Doing business with government agencies at all levels in industrialized countries can be both lucrative and frustrating. While governments often spend money in large amounts, most agencies -- at least the honest agencies -- operate under strict rules for transparency and fairness that require submitting detailed proposals meeting strict specifications with voluminous documentation.
Governments also specify and standardize their procurement rules at the national level in most countries, and European countries are no exception. For companies doing business in multiple European countries, however, the various national rule sets become a barrier rather than an enabler, which would seem to violate the original purpose of the EU. Those barriers can become even more formidable when companies need to support different electronic formats and specifications in each country where they hope to do business.
To break down these e-business barriers, a consortium of 11 countries in the EU -- Austria, Denmark, Finland, France, Germany, Greece, Italy, Norway, Portugal, Sweden, and the United Kingdom -- are developing agreements and standards for the exchange of business information between contracting authorities and their suppliers. The project, known as Pan-European Public Procurement OnLine or PEPPOL, is part of a larger European Commission effortto make better use of IT and communications to foster innovation, particularly among smaller business enterprises.
Communities of transactions
PEPPOL says it wants to supplement, not replace, existing national and commercial trading networks, but still make it possible for companies large and small in the European market to exchange documents without any previous bi-lateral setup or technical agreements. The initiative organizes its exchange standards into what it calls communities, with four different sets of transactions: Pre-Award eProcurement, Post-Award eProcurement, Transport Infrastructure, and eSignature Validation Infrastructure.
The pre-award specifications cover the tendering process with two main elements -- Virtual Company Dossier and eCatalogue. The Virtual Company Dossier makes it possible to request and submit standardized company information and qualifications such as candidate statements, certificates, and endorsements. PEPPOL has an XML schemadedicated to the Virtual Company Dossier, with extensions supporting the Universal Business Languagefor message payloads.
eCatalogues tell contracting authorities about goods and services supplied under a specific contract, or updates made available on a regular basis according to terms of contracts. These transactions can be part of both the tendering (pre-award) and purchasing (post-award) processes.
The post-award model is something of a misnomer, in that it covers a wide range of business functions, including catalogs, orders, invoices, and credit notes. PEPPOL defines the choreography of the electronic document exchange and offers a semantic document model covering content and rules for the transaction, as well as identifiers and code lists. The semantic models are mapped to the XML-based Universal Business Language, and UN/CEFACT syntaxes.
PEPPOL`s transport infrastructure is a messaging framework that can be used for pre-award transactions, but is required for post-award processes (PEPPOL is renaming the infrastructure as "eDelivery"). Trading partners connect to the infrastructure through PEPPOL access points, which are gateways to the network, provided by government agencies and private companies. There are 18 such access points now, with another 16 access points in the works.
The transport infrastructure acts as a secure value-added network containing registries with data and metadata for the network participants to authenticate and assure delivery PEPPOL transactions. The infrastructure connects the PEPPOL access points to which senders and receivers make their own connections.
PEPPOL uses electronic signatures to authenticate senders and assure the integrity of messages flowing through the transport infrastructure. The initiative takes advantage of a network of federated services, that can validate qualified signature certificates from trusted certification authorities. PEPPOL uses the XML Key Management Specificationissued by the World Wide Web Consortium and OASIS’s Digital Signature Servicesto support its e-signatures.
An abundance of pilots
PEPPOL is officially a pilot project, but that now includes 22 different demonstrations across Europe. The initiative also appears to be positioned for growth beyond the €2.2 billion ($US 2.9 million) European procurement market.
One direction of growth is into private sector purchasing. The international health technology company PerkinElmer, based in Waltham, Massachusetts, takes part in an electronic invoicing demonstration and has become an advocate of sorts for the program. A company representative tells PEPPOL...
Having one standard for the public sector in EU would mean that we would send 30 percent of our invoices electronically with one standard. We, as suppliers, are looking forward to seeing this happen, and we can easily see PerkinElmer actively promote or even impose the public standard to our private customers approaching us for e-Invoicing in order to reduce overhead, costs, and variances in our current invoicing processes.
The PEPPOL transport infrastructure also expects to get traffic from more than procurement transactions. One of the reasons the name of the infrastructure is being changed to eDelivery is to help make it more accessible to other EU-funded projects.
But even without these expansions, PEPPOL can make an impact on its own. PEPPOL says less than 5 percent of total public procurement budgets in Europe are now awarded electronically, and only 1.6 percent of contracts are filled by suppliers in other EU member states. If electronic procurement is adopted by all European contracting authorities, says PEPPOL, estimated annual savings could exceed €50 billion ($US 65.3 billion).
Alan Kotok is editor and publisher of theScience Businessnews blog, and author, with David Webber, ofebXML: The New Global Standard for Doing Business on TheInternet(New Riders, 2001).