OK, attention out there! Hands up – who has heard of the OASIS Universal Business Language (UBL)? Hmmm – not many hands. What’s that you ask? What is UBL and what’s it used for?
To explain, lets first look at the problem domain. Generally UBL is meant to describe in an open global standard way the documents that typically get exchanged between two organizations in a customer (buyer)/ supplier arrangement.
Generally, each “customer” has the need to purchase services and/or goods from a number of “suppliers.” An entire choreography of documents get exchanged e.g. Request for Information, Request for Quotation, Purchase Order, Shipping Notice, Invoice, Credit Note, and so on.
Up to this point in time, the most common form of document exchange is paper. This does make some sense in that both the customer and supplier have their own application processing systems, data models, business practices and work flow, and these are typically not compatible with each other.
UBL could simplify invoice exchange
To simplify the discussion, let’s concentrate on just one of these documents – the invoice. The supplier’s system will know that the goods/services have been shipped/rendered. The supplier will invoice the customer for these goods/services. The problem is – if we want to send the document electronically rather than on paper, how can we do this, and what form should the invoice take? The internal representation in the supplier’s system could be quite foreign to the customer’s processing system.
The problem that the supplier has is that their customers might take the position that they should submit the invoice in a form that the customer’s accounting system expects. Perhaps they expect their suppliers to also install and maintain some software to accomplish this. However, the supplier has multiple customers, and generally they won’t elect to implement a different invoicing solution for each of their customers.
The problem the customer has is that they have multiple suppliers (some customers have thousands of suppliers) and each of them has a different way of sending invoices, requiring the customer to have a different process for each supplier. If the invoice arrives on paper, or even PDF, there is a significant processing cost to convert the document to an electronic form the customer’s application can use.
The cost of this processing originates in the re-keying of the Invoice, or submitting the paper document to a scan/OCR process. The customer also assumes the problem of quality control to make sure the electronic invoice they generate is an accurate representation of what the supplier sent. Clearly this should be a task the supplier should undertake – not the customer.
Now this seems like a particularly silly exercise since the invoice was already in electronic form at the supplier end. Even if the supplier sends the invoice as a PDF via email, there is still a processing cost to convert the PDF to the form required by the customers processing system, and this is different for each supplier.
Based on European estimates of the cost to the customers to process a single invoice is €7-15, we can suggest a very optimistic estimate for Canadian customers of $10/invoice. If you are processing thousands of invoices per year, this can amount to a sizable chunk of change (for the Canadian government this is probably in the range of $90-100 million/year). The customer would like some way that all their suppliers can submit invoices electronically in a form that can be directly processable by their application system.
Why we’re still dealing with paper
However, in this scenario so far, you will note that the benefits for most solutions will accrue to the customer, and much of the expense will accrue to the supplier. No wonder suppliers are reluctant to change, and use the default “paper” means instead.
The problem can be summarized by the following:
- There is no standard structure for documents being exchanged
- Business policies, procedures and work flow are different at each end
- Customer incurs cost of $10/invoice merely to process document into usable form
- Suppliers expected to implement solutions that only benefit customer
- Other than email/fax no infrastructure is available to exchange documents for SMEs
- Inter-country exchange complicates problem (language/legal, infrastructure incompatibilities)
The challenges to finding a solution are:
- Technical changes to existing customer/supplier systems should be minimal – ideally zero
- Process changes to current current workflows for both customer and supplier should be minimal – ideally zero
- Suppliers will not pay to send invoices. Cost should be minimal – ideally zero
Well, if nothing significant changes at either end – how can we achieve any form of electronic exchange of these documents? The solution lies in concentrating not on the systems at either end, but only on the expression of the business documents being exchanged, and the means for exchanging these documents. Is there a Global Open standard for these documents that could be exchanged between customer/supplier, and if there is, what problems could this solve?
In the case of a customer with thousands of suppliers, if every supplier sent their documents electronically based on this single global open standard, the customer would only require a single simple conversion routine that converts from the standard to their proprietary form. In the case of a supplier with multiple customers, they only need to convert their proprietary form to a single global standard. Fortunately such a global open standard already exists in the form of the OASIS Universal Business Language (UBL) released as version 1.0 in 2004. Since UBL documents are expressed as XML, standard off-the-shelf XML software such as XSLT (the XML Transformation Language) can be used to do this conversion,
UBL is designed:
“to provide a universally understood and recognized syntax for legally binding business documents and to operate within a standard business framework such as ISO 15000 (ebXML) to provide a complete, standards-based infrastructure that can extend the benefits of existing EDI systems to businesses of all sizes. UBL is freely available to everyone without legal encumbrance or licensing fees.”
The Organization for the Advancement of Structured Information Standards (OASIS) had the following as an objective for UBL:
“UBL is designed to plug directly into existing business, legal, auditing and record management practices, eliminating the re-keying of data in existing fax- and paper- based supply chins and providing an entry point into electronic commerce for small and medium-sized businesses.”
The first country to take serious notice of this was Denmark. They passed legislation in 2005 that declared that any company invoicing the Danish Government had to present the invoice to the government in electronic form encoded as UBL. A lot of Danish companies took a sudden interest in UBL. Today, UBL is in use in over 196 countries (not Canada or the US), many following Denmark’s lead, making submission of UBL based documents (usually invoicing first) mandatory.
Now, it is not sufficient to merely standardize on the expression of the invoice, you must also provide a country wide infrastructure to allow companies, large and small to submit these electronic invoices to the Government. The system the Danish government built was called “NemHandel” (which means “easy trade”). All Danish companies were given access to this system to submit invoices. Today some 90-95% of all suppliers in Denmark use Nemhandel for all their B2G and B2B invoicing. The EU also moved in this direction building the PEPPOL infrastructure, that allows cross border exchange of UBL Invoices.
UBL version 2.1 which is just into final review before final release, defines 65 business documents covering multiple areas. These include:
- Catalogue, Quotation, Ordering, Fulfillment,Billing, Payment, Statement, Transport Services, Certificate of Origin
- eTendering, Vendor Managed Inventory, Intermodal Freight Management, Utility Billing, Collaborative Planning, Forecasting, and Replenishment
- Document Status and Document Status Request
Tim McGrath, one of the creators of UBL declared: “The UBL Invoice is the only XML Invoice document standard that is sanctioned, stable, integrated within a suite of supply chain documents and is the nearest thing the world has to a purpose-built ebXML document format.”
In future blogs I will provide a more detailed look at both UBL and the infrastructure required to move the electronic UBL documents.