intra-group
experiences)
Electronic Invoicing with digital signature, in full
compliance with the enacted law, includes:
q Agreement between the parties
q 15 days to send received invoices to Substitute
Archiving
businesses
The supplier sends active Invoices to its clients
electronically and stores them by Substitute Archiving
Replicates the «pure Electronic Invoicing» process, but
only the active side
businesses
(Lower Bound )
Both the supplier and the client store the invoices
exchanged electronically by Substitute Archiving
Mimics «pure Electronic Invoicing», aside from the
requirement for an agreement between the parties and to
respect the 15 days
There are still only a few dozen cases of «pure Electronic Invoicing»,
according to the Italian regulatory definition ...
... but the number of companies to do Electronic Invoicing is growing!

How to increase its spread
The «Quaderno del Fare»
1.  Is it true that Italian regulations allow me to do
“Electronic Invoicing” and to dematerialize all
Order Cycle documents?
2.  The benefits that one hears about seem to be very
consistent: but are they true?
3.  How do I bring home these benefits?
4.  What costs must I incur?
5.  Does it make sense to undertake these projects
in a SME?
6.  How do I get my clients and suppliers involved?
7.  Where do I begin?
8.  Is it certain that I will not be putting myself in a
position to endure additional “controls”?
9.  Isn’t it better to wait until the PA makes a move?
Questions by those who want to “DO”
The new contribution developed by the
Observatory is
at www.osservatori.net
www.osservatori.netwww.osservatori.netDANIELE MARAZZI | Digital Italy: it is possible! 21st September 2012

Digitalization opportunities
Specific areas identification
Definition of a set of
indicators that determine
the characteristics
of a generic document
Development of a “radar model”
able to provide the most
important indicators and
characterize the most interesting
application areas related to
document dematerialization
Mapping of certain documents
in a matrix that allows the
attractiveness factor tied to
the dematerialisation of a
specific document to be
highlighted
VAT records,
some accounting
books and records
Contracts
(of purchase)
Bank
Contract
. . .
Banking
slips

The possible approaches to Digitisation
The most «interesting» documents to dematerialise present 5 key characteristics:
(i) dimensions (no. of pages) and diffusion (no. of documents); (ii) level of dispersion in
the organisation (reception and workflow points/reception points and workflow; (iii)
access frequency; (iv) impact on interface processes; (v) presence of storage costs/risks
Quality analysis
B.E.M.
Clinical
records
Contracts
Letters and
correspondences
Transport
documents
Court documents
Primary care
physician records
Customs
dossiers
Notarial Deeds
University
docs
Project
documents
Bank documents
Accounting books
and registers
Payment
orders
Expenses
Insurance
dossiers
Receipts
Cash accounting
«Physical»
characteristics
Need to access
document
Impact on interface
processes
Storage costs and risks
Dispersion in the organisation

The main areas of interest
«Physical»
characteristics
Need to access the
document
Impact on interface processes Costs and risks of storage
Dispersion in the organisation
The most «interesting» documents to dematerialise present 5 key characteristics:
(i) dimensions (no. of pages) and diffusion (no. of documents); (ii) level of dispersion in
the organisation (reception and workflow points/reception points and workflow; (iii)
access frequency; (iv) impact on interface processes; (v) presence of storage costs/risks
Document management
Substitute archivingIntegration

The possible approaches to Digitisation refer to three main «project goals»
each characterised by specific impacts
  Focus: exchange of information between players of the process
  Main benefits: reduction of the activities of processing of
documents (data entry) and increase in quality of the process
(reduction of errors)
  Focus: creation and management of documents, mainly in the
back-office activities
  Main benefits: reduction of time and «clarity» of processes,
reduction of use of materials (consumable) and of internal
transfer costs, improved access to information
  Focus: storage, over time, of information and documents (in
particular with strong guarantee of security)
  Main benefits: reduction of storage costs (materials, space etc.),
conformity to norms, guarantee to accessibility documents and
information over time
Integration
Document
management
Substitute
archiving

Digitalization Opportunities
HighLow Document diffusion (on an annual basis)
Tens of
Millions
A few Million
Hundreds of
Millions
Billions
UnitBenefit
Elevated
Limited
Over
€100
A few €
Tens of €
Medical records
Notarial
Deeds
Insurance
Dossiers
Contracts
(of purchase)
VAT records, some
accounting books
and records
Bank
Contract
Banking slips
(Deposit/Withdrawal)F24
Balance
Sheets
Customs Dossiers
Bills
Invoices
Delivery
notes
Orders
«Trade Processes»

Digitalization Opportunities
HighLow Document diffusion (on an annual basis)
Tens of
Millions
A few Million
Hundreds of
Millions
Billions
UnitBenefit
Elevated
Limited
Over
€100
A few €
Tens of €
Medical records
Notarial
Deeds
Insurance
Dossiers
Contracts
(of purchase)
2
1
VAT records, some
accounting books
and records
4 Bank
Contract
Banking slips
(Deposit/Withdrawal)
3F24
Balance
Sheets
Customs Dossiers
Bills
Invoices
Delivery
notes
Orders
«Trade Processes»

Accounting Books and Records: the process
Data Entry Production Consultation Conservation
  Required for 10
years
  Ususally very
large documents
  Mainly required
in the event of
an audit
  Process takes
place a few
times a year
  Expensive
printing routines
required
  High risk for
errors and time
wastage
  Usually takes
place using
accounting
systems
  Sequential entry
of information in
the appropriate
register
21 43

Accounting Books and Records: the benefits
Data Entry Production Consultation Conservation
Avoid the complex printing process
(printer jams, “blocked” labour and
resources)
Greater ease of
consultation,
rarely necessary
Archiving and
materials cost
savings
The estimated potential benefit is
between € 0.5 and € 1 per page
(depending on the specific context of
each individual company: labour cost,
cost of space, etc.)
21 43

Accounting Books and Records: diffusion
VAT Records
150 m
Pages
(lower bound)
Data:
q  2 registrations (lines) per invoice, in each record
q  40 lines per page
q  1.3 m B2b invoices (Observatory on EI and D)
q  Survey (241 responses)
Single
Employment
Ledger
250 m
Pages
(lower bound)
Data:
q  1 page/month per employee
q  17.2 m workers (Istat)
q  13 month “average”
Transaction
Books
3-4 bn
Pages
(lower bound)
Data:
q  Interviews with companies, auditors, employment
consultants
21 43

Contracts of purchase: the process
Drafting of
specifications
Negotiation
Signing of
Agreement
Contract
management
(issuance of
orders)
Archiving
Customer
Supplier
21 43

Contracts of purchase: the benefits
The potential benefit, for the
client, is estimated to be several
tens of € per contract
(lower bound)
Drafting of
specifications
Negotiation
Signing of
Agreement
Contract
management
(issuance of
orders)
Archiving
Customer
Supplier
Cost savings on
printing and mailing
Decreased
research and
consultation
time
Greater internal
workflow efficiency
Greater efficiency
and effectiveness in
support of
document exchange
Archiving and
materials cost savings
21 43
Greater internal
workflow
efficiency

Contracts of purchase: regulation
In the dematerialization of contracts, attention must be paid to the
inclusion of signatures…
… an issue that must be carefully managed in order to proceed with
Substitute Archiving of the document
21 43

Processes of
relationships with
employees and non-
client third-parties,
but also processes
supported by
accounting, legal
and/or company
Processes of
relationships with clients
(business and/or retail)
supported by following
documents concerning:
q Bank accounts
q Securities deposits
q Collections and
payments
q Credit
q Generic
Preliminary processes that activate/renew/modify the delivery of
services by the bank (basically data collection and use, but not
only…)
We analysed over 100 types of documents supporting bank processes,
investigating those that require an authentic signature
Process digitisation
The case of the bank sector
Contracts
«Teller»
processes
Internal
processes
Processing requiring
Authentic signature
21 43

Signature
required
«Strong»«Absent»
Signature
«the norm»
Signature
non required
Regulatorylaws
Signature required by Client
Bank account contract
Deposit/withdrawal slips
Securities deposit contract
Purchase order
Information
notes
Privacy form
Information on
bank statement
A mapping of «relational» documents21 43

The slips of Deposit/Withdrawal
Processing of
paper forms
Printing of
paper forms
Storage of
paper forms
Retrieval
Paper forms
FrontOfficeBackOffice
  ID of client
  Collection of client info
for completion of
authorisation form
  Print out of form on A4
paper and receipt on A5
chemical paper
  Signature of receipt of
A5 by client and
operator
  Delivery of receipt in A5
to client, signed
  Processing of request of
client for documention
  Retrieval in branch (in
presence of client for
recent docs
  Retrieval of forms
(Format A4 + Receipt in
chemical A5 format)
  Distribution to branches
  Stocking in branches
  Data entry into system
of info provided by
client
  Management/
maintenance of
mechanical printers
  Daily creation of Cash
envelop with A5
receipts and A4 forms
  Periodic creation of
boxes for storage
  Sending of request to
central storage
  Manual retrieval of file
  Transfer of document to
branch
21 43

The slips of Deposit/Withdrawal
Processing of
paper forms
Printing of
paper forms
Storage of
paper forms
Retrieval
Paper forms
Storage of electronic
documents and substitute
archiving
Authorisation for
the execution of
operation
POTENTIAL BENEFIT
ADOPTION BYALL 33,000 BRANCHES PRESENT
IN OUR COUNTRY
~ 150
Million €/year
21 43

Bank account contracts
  Document collection
from the client for ID
(Fiscal code/SS#,
Identity card, ...)
  Photocopy of all
documents
  Creation of Client
dossier with copies of all
documents
  Paper storage of client
dossier
  Entry into the system of
the New Account Request
  Printing of request on
pre-printed A4 paper (3
copies
  Collection of client
signatures on request
  Controls (Anti-money
laundering, title
searches, ...)
  Printout of control results
and data entry into client
dossier
  Passing of paper dossier
for collection of internal
approvals
  Placing of signature by
various internal
approving parties
  Stipulation of contract
with underwritten
signature of client and
authorised proxy
  Restitution of one
underwritten copy to
client
1 2
3
4
  Storage of one signed
contract copy in client
dossier
  Transfer to central storage
of dossier (guarantee
storage fro 10 years from
the relationship
termination)
  Storage of third signed
contract copy in the
branch (fireproof
armoured storage, ...)
5
Acquisition of
Client
documentation
Request to
Open account
Internal controls
and approvals
Storage of
contract
and dossier
Contract
stipulation
1 2 3 4 5
21 43

Acquisition of
Client
documentation
Request to
Open account
Internal controls
and approvals
Storage of
contract
and dossier
Contract
stipulation
1 2 3 4 5
  Document collection
from the client for ID
(Fiscal code/SS#,
Identity card, ...)
  Photocopy of all
documents
  Creation of Client
dossier with copies of all
documents
  Paper storage of client
dossier
  Entry into the system of
the New Account Request
  Printing of request on
pre-printed A4 paper (3
copies
  Collection of client
signatures on request
  Controls (Anti-money
laundering, title
searches, ...)
  Printout of control results
and data entry into client
dossier
  Passing of paper dossier
for collection of internal
approvals
  Placing of signature by
various internal
approving parties
  Stipulation of contract
with underwritten
signature of client and
authorised proxy
  Restitution of one
underwritten copy to
client
1 2
3
4
  Storage of one signed
contract copy in client
dossier
  Transfer to central storage
of dossier (guarantee
storage fro 10 years from
the relationship
termination)
  Storage of third signed
contract copy in the
branch (fireproof
armoured storage, ...)
5
21 43

Acquisition of
Client
documentation
Request to
Open account
Internal controls
and approvals
Storage of
contract
and dossier
Contract
stipulation
Acquisition of
Client
documentation
Request to
Open account
Internal controls
and approvals
Storage of
contract
and dossier
Contract
stipulation
POTENTIAL BENEFIT
ADOPTION BYALL 33,000 BRANCHES PRESENT
IN OUR COUNTRY
~ 230
Million €/year
21 43

The main questions to ask to knowledgeably
tackle Digitization
Where a signature is used today, is it needed?
If needed, who needs it?
(e.g. internal regulation, Legislators)
If a signature is not needed, what is the cost of
maintaining this “hard copy” process?
How does one get all the players who will be impacted by
the innovation ensuing from Digitization involved?
(clients, suppliers, PA, citizens etc.)
And for what purpose?
(e.g. control, identification, enforceability against
third parties)

Daniele Marazzi – daniele.marazzi@polimi.it
Osservatori ICT & Management
School of Management – Politecnico di Milano
Digital Italy: it is possible!
Dematerialization: a snapshot
Osservatorio Fatturazione Elettronica
e Dematerializzazione
Customer conference 2012
Modena - 21 Settembre 2012

Evento 21 settembre 2012

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