Real-Time Economy – End to Redundant Paperwork and Paper-Pushing Economy
‘There are no good times, there are no bad. The present is all there is to be had. What starts will never come to an end. Neither beauty nor ugliness is part of the plot’.
With these verses, the Estonian poet Artur Alliksaar has perfectly captured the nature of time and reality. It is especially topical in these trying times of global virus outbreak, but also relevant for the real-time economy concept. Interestingly, the term ‘real-time economy’ (RTE) is nothing new. It was first used as early as 2002 in The Economist’s article “The Real-Time Economy: How about Now?” by Ludwig Siegele. This article demonstrated how ‘real-time’ information was implemented and used for management purposes in the General Electric company.
Due to rapid technological developments and growing business data exchange, the time was ripe for introducing automated bookkeeping and e-invoicing in digitally advanced countries. It was then that RTE became a research subject in Finland’s Aalto University, which even established an RTE competence centre and started work on developing the concept. Many research papers were written in 2008. According to the grandfather of the concept, Bo Harald, RTE is ‘an environment where financial and administrative transactions connecting citizens, business and public sector entities are (i) in structured standardized digital form, (ii) increasingly generated automatically, and (iii) completed increasingly in real time without store-and-forward processes’. This makes it an ecosystem that encompasses all the economic actors: public sector, private sector, and citizens.
It is estimated that bookkeeping and accounting services constitute approximately 0.7–0.8% of the GDP, although Estonia is well known for its high level of digitalisation with anecdotal examples of establishing a company in 20 minutes and filling in personal tax return forms in 20 seconds. This is one of the reasons why the RTE concept regained traction in Estonia nearly ten years after its first impression. During the last few years, Estonia has assumed a leading role together with Finland in implementing RTE principles in Nordic-Baltic cooperation.
In 2019, the Tallinn University of Technology conducted an academic research on “Real-Time Economy: Definitions and Implementation Opportunities”. It established that ‘real-time economy is a digital ecosystem where transactions between diverse economic actors take place in or near real time. This means replacing paper-based business transactions and administrative procedures by automatic exchange of digital, structured and machine-readable data in standardized formats’. A separate study on the economic impact of RTE was conducted by Tieto Estonia AS, which found that switching to RTE solutions in selected processes would save over € 210 million and over 14 million working hours per year, and reduce greenhouse gas emissions in Estonia by over 27,000 tonnes per year. This indicates that there is a lot of vacuous activity, or more bluntly – paper-pushing – in traditional business practices.
Why is it all necessary? On top of these self-evident quantifiable facts, RTE-based tools can help with faster crisis management or even prevent problems that arise during this pandemic by providing real-time overviews of medical products, food supplies, and essential goods. However, the full potential of RTE will be achieved only through continued international cooperation and investments into both intellectual and material capabilities.