Move over Facebook and Twitter, PEEPOL is Coming!

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The world of public procurement is about to be rocked by a little publicized initiative called PEPPOL (that stands for Pan European Public Procurement Online). It promises to create one of the biggest global market spaces and threatens to be bigger than Facebook or Twitter. It may change the future of buying full stop!

Boundary-less Public Procurement

The European dream of a market without boundaries is edging closer to realization as a common framework for e procurement EU nears. But will a common public procurement framework open the world’s largest market to all, or simply result in an increased concentration of big vendors? More importantly what does it mean for your business?

The EU is moving speedily towards cross border, or more precisely borderless procurement in respect of public sector purchases. Now you would be forgiven for imagining that that was already in place, but the free market for public procurement has in reality been constrained.

The Limitations of Public Procurement Access Today

Theoretically it is possible at present for any company from any EU member state to compete for public contracts in another, yet there are practical barriers. For one different countries apply directives differently, and more important still there is no universal business processes, standards, classifications and signatures governing e-procurement. Additionally electronic signatures often not recognized across many EU countries. However, all this is soon set to change!

Creating The Worlds Biggest Marketplace

The EU has set the objective that any business of any size anywhere in the EU (or the EFTA indeed) will, at a click, be able to access public e procurement throughout the union – a market valued at 1500 million. That makes it one of the worlds biggest markets – bigger than the entire UK market for example! That means this is potentially bigger than web 2.0. than Twitter and Facebook! The world’s bigger marketspace is now being built.

It is worth repeating the objective behind this initiaitve – any company (including SMEs, and indeed according to policymakers especially SMEs) in the Union will be able to communicate electronically with any EU governmental institution for all procurement processes. Wow! This is the biggest thing to happen to public procurement ever!

A Single Window for EU Public Procurement

The initiative is driving union-wide e procurement, through the adoption of a common set of policies, templates and frameworks. It will result in a single window to European public procurement that will encompass all aspects of the procurement process from pre-tendering to e-catalogues, e-ordering and e-invoicing, with e-signature thrown in for good measure.

National procurement solutions will not be replaced, instead they will be aligned with common European standards and then linked through a common inter-operability infrastructure. This will see member states standardize the languages, the terminology, the procedures and the technology involved in public sector buying.

The Objectives of Pan European Public Procurement Online

Driving this is an initiative is called PEPPOL – that is short for Pan European Public Procurement Online. Its objectives are as follows:

Save time and money for buyer and seller
Create new markets for sellers and open up buyers to new suppliers
Reduce barriers to e Procurement
Increases competition among suppliers

More specifically the initiative is targeting; 100,000 work years being saved in public sector annually. 1-2 billion invoices generated and 23 million SMEs adopted eProcurement. All that sounds great, but will the BIG BROTHER of public procurement have unforeseen consequences.

European Dream, or Nightmare?

It is important to realize that the implications of the PEPPOL drive reach far beyond public procurement. For example it is likely to:

Underpin the next generation of ERP systems and set new standards for all sellers as buyers will increasingly ask for PEPPOL compliance

Be adopted by major corporations outside public procurement – that is many global corporations already look set to adopt the standards, or the technology

Now in a statement that will surely worry anybody who has ever bought any IT system, the new process promises to make ‘e procurement as easy as sending email’. But what does it really mean for sellers? Well, perhaps that depends on the following:

How easy to use will it be for both buyer and seller?
How will it reinforce best practice in respect of public procurement (including for example market analysis, setting of criterion, feedback to losers, etc.)?
How will it facilitate greater innovation and enable smaller players to compete and win?
Will it result in a further concentration of suppliers?