The Bolero Experience

1. The Bolero Experience Alan AsayBolero International LimitedLondon UK

2. Overview • What is the Bolero System? • The Bolero System began operations exactly two years ago. What have we learned from our experience?

3. What is the Bolero System? Objectives and our role • Mission: Facilitate international trade through electronic means • Focus on trade documents • Common legal and security basis for international business transactions • Role: A trustworthy, central operator: • Trustworthy: • Disinterested and cross-industry make-up • Commercial-grade security, tracing and auditing, operational stability • Financially responsible risk-bearer • Central • Focused to a universal transactional switch/nexus

4. What is the Bolero System? Community sharing a common infrastructure Bolero users comprise a contractually based community sharing a common legal and technical infrastructure. • Technological Infrastructure Messaging Applications enabling transactions User administration and support • Legal Infrastructure • Bolero Rulebook • Community self-governance • Service contracts Seamlessly woven together.

5. What is the Bolero System? Who does what in the Bolero System? • Bolero International • Who’s in: For-profit shareholders • Roles: • Trustworthy central operator • Developer • Sales and marketing • Bolero Association • Who’s in: All users are members • Roles: • Bind all users to Rulebook • Rule-making • Discipline and eligibility • Users • Global: Many legal systems, languages, cultures • Trade: Our value lies in facilitating trade Organisation

6. What is the Bolero System? Why do you need a trustworthy, central operator? • Setting a system-wide security baseline: • Ensure proof of authenticity; enable attribution • Provide for confidentiality if desired • Commercial-grade messaging • Proof of receipt • Logging, tracing, and auditability • Functional equivalents for difficult transactions, e.g.: • Bills of lading through central Title Registry • Electronic document: Receipt, contract of carriage • Negotiability through Rulebook and database recording transfers • Payment instructions (comparable to bills of exchange)

7. What have we learned? 1. Implementation isn’t easy • Implementing an actual conversion to paperless trade is more difficult than we anticipated. • Reasons why: • Assembling trade chains requires a driver willing to: • Enable suppliers also to convert to paperless documents • Manage risks and uncertainties of outmoded (but improving) legal and technical infrastructure • Evolving regulatory schemes in developing countries • Public-key certificates • Encryption continued…

8. What have we learned? 1. Implementation isn’t easy • Why implementation has been difficult: • Detailed issues of functional equivalence • Major benefits come from system integration, not just conversion to paper (i.e. it costs even more!) • Macro-economic slow-down • Chicken-and-egg issues with software partners • Long learning curve • Secure messaging: Digital signatures, acknowledgements • XML documents • Legal culture clash, e.g. English-law concepts in the German legal mind

9. What have we learned? 1. Implementation isn’t easy • Problems being solved: • Assembling complete trade chains • Detailed equivalence issues • Business case for full integration • Interface software • Long learning curve • Continuing problems: • Encryption regulation • Macro-economic unease on the part of would-be implementers

10. What have we learned? 1. Implementation isn’t easy • Successes in spite of challenges: • Coffee from Colombia to EU, Japan • Large European retailer • Metals • Sales have been remarkably strong. • Lots of prospects are waiting in the wings to see how these projects go.

11. What have we learned? 2. What is local, what is central • Enrolment: • Proof of corporate existence and identity • Proof of agency • Initial digital signature key generation and certification • A barrier to entry into the Bolero community. • Cause: Enrolment is a local process but we are a central organisation. • Solution: Go to a local enrolment agent.

12. What have we learned? 3. The basic principles remain true. • Paperless trade is faster and cheaper. • National Federation of Coffee Growers of Colombia found: • Investment paid back in 12 months. The rest is clear savings. • Faster response time saves their customers money—just-in-time ordering and shipping with fewer snafus. The Federation can compete more effectively. • The Federation get paid more quickly—less float while the bank waits for documents to arrive. • Case study at www.bolero.net/decision/casestudies/. • Digital information security is better than paper. • Digital signatures provide greater assurance of authenticity. • Encryption makes possible a high degree of confidentiality (subject to some restrictions in a few countries)

13. What have we learned? 3. The basic principles remain true. • Private-sector infrastructure responds effectively to change. • Economics, technology, and globalization have dramatically increased the pace of change. • Laws and treaties change too slowly. • A self-governing community of interest is the key to coping with rapid change. • The technology is ready. The greater problems involve people. • Most of our implementation difficulties were people problems. People love ideas but hate change. • These get better with time.