On a daily basis, business executives must keep up with changes in the business dynamics of how businesses operate. In doing so, they devote a significant amount of time to considering the adoption of cutting-edge technologies.
Regardless of how much executives swear by their instincts and gut feelings, the reality is that very few executives can get their way without a clear objective analysis of the investment needs that justifies the budget spend.
Total cost of ownership (TCO) and return on investment (ROI) are two popular methods for securing funding for planned initiatives.
Total Cost of Ownership (TCO) is a calculation method that determines the total cost of a product or service over its life cycle. TCO is more than just a number on a piece of paper. It should notify the following relevant stakeholders:
Direct costs are derived from keystroke count and are nothing more than workforce-related expenses in terms of FTE Load. The Full-Time Equivalent (FTE) Load is the effort required to perform data entry tasks by one employee full-time. For example, if there are 9 employees, each employee will work 9 hours, and if each data-entry operator’s efforts in hours are equivalent to 3 hours, the data entry FTE Load is 3.
The costs described above are typical for a manual invoice data extraction process. An OCR-based invoice data extraction process incurs additional costs.
Templates are commonly used in data extraction systems based on OCR engines for invoice data extraction. A template is either a zonal OCR engine extractor with fixed page locations for individual data fields or a rule-based OCR engine extractor with a series of if-then rules telling the software where to look for specific information and a parser to make sense of that information.
In addition to direct and indirect costs associated with employee wages, there are additional cost structures that must be considered when establishing a data-extraction system.
Costs will differ depending on the vendor, the implementation, and the organization.
Licensing structures differ from one vendor to the next. Almost all structures are renewed on a yearly basis. It can be a one-time fee or a pay-per-use arrangement ($/page, $/field, $per document type), or a combination of the two. It can grow as functionality improves. In general, a cloud-based AI-powered solution may be more expensive than an on-premise template-based OCR data-extraction system.
Initial setup takes time, requires management involvement, evaluation of the extraction system with vendors, and IT-related enablement (if on-premise), and is thus costly. Integration, system configuration, and setup, as well as template configuration, are all required.
As needed to account for changes in layout and structure: Depending on the type of data extraction system chosen, costs can be attributed to activities such as creating and deploying configuration files, customizing extractors, configuring parsers, and pre-validating using training sample sets.
Even with automated data extraction systems, some organizations will still have to process a significant portion of their invoices manually.
Insufficient volumes of a vendor invoice may not justify the development of an automated data extraction template. As with manual data extraction, indirect costs such as verification and rework must be considered. The costs for managing the external consultants who maintain the OCR software are typically the hidden costs.
The greater the number of errors, the higher the cost of data extraction. This is where TCO estimates frequently fail. Cost leakage is also caused by delays and inaccuracies. Organizations must go to great lengths to ensure adequate pre-processing for a smooth and error-free data extraction process. To improve the accuracy and efficiency of the automated data extraction processes, discussions on invoice layouts, field descriptors, page background, font size, number of pages, and so on may be required. Such costs, however, are difficult to quantify and factor in.
While some organizations may dismiss the TCO calculation as a simple heuristics exercise, TCO data is more important than one might think. It is critical to the successful implementation and monitoring of a data extraction system capable of automating downstream Accounts Payable processes.
Are you interested in efficient invoice data extraction, with 100% accuracy at a calculated low cost?