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What happens when you ban paper in the Public Sector?

Tuesday 5th March, 2013

In an interview with The Guardian this morning, Christian Lanng - CEO of Tradeshift makes the point that the UK public sector, like many of its counterparts around the world, is looking for ways to make services more efficient. Denmark has shown that the move to an electronic procurement system is possible –  the answer is to make such a system free, open and online.

In January, two Conservative MPs wrote an article on the Public Leaders Network on how e-invoicing could revolutionise public sector procurement, creating new jobs and saving money. One of their examples was the Danish government, where paper invoicing has been banned in the public sector since 2005.

Back in 2004, Denmark found itself at a similar stage to the UK: it realised that an electronic approach to supplier relationships could both increase efficiency within the government and would benefit the whole economy.

Work began to explore and create such a policy. At the time, paid-for electronic data interchange (EDI) had been around for decades, so this is where the team turned its attention first. Then the bill arrived.

It quickly struck Christian that if you want your suppliers to start behaving a certain way or adopting a certain technology, charging them to do so wasn't going to work. Around this time, networks like Linkedin, Facebook and Twitter were demonstrating how platforms could connect people and spread virally if you eliminated the price of entry.

As a former technology entrepreneur, this possibility appealed. Why choose the proprietary path when simple open technology could provide a smarter alternative?

Christians note joined the document and before long was reaching the upper echelons of the Danish public sector. Sadly, it's not so easy to shape policy and the EDI-based system already in progress was launched.

Almost immediately, however, a backlash began. Hard-working Danish businesses wanted to know why the government was asking them to pay to adopt software simply to be paid.

Shortly after, Christian managed to find a partner, one of the smartest technical guys around. We secured a little budget to issue a prototype of our open source alternative and find opportunities for it to speak for itself.

As soon as the decision was made to shift support behind our open alternative, EasyTrade, the tide turned almost immediately. Suppliers that wouldn't have touched the paid EDI approach began to download the new, free software.. Within weeks, tens of thousands of companies had adopted the system. Within six months, there were 70,000 users.

In the years since, EasyTrade (NemHandel in Danish) has become ubiquitous across Denmark, showing every other region that the move to an electronic system is not only possible but, if you crack certain prerequisites, inevitable. As the UK public sector finds itself, like many of its counterparts around the world, looking for the secret to this transition, the answer from our experience, the answer is clear: free, open, online.

This is the secret to any platform for bringing suppliers and buyers together, and makes all the difference in getting a whole economy of suppliers to embrace new opportunities.

Christian Lanng is chief executive of software company Tradeshift