Comparing OCR software versus OCR Service for Document Management & Data Entry Solution

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Author Kevin V. McQueen Internet fax and Document Management professional

Can cloud computing solve your data entry of paper forms problems? This article considers the feasibility of document management under the SaaS model and gives a quick snapshot of the application elements that should be involved when looking at renting versus building an OCR Document Management solution for automated data entry of paper.

For the purpose of this article, we define OCR SaaS as a means of outsourcing data extraction from forms into the cloud to a Service Bureau, while having access to data for image archiving and for exception handling. Technically, this could be considered a hybrid SaaS model.

Buying Software and Hardware to enable a premise document management application versus outsourcing the application should come down to a sound business case with quantitative analysis. Although there should be many components that go into the business case as defined below, the basic process is about understanding the cost for three basic decisions.

• The cost of doing nothing-What is the hard and soft cost for processing paper today?

• How much will a premise solution cost?

• How much would it cost to outsource this function?

In further drilling down on the cost of the options, the following list should be considered if your company is in need of automating manual data entry of paper and is considering the question of in-house versus outsourcing its data entry needs.

1. What is the cost of doing nothing? Including hard and soft cost.

2. Inbound forms- paper or digital?

3. If paper, they need to be digitized. If digital, are images skewed or of poor quality?

4. Are you using fax machines, a fax server, or a fax service?

5. Image quality- OCR software does not read poor image quality or low dpi images very well; the image will need to be enhanced for an accurate read, so this requires another software package.

6. What kinds of forms are being received? Structured or unstructured. OCR software alone is not 100% accurate with unstructured forms. How will this be handled?

7. Will the software vendor give a guarantee for their accuracy claims? Hint, no.

8. How will you handle false positives?

9. Will the OCR Service offer accuracy guarantees? Hint, yes.

10. Does it make sense to incur training cost to train data entry staff on using OCR software? What is the turnover rate in this department?

11. What accuracy rate is required to guarantee a reduction in FTE´s for the data entry task, this is an important component of your business case. Since labor can be both a fixed and a variable cost how will this apply to your data entry operations scheduling with relation to the accuracy rate?

12. What is the lifespan of the hardware and software before it is obsolescent for your cost of capital formula?

13. Can the OCR software interface with an Image archiving solution and what is the capital expenditure for archiving hardware and software?

14. What is the annual cost for hardware, software, training, maintenance, and implementation for an in-house OCR solution versus the transactional cost of using an OCR Service? How much will the learning curve cost?

15. What is the cost of implementation delays if they occur? How well does your IT department meet its implementation schedules?

16. Redundancy- Is disaster recovery required, what is the cost of redundancy?

17. When considering the capital expenditures equation, is risk part of your discount factor for the NPV equation for a premise solution?

18. Does your business have peak periods? Is the turnaround time an important consideration? How do you handle staffing for peak periods?

19. Does the Service Bureau solution eliminate the challenges of peak period staffing? Hint, yes.

For applications like OCR document management to automate data entry of paper forms, it is crucial to understand all the cost of a solution. One must consider both the hard cost and soft cost of processing paper for all three decisions. Depending on the application, the soft cost can be more than the hard cost. For example, consider the cost of mistakes caused by errors. They should include all the cost incurred by data entry mistakes like, re-keying cost, stocking, shipping and the cost or poor customer service which can be difficult to measure but can be obtained through exit interviews. Go to OCRSERVICEBUREAU.com for a spreadsheet tool that will assist you in capturing all the cost of processing paper.

In today´s global economy, efficiency is the name of the game. Since resources are never unlimited, intelligent use of capital is crucial; understanding your cost and options for OCR related document management will assist your company in maximizing its profits.

For more information on outsourcing your paper processing needs, feel free to contact Kevin McQueen

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