Norway as a front-runner for e-procurement in Europe
Read about the Norwegian historical process to achieve electronic procurement.
As early as 1997, Norway started to use electronic tender notifications. Since then, the implementation of e-procurement has reached many milestones:
- Support for the public procurement post award processes started in 1999.
- The first live transactions took place in 2002.
- Piloting of e-tendering/pre-award public procurement processes started in 2005.
- Software as a service (SaaS) access to e-tendering tools was provided from 2007.
- A project for implementation of e-invoicing in the public sector was established in 2009.
- From July 2011 it was required that all government agencies and health authorities should be able to receive e-Invoices.
- From July 2012 it was required that all central government agencies should demand e-Invoices in a standard format (EHF), for all new agreements.
With electronic procurement we aim to achieve:
- Better procurement
- Increased use of framework agreements
- Increased negotiation power
- More effective procurement
- Effective workflow
- Effective communication
- Safer procurement
- Reduced error handling (e.g. invoices)
- Increased traceability and transparency
The overall Norwegian goal is to provide digital support for the complete end-to-end procurement process.
The e-invoicing process
The first step in the Norwegian market was to mandate e-invoicing for public entities, starting with the Ministry of Administration and Church affairs.
The e-invoicing project launched in 2009, aimed at developing a format for e-invoices and credit notes. This work was finished in 2011, and the format was based on CEN BII.
The project was focused on on-boarding ERP vendors, so that entities could process e-Invoices, both incoming and outgoing. This is an ongoing process, since it is most efficient to process the invoices format inside the entities’ ERP systems.
The following step in the process was to get access points that could help end users to send and receive electronic invoices. The project was supported by the two biggest public agencies. They were launching a tender for e-invoice receiving to ensure e-invoicing capabilities for the standard format. All service providers had to be listed as an access point and approved by Difi. That project increased the number of access point from 6 to 23 access points. Since then, access points have signed contracts with both private and public entities for sending and receiving invoices in the PEPPOL infrastructure. The number of access points in Norway is currently 43.
To support SMEs and sole traders, the project facilitated the development of web invoice portals by service providers. As of today, 22 web portals for e-invoicing have been set up, using the standard format, and many of them provide access point services as well.
Status of e-invoicing in Norway by June 2014
With more than 22.000 public and private sector entities exchanging over 5.8 million electronic invoices since the mandatory requirement in 2012, the Norwegian approach to e-invoicing is a story of success for regulatory, standardisation and competitiveness achievements, replicable across Europe. Find a list of all Norwegian invoice receivers here.
Electronic invoicing transactions
Norway is a very active player in the area of electronic procurement, particularly in e-ordering and e-invoicing. As an integrated part of the European market in most areas, Norway has implemented the same public procurement regulations and has already ensured compliance with the upcoming EU Directive on “electronic invoicing in public procurement”.
The Norwegian public sector e-invoicing project started in 2009. The infrastructure for e-procurement and e-invoicing is based on the standardisation framework and specifications developed during the PEPPOL (Pan-European Public Procurement Online) project and are now maintained by OpenPEPPOL, the international non-profit organisation set up by European governments in September 2012.
The e-procurement specifications maintained by OpenPEPPOL builds on the work of the CEN Workshop on Business Interoperability Interfaces for Public Procurement in Europe (CEN BII). PEPPOL has not developed new standards, but has used the CEN BII results to develop implementation guidelines known as PEPPOL BIS (Business Interoperability Specifications) that can be embedded in any e-procurement and e-invoicing system, ensuring interoperability across Europe.
The Norwegian starting point
The main success factors of the Norwegian approach to e-invoicing are: regulatory measures, EU-wide interoperability and connectivity through PEPPOL, and a roll-out plan focused on getting the major central government entities onboard as first movers to trigger market adoption among their suppliers and e-invoicing service providers.
Government regulations have indeed played a relevant role. Since the 1st of July 2011, it became mandatory for all central government entities to receive invoices electronically in a standard format; and from the 1st of July 2012 it became mandatory for central government entities to require their suppliers to invoice them electronically using a national implementation of the PEPPOL specifications.
The role of regulations and standards
An important lesson learned is that to promote market adoption is not sufficient to mandate the receiving capabilities among public sector entities to process electronic invoices. After a slow start in 2011, the transaction volumes picked up in 2012, when central governments started requiring suppliers to send e-invoices, with more than 58 million e-invoices sent by the end of 2013. During 2013, the number of e-invoices received increased by 23,14 %.
The two main drivers for this growth, which is expected to continue in 2014, are that more contracting authorities mandated e-invoicing from their suppliers when entering into new contracts; and the increased market maturity among e-invoicing service providers and senders of e-invoices.
Norway ensured standardisation and interoperability by mandating the use of a standard format called EHF (Elektronisk handelsformat – electronic trade format); a national implementation of UBL (Universal Business Language) syntax and semantic interoperability model compliant with CEN BII profiles and PEPPOL BIS, and recommending use of the PEPPOL Transport Infrastructure for business document exchange. Both buyers and sellers can choose to establish their own Access Point or to enter into an agreement with any of the service providers connected to the PEPPOL Transport Infrastructure in Norway or throughout Europe.
Private sector involvement and adoption
Another decisive factor for the Norwegian success has been private sector involvement. Today, more than 30 ERP/other software providers offers EHF/PEPPOL BIS enabled products or services, and more than 40 PEPPOL Access Point providers offers connectivity with the PEPPOL Transport Infrastructure. In January 2014, an important milestone was reached when the entity number 10.000 was registered as a recipient of EHF/PEPPOL BIS business documents, and more than 22.000 in May. Most of these organisations have capability to receive e-invoices. From October 2013, an increasing number of Access Point providers also offer their customers the capability to receive EHF/PEPPOL BIS e-catalogues and e-orders.
Among the over 22.000 organisations, approximately 7 % are public sector recipients (including all central government entities and a majority of municipalities and counties) while approximately 93 % are private. Out of the first million transactions exchanged over the PEPPOL network, nearly 50% were Business-to-Government, and the remaining was Business-to-Business.
Difi, the Norwegian Agency for Public Management and eGovernment, is the national PEPPOL Authority. They support the private sector Access Point providers and users of EHF/PEPPOL BIS through regular meetings, web pages and other means, and operates a centralised addressing mechanism** which includes information about the EHF/PEPPOL BIS receive capabilities of Norwegian public and private sector entities. Difi also operates a test Access Point and validation services for business messages compliant with EHF/PEPPOL BIS. In order to facilitate technology adoption, Difi offers the Oxalis open source sample implementations for PEPPOL Access Points, which are widely used by service providers. Small IT companies have now the opportunity to offer Access Point services across Europe, expanding business potential beyond national borders and increasing competition.
Norway has been driving e-procurement standardisation developments in Europe. In particular, by supporting the activities on the CEN BII workshop on public procurement in Europe, by leading the PEPPOL project (2008 – 2012) and, today, the e-procurement pilots in the EU co-funded large scale pilot project eSENS.
What can be replicated?
The Norwegian approach is replicable outside national borders for two main reasons. Firstly, the business processes supported and the technology implementing them meets European-wide business requirements in a scalable way, available all over Europe through PEPPOL. Secondly, the forthcoming ‘ e-invoicing in Public Procurement’ Directive will facilitate a similar regulatory framework throughout Europe, as Norway implemented it in 2011.
If Member States and affiliated countries could seize the opportunities that PEPPOL and the new Directive provide, they can re-create the Norwegian success, at a reasonable cost and with very little risk. Some of the countries already implementing the PEPPOL approach for e-invoicing are: Austria, Denmark, France, Ireland, Italy, Netherlands, Poland and Sweden, while the first PEPPOL Access Point has recently been set up in the Russian Federation.