Across all industries organisations are always looking to make the exchange of business-critical information easier in an attempt to streamline their supply chains and reduce costs. One of the most popular methods of achieving this is through electronic data interchange, or EDI. This involves companies exchanging data with one another automatically in the form of structured electronic messages in order to minimise human input (and thus errors) and maximise speed and efficiency.
However, while EDI connections can bring many benefits for the businesses involved, setting up different connections with multiple partners can be complicated and time-consuming. Service providers can streamline this process hugely, but even the best provider can’t do anything about the fact that companies and industries differ greatly from one another when it comes to their preferred processes and requirements. For example,
- Each industry has its own standards and protocols
- Each partner may have its own document formats
- Each partner may use different exchange protocols
- Each partner has different methods of setting up an EDI project
- Plus each partner has different ways of testing messages during an onboarding process
With so much heterogeneity, simply finding out what each partner’s unique requirements are takes time and effort, let alone setting up the connection.
Peppol represents an attempt to eliminate these issues and make establishing EDI connections with partners simpler and faster. With Peppol,
- The technical details needed to exchange messages with partners are available instantly (you only need to know the Peppol-ID of the recipient)
- Document exchange formats are standardised
- All messages are automatically validated before they are sent to partners, ensuring no invalid data is exchanged
What is Peppol?
While Peppol is hugely useful for streamlining e-procurement processes, Peppol is not an e-procurement platform. Rather Peppol provides the methodology and technical specifications as well as an agreement framework to send documents between e-procurement partners.
Ultimately, what Peppol provides can be boiled down to three factors (known as the three pillars of Peppol): these are…
- The Peppol network
- Peppol’s document specifications
- Peppol’s agreement framework
By looking at each of these briefly we can see how Peppol works. Let’s look first at Peppol’s eDelivery Network.
How Peppol Works
Column 1: Network
Peppol’s network is based on a four corner model. To understand what this is we must first consider what 2 and 3 corner models are. A two corner model requires a direct connection between you and your partner. The downside of this approach is that every partner connection will require time-intensive custom mappings.
A three corner model is where both you and your partner exchange EDI messages via the same service provider. The downside of this approach is that – while using a service provider for EDI can be hugely beneficial – being forced to use the same service provider as your partner can quickly lead to a complicated EDI landscape, as many partners will have different providers. As a result, as with the two corner model, multiple connections must still be maintained.
By contrast, in Peppol’s four corner model, companies can use any certified Peppol Access Point to connect to ALL Peppol-enabled partners. The “four corners” in this model are you, your Peppol access point, the Peppol access point of your partner and your partner themselves. When using Peppol’s network, it doesn’t matter if your partners use different providers, you still only need one connection to connect to everyone.
Upon connection to a Peppol Access Point, that organisation’s requirements for receiving automated messages (such as e-invoices) are published using a Service Metadata Publisher, or SMP. In order to allow for an automated lookup of the SMP details, these details are made accessible via a Service Metadata Locator (or SML). Essentially the SMP and SML function as simple, fully automated self-service libraries, meaning Access Point service providers don’t need to liaise with recipients or their service providers to get this information. This in turn increases the speed of partner connection.
Column 2: Document specifications
When it comes to the formatting of documents exchanged between Peppol Access Points, all messages must conform to Peppol Business Interoperability Specifications 3.0 (known as Peppol BIS). The Peppol Code list provides standards for >100 message types (most of which are Peppol BIS). Peppol also allows custom document types within a country, if these are officially acknowledged.
This way each access point only needs to be able to process these approved messages. Consequently, systems connected to the Peppol access point only need to convert from the BIS format to the inhouse format and vice versa. Thus, once the mapping is set up, it is valid for all business partners. This is much simpler than building custom mappings for each partner connection.
Column 3: Transport Infrastructure Agreements (TIAs)
Finally, the existence of Transport Infrastructure Agreements (or TIAs) ensures that all parties conform to the necessary Peppol regulations This protects the reliability of document exchange via Peppol. Peppol Authorities, Peppol Access Point providers and Peppol Service Metadata Publisher providers must all sign these agreements.
The Benefits of Peppol
As Peppol relies on documents being exchanged electronically, businesses using Peppol will naturally experience all the benefits associated with automated document exchange, from cost and time savings to reduced risk and increased competitive advantage
Compared to document exchange via traditional EDI channels, Peppol also offers faster connections, reduced partner connection costs, increased message reliability and an all round simpler process for everyone involved.
Given these significant benefits, it’s hardly surprising that Peppol’s usage has grown steadily over the past decade. Today Peppol is not only used across the vast majority of European countries but further afield as well, with countries such as Australia, Canada, New Zealand, Singapore, the USA and Japan all now placing their trust in Peppol.
Getting Ready for Peppol
So what do you need to do to become Peppol compliant? Thankfully, gaining the ability to exchange messages via Peppol is pretty simple, and involves two key steps:
The first of these is setting up your internal processes. To be able to take advantage of Peppol, internal processes must be adjusted accordingly. For example, your ERP or accounting system must be set up to be able to process structured electronic invoices, which may require workflow add-ons or a converter service. The latter is able to convert from your ERP’s format to the Peppol BIS format and vice versa.
The second and most crucial step is choosing a Peppol Access Point strategy. You can either become a Peppol Access Point yourself, or use the Peppol Access Point of a managed service provider in the cloud. Becoming an access point yourself involves setting up and running the entire messaging infrastructure inhouse and going through the official certification process of Peppol. Due to these significant technical and operational requirements, most companies chose a fully managed Peppol solution.
With a managed service provider for Peppol, standardised project execution for the connection of customers and suppliers will help to improve project execution time and lead to faster ROI.
Once you’ve chosen your provider and a connection to them has been established, you’ll be able to start taking advantage of Peppol and exchanging messages with Peppol-connected companies around the world.
Find out more
At ecosio we were one of the very first Peppol access points and have passed both Peppol AS4 testing and European Commission AS4 interoperability testing.
Thanks to our unique API connection to Peppol enables our customers to experience remarkable data visibility. Meanwhile, our full service offering ensures minimum internal effort is required on your side to connect to your partners.
Contact us to find out more about how ecosio could help your business start experiencing the benefits of Peppol. We’re always happy to answer any questions!
Are you aware of our free XML/Peppol document validator?
To help those in need of a simple and easy way to validate formats and file types, from CII (Cross-Industry Invoice) to UBL, we’ve created a free online validator.