I recently completed a little research project with Pete Loughlin, author of the Purchasing Insight blog. Pete’s the best blogger (and analyst) focused exclusively on the P2P market that I know. His knowledge, network and expertise as a practitioner put traditional industry analysts to shame, and he’s a perfect example of the Analyst 2.0 model that some people suggest is starting to emerge from the realm of practitioners, not ivory tower pundits. Even though Peter might claim, ever so humbly, that I’m teaching him a few things or two about P2P, every time I chat or work with him, I feel the opposite. I’m the student. My knowledge is a fraction of his. I still, however, enjoy disagreeing with him from time to time, as I do when he suggests, quoting a colleague, that banks have ignored e-invoicing.
Peter believes that banks aren’t going after the e-invoicing market — and to him, this appears to an incorrect judgment. Quoting a colleague, he suggests that there are three reasons for this: “Firstly, poor adoption of e-invoicing in the marketplace. Secondly, the complexity of the market — it’s too different to ordinary banking and it has been seen as pragmatic to wait for the world to simplify. And thirdly because they can’t see where they fit in.” I don’t think Peter gives the finance world enough credit here. I’ve spoken to two colleagues recently on the commercial banking side and some of folks in the origination ecosystem (i.e., those that want to finance receivables-based transactions). And nearly all of them understand e-invoicing. But they quietly accept it as a small component of where the real money is — in finance.
Just as Accenture, IBM, Deloitte and countless others grew seriously fat off of charging 4-5 times the cost of software licenses to implement ERP solutions, it’s the banks who stand to profit most from providing financing in the receivables marketplace. Why own the last mile of pipes into the house when you own just about everything else (e.g., relationships into treasury departments) required to get the water truly flowing with any speed and value? Electronic invoicing may offer a huge value proposition, but there’s no need for banks to put too much effort into owning or reselling software components that enable it given the far larger opportunity that fits their core business model, anyway.
When there’s big game in the deep waters, why go for the small fish in the bay?