July 2008

PEPPOL Consortium, e-Procurement in European Union

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In order to support Member States of the European Union and the private sector in implementing its  e-Procurement vision, the European Commission has launched a pilot project called Pan-European Public Procurement Online (PEPPOL). It  facilitates the electronic cross border exchange of orders, invoices, and catalogues. It also includes the re-use of company information required for bidding as well as the mutual recognition of electronic signatures.

Role of Public e-Procurement in the European Union

Overall governments are the largest buyers of services in the European Union. Total public procurement in the EU is estimated to be around 16% of the Union’s gross domestic product (GDP) or 1,500 billion. This means public e-Procurement is an important issue in the EU.

e-Procurement systems are already functioning in several Member States. However, many public administrative bodies lag behind industry in electronic data exchange with their suppliers.

There is a lack of common standards, which is a major obstacle for companies to participate in the public procurement process.

Moreover, the lack of harmonised electronic procurement and invoicing business processes is an additional administrative burden for companies. This affects suppliers of governments which operate cross-border as well as suppliers dealing with different governmental organisations in the same country. Electronic public procurement processes have to be lean and as much as possible harmonised across all governmental institutions in Europe.

Europe´s  Vision

Major changes in the way European governments are dealing with their suppliers are on the anvil. It is sure that those changes are going to happen, there is a political will and initiatives have reached a critical mass.

In 2006, EU Member States agreed to enable public administrations across Europe to carry out 100% of their procurement electronically and ensure that at least 50% of public procurement – above the legally set threshold values – is indeed carried out electronically by 2010.

Some Member States have already implemented legislation, which makes the electronic submission of tenders or invoices mandatory, other member states are preparing such legislation.

The broader vision is that any company in the EU can easily communicate electronically with any EU governmental institution for all procurement processes.

It is important to understand that e-Procurement is not limited to the pre-awarding phase, it covers  the electronic exchange of all documents related to the various phases of the public procurement process such as tendering, bidding, ordering and invoicing.

The implementation of this vision requires following actions:

  • Governments and their suppliers must adjust their business processes and modify their IT-systems.
  • Standard software suppliers must modify their software and adhere to common standards for the public sector in the EU.
  • Governments may have to adopt new laws to ensure that all electronic processes are as easy as possible and legal barriers are removed.
  • Governments have to initiate appropriate actions to encourage supplliers to implement the new electronic processes quickly.

The Role of the PEPPOL Consortium

In order to support Member States and the private sector in implementing this vision, the European Commission has launched a pilot project called Pan-European Public Procurement Online (PEPPOL).

The pilot project builds on current e-Procurement activities at the national level. It  facilitates the electronic cross border exchange of orders, invoices and catalogues. It also includes the re-use of company information required for bidding as well as the mutual recognition of electronic signatures.

The Strategy of the PEPPOL Project

Dissemination and consensus building is of key importance to the success of the project and therefore, at the centre of its strategy. The project and its results have to be accepted and well-known by all key players in the EU.

A core team of EU Member States is involved in this project in order to ensure that the development of new technologies in different countries does not create new barriers to the single market. This core team comprises of countries such as Austria, Denmark, Finland, France, Germany, Hungary, Italy and Norway.

The current project partners are governmental organisations, like central purchasing agencies or Ministries of Finance in Members States.

The project is open to interested parties. At all stages, the work will be carried out openly to facilitate consensus on the results by public administrative bodies, their suppliers, the software industry and standardisation bodies. All reports will be made public and the software solutions will be published under the EUPL license (European Public Licence) or equivalent. This will facilitate acceptance of standards by all countries and enable an effective crossborder e-Procurement service.

In its first phase, ministries and public authorities will be the most active. Public authorities from all Member States and Associated States are encouraged to join the reference group, which currently comprises the project partners as well as Belgium, Bulgaria, Croatia, Iceland, Estonia, Luxembourg, Netherlands, Romania, Scotland, Spain, Sweden and Switzerland. A first consultation meeting has already taken place on the 11th of June 2008.

Software companies are also invited to monitor the development and prepare their own product in view of the expected outcome. Interested software suppliers are invited to participate in a technical advisory group to get all the information, how to connect to the PEPPOL infrastructure and provide their input to the design of the specifications. The first meeting is planned in the 4th quarter of 2008.

Likewise, coordination with all projects active in the area of e-Procurement and e-Invoicing is considered to be very important to avoid duplication of efforts and share experiences. The PEPPOL project has a special responsibility in this respect, because of its size and the project partners involved.

For each initiative or project relevant to the PEPPOL project, a liaison manager has been appointed and other initiatives and projects are invited to do the same.

Work Plan

The project has 3 main phases:

  • Q2/2008 – Q2/2009: Requirements and design
  • Q2/2009 – Q2/2010: Implementation
  • Q2/2010 – Q2/2011: Pilots running

It will focus on in depth development of the key blocks/enablers to the interoperability solution while ensuring a red thread along the project course.

The major topics are:

Infrastructure (interoperability layer): The activity is focused around architectural work in order to define the technical interoperability layer and development activities required to provide an operational e-Business infrastructure to the PEPPOL project. A proper operational infrastructure at a very early stage is believed to be a key success factor to the PEPPOL project.

e-Signature: The vision is to make it possible for economic operators in any European country to utilise the e-Signatures of their own choice when submitting offers electronically to any European public sector awarding entity. That means that based on a comprehensive review of national activities, PEPPOL will select some alternative procedures for use of signatures and describe them in common specifications. The initial focus will be on simple procurement scenarios where one economic operator is the signatory. More complex tasks like submission of a certificate signed by the issuing body and tender documents signed by different parties will also be studied.

Virtual Company Dossier (VCD): Economic operators and awarding entities in any European country will be able to use electronic means to submit business attestations and certificates normally required for the participation in the public procurement procedures when submitting offers electronically to any European public sector awarding entity.

e-Catalogue: This work-package will implement solutions that will allow economic operators in any European country to provide product information, descriptions and prices in electronic catalogues as basis for an offer. Specifically, it will define a set of standard attributes to be used independently of category, and a standardised pan-European meta-catalogue structure, for an identified set of categories, i.e. the identification and sharing of a data structure to represent supplies and services through the unambiguous description of their commercial and technical characteristics.

e-Ordering: Solutions will be provided to demonstrate that electronic orders and related documents such as order notification and advanced shipping notices can be exchanged between awarding entities and economic operators across EU member states, and thus be received into respective business systems without any ‘manual action.’  Furthermore, the e-Ordering solution will have its basis in electronic catalogues ensuring that orders are based on agreed contract prices and accordingly reduce the need for further clarification in the purchase to pay process.

e-Invoicing: Economic operators in any European country will be in a position to send invoices electronically to any European awarding entity. The deliverables will include aspects such as software building blocks that will lower organisational, semantic and technical barriers; benchmarking and good practices will be highlighted and communicated.

Benefits

The implementation of  Europe´s  vision promises huge benfits:

  • Both governments and their suppliers will benefit from more efficient, harmonised electronic procurement and invoicing processes.
  • The initiative will also be a catalyst for introducing
    e-Business in companies and for speeding up the overall uptake of new technologies.
  • It is anticipated that the use of  e-Procurement will save billions of Euros not only by reducing administrative burden but also by increasing competition and transparency.
  • Tax-payers will ultimately benefit from the increased efficiency of the procurement processes and the savings achieved through better competition.

*Disclaimer:  Opinion expressed in this article is the personal opinion of the author.

ICICI Bank Launches Visa e-Marketplace

Visa, ICICI Bank and Elcom Systems Ltd announced the launch of the Visa eMarketplace, an online portal that connects sellers and buyers of commercial goods and services. Visa eMarketplace makes it possible for businesses in India to conduct the entire procurement and payment transaction electronically and efficiently over the internet using a Visa Purchasing Card. This is the first Visa eMarketplace service to be launched in Asia Pacific.

Santanu Mukherjee, country manager, South Asia, Visa International, said, “Visa eMarketplace is designed to be an efficient, seamless and transparent procurement system for the commercial and government sectors. It helps to eliminate the need for paper-based purchase orders and approvals. “

Visa eMarketplace offers a secure online option that builds on the existing Visa Purchasing Card platform. Sellers can give buyers easy access to their product catalogues while buyers can have better understanding and management of their inventories, for example, by providing purchase analysis to help in the planning of expenses. The records provided also help ensure detailed tracking for audit purposes. Sachin Khandelwal, Head – Cards Product Group, ICICI Bank said, ” Visa eMarketplace are designed to offer corporates and government organisations a robust, transparent, more economical and secure procure-to-pay solution. Corporates and government departments can use Visa eMarketplace to make purchases online from their suppliers and use ICICI Bank Purchase Card to make payment. “

William Lock, Chairman, Elcom Systems Ltd added, “The combination of the Visa payment card with Elcom’s world-class eProcurement Platform improves the procurement process in any organisation.”

Visa eMarketplace is an eProcurement service that does not require participating organisations to invest in hardware, software or continuous upgrades. Visa eMarketplace is a secure system that uses Secure Sockets Layer (SSL) data encryption to help ensure that information exchanged within Visa eMarketplace is encrypted to prevent unauthorized disclosure.

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