Zvonimir Vanjak, Vedran Mornar
Faculty of Electrical Engineering and Computing,University of Zagreb, Unska 3, Zagreb, Croatia
Ivan Magdalenić
Faculty of Organization and Informatics, University of Zagreb, Varaždin, Croatia
Keywords: e-Invoice, e-Business, ebXML, Web services.
Abstract: Deployment of e-Invoice infrastructure promises great savings in business transactions costs. But, due to
slow transition from socialist economy, Croatia has just begun planning deployment of e-Invoice
infrastructure in accordance with recently released national strategy for development of e-Business.
Unfortunately, existence of globally competing standards makes decision making much harder. Technical
sophistication of ebXML standard hasn't prevailed in struggle for global dominance with much broadly
implemented technology of web services. Some compromise will therefore be necessary. Paper presents
overview of different standards considered as candidates for deployment of e-Invoice infrastructure in
Croatia, as well as details regarding particularities of Croatia's legal and business environment.
Landscape for doing business has changed
dramatically in the last decade, thanks to advances in
information technology, coupled with big expansion
of available network bandwidth. Although EDI
(Electronic Data Interchange) systems have been
around for decades (Hayes, 2002), gains from their
introduction were realized mostly by large
enterprises because of the economies of scale EDI
required in order to get return on investment. EDI
was introduced over value-added networks (VANs),
which served as the common communication
method but were expensive, with an initial cost of
about US$ 250,000 for a mainframe installation and
subsequent fees as high as US$ 0.70 per transaction
(Albrecht et al, 2005).
Because of this high demand on ICT
investments, small and medium-sized enterprises
(SMEs) that form the backbone of developed world
economies have hesitated with adoption of EDI
(Banerjee and Golhar, 1994), but explosive growth
of Internet as cheap and widely available
information exchange platform has given them
affordable alternative.
Emergence of XML and Web Services standards
and their fast global adoption has certainly helped in
that regard. From Clipper and dBase to Java and
.NET, software development industry has come a
long way. Ease of developing simple business
applications with the use of modern integrated
development environments (Microsoft Visual
Studio, Eclipse, IBM WebSphere) has put e-
Commerce definitively within reach for SMEs.
Unfortunately, fundamental problem has
remained the same – how to enable secure and
semantically meaningful communication between
different information systems. XML as a standard
certainly defines „how“ to construct a valid XML
document, but it doesn't say (nor it is its purpose)
„what“ to put in XML schema that will represent
some business information. Problem is similar with
the set of specifications related to the technology of
Web Services. They define basic infrastructure for
message exchange, but there are multitude of issues
regarding security and service discovery that have to
be agreed between parties before message exchange
can take place.
E-Invoice, as the most used electronic document
(dubbed as „queen of commercial documents“)
provides a case in point. There are literally hundreds
of different definitions for XML schema
representing e-Invoice in the world today and this
was, and still is, one of the major stumbling blocks
Vanjak Z., Mornar V. and Magdaleni
c I. (2008).
In Proceedings of the Third International Conference on Software and Data Technologies, pages 348-354
DOI: 10.5220/0001888903480354
for wider adoption and implementation of e-
Procurement. Fortunately, at least there is
widespread agreement that XML must be the
underlying format for the message (Nurmilaakso,
Situation is much worse regarding
standardization of infrastructure for message
exchange, usually called “interoperability
framework”. Efforts at standardization by
UNCEFACT/OASIS alliance which started in 1999
and resulted in ebXML standard didn’t lead to wider
adoption, mostly due to technical complexity of
implementation and lack of support from major
software vendors. Prevalence of web services as
message-exchange “standard” on the Internet hasn’t
gone unnoticed by ebXML committees and in its
most recent version 3.0, ebXML turns to Web
Services technologies, using WS-Security and WS-
Reliability as standards for security and reliable
In the following sections we will first give an
overview of efforts at e-Invoice standardization in
Europe and then proceed with the review of basic
technologies relevant for deployment of e-Invoice.
Situation in Croatia regarding e-Invoice is described
in the final part of the paper.
Realization of electronic invoicing has potential to
reduce supply chain transaction cost in corporate and
public sector by 243 billion Euros annually (Bryant
and Liezenberg, 2008). Although such projections
must always be taken with the grain of salt, it is
clear that electronic invoicing is the way of the
The European Commission has made the
development of e-Invoicing an objective in both the
2002 and the 2005 eEurope Action Plans and
recently launched European Commission Expert
Group with the objective of developing a European
Electronic Invoicing Framework (EEI) in the
timeframe 2008-2009. EEI has the scope and
objective to „provide the basis to achieve
interoperability of e-Invoicing solutions in the public
and private sector” and to “help strengthen the
positive commercial incentives for electronic
trade as a replacement to manual paper-based
processes” (European Commission Informal
Task Force on e-Invoicing, 2007).
Considering the national differences in EU
regarding status of e-Business development, it is not
at all surprising that some countries didn’t wait for
EU-wide initiative and had started work on e-
Invoice on their own. Northern European countries
in particular are leaders in this area. Probably the
most cited example is Denmark with reported
savings of 100+ million Euros after their “big-bang”
implementation of e-Invoice in 2005 (Brun, 2007).
After initially introducing e-Invoice based on
traditional EDI Value Added Network combined
with OIOXML and UBL 0.7, Denmark is currently
in the progress of introducing service-oriented e-
Commerce network based on UBL 2.0, SOAP 1.1
(1.2), UDDI 3.0 and WS-* standards.
Finland is another example. Its implementation,
Finvoice, uses custom XML format for representing
invoice, enclosed in an electronic envelope with the
additional use of ePI (Electronic Payment Initiator)
standard (Cimander and Kubicek, 2006). In
Croatia’s neighborhood, Italy is in the process of
deploying CBI as a variant of interbanking VAN
where banks act as portals and intermediaries for e-
Invoice users. Slovenia has ambitiously started e-
Slog project, trying first with direct translation of
EDIFACT (EANCOM) norms to XML but recently
there are signs of a preference for a switch to GS1
Obviously, this proliferation of national
initiatives in deployment of e-Invoice infrastructure
creates many problems when it comes to cross-
border interoperability. Problem is especially hard
for small countries like Croatia that currently aren't
at the forefront of e-Invoice development, and, in
Croatia's case, not even in the EU yet. Of course,
there is a readily available possibility of „wait-and-
see“ approach with all the usual benefits for late
adopter, but e-Business is too important as an engine
for growth and innovation for this scenario to be
realistic. Notwithstanding problems created by
different standards available, some basic
requirements for e-Invoice infrastructure are clear:
secure message transport
existence of common interoperability
standardized format for message
Next three sections give an overview of current
situation in these areas.
Security considerations are paramount whenever
there is an electronic exchange of sensitive
information over public network. There are five
security criteria that must be satisfied in such
communication: trust, authenticity, non-repudiation,
integrity and confidentiality. Solution exists in the
form of public key infrastructure (PKI) where
certificate authority guarantees binding of user
identities with public keys, thus solving the biggest
problem of public key cryptography - proving that a
public key is authentic, and has not been tampered
with or replaced by a malicious third party.
Although technical aspects are relatively clear,
there are problems in implementation and
deployment of such systems, mostly related to the
distribution of keys, and especially their revocation:
privilege of key revocation, distribution of a new
key, spreading the revocation and recovery of a
leaked key.
Another issue is cross-border interoperability and
standardization. Internet is becoming global
marketplace, and EU started efforts at
standardization in 1999, when European
Commission in its Directive 1999/93/EC adopted
legislation regarding advanced electronic signature.
Of importance for digitally signing e-Invoice is also
Directive 2001/115/EC and provisions of this law
have been transferred to new EU VAT Directive
In 2005, Croatia’s government adopted
legislation concerning electronic signature (Narodne
novine, 2002) and electronic document (Narodne
novine, 2005) that are in compliance with EU
legislation. FINA (Financial Agency) was given
central role as national certificate authority and since
then some 10.000 digital certificates were issued.
Croatia’s banks, mostly in foreign ownership,
didn’t wait for government legislation, and started
development of e-Banking on their own. With more
than 80.000 certificates issued so far banks are at the
forefront of e-Business development in Croatia.
Unfortunately, although these certificates certainly
satisfy technical requirements for secure message
transport, they weren’t issued in formal accordance
to the law and use of these certificates within e-
Invoice infrastructure would require legislative
Although there are issues that need further
addressing, mainly in regard with cross-border (i.e.
EU) interoperability of national PKI infrastructures,
current development in the area of electronic
security is sufficiently advanced for the purposes of
Be advised that papers in a technically unsuitable
form will be returned for retyping. After returned the
manuscript must be appropriately modified.
Interoperability framework (IF) is a crucial
component for deployment of e-Business
infrastructure and all its aspects, including e-Invoice.
IF can be described as a set of policies, technical
standards and guidelines which enable solving
interoperability issues between different IT systems.
Some interoperability issues arise from the
differences in the meaning of terms and modes of
operations and some are related to the fact that
different informational systems cannot share
information easily. Within interoperability
framework communication is done using a
predetermined framework based on open
international standards. As Croatia is a country
where most companies are small and medium in size
and EDI infrastructure is not so widely used, legacy
considerations can be put aside.
Interoperability can be analyzed and
implemented on three main layers: technical,
semantic and process layer. Technical layer of
interoperability encapsulates standards and norms
for binding different systems and it forms a basis for
enabling communication between them. It also
specifies the envelope to package the content of
business document with necessary headers as well as
security and transportation standards.
Semantic level of interoperability deals with the
meaning of data and ensures that data will be
interpreted the same at both communication ends.
Semantic layer also defines structures and elements
of the business documents as well as the meanings
of the terms used in these documents.
On the process layer, main concern is
reconciliation of business processes. This layer
defines roles of business partners, order of business
documents exchange and how to respond to
information in business documents with appropriate
actions within defined business process. To take
advantage of new technology business processes
should be reexamined and reengineered and this
issue goes to the heart of e-Business infrastructure.
Today, there are several competing standards on
each layer and following sections give overview of
different standards considered as candidates for
deployment of e-Invoice infrastructure in Croatia.
There are several XML frameworks that handle
interoperability issues on different levels of
interoperability, with twelve of them listed and
compared in (Nurmilaakso, 2006).
On technical layer our candidates are:
ICSOFT 2008 - International Conference on Software and Data Technologies
ebXML - a modular suite of specifications for
conducting business using Internet, that puts at
enterprise disposal standardized methods for
business message exchange, data
communication, definition and registration of
business processes
Web Services – based on a collection of XML
technologies with the core consisting of three
standards: SOAP (Simple Object Access
Protocol) for transport, UDDI (Universal
Description, Discovery and Integration) for
discovery and WSDL (Web Services Definition
Language) for description. Additional standards
extend these basic standards and implement
different capabilities such as security and
reliable messaging.
4.1 ebXML
ebXML, in development since 1999 and now in its
version 3.0, provides solutions on all three layers. It
encompasses following set of standards, most of
them accepted as ISO 15000 standards:
ebMS (ebXML Messaging Services, accepted as
ISO 15000-2) - standard for exchanging
messages reliably and securely. It also provides
means to route a payload to the appropriate
internal application once an organization has
received it.
ebRIM (Registry Information Model, ISO
15000-3) and ebRS (Registry Service, ISO
15000-4) - standards for publishing and
ebCPP (Collaboration Protocol Profile and
Agreement, ISO 15000-1) - standard for
specifying the details of how an organization is
able to conduct business electronically. It
specifies such items as how to locate contact
and other information about the organization,
the types of network and file transport protocols
it uses, network addresses and security
ebCCTS (ebXML Core Components Technical
Specification, ISO 15000-5) - standard for
defining business documents semantics
BPSS (Business Process Specification Schema)
- standard for describing business processes
One of the primary strengths of the ebXML
infrastructure lies in its modularity. With a few
exceptions listed standards may be used somewhat
independently as they are only loosely related. The
elements of the ebXML infrastructure may interact
with each other, but in most cases are not required
ebMS operates on technical level of
interoperability framework and its version 2.0 is the
most implemented ebXML specification with many
successful implementations. ebMS is complete
solution which provides ways to pack data and
transport them reliably and securely. On the other
hand, ebMS is technically complicated standard and
for some features implemented in version 2.0, such
as security and reliability, more advanced
implementations appeared. Weakness of ebMS
version 2.0 was recognized and new ebMS
specification version 3.0 carries significant changes
and it is turning up to Web services technologies.
ebMS 3.0 still relies on SOAP and SOAP with
Attachments, but it uses WS-Security and WS-
Reliability or WS-ReliableMessaging for security
and reliable transport respectively.
4.2 Web Services
Web Services core standards, SOAP, WSDL and
UDDI, are not sufficient to handle successfully all
aspect of e-Business infrastructure. A couple years
ago lack of standardization concerning service
discovery and business semantics significantly
impeded usefulness of Web Services (Albrecht et al,
2005). In the meantime situation has improved and
is still changing rapidly with many standards
concerning e-Business in the process of
formalization by relevant standardization bodies.
The most important standards for e-Business are the
WS-Security – this part of WS-* specification is
meant to provide a flexible set of mechanisms
that can be used to construct a range of security
protocols. The main goal is to accomplish end-
to-end message content security and not just
transport-level security. Message integrity is
provided by XML Signature. Message
confidentiality leverages XML Encryption in
conjunction with security tokens to keep
portions of a SOAP message confidential.
WS-Reliability/WS-ReliableMessaging – this
standard is intended to provide quality of
service in the reliable delivery of messages.
WS-Addressing – purpose of this standard is to
provide transport-neutral mechanisms for
addressing Web services and messages.
Standard defines XML elements to identify
Web service endpoints and to secure end-to-end
endpoint identification in messages.
Two of the greatest strengths of Web Services are
support from major software vendors and support for
its core standards in many different languages from
very beginning. Implementation libraries exist in
languages such as Java, .NET, Perl, Python, Visual
Basic etc. and this was probably the major factor in
their fast acceptance. Web services standards are
also modular in nature and they do not depend on
each other with the exception that all of them use
SOAP as base protocol.
4.3 ebXML/WS Final Remarks
Existence of two competing standards confuses
users and puts them in uncomfortable situation.
There are not many complete ebXML
implementations around, and only ebMS is well
accepted and implemented. On the other side Web
Services technology is still evolving and WS
specifications are not yet mature nor do they have
significant reference implementations. Denmark’s
experience after it completes its transition to UBL
2.0 and WS-* will provide valuable and eagerly
awaited input.
First step in resolving such situation was made
recently by ebMS technical committee when it put
development direction of ebMS version 3.0 towards
Web Services technologies. This move resulted in
lack of backwards compatibility with ebMS version
2.0 and ramifications of this are yet to be seen in
practice. On the other hand, new version has
introduced new features such as different processing
modes, message pulling and message partition
channels which are step ahead comparing to Web
Services technology.
Some authors say that the ebXML organization
views the ebXML standard not as an alternative to
Web services, but as the standard for "Business"
Web services. "Business" Web services are based on
a peer-to-peer collaborative business process model,
while the basic Web services are based on a client-
server, RPC style model. ebXML provides a
modular suite of specifications that is designed to
enable standards-based, peer-to-peer, collaborative,
business communication between enterprises.
ebXML is complementary to basic Web services and
builds upon them to enable "Business" Web services
(Endrei et al, 2004).
After resolving issues regarding technical layer of
the interoperability framework and establishment of
message exchange protocols, there is one more
question that needs to be addressed – agreeing on a
format for the message. As has already been stated
in the introduction, today XML is the first, and for
all practical purposes the only solution for sharing
structured data across different IT systems.
But, porting flexibility of a paper invoice to the
digital domain proved difficult to achieve. Even
though defining XML schema for exchange of data
in specific situation and between parties that know
each other business well is fairly easy task,
interoperability becomes important sooner or later.
How to represent date in such communication is the
simplest example of interoperability problems (is it
DD-MM-YYYY or MM-DD-YYYY?) and situation
is similar regarding different conventions for use of
decimal point in North America and Europe.
Bottom-up approach, without agreement on
interoperable standards, resulted in a whole array of
different XML schemas for e-Invoice in use today.
Most of them were defined ad hoc as an extension of
ERP systems currently in use or for some specific
industry or market segment (large customers, for
To realize maximum benefits and savings from
implementation of e-Invoice infrastructure,
integration with ERP (Enterprise Resource
Planning) and SCM (Supply-Chain Management)
systems is essential and this requires adoption of
standards for semantic and process layer of
interoperability framework. Unfortunately, as is the
case with the technical layer, there are three globally
competing standards in existence today:
UBL (Universal Business Language) –
currently in version 2.0.
GS1 BMS (Business Message Standard)
UN/CEFACT CII (Cross Industry Invoice) –
awaiting formal acceptance, work has already
started on version 2.0
There is multitude of criteria that can be used for
deciding this question, and authority of
UN/CEFACT standards body weighs heavily here
with UN/TDED norm (ISO 7372) and its follow up
ebCCTS (ISO 15000-5) norm. ebCCTS serves as
foundation for both UBL and CII, and GS1 BMS
committee has announced its intention to follow
similar path in next versions of BMS. Delay in
formal acceptance of CII standard gives an edge to
UBL, but question is far from settled.
Additionally, there is a question of integration
with product catalogs and the role of e-Invoice in the
wider e-Procurement picture. GS1 BMS standard
requires existence of GLN and GTIN catalogs, while
UBL can work even without them. CII on this
account has the advantage because it can work with
catalogs across different industries. Successful
resolution of this problem hinges heavily on the
ICSOFT 2008 - International Conference on Software and Data Technologies
Figure 1: Croatian e-Invoice project organizational framework.
involvement of business subjects, but also on ERP
vendors and their willingness to support adopted
Development of e-Business in Croatia was slow and
progressed in piecemeal steps. Although there is
visible improvement in providing basic electronic
services for dealing with government, for example
enabling submission over Internet of social security
and tax forms (but only for firms and not for
individuals), National strategy for development of e-
Business was adopted only recently, at the end of
2007. Main goal is to increase economic
competiveness and to enable wider adoption of e-
Commerce. e-Invoice and e-Procurement are among
its most important projects.
The main obstacles in e-Invoice adoption are
Croatian legislation, especially VAT legislation, and
absence of interoperability framework. Our
legislation is currently being adjusted as a result of
negotiation with EU legislation and it is expected
that this obstacle will soon be removed.
There are many open questions in adoption of an
interoperability framework in Croatia. Starting
points in building our interoperability framework are
use of common standards and compatibility with EU
directives. The first step is initiation of a pilot
project with the intention of providing answers to
business and technical dilemmas. Proposed
organizational framework for e-Invoice pilot project
is shown in Figure 1.
Taking into consideration reluctance of firms and
their software vendors to change and adapt their IT
systems to newly defined format, one possibility is
for service providers to assume responsibility for
converting exchanged messages to appropriate
format. Exchanges of e-Invoices with international
systems are encouraged to go through service
Basic roles of service providers, as defined by
Croatian legislation, are receiving, sending,
archiving and securing of electronic documents in
the name of contracted users (Narodne novine,
2005). We are planning to take into account
directives from European Committee for
Standardization that additionally defines roles such
as conversions between different formats,
authentications and digital signing.
Croatia has started deployment of e-Invoice as first
of several planned e-projects in accordance to
recently adopted National strategy for e-Business.
First task is to define common ICT infrastructure
that will serve as foundation for further development
of e-Business. There is a common agreement that it
should be based on XML family of standards, and as
much as possible in compliance with EU directives
and practice.
Croatian Government and several public and
private institutions are in the process of starting a
pilot project with the primary goal of choosing
appropriate standards for defining secure and
reliable communication, business documents
description and business process description. There
are several competing standards in each area and
choosing between them is not a trivial task.
Beside technology characteristics other issues
should be taken into account such as future direction
of technology development and progress of situation
in European Union. At the moment we are leaning
towards Web services as technology for enabling
secure and reliable communication although we are
closely monitoring ebXML suite of standards. There
are still open questions about standards for
describing business documents and standards for
registry implementations. Our hope is that pilot
project will provide us with further insights
necessary for successful implementation and
deployment of e-Invoice infrastructure.
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