I don’t believe that invoicing is a standalone business process. One could argue that Accounts Payable (A/P) or Accounts Receivable (A/R) functions are independent processes. However, even A/P and A/R are critically linked to upstream processes such as a contracting, purchasing and receiving in the physical supply chain as well as downstream processes such as payments, factoring and cash management in the financial supply chain. Consequently, I think that the electronic invoicing market that we describe as independent today will cease to exist five years from now (early 2016).
Instead, I think e-invoicing will be consumed by four broader business models, each of which will provide a scope of services much beyond e-invoicing:
- Business Process Outsourcing – firms that will assume full responsibility for a company’s collections or accounts payable activities through an outsourcing engagement that involves transfer of assets and personnel. Example vendors might include Genpact, Accenture and Wipro.
- Procure-to-Pay Applications – technology vendors which provide a full lifecycle approach of contract lifecycle management, sourcing, e-procurement, spend management and e-invoicing. Example vendors might include Ariba, Emptoris and Basware.
- Transaction Banking – financial institutions, primarily banks, will provide e-invoicing as part of a larger portfolio of financial supply chain services. Examples will include closely-linked transactions such as foreign exchange hedging, payments processing and supply chain finance. Transaction banking vendors offering these services might include Citi, HSBC and Deutsche Bank.
- B2B Integration Technology – vendors will offer e-invoicing services as one of many e-commerce capabilities (e-catalogs, e-customs, ASNs, barcode labels, e-payments) that enable automation of the supply chain. B2B integration vendors might include GXS, IBM and Crossgate.
What will happen to the various e-invoicing providers? The big vendors will grow quickly until they are acquired by a larger service provider for a premium. The smaller vendors will merge with one another to attempt to gain scale. As with any market, there will be a subset of vendors that will not grow fast enough to meet their business plan. These less successful vendors will ultimately become insolvent then sell their assets and customers to another vendor.
More thoughts on how the market will evolve in a future post.
2 Responses to “2016 Scenario – The E-Invoicing Market Ceases to Exist”
Thanks for the comment. More posts on e-invoicing to come soon.
Great article, it’s really helped to clear up one or two things that I’ve been looking into. Keep up the good work.