Defence kills bills with $2.6m OCR rollout

The Department of Defence will transfer manual processing of 600,000 paper invoices a year over to a $2.6 million scanner-fed, optical character recognition (OCR) system as part of an ongoing automation of its accounts payable systems.

Residing under the umbrella of Defence's Corporate Services and Infrastructure Group (CSIG), the new system will be implemented and integrated by services giant CSC and is essentially comprised of a four-step process that will see paper invoices eventually ported straight into Defence's SAP financials package.

While hardware for scanning and feeding is still under consideration, Defence has confirmed it will run with Top Image Systems' eFlow recognition software porting over to an Ixos e-content management system to correct, label, store and manage documents before data is up-loaded into SAP.

"What we are planning on doing is having a 'look-up' into the SAP system to pick out all of the purchase order details, along with all of the goods received [details] so we can do the matching [reconciliation] exercise. Once that's all done it will be loaded into SAP as a completed document," CSIG's project director for accounts payable imaging, Mike Seymour said.

Seymour added that the new solution had come as the result of a review of CSIGs accounts payable system in 2001 that recommended a review of the way information technology could streamline business processes.

"It's basically to improve the effectiveness and efficiency of the business," Seymour said, adding that the selection of hardware would come from existing arrangements CSIG had with Defence's information systems division.

Feeds for the system will come from two centralised processing points, the first one of which is expected to be operational by August 2004.

Asked why Defence had opted for an OCR solution rather than migrating suppliers directly onto direct data interchange systems, Seymour said the solution was a matter of pragmatism.

"[Defence] is obviously looking at e-business - getting invoices electronically and straight into the system - but that's a process that will probably take a little while to get to an end state. In the interim, we are trying to look at our paper-based solution and trying to cut down on the amount of processing involved," Seymour said.

IDC's research director for software and services Brooke Galloway said that when it came to automating business processes, many software vendors had concentrated their offerings on the procurement side rather than looking at how transactions in areas like accounts payable were executed.

"Most e-business hasn't focused on workflow [across the whole of the enterprise]. That has been a later consideration. This is why large scale ERP applications vendors will continue to dominate this space," Galloway said, adding that even most large applications vendors were still coming to terms with how to push scanner-loaded data up into their offerings.

"ERP has recognised that it was little bit behind, but it is catching up," Galloway said.

CSC declined to respond when asked to comment.

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