FinTechBig DataWhy (and how) to move from OCR to EDI

Why (and how) to move from OCR to EDI

Although Electronic Data Interchange (EDI), which is the intercompany digital exchange of business documents, has become an information-sharing standard, technologies such as Optical Character Recognition (OCR) remain relevant alternatives. How is it that a technique initially developed in the late 70s, used for visually identifying characters in the text and translating that into a computer code, can still (at least to some extent) compete with a modern data management solution that is much more elaborate?

In general, OCR seems to have what it takes to do the job – it can help automate various data exchange processes; it can perform compliance verification; it can be used for many different types of documents, including letters, invoices, delivery notes, and purchase orders; it also allows for easy onboarding and document management (a file is sent via e-mail, then OCR works its magic).

As exciting as it sounds, OCR has a fair share of limitations. For example, you cannot be 100 percent sure that data extracted from a given document is correct when you use it. You will always need to verify that piece of information. It is a matter of an economic trade-off between automatisation and mismanaged documentation. Plus, compared to EDI, OCR is more expensive (in the long run; getting started with EDI requires a relatively bigger investment). Not to mention that most OCR systems do not support “right-to-left” languages.

Let’s now take a closer look at EDI. Not only is it a perfect solution for large corporations (to exchange documents both internally and externally via systems that are not interfaced with one another), but it also supports countless document types. Although some companies say that onboarding poses a challenge, getting your partners and clients to jump on the EDI bandwagon usually results in building stronger business relationships, so – in the end – it is definitely worth the struggle. Plus, “struggle” is too heavy of a word. Onboarding can be user-friendly if the process is well-designed. And there are EDI platform providers, such as Comarch, that are perfectly aware of that.

It would be hard to imagine a prosperous company operating without an EDI system these days, given that we are all so interconnected. Running a business in 2021 means you need to follow the technological progress as closely as possible – and then find a way of using the latest solutions, such as data exchange platforms, to your advantage.

So, how do you approach “OCR-to-EDI” migration?

Every company interested in EDI should focus on the segmentation of their supplier/customer network first, which is the analysis of all internal document exchange processes. If you do the segmentation correctly, you will meet all partners’ and clients’ needs. At this stage, it should also be determined the exchange of what type of documents (payment advice, orders, price catalogs, inventory reports, sales reports, transport instructions, and so on) need to be automated.

The first group should comprise partners with whom you exchange large amounts of business documents each month. Those would be the best candidates for the EDI implementation. Of course, you need to consider that some may not have an appropriate IT infrastructure to introduce EDI. Thus, you must discuss such matters with each of them and find out what their options are.  Well, that’s the price you pay for the seamless and cost-effective electronic document exchange.

The second group should consist of smaller trading partners, with whom the exchange of documents happens occasionally. Here, the best solution would be using a WebEDI application. Why? Because your suppliers don’t need to invest in their IT infrastructure to send and receive EDI messages and do so efficiently. The only downside of this approach is that somebody must perform manual work to bridge the gap between trading partners’ internal systems and the web application. Fortunately, modern WebEDI solutions provide many features that can make a strenuous job like this feel like it’s a walk in the park.

The needs of the final group can be addressed – wait for it – with OCR! That’s right. Considering it should be a group of partners that share only a small number of invoices with you each month, OCR will be perfect for that. Those partners are less likely to invest in an EDI solution as they usually exchange paper or PDF documents.

What it all means is that both EDI and OCR can help your company improve its business efficiency and reduce operational costs. Thus, the most important decision you need to make (if you want to go digital) is to choose the right system; one that will meet your company’s (and your business partners’) needs and expectations. And remember, there are many different EDI and OCR solutions out there – so make your choice count.

 

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