Rip those bills up

Balfour Beatty spends more than £45m A year on bits of paper. It calculates this staggering figure by multiplying the 965,000 purchase invoices generated annually by the £4.74 it reckons each costs to handle.

You would think this was all the incentive the company needed to race head-first into e-trading, which it reckons can reduce the cost of its transactions by 80%, simply because it cuts out paper and postage. But drawing attention to what IT director Colin Darch calls the "unsexy end of e-business" isn't that easy.

"The biggest challenge is persuading people - both suppliers and internally - that e-trading is the way to go, and getting them to put it at the top of their agenda. It's not particularly sexy, it's not 3D modelling or mobile computing, but the potential for savings is huge."

The system Balfour decided on was Burns' beX e-invoicing package. Darch says it was an advantage that Burns hadn't worked in construction before. "Handling invoices in construction is no different to handling invoices in any other industry and there is no reason why we shouldn't benchmark ourselves against the likes of Tesco. Why should construction be different?"

After six months of preparation, Balfour began testing electronic trading between its plant division and other areas of the business in August 2001. The system works by exchanging messages via Burns' trading hub in XML file format.

Darch sees it as an ongoing project rather than a race against time. "With construction being as conservative towards IT as it is, not all our suppliers are ready to exchange invoices electronically, which stretches the time scale. But we don't want to bully them into complying. We want to persuade them it can benefit them too in the long term."

Convincing staff takes time too. "They're warming to it," says Darch. "But it is probably more painful to use at the moment than the old paper-based system because of the large number of order failures. If the order number on the request doesn't match the invoice number, the invoice gets kicked back. It's easy for the human eye to see where the letter O has been mistaken for the number zero, but not for a computer. We are trying to make people aware that they have to be more careful about entering invoice numbers."

WE DON’T WANT TO BULLY SUPPLIERS INTO COMPLYING. wE WANT TO PERSUADE THEM THEY CAN BENEFIT TOO

Security of information was another concern, says Darch. But he claims that digital signatures are less open to abuse than paper systems, and it's just a case of convincing people. "We are trialling a number of security systems including digital certificates, secure ID and password-protected systems, but they are all just as safe as if not safer than paper. This sort of process goes on all the time and people trust it, you just have to make them aware of it: using a hole-in-the-wall machine, for example, instead of cashing a cheque. Providing you keep your PIN safe, it's more secure to take money out that way than signing a cheque, because it's easier to forge a signature than to guess someone's PIN."

Balfour has spent £100,000 over two years so far on the system. But it doesn't stop there and even though Darch is now happy with the technology, he sees this as the beginning not the end. "We are talking to our top 10 suppliers, in terms of volume of invoices, about hooking up our systems. But we've put that on hold slightly because we are bringing in a document management system to manage the workflow when processing invoices."

The system creates a digital image of the invoice so there is no need to print it out to keep it on file; it can be filed electronically.

And he sees the system mushrooming to drive efficiency on site also. "We want to extend this to encompass the whole delivery process. When the goods actually arrive on site, the site manager can sign for them electronically, so we can cut out paper there too."

Richard Fernie, business systems manager at Balfour Beatty's plant division, agrees that the difficulty with implementing the system is not the technology but changing people's minds and ways of working. "To the user, the system is seamless," he says. "They don't have to do anything different to what they did before, it's all done in the background. But getting people to give up paper isn't easy.

"Some people struggle to get used to the lack of paper and still print invoices out. But they are getting there slowly. Some re-education is needed."