What Does Interoperability Mean? (and Why Does it Matter?)
Thursday, 5 Apr 2018
Director of Network and Financing Services, Americas and APAC
Business networks handle 82% of US B2B online channel spending1
Interoperability sounds like a techy phrase, but the technology you use every day is built on this concept. Making phone calls, sending texts, paying bills online – all these tasks and more are possible because of interoperability networks.
What does interoperability mean?
At the most basic level, interoperability is a set of standards and protocols that govern how information is sent and received. It is a standardized framework that enables the easy transmission of information to parties, regardless of which network they’re using (just like how you can send a text to someone who uses AT&T even though you use Verizon).
Given the strides that organizations are making in purchase-to-pay automation today, it makes sense to look at interoperability from that perspective. Interoperability connects multiple business networks – where the bulk of US B2B online channel spending happens – allowing information to be communicated with ease. Now, let’s look at what else it can do for our organizations.
Why does interoperability matter?
In a few words, interoperability matters because it significantly streamlines business processes across the world.
Imagine for second that all your suppliers were able to send their invoice details in the exact same electronic format. It would reduce work on the supplier side of setting up and maintaining various formats. It would also mean a single integration with your accounts payable system, and the data from your largest supplier down to your smallest mom-and-pop vendor would be available in real time in a touchless manner. I know; it sounds too good to be true! But interoperability makes this possible.
Interoperability in purchase to pay also simplifies supplier on-boarding. Suppliers can continue sending invoices using the network they have today, and that information can be retrieved through the other connecting networks used by their customers. Interoperability would make sending electronic invoices as easy as sending an e-mail.
What are examples of purchase-to-pay interoperability in action?
In Mexico every accounting system can create and read the same format. This allows all suppliers, regardless of their IT resources, to send electronic data without paper. In fact, paper invoices are by and large prohibited. The European Union has created its own set of interoperability standards, PEPPOL (Pan European Public Procurement On-Line). Even Australia has built an interoperability framework through the Digital Business Council.
What about interoperability in the U.S.?
While there is no interoperability standard in the U.S. today, Basware has built a global interoperability network, with over 220 e-invoicing providers worldwide. This has helped Basware customers easily onboard their suppliers, both domestically as well as internationally. In addition, we have been actively championing a U.S. based interoperability framework.
In the U.S., the Business Payments Coalition has taken on the task of evaluating these existing interoperability frameworks, and how they could be utilized in our market. The group will be sharing their initial findings at the NACHA 2018 Payments Conference (April 29, San Diego, CA) and at the Exchange Summit (May 8, Miami, FL).
Want to learn more?
Check out Basware’s list of interoperability network partners and learn more about e-invoicing success using the world’s largest open business network.
1 Vendor Landscape: B2B Business Networks, 2017 to 2018, Forrester