Evento 21 settembre 2012

Daniele Marazzi Osservatori ICT & Management School of Management – Politecnico di Milano

Digital Italy: it is possible!

Dematerialization: a snapshot

Osservatorio Fatturazione Elettronica e Dematerializzazione

Customer conference 2012

Modena - 21 Settembre 2012

www.osservatori.net DANIELE MARAZZI | Digital Italy: it is possible! 21st September 2012

Agenda

The Observatory on Electronic Invoicing and Dematerialisation The state of the art of Digitalization in Italy Digitalization opportunities in some specific areas


Observatory on Electronic Invoicing and Dematerialization

Mission q  Deeply analyze the themes related to the integration and dematerialization of the company

processes:

q  Analyze the main opportunities stemming from the Digitalization of both company and inter-company processes

§  Electronic Invoicing §  Substitute Archiving

§  Integration and Dematerialization of the Trade Process

Benefits of the Dematerialization

Electronic Invoicing: benefits not just on the paper

Systemic Initiatives and Diffusion of Dematerialization projects

Joint collaboration_a powerful driver for Electronic Invoicing in Italy

ROI Assessment of Dematerialization projects

Electronic Invoicing as a keystone in the collaboration between

companies, banks and PA

Dematerialization, eSupply Chain Collaboration and Financial Value Chain

Beyond the Invoice

Stressing the Communication of our results and development of

self assessment tool

Electronic Invoicing in Italy: reporting from the field

2008 2009 2010 2011 2007 2012


Agenda



q  approx. 600 billion pages of business documents dematerializable in a year

q  approx. 45 billion dematerializable business documents

 

 

Digitization Opportunities in Italy

Over €200 billion

could be saved each year

almost 10 billion Man-hours

“convertible” into higher value activities

24,000,000 trees 4 Million tonnes of CO2

1.5 times the circumference of the Earth

6,780 times Everest


Digitization is possible What does it mean?

…nature of the document

Public official is required

Attention must be paid to the electronic document’s “non reproducible” elements

resulting from its dematerialization

Document must be digitized

Document must be “crystallized” by affixing a digital signature

Digital «substitute» archiving European Directives

Enabling rules…

CAD

[ . . . ]

“Native” electronic document

(with digital signature)

Digital document

“Printed” paper document

Paper document with holographic elements

Original unique analogue

“Eas

e” o

f d

emat

eria

lizat

ion

Dematerialization is easier when starting with digital or electronic documents

Technical rules

DigitPA (ex CNIPA)

Revenue Agency

Resolutions


The spread of Substitute Archiving

Businesses in Italy that practice Substitute Archiving of

Over 90,000 businesses in Italy Substitute Archive accounting books and records

The 2009 and 2010 data are from the Revenue Agency, ricostruiti attraverso il conteggio delle impronte, submitted at the beginning of 2012, in accordance with regulatory requirements

*

The number of businesses with active and passive invoice Substitute Archiving projects continues to grow ...

... and many businesses archive accounting books and records electronically

+ 28%

+ 35%

3,400

2011 2010 2009

1,965 *2,510 *

Significant growth trend in companies that use Substitute Archiving for active invoices (over 90%) and passive invoices (about 35%)

The number of companies that use Substitute Archiving of invoices, both active and passive,is also growing Market penetration

36% at Large companies (over 250 employees) 1% at PMIs (10 to 250 employees)


The spread of Electronic Invoicing

(in most cases, intra-group experiences)

Electronic Invoicing with digital signature, in full compliance with the enacted law, includes:

q Agreement between the parties q 15 days to send received invoices to Substitute

Archiving

businesses

The supplier sends active Invoices to its clients electronically and stores them by Substitute Archiving

Replicates the «pure Electronic Invoicing» process, but only the active side

businesses (Lower Bound )

Both the supplier and the client store the invoices exchanged electronically by Substitute Archiving

Mimics «pure Electronic Invoicing», aside from the requirement for an agreement between the parties and to respect the 15 days

There are still only a few dozen cases of «pure Electronic Invoicing», according to the Italian regulatory definition ...

... but the number of companies to do Electronic Invoicing is growing!


How to increase its spread The «Quaderno del Fare»

1.  Is it true that Italian regulations allow me to do “Electronic Invoicing” and to dematerialize all Order Cycle documents?

2.  The benefits that one hears about seem to be very consistent: but are they true?

3.  How do I bring home these benefits?

4.  What costs must I incur?

5.  Does it make sense to undertake these projects in a SME?

6.  How do I get my clients and suppliers involved?

7.  Where do I begin?

8.  Is it certain that I will not be putting myself in a position to endure additional “controls”?

9.  Isn’t it better to wait until the PA makes a move?

Questions by those who want to “DO”

The new contribution developed by the Observatory is

at www.osservatori.net

www.osservatori.net www.osservatori.net DANIELE MARAZZI | Digital Italy: it is possible! 21st September 2012


Agenda



Digitalization opportunities Specific areas identification

Definition of a set of indicators that determine the characteristics of a generic document

Development of a “radar model” able to provide the most important indicators and characterize the most interesting application areas related to document dematerialization

Mapping of certain documents in a matrix that allows the attractiveness factor tied to the dematerialisation of a specific document to be highlighted

VAT records, some accounting books and records

Contracts (of purchase)

Bank Contract . . .

Banking slips


The possible approaches to Digitisation

The most «interesting» documents to dematerialise present 5 key characteristics: (i) dimensions (no. of pages) and diffusion (no. of documents); (ii) level of dispersion in

the organisation (reception and workflow points/reception points and workflow; (iii) access frequency; (iv) impact on interface processes; (v) presence of storage costs/risks

Quality analysis

B.E.M.

Clinical records

Contracts

Letters and correspondences

Transport documents

Court documents

Primary care physician records

Customs dossiers

Notarial Deeds

University docs

Project documents

Bank documents Accounting books

and registers Payment orders

Expenses

Insurance dossiers

Receipts

Cash accounting

«Physical» characteristics

Need to access document

Impact on interface processes Storage costs and risks

Dispersion in the organisation


The possible approaches to Digitisation The main areas of interest

«Physical» characteristics

Need to access the document

Impact on interface processes Costs and risks of storage

Dispersion in the organisation

The most «interesting» documents to dematerialise present 5 key characteristics: (i) dimensions (no. of pages) and diffusion (no. of documents); (ii) level of dispersion in

the organisation (reception and workflow points/reception points and workflow; (iii) access frequency; (iv) impact on interface processes; (v) presence of storage costs/risks

Document management

Substitute archiving Integration


The possible approaches to Digitisation refer to three main «project goals» each characterised by specific impacts

The possible approaches to Digitisation

  Focus: exchange of information between players of the process

  Main benefits: reduction of the activities of processing of documents (data entry) and increase in quality of the process (reduction of errors)

  Focus: creation and management of documents, mainly in the back-office activities

  Main benefits: reduction of time and «clarity» of processes, reduction of use of materials (consumable) and of internal transfer costs, improved access to information

  Focus: storage, over time, of information and documents (in particular with strong guarantee of security)

  Main benefits: reduction of storage costs (materials, space etc.), conformity to norms, guarantee to accessibility documents and information over time

Integration

Document management

Substitute archiving


Digitalization Opportunities

High Low Document diffusion (on an annual basis)

Tens of Millions A few Million Hundreds of

Millions Billions

Uni

t Be

nefi

t

Elevated

Limited

Over €100

A few €

Tens of €

Medical records

Notarial Deeds

Insurance Dossiers

Contracts (of purchase)

VAT records, some accounting books and records

Bank Contract

Banking slips (Deposit/Withdrawal) F24

Balance Sheets

Customs Dossiers

Bills

Invoices Delivery notes

Orders

«Trade Processes»


Digitalization Opportunities

High Low Document diffusion (on an annual basis)

Tens of Millions A few Million Hundreds of

Millions Billions

Uni

t Be

nefi

t

Elevated

Limited

Over €100

A few €

Tens of €

Medical records

Notarial Deeds

Insurance Dossiers

Contracts (of purchase) 2

1 VAT records, some accounting books and records

4 Bank Contract

Banking slips (Deposit/Withdrawal)

3 F24

Balance Sheets

Customs Dossiers

Bills

Invoices Delivery notes

Orders

«Trade Processes»


Accounting Books and Records: the process

Data Entry Production Consultation Conservation

  Required for 10 years

  Ususally very large documents

  Mainly required in the event of an audit

  Process takes place a few times a year

  Expensive printing routines required

  High risk for errors and time wastage

  Usually takes place using accounting systems

  Sequential entry of information in the appropriate register

2 1 4 3


Accounting Books and Records: the benefits

Data Entry Production Consultation Conservation

Avoid the complex printing process (printer jams, “blocked” labour and

resources)

Greater ease of consultation,

rarely necessary

Archiving and materials cost

savings

The estimated potential benefit is between € 0.5 and € 1 per page

(depending on the specific context of each individual company: labour cost,

cost of space, etc.)

2 1 4 3


Accounting Books and Records: diffusion

VAT Records 150 m

Pages (lower bound)

Data: q  2 registrations (lines) per invoice, in each record q  40 lines per page q  1.3 m B2b invoices (Observatory on EI and D) q  Survey (241 responses)

Single Employment

Ledger

250 m Pages

(lower bound)

Data: q  1 page/month per employee q  17.2 m workers (Istat) q  13 month “average” q  Survey (241 responses)

Transaction Books

3-4 bn Pages

(lower bound)

Data: q  Interviews with companies, auditors, employment

consultants q  Survey (241 responses)

2 1 4 3


Contracts of purchase: the process

Drafting of specifications Negotiation Signing of

Agreement

Contract management

(issuance of orders)

Archiving Customer

Supplier

2 1 4 3


Contracts of purchase: the benefits

The potential benefit, for the client, is estimated to be several

tens of € per contract (lower bound)

Drafting of specifications Negotiation Signing of

Agreement

Contract management

(issuance of orders)

Archiving Customer

Supplier

Cost savings on printing and mailing

Decreased research and consultation

time Greater internal

workflow efficiency

Greater efficiency and effectiveness in

support of document exchange

Archiving and materials cost savings

2 1 4 3

Greater internal workflow efficiency


Contracts of purchase: regulation

In the dematerialization of contracts, attention must be paid to the

inclusion of signatures…

… an issue that must be carefully managed in order to proceed with

Substitute Archiving of the document

2 1 4 3


Processes of relationships with employees and non-client third-parties, but also processes supported by accounting, legal and/or company

Processes of relationships with clients (business and/or retail) supported by following documents concerning: q Bank accounts q Securities deposits q Collections and

payments q Credit q Generic

Preliminary processes that activate/renew/modify the delivery of services by the bank (basically data collection and use, but not only…)

We analysed over 100 types of documents supporting bank processes, investigating those that require an authentic signature

Process digitisation The case of the bank sector

Contracts

«Teller» processes

Internal processes

Processing requiring Authentic signature

2 1 4 3


Signature required

«Strong» «Absent»

Signature «the norm»

Signature non required

Regu

lato

ry la

ws

Signature required by Client

Bank account contract

Deposit/withdrawal slips

Securities deposit contract

Purchase order

Information notes

Privacy form

Information on bank statement

The case of the bank sector A mapping of «relational» documents

2 1 4 3


The case of the bank sector The slips of Deposit/Withdrawal

Processing of paper forms

Printing of paper forms

Storage of paper forms

Retrieval Paper forms

Fron

tOff

ice

Back

Off

ice

  ID of client   Collection of client info

for completion of authorisation form

  Print out of form on A4 paper and receipt on A5 chemical paper

  Signature of receipt of A5 by client and operator

  Delivery of receipt in A5 to client, signed

  Processing of request of client for documention

  Retrieval in branch (in presence of client for recent docs

  Retrieval of forms (Format A4 + Receipt in chemical A5 format)

  Distribution to branches   Stocking in branches

  Data entry into system of info provided by client

  Management/maintenance of mechanical printers

  Daily creation of Cash envelop with A5 receipts and A4 forms

  Periodic creation of boxes for storage

  Sending of request to central storage

  Manual retrieval of file   Transfer of document to

branch

2 1 4 3







Fron

tOff

ice

Back

Off

ice

  ID of client   Collection of client info

for completion of authorisation form

  Print out of form on A4 paper and receipt on A5 chemical paper

  Signature of receipt of A5 by client and operator

  Delivery of receipt in A5 to client, signed

  Processing of request of client for documention

  Retrieval in branch (in presence of client for recent docs

  Retrieval of forms (Format A4 + Receipt in chemical A5 format)

  Distribution to branches   Stocking in branches

  Data entry into system of info provided by client

  Management/maintenance of mechanical printers

  Daily creation of Cash envelop with A5 receipts and A4 forms

  Periodic creation of boxes for storage

  Sending of request to central storage

  Manual retrieval of file   Transfer of document to

branch

2 1 4 3







Storage of electronic documents and substitute

archiving

Authorisation for the execution of

operation

POTENTIAL BENEFIT ADOPTION BYALL 33,000 BRANCHES PRESENT

IN OUR COUNTRY

~ 150 Million €/year

2 1 4 3


The case of the bank sector Bank account contracts

  Document collection from the client for ID (Fiscal code/SS#, Identity card, ...)

  Photocopy of all documents

  Creation of Client dossier with copies of all documents

  Paper storage of client dossier

  Entry into the system of the New Account Request

  Printing of request on pre-printed A4 paper (3 copies

  Collection of client signatures on request

  Controls (Anti-money laundering, title searches, ...)

  Printout of control results and data entry into client dossier

  Passing of paper dossier for collection of internal approvals

  Placing of signature by various internal approving parties

  Stipulation of contract with underwritten signature of client and authorised proxy

  Restitution of one underwritten copy to client

1 2

3 4

  Storage of one signed contract copy in client dossier

  Transfer to central storage of dossier (guarantee storage fro 10 years from the relationship termination)

  Storage of third signed contract copy in the branch (fireproof armoured storage, ...)

5

Acquisition of Client

documentation

Request to Open account

Internal controls and approvals

Storage of contract

and dossier

Contract stipulation

1 2 3 4 5

2 1 4 3




documentation



Storage of contract

and dossier


1 2 3 4 5

  Document collection from the client for ID (Fiscal code/SS#, Identity card, ...)

  Photocopy of all documents

  Creation of Client dossier with copies of all documents

  Paper storage of client dossier

  Entry into the system of the New Account Request

  Printing of request on pre-printed A4 paper (3 copies

  Collection of client signatures on request

  Controls (Anti-money laundering, title searches, ...)

  Printout of control results and data entry into client dossier

  Passing of paper dossier for collection of internal approvals

  Placing of signature by various internal approving parties

  Stipulation of contract with underwritten signature of client and authorised proxy

  Restitution of one underwritten copy to client

1 2

3 4

  Storage of one signed contract copy in client dossier

  Transfer to central storage of dossier (guarantee storage fro 10 years from the relationship termination)

  Storage of third signed contract copy in the branch (fireproof armoured storage, ...)

5

2 1 4 3




documentation



Storage of contract

and dossier



documentation



Storage of contract

and dossier


POTENTIAL BENEFIT ADOPTION BYALL 33,000 BRANCHES PRESENT

IN OUR COUNTRY

~ 230 Million €/year

2 1 4 3


The main questions to ask to knowledgeably tackle Digitization

Where a signature is used today, is it needed?

If needed, who needs it? (e.g. internal regulation, Legislators)

If a signature is not needed, what is the cost of maintaining this “hard copy” process?

How does one get all the players who will be impacted by the innovation ensuing from Digitization involved?

(clients, suppliers, PA, citizens etc.)

And for what purpose? (e.g. control, identification, enforceability against

third parties)

Daniele Marazzi – [email protected] Osservatori ICT & Management School of Management – Politecnico di Milano

Digital Italy: it is possible!

Dematerialization: a snapshot

Osservatorio Fatturazione Elettronica e Dematerializzazione

Customer conference 2012

Modena - 21 Settembre 2012

Technology

Evento 21 settembre 2012