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PEPPOL perspectives on the European eProcurement landscape

by Roman Weber created on 30/07/2012 03:05

As the initial PEPPOL project winds down and the OpenPEPPOL association is being established as a market driven initiative, André Hoddevik – PEPPOL Director and the Secretary General of the OpenPEPPOL association under establishment - provides some insight into what PEPPOL has achieved and its relevance to the eProcurement landscape in Europe.

PEPPOL.EU: Why was PEPPOL launched and what is its role in supporting the various phases of eProcurement in Europe?


When Member States and associated countries like Norway in 2005 agreed on the Manchester declaration, setting ambitious targets for e-procurement by 2010, the main focus was on the process leading to the establishment of contracts with public sector entities (pre-award). This was also the initial focus for the EC work initiated in 2006 on setting up a large scale pilot project (Pilot A) on European wide public e-procurement, that led to the establishment of the PEPPOL project in 2008. However, the scope was extended to also include ordering and invoicing (post-award) in the work programme/call for proposal establishment process.

This means that the PEPPOL project both has targets for supporting pre-award and post-award procurement processes. Our most important achievements have been made in post-award; here we have delivered the basis for a four corner model, enabling technical, semantic, process and legal interoperability not only for cross border trade, but also available for connecting e-procurement communities within one country/region (connecting the “e-procurement islands” traditional three corner model e-procurement solutions tend to create). Unnecessary to say, the “cross-community-border” approach gives a better business case for most implementers compared to a sole focus on a cross-national-border approach. In Norway alone, 25 service providers have established PEPPOL compatible access points in order to exchange PEPPOL compatible invoices with each other on behalf of their public and private sector customers. Many of these service providers operate in the Nordic market, some in the European. Most of the invoices exchanged will be between Norwegian suppliers and their customers, but some will also come from other countries.

PEPPOL.EU: How would you respond to those market players who say that PEPPOL is ‘behind the curve’ or has re-invented the wheel in some respects?

Before taking the role as lead in the PEPPOL project, I was responsible for the Norwegian e-procurement program which has been deemed rather successful also in a European context. It is very difficult for me to see that what I am involved in now is the same as I was involved in a decade ago! Back in 2002, my team was challenged on the choice of a single solution as the Norwegian e-procurement platform, where both public sector buyers and their suppliers needed to enter into a business relationship with the same solution provider (a three corner model).

The alternative, some technologists claimed, was to use the internet to exchange business documents just like GSM was used for connecting phone calls and roaming agreements made calls possible across borders (although expensive).

We looked into this and found that the technology was indeed available (although a bit immature). However, we also found that there were no recognised standards for what information content to exchange (semantic interoperability) or what choreography messages should follow (process interoperability). There was a number of business message formats in use (challenging the technical interoperability) - conversion could of course be achieved (delivered by the market), but only at a substantial cost. Last, but not least, there was no common legal framework for entering into “roaming agreements” between service providers (which is one facet of legal interoperability); making it a cumbersome and costly process to exchange business documents between a buyer and seller using different solutions/service providers (a four corner model).

We saw the benefits of a four corner model as a driver for competition among solution and service providers, which could drive prices for doing e-procurement down. We also saw such a model as an enabler for innovation of procurement processes, as exchange of business documents would become trivial (like being able to talk with someone through a GSM phone) and technology development and competition would lead to the development of new types of services supporting the procurement process (somewhat like the emergence of smart-phones and applets have changed the way you use your phone).

We also saw that standards were missing, and since 2002/03 we have been involved in (e-)procurement standardisation (having the “e” in brackets, as this is really about procurement process standardisation) at the Scandinavian, European and global level, representing the (potential) users of procurement standards.

PEPPOL.EU: What in your view is PEPPOL’s remit in terms of facilitating cross-border trade and how can it be successful while ‘protectionist’ trade barriers still exist?

European markets for cross border trade exist, also towards public sector customers. It is not a big market, but even a small percentage of 2.400 billion euro purchased by the public sector throughout Europe annually represents a significant value! The players in this market are not a homogenous group; they can be SME niche suppliers of advanced products that either have to expand their product range or sell their products in more markets; they can be suppliers operating in a cross border region where proximity, language and culture is no obstacle, but multiple ways of doing business electronically could be; or they can be multinational companies striving to address Europe as one market. In the latter case, they most probably have a sales representative in each country, participating in tenders and selling according to national regulations and traditions, but they often also have a European wide back office solution where they face the challenges of multiple standards and processes for ordering and invoicing every day.

Protectionism exists at many levels, from municipalities buying from the shop at the corner to countries favouring national industry. National public procurement legislation based on EU directives cannot prevent this completely, but the legislation helps levelling the playing field so that over time we get a functioning inner market. eProcurement is another enabler that could facilitate an inner market, but only if we avoid establishing isolated national or regional “eProcurement islands”. In an inner market facilitated by interoperable eProcurement solutions, cross-community and cross border trade will happen when there are competitive advantages to be exploited.

To conclude, my main message is to say that the PEPPOL project – already at this stage – is a considerable success as an enabler for cross-community procurement – connecting the “eProcurement islands”. How big a success the PEPPOL results will be in the future is very much up to the procurement professionals throughout Europe; if they think market will deliver the best interoperable solutions without them setting the requirements, PEPPOL will be in trouble. If they understand their position and the benefits of a four corner model and ask for PEPPOL-enabled solutions when they are buying solutions or services to support their procurement processes, interoperable e-procurement will be a reality, the many (well functioning) “eProcurement islands” in countries both within and outside the PEPPOL consortium will be connected and PEPPOL will be a big success.


For more information, please contact:
André Hoddevik, PEPPOL Director
Enrique Vich, PEPPOL PR Director

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