Time to drive standardization - ISO and XBRL – for e-invoicing and e-banking Bo Harald

1. 22nd XBRL International Conference“Sharing Economic Information in a Global World: the XBRL Contribution”17-19 May 2011Brussels, Belgium Time to drive standardization - ISO and XBRL – for e-invoicing and e-banking Bo Harald Head of Executive Advisors Tieto

2. 1. Much more need for standardization2. Real Time Economy program findings3. E-Invoicing – ISO20022 is the global key4. Enterprise financials to banks - XBRL is the key

3. 1. Drive standardization – why? Many reasons: • Costs down > business process automation • Service levels up > interoperable e-transactions and reports • Risks down > standards reduce breakage and fraud risks • From harmonized payments to x-EU harmonized extended payments >far more important for the Single Market than SEPA • Financials into Real Time • Sustainability >standards speed up digitalization • Global Networked economy >expontially growing need

4. Networked economy – radical change in the way companies and public sectors work PAST PRESENT End-customer Sales Delivery Supplier Supplier Finance Partner HR Customer Company R&D Potential End-customer

5. Tieto and m2m m2m machine 2 machine needs standards Hans Wahlquist Head of Service Area Industrial R&D Tieto, Global Service Line Hans.Wahlquist@tieto.com

6. Obvious needs for much wider use of standards – why does it not happen? Several reasons: • Small benefits for indivual enterprises (huge for society at large – does not seem to count...) • Vested interest to stick to 3-corner models and proprietory standards – fear of competition • Standards competition • Lack of courage and leadership

7. Agenda • Much more need for standardization • Real Time Economy program findings • E-Invoicing – ISO20022 is the global key • Enterprise financials to banks - XBRL is the key

8. Real-Time Economy The Real-Time Economy is an environment where transactions of all sorts are digital, increasingly generated automatically and completed in real time without store-and-forward processing.

9. Vision of The RTE Program • Even the smallest enterprise will send and receive e-invoices, e-orders and other documents like Financial Reports, in structured form – in the best case without need for IT-investments or IT-skills • Documents received in structured form makes it possible for any organization to automate entire procurement processes, payments, accounting and auditing • One tool and one service agreement works for all counterparts – in private and public sectors • Harmonized and clear legal environment will exist across the EU 9

10. Motivation to move towards RTE • Europe needs to be more competitive • Declining population in working age (35 m less by 2020 –and corresponding rise in old age group) • How to maintain publicly funded welfare services? • To be more competitive Europe needs • More competitive enterprises - they grow faster, provide better jobs and pay more tax. • A more cost-efficient and better serving public sector –needs less tax and can add value • A more competent and mobile workforce • Digitalization is a key to all of these 10

11. Real-Time Economy programThe RTE program is the true Foundation for the whole Financial Information Supply Chain Full SEPA Full Value Chain Fully Integrated Accounting 1 Fully Integrated Accounting 2 Enterprise Risk Mitigation 2006 2008 2009 2010 2012

12. Fully Integrated Accounting 2 • Unified Reporting Code (URC) • Fully Integrated Payroll (FIP) • Automated Accounting (IDe-a) > XBRL to be studied as mandatory format • Automated accounting, cash flow • Estimates and VAT-reporting and payments URC IDe-a FIP

13. The RTE Network 13

14. Agenda • Much more need for standardization • Real Time Economy program findings • E-Invoicing – ISO20022 is the global key • Enterprise financials to banks - XBRL is the key

15. Old habits die hard • Almost all invoices (30bn/year in EU) are originally in electronic structured form • – before being printed or made into PDFs. • Only to being re-electronised at the receiving end – at considerable cost – and still losing much of the valuable data. • Instead send the invoice in its original e-form and provide SMEs with 0-Itskill and 0-investment e-invoicing generic tools

16. Key to better productivity – but also.. • Enterprise competitiveness can be improved (Finnish Federation of Industry: 2,8bn/year, Deutsche Bank Research: 54bn – EU: >250bn) Which action could be even nearly as important? • VAT-gap can be reduced efficiently (966bn business case in EC Green Paper PWC-report) • Public sector productivity can be increased (procurement, payments, tax returns, VAT administration, VAT audit...) • Liberating workforce (increasingly scarce) for more productive tasks • 300g CO2 reduction potential per transaction

17. But above all • Give a boost to the Single Market - way more than SEPA and pushing SEPA (VAT-directive, common ISOstandard ready – next step common VAT-collection model..) • And paving the way for cutting enterprise administrative cost in half (VAT-reporting, accounting and payment automation important) Small wonder e-invoicing is so high on the EU, ECB and member state agendas.

18. Major Innovation for EU Two key recommendations implemented: - New VAT directive - ISO20022 global message standard (UNCEFACT CII v2 based)

19. Standardization breakthrough – e2e Invoice Biller Service Provider Buyer Service Provider Invoice Invoice Seller Buyer Payment instruction Account statement Account statement 20022 payment 20022/11649 creditor reference 20022 XML account statement 20022 XML account statement 20022 e-invoice Biller’sBank Buyer’sBank Payment Infrastructure

20. ISO 20022 • Universal financial industry message scheme • The approach…. • syntax neutral business modelling methodology • syntax specific design rules • industry led development/registration process • financial repository on www.iso20022.org • reverse engineering approach to ease coexistence • SWIFT’s long term strategy is ISO 20022 SWIFT e-invoice Ad Hoc Group Meeting, 15 March 2011

21. ISO 20022 Financial Invoice • Usage Scenarios • Request for Payment scenario • Invoice Factoring scenario • Electronic Bill Payment & Presentment (EBPP) scenario • e-Invoicing via Service Provider scenario • Supply Chain Financing scenario • Trade Services Utility (TSU) scenario http://www.iso20022.org/ SWIFT e-invoice Ad Hoc Group Meeting, 15 March 2011

22. Cutting administrative cost in half – enabled by and driving Cloud Services Next layers – based on e-invoicing 1. Accounting fully automated and real time in SMEs 2. Automated and real time cash flow forecasts 3. Automated and real time VAT-reporting 4. Automated e-invoice financing 5. Reuse e-invoicing tool for e-orders, e-rfps, e-offers.. 6. Payment behavior integration 7. Presentment and archiving 8. Unified reporting code automated reporting from any account chart to any receiver – XBRL as future format

23. Agenda • Much more need for standardization • Real Time Economy program findings • E-Invoicing – ISO20022 is the global key • Enterprise financials to banks - XBRL is the key

24. Why standardization of Business Information? • Standardization means availability, comparability and trust • Open standards is a critical question for the acceptance of new technology. • From General Ledger to Bankers Credit Decisions in one unbroken chain of Business Information • With ONE international standard, Business Information will get it's breakthrough distributed electronically via Internet • A standardization concept will assure access to financial data for any user at any time in any environment. • To fulfill the international demand for data accuracy and the ability to meet various reporting requirements simultaneously. Standardized Business Information must be a paradigm in the Global Economy ! 24

25. Standardized Financial Information! • Automated Assurance • Available • Borderless • Comparable • Correct • Digital • Efficient • Increased speed • Reliable • Secured • Supporting decisions • Traceable • Transparent = Reduced risk enables lower capital costs! 25

26. An Efficient Trustworthy Financial Information Supply Chain, on a foundation of Open International Standards! From General Ledger >>>>>>>>>> Bankers Credit Decisions 26

27. It is created ! The future is not planned nor prognosed Thank you bo.harald@tieto.com, http://boharald.blogspot.com