By Ed Wingate, Head of Strategic Partnerships at Aluma
The high-volume document processing market has been around for over 20 years. The beginnings of the market originated with Optical Character Recognition (OCR) technologies being applied to bulk document scanning activities. With the advent of this technology came opportunities to introduce automation into an otherwise labor-intensive process.
Organizations could leverage this technology to eliminate manual labor costs associated with keying in data from documents. But, while OCR was revolutionary at the time, it wasn't exceptionally reliable. In addition, as with most technologies, as they matured, businesses encountered a productivity plateau. For many organizations, OCR eliminated some manual resources, yet there remained a substantial amount of error checking, which required additional labor in the process.
To counteract this, the task of keying in data was outsourced.
Desperately in need of a solution, the market shifted, and deployment of powerful scripting tools was introduced, allowing error checking, logic, and other manual involvement to be automated. Scripting overcame the shortcomings of the prior generation of tools and provided an alternative to the labor-based model. However, these changes created unintended consequences, one being that there were substantial fixed costs associated with new scanning operations, scripting, and professional services.
Naturally, technology addresses the acute problems of previous generations. As modern organizations continue to evolve online, so do the problems they face. To combat these challenges and truly optimize high-volume document processing automation, organizations must rethink their existing processes and embrace new technologies.
Market Forces Affecting Document Processing
Introducing new technologies creates a dynamic market where various parties can benefit depending on their ability to adapt and exploit them. Before adopting and embracing new technologies, being aware of how external sources impact the market helps create a better picture of how a specific technology can be beneficial.
Labour Supplier Impact
Considering the impact labor suppliers have on the market can't go unstated as many organizations leverage outsourced labor to complete manual tasks. Professional service requirements are substantial and the costs associated continue to rise each year. Similarly, an operator labor cost is still present, and even when outsourcing, prices continue to rise.
Chasing the next cost-efficient outsource opportunity is a challenging business model for many organizations. By looking at the market, one thing is sure: technology cost is dropping, whereas manual labor options are rising.
The tradeoff between technology and labor shifts with each generation. With newer technologies surfacing, businesses have to look at the availability of this technology and evaluate whether now is the time to alter their approach.
Backfile conversion is still a demand today, yet not as much as the days when multiple filing cabinets of documentation were waiting to be digitized. With the substantial drop in necessity, the average backfile conversion size has decreased over time, yet, a rise in re-indexing has increased as a result.
The way documentation was previously indexed was often limited, due to a lack of technical capabilities at the time. This in turn limited future use of the information in many ways but has duly opened up a new market opportunity for modern re-indexing services.
New Entrants to the Market
In the past, high-volume document processors might engage one customer that would constitute the bulk of their volume – a bank with account openings, mortgage processing, and backfile conversions for example.
Now, we're increasingly seeing that there are “category killers” disrupting the market. A great example of this is in retail with office superstores replacing mom-and-pop family businesses. These superstores become increasingly efficient at selling one specific service instead of offering a portfolio of general services. New entrants are now offering specialized mortgage processing, for example, to several customers instead of obtaining total volume from one source.
These digital-native category killers have developed a business model around specialization and just-in-time processing. It is the latter that places demands on their processes and technology to be equally nimble and responsive to changing demand.
While external factors can cause disruption, so too can new technologies within the same space. For example, self-serve desktop technologies are rising to become an option for customers to do it themselves.
While largely unreliable, these self-serve options create a perception that customers no longer need to find a service-based solution. They can instead spend a bit of money and their own time to obtain the same result as outsourcing. Service providers have to keep in mind that to remain competitive they need to do things efficiently, accurately, and to cost, whether through manual labor or other processes.
And while these desktop technologies can't compete with 99.9% accuracy, understanding that this is a competitive threat over time is crucial – including the acknowledgment that perception shifts themselves can cause market rifts.
What Does This Mean for the Market?
Analyzing each piece of the puzzle helps us get a clear view of the market as a whole:
- Smaller average deal size due to reduced backfile conversion
- A move to on-demand versus batch processing
- Increasing category killers
- Responsiveness matters now more than ever
As a result of needing to be on-demand and responsive, volumes are volatile and unpredictable, meaning the utilization of systems, processing power, and user adherence becomes very volatile. All this points to the fixed cost model becoming unsustainable.
Rethinking high volume Document Automation
Traditionally, technologies have a lasting impact on the market across a significant period. Enhanced by the digitization of information, modern technologies are now developed at an accelerated rate, meaning more market shifts, faster.
Agility and speed are more critical than ever for modern organizations, as failing to adapt quickly severely impacts their bottom line. A large portion of this agility can be aided by the implementation of document intelligence enriched with AI technologies.
Document intelligence can improve the speed of document classification and provide more sophisticated data extraction, significantly reducing the time required to configure intelligent systems without compromising accuracy. Furthermore, automated data validation and error-checking functionalities provide a means for even poorly OCR'd documents to provide nearly 100% accurate data.
Tools like in-line data cleansing can open up low-cost handling processes without undermining security controls, especially with off-shore processing.
We’ve recently explored these functionalities in more detail, including a deep dive into the market for high-volume scanning operations with our webinar: “Rethinking High Volume Document Automation”. If you missed the live event, be sure to check out the recording here: