Going with the Flow

The combination of imaging and workflow technologies is making life a lot easier in the back office.

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If you take the long view, imaging technology has a big problem. Initially designed to handle reams of reports generated by mainframes in the 1970s, imaging adapted in the 1980s to local, decentralized PC networks and the copious printouts they produced. But the late 1990s is finally beginning to see some of that paper disappear, thanks to increased systems integration, sweeping enterprisewide systems, and high-speed networks based on Internet technologies. Does this mean that imaging will be relegated to storing pretech documents and servicing legacy systems? Not anytime soon. Vendors are determined to keep up with the times, shifting their focus from the simple capture and storage of paper documents to managing digital as well as paper documents, linking documents by function, handling document workflow, and integrating these document management functions with enterprisewide systems.

Oracle users, for instance, can now choose from a number of third-party products to image- enable their finance modules. Scanned documents can be automatically routed to the appropriate function and linked to their corresponding records in the Oracle system. When, say, an invoice comes in from a vendor that doesn’t have an ID number, the invoice is automatically E-mailed to the appropriate staff member, who creates the appropriate vendor ID; then the message is routed back to Oracle.

Advances in technology are spurring the convergence of imaging and workflow. “When LANs [local area networks] were first introduced, only about 35 percent of staff members had regular access to E-mail,” says Ed McNierney, chief technology officer for Billerica, Massachusetts-based Eastman Software Inc. (formerly owned by Wang Laboratories Inc.). “Now, between 85 and 95 percent of corporate users are on line. The possibilities for routing work and images have greatly increased.”

Paul Barber, marketing director for imaging at Unisys, in Blue Bell, Pennsylvania, says the combination of imaging and workflow pays off in applications such as insurance claims processing. Claims officers must review a variety of documents–such as word-processing files, photographs, or letters–in order to process a case. With imaging and workflow technology, all these documents can be linked together on line. If an officer decides to pay a claim, the relevant documents can be automatically routed to managers who must approve the decision, and then the payment record can be routed to an enterprisewide package that may handle, among other things, accounts payable.

Over the past several years, imaging vendors have been aggressively pursuing relationships with leading enterprise software vendors such as Oracle, SAP, and PeopleSoft. Oracle, for one, has been particularly aggressive in reciprocating. Unisys and Eastman Kodak are major Oracle business partners, which means a joint commitment to product integration and technological compatibility. Last March, Mississauga, Ontario-based Lava Systems Inc., a vendor specializing in document management, imaging, workflow solutions, and COLD (computer output to laser disk) storage, signed on with Oracle; so did Emeryville, California-based IA Corp., which sells image- based software to help banks automate their lockbox services.

The ultimate aim of imaging vendors is “to put images into context,” says Lori Nave, Lava’s director of marketing. Lava’s recent efforts, both with clients and with enterprise-systems vendors, have been to create an integrated environment in which records can be seamlessly passed between imaging and document management applications and common financial packages. “The goal is to eliminate rekeying and let users pull up image-enabled documents via their enterprise applications,” says Nave.

Lava and other vendors are learning to mesh their products with an increasingly integrated systems environment. In the process, imaging is becoming a commodity. Sophisticated software, scanning hardware, and the other building blocks that make up imaging systems are now cheap and, to a great extent, interchangeable, thanks to the ongoing development of technology standards.

A top 10 technology

Another sign of the continued significance of imaging technology comes from the American Institute of Certified Public Accountants (AICPA). Each year the AICPA asks a panel of members to choose the technologies that will have the greatest impact on the accounting profession (see “Hitting the Charts,” page 56). This year image processing was voted number 2, behind security; last year it was number 1. Workflow was also a top 10 technology, at number 8.

It isn’t hard to see imaging’s relevance for finance departments, which have traditionally deployed small armies of clerks to keep mountains of paper at bay. This is especially true in the realm of accounts payable. When an imaging/workflow system can be integrated with a company’s financial software, accounts payable can become far more productive and cost-effective.

With imaging, invoices no longer have to be input and filed manually; both head count and the rate of errors can be dramatically reduced. Some products enable suppliers to fax invoices directly into the system, providing a cheap alternative to EDI (and eliminating the need for scanning and indexing). The time required to process invoices is also slashed. That translates into a smaller percentage of invoices paid past net terms, and a greater amount of discounts earned. And when auditors visit, automated storage and retrieval make it easier to provide documentation.

Such benefits are being realized by many companies, including the two profiled on the following pages–Carnival Cruise Lines and IGT. Both have successfully applied imaging and workflow to accounts payable in an integrated systems environment.

CARNIVAL: SAILING A SEA OF INVOICES

Miami-based cruise line Carnival, a division of $2 billion Carnival Corp., uses imaging and workflow technology to achieve close to “straight-through” processing in accounts payable. (Straight-through processing refers to the paper-free completion of a series of tasks on line.)

“A few years ago we were drowning in paperwork,” recalls Carol Conine, the firm’s director of financial technology. Invoices were sorted by hand, then walked over to A/P clerks, who matched them with purchase orders contained in the firm’s Oracle accounts payable module. If necessary, invoices would be routed to managers for approval, in which case an extra copy of each invoice was made and filed at a clerk’s desk.

Next, invoices were input into the Oracle system, verified, and processed into a batch file, which would be turned over to the cash disbursements department. The cash disbursement staff would copy and file these invoices and use Oracle to print checks. Each check would be matched against a copy of the original invoice; once checks were approved, invoices would finally be filed in a large, warehouselike room.

Changing this cumbersome system to a streamlined, imaged-based process began in earnest in early 1995, when Carnival chose Unisys’s imaging and workflow products for the job. Conine and other members of the implementation team decided that a gradual approach to implementation would work best; during the past two years, Carnival has been steadily adding new imaging and workflow functions to accounts payable–for instance, automated approvals and the ability to query directly from Oracle to the imaging system.

Today, invoices are either faxed directly by vendors into Carnival’s imaging system or scanned into the system in batches. Each image in the system is assigned basic indices, such as the vendor’s Oracle ID number and the invoice number. Because the imaging system is linked to Oracle Financials, input clerks can type in partial vendor names and automatically receive a list of known vendors. The index information can then be automatically attached to the invoice. If there is no vendor ID number on file, the record proceeds to an electronic queue for problem resolution.

Once indexed, invoices are automatically sorted and matched with their corresponding purchase orders in the Oracle system. If there is no match, the invoice proceeds to an electronic queue and is routed to a staff member who can resolve the exception. Otherwise, the linked invoice and purchase order moves on to the staff member who handles payables for the vendor in question. (The workflow software sends invoices through the system according to a series of business rules, which may include staff member names and the vendors they are responsible for.)

At this stage, the invoice may still have to be printed in order to get approval from a manager; Carnival is currently implementing the on-line approval function that comes with the workflow software. But even in cases where paper copies must be submitted for hard-copy signatures, the signed documents can be rescanned into the system and rejoin the workflow process.

The end of paper

Once invoices have been processed and approved, they are sent in electronic format to the cash disbursement group. The Unisys software automatically links the payment information from Oracle to the imaging record. After the checks have gone out, invoices are routed to an electronic filing cabinet, where they remain available on line for future queries. (All records associated with a particular invoice are now linked, making on- line queries much easier.)

The Oracle and Unisys systems work in tandem, giving users a seamless, easy-to-use interface. About 30 staff members now use the new accounts payable system, says Conine. Cost of the system, along with another imaging- based system used for personnel records: $1.5 million, including hardware, software, and consulting assistance.

Conine says Carnival estimated it would achieve return on investment about five years after the systems were implemented in December 1996. “Within a few months, it became evident that the imaging and workflow systems would soon pay for themselves,” she says.

Carnival will expand its use of imaging and workflow, predicts Conine. Prime targets include adding functionality to the personnel system so that administrators on Carnival ships can access staff records on line, and streamlining payroll processing. Meanwhile, IT staffers are planning to look into Web- enabling portions of the imaging systems to allow on-line reporting–and access to reports- – through a secure, corporate intranet.

IGT: COMING UP A WINNER

Reno, Nevada-based IGT, a wholly owned subsidiary of International Game Technology (FY 1996 revenues: $733.4 million), sees imaging and workflow software as a means of coping with explosive business expansion.

“We started out as a small company, and we grew fast,” says Cindy Nelson, manager of systems development for IGT, which designs and manufactures slot machines, video-game equipment, and proprietary software for game monitoring systems. “Soon, our [Nevada] manufacturing plant was operating at maximum capacity, and we had parts and supplier invoices coming in fast and furious.” In turn, invoices, packing slips, and other supporting documentation had to be matched to their corresponding purchase orders. Says Nelson, “We decided that it would be more cost effective in the long run to automate this process than to hire a lot more clerks.”

However, the firm’s first implementation of imaging software, in December 1993, didn’t pan out. “The first imaging tool’s workflow package did not work well with our existing accounts payable software,” says Tim Suiter, a senior programming analyst in the IS department.

So, in August 1995, IGT went back to the drawing board, establishing five criteria for systems selection. These were the supplier’s commitment to maintaining the technology, the supplier’s willingness to provide implementation assistance, the robustness of the underlying technology, the technology’s useful life, and the software’s compatibility with IGT’s accounts payable software. (As part of its initiative to improve accounts payable, IGT was also installing new A/P software in its AS/400-based Maytex enterprise system, which tracks financials and manufacturing operations.)

At the end of the selection process, the company chose Eastman Software’s Open/image and Open/workflow products. Implementation began on January 15, 1996. IGT took a “big bang” approach to implementation, directed by a small team comprising IS staff and two representatives from the accounting department. Ninety days later, the system was brought on line.

A user meeting was held one month into production, to learn how the software could be streamlined and modified to better suit users’ needs. That led to a top 10 list of modifications, says Nelson. “Now that the accountants and bookkeepers have had a chance to guide the development process, they ‘own’ the system, and they are much more enthusiastic about adopting new functions,” she reports.

Today, new invoices, packing slips, and other supporting documentation are scanned into the system and indexed according to various codes. New images then sit in a queue for a maximum of five days, waiting to be automatically matched. If they are not matched within this time period, an exception report is automatically routed to the appropriate staff member. Otherwise, the matched records proceed to the data entry area.

The system’s workflow capabilities have also made auditing much faster and more efficient, allowing general-ledger postings to be reviewed according to a variety of business rules. If, for example, a bookkeeper posts something above his or her audit limit, the posting is automatically flagged. (The business rules are flexible, and can be easily changed.) Likewise, the time it takes to conduct the weekly, random audit of checks to be disbursed has been slashed from approximately 32 FTE hours to 2 FTE hours. Many auditing tasks can now be completed on line, says Nelson, and exceptions can be efficiently routed among staff for quick resolution.

Thanks to imaging and workflow, managing IGT’s accounts payable process requires much less time and effort than formerly, says Nelson. Encouraged by its success, the company is considering the technology for accounts receivable and for credit, sales, and order administration; all of these functions could benefit from workflow, says Nelson. One day, she adds, virtually all of IGT’s back-office functions may be connected via workflow, providing a framework for straight-through, enterprisewide processing.

The AICPA’s Top 10 Technologies for 1997

  1. Security
  2. Image Processing
  3. Communications Technologies
  4. Internet & Public Online Services
  5. Training & Technological Competency
  6. Year 2000
  7. Electronic Commerce
  8. Workflow Technology
  9. Private Networks
  10. Electronic Data Interchange

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