OCR, Integration, And Company Merger Add Value To Scanning
With the cost of document management hardware decreasing, VARs need to find ways to add value to the sale and stay profitable. Systems integrator ICG Consulting, a division of LeapSource, has changed its focus from consulting to integration over the past 10 years.
First you must identify the business problem, then you can figure out how to apply the best technology," said Maurice Rodriguez, senior partner with ICG Consulting, a division of LeapSource (Phoenix). ICG was founded in 1989 as a four-person consulting firm concentrating on workflow and imaging in the healthcare industry. Over the years, it has shifted from consulting to integration.
"Our business is 10% consulting and 90% integration now," said Rodriguez. "We migrated to the finance and accounting side of business, not by choice, but by happenstance. Companies with a need in that area sought us out. We have become very well-known for our work in the finance and accounting world. But we provide solutions anywhere there's a paper and workflow problem."
Natural Attraction Leads To Merger
ICG continually looks for ways to provide greater value and more choices to its clients. "We wanted to get into the ASP (application service provider) and outsourcing arena, but we didn't have the financial backing to do that," said Rodriguez. "A new company, called LeapSource, was looking for a partner that could provide best practices and world-class solutions. There was a natural attraction."
LeapSource was founded in September 1999 by a group of former Arthur Andersen partners. They included Chris Kirk, now LeapSource's CEO, and Julie McCollum, now LeapSource's COO. "We wanted to offer options to our clients," said Kirk. "Those options take a traditional consulting time and materials model and shift to a co-ownership model. We create a solution and rent it back to our clients, or outsource it for them. We want to be the virtual back office of our clients so they can focus on making money."
LeapSource's core competency is in BPO (business process outsourcing). "BPO reduces the cost to the end user," said Rodriguez. "It minimizes the amount of time the end user spends on applications. The biggest advantage to customers is that instead of capitalizing hardware and software, they can now expense it. This way they don't have to go through a long approval process. For example, an investment can be amortized over five years rather than going through a capital acquisition request through the organization."
LeapSource looked into licensing some of ICG's finance and accounting applications. ICG had addressed some of the specific problems that finance and accounting departments in all types of business encounter. "We agreed, through negotiations, that licensing wasn't the best option, so we decided to merge," said Rodriguez. "Through our merger with LeapSource, we now give more choices to the customer. We can provide solutions as a systems integrator installed in-house, or as an ASP. Or we can perform outsourcing services to address a business problem."
Applying OCR To Accounts Payable
Most companies have finance and accounting departments, with general ledger, accounts payable, accounts receivable, credit, and collections. Rodriguez relayed how ICG addresses the considerations in one area of finance and accounting - accounts payable.
"The problem is that accounts payable departments scan documents just for archival storage and retrieval," stated Rodriguez. "It's difficult to automate their front end systems because accounts payable departments can't control the forms they receive. Invoices come in varied sizes and formats. An employee usually just scans an invoice or takes information off it, as an afterthought for storage and archiving."
ICG adds value to the scanning process by helping companies automate the front end of their businesses. "We add more intelligence to the scanning process," illustrated Rodriguez. "So, the end user can automatically enter data, even in an accounts payable situation. Therefore, the client gets the maximum from its imaging system."
To automate the many different types of invoices, Rodriguez stressed that intelligent software is needed, like OCR (optical character recognition) or ICR (intelligent character recognition). "But this requires a template for each document that information is pulled from," he said. "Every type of invoice that comes into a company needs its own template. A large company with 25,000 vendors would need 25,000 templates. Most OCR packages don't cater to more than 100 templates at a time. It can take a half hour to make one template. Multiply that by the total number of documents, and you get into hundreds of man-days." ICG invented a product called OCR for Payables as a method to create templates in less than five minutes.
"The next step in the process is to identify which template to use from a library of many that OCR for Payables created," explained Rodriguez. "Our system handles tens of thousands of templates. It can sort through them very quickly, identify the vendor, and decide which template to apply. Identifying the vendor is the most labor-intensive part of accounts payable."
Rodriguez said that too many people are scanning at the back end or are spending too much time on the front end entering data. Therefore, scanning becomes ineffective. And for the process to be effective, it's important to get a quality image of the document. "The Bell & Howell Copiscan 8000 production scanner has an ACE (adaptive contrast enhancement) card that allows us to get a quality scan at 200 dpi (dots per inch)," he said. "This allows a small file size and still enables OCR. In accounts payable departments, 50% of the labor is in data entry. So, if you get a good scan, OCR will shorten the data entry process."
Converting From Paper To Digital
Rodriguez believes that converting paper to digital as fast as possible allows a company to leverage workflow systems. "We did this at Alliant Foodservice with 1.8 million documents," he said. Alliant Foodservice, Inc. is the nation's third largest food distributor, with $7 billion in sales. Alliant currently processes invoices from more than 15,000 vendors. It uses workflow and imaging applications for accounts payable.
At Alliant Foodservice, corporate interest earnings increased by $7 million because of improved cash flow. The cost per invoice decreased from $4.50 per invoice to less than $1. Alliant takes advantage of 100% of vendor discounts by automating its accounts payable system.
"We enable our customers to focus on their businesses," said Rodriguez. "A food distributor can concentrate on food. We bridge the gap between the business world and technology."
What's ahead? Many companies are looking toward Web enablement in their imaging systems, said Rodriguez. "All of our applications are Web-enabled. Our scanner technologies allow our customers to scan remotely and share those images to central databases or image bases." The technology ICG provides has evolved significantly from its origin more than 10 years ago. Still, it aims to solve its clients' business problems and not just push technology.
Questions about this article? E-mail the author at AnnD@corrypub.com.