PIDX-Enabled eBusiness for All

So far, adoption of B2B electronic transactions proved to be poor and limited to large corporations, due to the lack of solutions matching the needs of midsize to small organisations. Such solutions now exist and can help the O&G industry to roll out standards like PIDX and increase the productivity and the efficiency of all trading partners.

The problem
A typical large international company has hundreds, or in some cases thousands, of people working on invoice processing. The work that they do is either routine, operational work, such as keying in, copying or filing, or it is solving any of the many types of problem that always occur with paper invoices. Whatever the work, it can be largely eliminated or automated by the use of appropriate IT solutions. The improvements that can be made are dramatic - best practice companies pay over 95% of their invoices on time and without any human intervention.

One problem that companies face when trying to achieve these levels of performance is what to do about suppliers that send only small numbers of invoices per year. Oil companies typically have along "tail" of perhaps thousands of these medium- and low-volume suppliers. Any solution needs to involve minimal cost for the supplier - if it is too expensive, the supplier will just not be interested. The aim should be to eliminate cost from the supply chain, not just to transfer it to the supplier. Another criterion that a solution must meet is that the buyer must be able to gather full details of each transaction for input to its management information system (MIS).

Possible solutions
There are several options available to deal with invoice automation, the main ones being

• procurement cards
• supplier direct access to the buyer's ERP or procurement system
• self-billing, effectively eliminating the invoice
• automated e-procurement link

The first three of these options have significant drawbacks. When procurement cards are used, the buying company can lose control over the supplier selection and the specification of goods purchased. This can be a critical problem where safety items or pressure containing components are concerned. There is also in most cases limited information provided by the card provider and so a reduction in detail in the buyer's procurement MIS.

Supplier direct access to the buyer's ERP or procurement system is generally attractive to the buyer, although good firewall protection is necessary. From the supplier's point of view, though, it is of no use at all, as at best a separate direct connection must be established with each customer and at worst each transaction has to be double-keyed - once into the supplier's own system and once into the customer's system. This is really justified only if some other added value services are provided, not yet available through other means, such as inventory level access for supplier replenishment of stock.

The third option, self-billing, is very attractive, in that it eliminates the invoice transaction completely, thus taking cost right out of the supply chain. However, it is really only suitable for suppliers with frequent transactions, where the investment in setting up the system can be justified. It is not a solution for the large number of suppliers that make up the low-volume tail.

The preferred solution - e-procurement - and its difficulties
In principle the automated e-procurement link meets all the requirements of both buyer and supplier. It provides secure, automated, controlled exchange of a range of documents, from system to system with little or no manual intervention. It speeds up document transmission, reduces or eliminates errors and saves manual effort. Internet marketplaces or exchanges are now mature and deal effectively with routing and translation of technical standards, whilst often also offering other added-value services.

Until very recently, though, there have been substantial obstacles to overcome, especially where small suppliers are concerned. Setting up full integration, including mapping documents and technical standards, and carrying out test has been expensive and time-consuming. These costs have not been justified for low-volume suppliers as the savings per transaction have not been sufficient to give payback on the investment. Furthermore, sophisticated IT skills have been required, skills that are not available in the small business and have to be purchased form outside.

Finally, and critically for the low-volume supplier, different customers require documents to be transmitted according to different technical standards, so the supplier may have to go through a similar, but different, exercise several times to meet the needs of its various customers. Even the establishment of oil industry standards like PIDX is not a complete solution, because very few companies supply only the oil industry, and so will have to comply with other industry and customer requirements. And to make it even more complicated, each O&G company using PIDX has its own flavour - the implementation of the standard being slightly different from one player to the other.
e-procurement benefits without the drawbacks with Amalto solutions
Until recently, these difficulties have caused large buyers to focus their e-procurement efforts on the high-volume suppliers, accepting the costs and difficulties of paper invoices from their long tails of low-volume suppliers or forcing them to manually enter their invoices on supplier portals.

This position has changed dramatically since Amalto Technologies now proposes a range of solution to fulfil the needs of both medium volume suppliers (with b2box) and small volume suppliers (with b2een).

b2box, for integrated B2B
Amalto's b2box is a packaged solution that makes it possible to quickly set up business-to-business electronic transmission of documents immediately, at a competitive price point, without internal IT expertise. For an organisation willing to set up automated B2B transactions, b2box is delivered ready to use, either as standard licensed software, or a software appliance or on-demand (Software as a Service). For large organisations, it can also be used to integrate more than one back-office system to the B2B connections. It is ideal for the medium-volume supplier who has to establish B2B relationships with a variety of customers, using different technical standards and/or marketplaces.

Amalto's b2box comes pre-configured to handle all the most common document types and message standards and so can go live within days. Where necessary, Amalto will create custom adaptors to the client's ERP system, with a typical lead-time of only one month from start to go-live.

The O&G b2box is PIDX-enabled and ready to exchange business documents with the largest players in the O&G Industry, either directly (for example Chevron, Conoco Phillips...) or via hubs/marketplaces (for example Devon, Ultra Resources, XTO, Oxy Permian and many others via DO2...). It natively supports widely adopted industry processes like sending PIDX invoices and scanned field tickets altogether, using AS2 or RNIF protocols.
With an O&G b2box, a company can be live with electronic exchanges in days.

b2een, the easiest and cheapest way to exchange PIDX documents
For the low-volume suppliers, Amalto's latest offering, b2een, is the perfect solution to get trading in fifteen minutes or so with no hardware installation, no IT project and minimal cost.

b2een enables secure document exchange with approved trading partners, within public or private communities or groups (all messages are digitally signed and encrypted).

b2een is definitely the most easy-to-use and affordable solution for a supplier to send PIDX invoices and scanned field tickets.

Documents can be posted on b2een in one of several standard formats, which are almost certain to be supported by the supplier's current systems. This means that the first document can be transmitted as soon as the registration process is completed.

Chevron U.S.A. Inc has selected the b2een solution to enable exchanges of electronic documents with suppliers across Chevron businesses.

Chevron' suppliers can now use b2een to post Excel formatted invoices (and related scanned field tickets) to Chevron. At the other end, Chevron B2B gateway receives PIDX Invoices and attachments that are automatically integrated into Chevron's e-procurement system.
A Chevron supplier testifies: "Prior to using b2een, we used to spend a lot of time in Chevron's e-procurement Portal, manually keying in invoices and attaching field tickets. With b2een, the process is really straight forward and highly valuable for us".

A solution for midsize O&G Operators
Midsize and small suppliers are not the only ones struggling with manual processes as far as invoicing is concerned.

The vast majority of midsize operators are not equipped to receive electronic invoices. They would benefit a lot from a solution that would allow them to collect electronic invoices from all their suppliers, the large ones like Schlumberger, Halliburton or Baker Hughes (which are already able to send e-invoices) as well as the smaller ones.

Amalto provides a solution combining a b2box (for connectivity to large suppliers and back-office system integration) and a b2een Community (for the enablement of all other suppliers regardless of their size) that is a perfect fit for midsize operators.

The way forward for medium- and low-volume suppliers
Of the various ways of managing invoices (and other business documents) Internet transmission is the solution that offers most benefits to both buyers and sellers. Until very recently, however, the costs of setup have limited its use to those relationships where relatively high volumes of transactions are exchanged. Amalto's b2box and b2een solutions now make it possible to bring the benefits of e-business even to those relationships where only medium and low volumes of transactions are exchanged.

Richard Wheeler, former Procurement Systems and Processes Manager for the Shell Group, and past chairman of the PIDX Europe sub-committee of the American Petroleum Institute

Emmanuel Thiriez, Amalto Technologies, EVP Operations