Today, businesses are experiencing a profound shift in the way they process transactions. Digital technology has become the foundation upon which organizations connect important documents, data sources and records into back-end databases and seamlessly deliver the information those databases contain via internal networks and the cloud.
Many organizations have embraced business process outsourcing (BPO) to cut costs and streamline workflows. In our experience as a BPO service provider, clients that outsource can cut the cost of departments such as accounts payable by 40 to 60 percent. Still, paper-based information is the lifeblood of many organizations, serving as the primary vehicle for receiving information from customers, partners, regulatory agencies and employees. According to a recent study by industry analyst firm Paystream Advisors, 84 percent of invoices enter processing in formats that include paper, fax and email attachments.
Most critical business activities, such as processing loan applications and insurance claims, still rely on paper as a primary “process intake” mechanism, creating parallel but disjointed paper and electronic work environments as well as a challenging infrastructure for completing important workflows. This reliance on paper creates several challenges when implementing an outsourced operation, including ensuring that original documents are connected with their digitized versions and are readily accessible at every step of the workflow process. When you digitize information from an invoice and enter the data into an enterprise resource planning (ERP) system, you must assume that someone at some point in the process will want to view the original invoice to obtain a more complete picture of the details connected with the transaction.
Considering the critical information value that paper-based documents contain, it is essential that companies ensure this information is converted accurately into digital content and is integrated into the appropriate databases. Making this process efficient requires technologies such as optical character recognition (OCR) to digitize the content and additional steps to properly validate and ingrate it into organizational systems. The conversion of paper-based content into digital workflows is the front-end process to BPO and is so critical that Canon Business Process Services has coined a term for it: business process imaging, or BPI.
What is business process imaging?
Many people erroneously believe that BPI simply involves scanning, but in reality, it goes far beyond that. BPI involves digitizing, indexing, validating and integrating paper-based content into digital workflows and databases. BPI breaks document input into a process and automates it as much as possible. The process, for example, can include receiving a paper document, scanning it, extracting critical information from the document and then ingesting that data into the relevant business process, such as an accounts payable system.
There are several characteristics that distinguish BPI centers from scanning centers:
- BPI eliminates manual data entry using intelligent OCR technology, automatically validating the data as it is being captured and pushing it and the scanned documents into workflow or ERP systems.
- Unlike scanning centers, a BPI center has a physical document processing capability and therefore handles a portion of the business process as part of the scanning and data capture process.
- A BPI center is attached to one or many business processes, such as accounts payable, claims processing and international trade finance, while scanning centers are typically detached from the business process they serve or feed.
- Unlike a scanning center, a BPI center is accountable for achieving service levels for different document types. Some documents, for instance, must be converted within an hour of receipt, while others must be converted within 24 hours or an even longer time frame.
An effective BPI program should encompass four stages:
- Receiving paper and digital documents
- Scanning those documents using intelligent OCR and extraction
- A transaction setup process
- An outbound print mail and distribution process
Documents can be received via USPS, FedEx and UPS as well as through digital channels like fax, FTP, email and various Web-based e-commerce portals. Once the documents are received, they are scanned with free-form, intelligent OCR that extracts, matches and validates data as it is being scanned. After they are scanned, some physical documents — for example, signed applications, checks or a physical item like a credit card that must be retained — may require additional processing in the transaction setup stage.
The BPI center also encompasses outbound print mail distribution activities. A portion of the incoming transactions requires some sort of outbound communication by physical mail, like a check that is missing a signature or an application that was not properly filled out. A BPI center has the equipment and the staff to handle outbound communications the same day, saving time and improving customer satisfaction.
Choosing the right provider
The vast majority of businesses do not have the ability to create and maintain an effective BPI program in house. Many companies in sectors such as financial services, insurance, health care, manufacturing and legal — primarily companies in service industries — have opted to outsource their BPI programs so they can remain focused on their own clients’ needs.
There are many factors a company must consider when choosing a BPI provider. Based on a company’s size and scale, it may choose to work with a local, regional, national or multinational provider — one that provides an on-site, off-site or hybrid model. The provider must have the ability to carry out the BPI program required of that organization, which depends on several variables, including the desired business outcomes, labor and technology requirements, the volume and pattern of incoming mail or documents, location, security, information flow, cycle time, performance mandates, handoffs, and costs. Lastly, the provider’s scalability is an important factor to consider. Even if the organization wants to start with one aspect of BPO, such as accounts payable outsourcing, we recommend factoring in the provider’s ability to provide other services should the company decide to expand its BPI program.
As mentioned earlier, the three BPI models companies can utilize are on-site, off-site and hybrid. An on-site model, located within the client’s facility, offers the highest customization and the best integration with the BPO operations it supports. On-site BPI operations can be outsourced while ensuring control and security. However, on-site BPI operations are also the most costly because they are more customized and comprise a much lower volume scale.
An off-site BPI model is one in which the BPI center is located outside of the company’s facility, and documents are sent there to be digitized. The electronic data and images are then pushed into the company’s systems, and paper documents are either returned to the company or shredded. While this model has a lower cost than an on-site BPI model, the disadvantages include less customization and longer cycle times.
Many companies opt for a hybrid BPI model: a blend of on-site and off-site/offshore BPI centers. In a hybrid model, the goal is to minimize the time and labor associated with mailing or scanning, then use technology and offshore labor to finish the conversion work. After scanning the paper, the OCR, quality assurance and data processing are completed online from offshore operations. Many companies prefer the hybrid BPI model because the results are similar to an on-site or off-site BPI model but are available at a lower cost. Additionally, there are no facilities, hardware/software systems or staff to manage.
Payoffs and challenges
The use of BPI solutions can pay significant dividends as businesses accelerate the pace of their digital conversion processes. The following are a few of the benefits:
- Reducing costs by automating information retrieval and administrative time in companies of all sizes
- Significantly increasing operational efficiency by more quickly providing information when and where it is needed
- Increasing customer satisfaction by enabling faster and more accurate response times
Besides benefits, there are also challenges associated with operating BPI solutions:
- Coping with a high variation in transaction volume, such as receiving 5,000 insurance claims on Monday and 500 on Thursday
- Effectively using and maintaining technology that supports the operation
- Integrating BPI processes with other business systems within the organization
Implementing a BPI program may seem daunting, but as long as the company chooses the provider and program that best serve its unique requirements, the benefits will be experienced almost immediately and will create a ripple effect throughout the entire organization, significantly cutting costs and improving workflow.
This article originally appeared in the December 2013 issue of Workflow.