The Bolero Experience

1
The Bolero Experience

• Alan AsayBolero International LimitedLondon UK

2
Overview

• What is the Bolero System?
• The Bolero System began operations exactly two
  years ago. What have we learned from our
  experience?

3
Objectives and our role
What is the Bolero System?

• Mission Facilitate international trade through
  electronic means
• Focus on trade documents
• Common legal and security basis for international
  business transactions
• Role A trustworthy, central operator
• Trustworthy
• Disinterested and cross-industry make-up
• Commercial-grade security, tracing and auditing,
  operational stability
• Financially responsible risk-bearer
• Central
• Focused to a universal transactional switch/nexus

4
Community sharing a common infrastructure
What is the Bolero System?
Bolero users comprise a contractually based
community sharing a common legal and technical
infrastructure.

• Technological Infrastructure
• Messaging
• Applications enabling transactions
• User administration and support

Legal Infrastructure Bolero Rulebook Community
self-governance Service contracts
Seamlessly woven together.
5
Who does what in the Bolero System?
What is the Bolero System?
Bolero International Whos in For-profit
shareholders Roles Trustworthy central
operator Developer Sales and marketing
Bolero Association Whos in All users are
members Roles Bind all users to
Rulebook Rule-making Discipline and eligibility
Users Global Many legal systems, languages,
cultures Trade Our value lies in facilitating
trade
Organisation
6
Why do you need a trustworthy, central operator?
What is the Bolero System?

• Setting a system-wide security baseline
• Ensure proof of authenticity enable attribution
• Provide for confidentiality if desired
• Commercial-grade messaging
• Proof of receipt
• Logging, tracing, and auditability
• Functional equivalents for difficult
  transactions, e.g.
• Bills of lading through central Title Registry
• Electronic document Receipt, contract of
  carriage
• Negotiability through Rulebook and database
  recording transfers
• Payment instructions (comparable to bills of
  exchange)

7
1. Implementation isnt easy
What have we learned?

• Implementing an actual conversion to paperless
  trade is more difficult than we anticipated.
• Reasons why
• Assembling trade chains requires a driver willing
  to
• Enable suppliers also to convert to paperless
  documents
• Manage risks and uncertainties of outmoded (but
  improving) legal and technical infrastructure
• Evolving regulatory schemes in developing
  countries
• Public-key certificates
• Encryption
• continued

8
1. Implementation isnt easy
What have we learned?

• Why implementation has been difficult
• Detailed issues of functional equivalence
• Major benefits come from system integration, not
  just conversion to paper (i.e. it costs even
  more!)
• Macro-economic slow-down
• Chicken-and-egg issues with software partners
• Long learning curve
• Secure messaging Digital signatures,
  acknowledgements
• XML documents
• Legal culture clash, e.g. English-law concepts in
  the German legal mind

9
1. Implementation isnt easy
What have we learned?

• Problems being solved
• Assembling complete trade chains
• Detailed equivalence issues
• Business case for full integration
• Interface software
• Long learning curve

• Continuing problems
• Encryption regulation
• Macro-economic unease on the part of would-be
  implementers

10
1. Implementation isnt easy
What have we learned?

• Successes in spite of challenges
• Coffee from Colombia to EU, Japan
• Large European retailer
• Metals
• Sales have been remarkably strong.
• Lots of prospects are waiting in the wings to see
  how these projects go.

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2. What is local, what is central
What have we learned?

• Enrolment
• Proof of corporate existence and identity
• Proof of agency
• Initial digital signature key generation and
  certification
• A barrier to entry into the Bolero community.
• Cause Enrolment is a local process but we are a
  central organisation.
• Solution Go to a local enrolment agent.

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3. The basic principles remain true.
What have we learned?

• Paperless trade is faster and cheaper.
• National Federation of Coffee Growers of Colombia
  found
• Investment paid back in 12 months. The rest is
  clear savings.
• Faster response time saves their customers
  moneyjust-in-time ordering and shipping with
  fewer snafus. The Federation can compete more
  effectively.
• The Federation get paid more quicklyless float
  while the bank waits for documents to arrive.
• Case study at www.bolero.net/decision/casestudies/
  .
• Digital information security is better than
  paper.
• Digital signatures provide greater assurance of
  authenticity.
• Encryption makes possible a high degree of
  confidentiality (subject to some restrictions in
  a few countries)

13
3. The basic principles remain true.
What have we learned?

• Private-sector infrastructure responds
  effectively to change.
• Economics, technology, and globalization have
  dramatically increased the pace of change.
• Laws and treaties change too slowly.
• A self-governing community of interest is the key
  to coping with rapid change.
• The technology is ready. The greater problems
  involve people.
• Most of our implementation difficulties were
  people problems. People love ideas but hate
  change.
• These get better with time.