Are real-time controls changing trade as we know it?
Interview with Christiaan van der Valk, Vice-Chair of the ICC Commission on the Digital Economy.
Mr van der Valk is the President and Co-Founder of TrustWeaver and a recognized voice on e-business strategy, legal, policy, best practice and commercial issues.
Over the past 20 years he has presented at and authored several key papers for high-level international meetings at the Organisation of Economic Cooperation and Development, European institutions, the Asia-Europe Meeting, the World Trade Organization and several other UN Agencies.
What ICT trends are currently on your business’s radar?
There are many trends, but I’d say that one of the most significant is where companies are increasingly accessing software via connection to remote servers, commonly referred to as the “cloud”. Eighty percent of companies are increasingly using cloud-managed services, which provide software as an online service, rather than licensing and installing the software on a computer.
It’s not just businesses that are seeing the benefits of using of this technology, governments are also using cloud services for improving their efficiency, effectiveness and the quality of public services. For example, some tax administrations have started a trend towards auditing invoices while they are being processed by business applications, rather than years later as has historically been the case. Suppliers and buyers are given the opportunity, or are more often obligated, to use a cloud platform operated or controlled by a tax administration. Transactions must then be sent for automated pre-approval at defined steps.
This move towards what we call “real-time transaction controls” has been the start of a silent revolution in tax compliance, which has since spread to many countries. The trend is also spreading functionally, from invoices to other documents of public interest, and from tax administrations to other law enforcement authorities. This is creating interesting dynamics where complex business systems and processes need to adapt to ICT systems designed by the public sector.
Could a world with appropriately interconnected cloud-based processes improve efficiency for business and government?
If implemented the right way, cloud technology could be a win-win proposition for business and governments alike. But this promise of improved efficiency and resource savings isn’t currently being realised.
Governments are designing their cloud-based control and public service systems in relatively closed environments and there isn’t much coordination, not only between countries but among such systems within countries. There is more consistency within the private sector, but the level of coordination isn’t proportionate to the magnitude of investment in and likely future importance of cloud-based systems. This lack of coherence within and between private and public use of cloud-based processes is currently undermining efficiency and increasing compliance costs which is particularly troubling for SMEs.
How do you think these trends could evolve considering the proliferation of emerging technology like blockchain?
We’re not nearly done with understanding how cloud technology can be used to maximum impact and already other paradigm-shifting technologies such as blockchain – a distributed trust model – and artificial intelligence are quickly becoming household words. Both the public and private sectors have already committed large budgets to experimenting with combining these technologies with cloud, which could be mutually reinforcing. However, there needs to be greater dialogue and coordination between stakeholders as these innovations evolve. Without that, savings and process benefits compared with paper-based trade may not be fully realized.
What does this mean for business and trade as we know it today?
I think business processes and the ICT systems that encapsulate them will need to adapt to concepts designed by public sector architects. For example, technical standards for the exchange of business data between suppliers and buyers will probably migrate or need to interact with real-time government platforms. The enormous diversity among real-time control systems, and the rate at which government requirements in this space evolve, will pull businesses in many different directions. This could make high-quality integration virtually impossible – undermining efficiency, slowing down innovation, trade and stifling economic growth overall.
Is there a constructive role ICC could play?
A trusted platform is needed where the public and private sector can meet and start to chart out a path forward. Such an effort needs to be global, cross-sectoral and trusted by all stakeholders. Frankly, I think only ICC meets those criteria. This is why we’ve started a dialogue group with experts from both sides with ICC as the convener. We’re hopeful good progress can be made in the next year or two.