Image by Digital Strategy, CC license

Although EDI has been around for 20 years, lots of companies still process orders and invoices manually; that is, they receive a written, faxed, or e-mailed purchase order or invoice, then  type it into whatever software they have for tracking and fulfilling orders and paying suppliers.

If you  can’t or don’t want to get into EDI with your trading partners, there are at least two other options: buying software to image the paper documents and convert them to digital format for integration to your systems, or outsourcing the imaging and integration to a third party.

Let’s review the first option.  ReadSoft is one leading vendor offering document imaging.  The company states that it’s solutions “automate the processes of scanning, interpreting, and filing of invoice data,” and provide “seamless workflow integration with SAP, Oracle and over 50 ERP systems.”  The software enables three-way matching of invoice, purchase order, and contract.

My experience with ReadSoft is that it is a solid solution; although the expertise began with invoices the company also manages the purchase order side as well.  The companies that I know use ReadSoft have purchased it as an “on-premise” solution; that is, they have purchased the license for the software and installed it on a server within their organization.  It has a good rules-based engine for checking documents for certain attributes prior to integration with your main systems.

The second option is to outsource the receipt, capture, filtering, and integration to a 3rd party.  One vendor that does this is OmPrompt, a UK-based firm that is relatively small but boasts numerous marquee brand-name global companies as clients.  I also have experience with this company and indeed their solutions are solid and deliver as promised.

OmPrompt, in simple terms, works like this: your paper traffic is diverted to the company, you apply whatever business rules and filters to those documents, and OmPrompt then sends to your ERP system the proper digital files to complete the transactions.  OmPrompt handles business from around the globe, from the Middle East to China.  OmPrompt also processes EDI exchanges, and customer claims — a huge headache for many companies.

Which type of solution — on-premise or service — is better for you?  I am biased toward services rather than buying software, but you do need to consider the pros and cons in a balanced way:

The on-premise solution might be better if you want tight integration with the SAP or Oracle workflow, although the OmPrompt service can also filter invoices, claims, and POs based on your contracts and business rules.  The service-based solution removes the obligation to maintain server, operating system, licenses, users, and the core software;

Cost-wise you may pay much more upfront for the on-premise solution (license, installation, configuration, server, etc.) as well as 20-25% of the license cost each year for software maintenance.

The service option is very low-cost, after some setup fees, because you are using computing power that is shared across many clients.

Whichever option you choose, automating the manual work will bring clear returns:  reduced administrative work and solid internal controls to ensure you’re paying what you should on invoices and claims, plus the ability to standardize your inbound purchase orders or create a web portal for order capture.

If you visit OmPrompt in the UK you can stay in the nearby dreamy, historic, and beautiful town of Oxford. Photo by Tejvan Pettinger, CC license.

What if you want to make sure all of the data on a customer’s order is correct before it is processed in your systems?  Or if you want to stop orders that you can’t fill based on time constraints?  Many firms at first apply humans to these tasks (customer service), but what if you process 55,000 orders per year?  There must be some way to automate this screening process, right?

There are at least three ways to handle this problem with software.

The first is to modify your ERP system, to incorporate the rules you will apply to every order that is received.  Not only will the ERP system apply the rules and identify exceptions but alert you to those orders that must be stopped and changed before proceeding through the order cycle.

This is certainly a viable option, but you’ll find yourself pouring lots of money into it, with no end in sight, because as soon as you successfully incorporate a set of order checks, the business will come up with a new set of checks based on a new logistics or pricing strategy.  Most ERP systems are not built with user-configurable parameters; changes require programming by expensive resources.

The second is to build some type of middleware filter.  This is a custom application that every order would pass through before entering your ERP system.  The middleware would catch and hold up non-compliant orders.  A lot of firms adopt this route, because it is so much less expensive and much more flexible that tearing into the guts of an expensive ERP system.  And there is no shortage of eager programmers, within company IT departments, who want to build such a tool, in the language they know best on the computing platform they know best.

This second option is better than the first, but barely.  The second option makes you dependent on the genius that builds and maintains that middleware tool, and that is almost as bad as being dependent on an ABAP (SAP code) programmer.  And there will be instances where no matter how brilliant your middleware architect, certain business requirements will be beyond the capabilities of him/her and/or the software they have created.

The third option is to outsource your order capture, partially or entirely, to a firm that has the systems agile enough to handle the ever changing order filters your business may want to apply.  The advantage of these firms is that they serve as adapters: the incoming order is converted to a standard computer script where all of your rules can be applied; the script is then converted to the digital code (such as EDI) needed by your ERP system.

One firm that does this is UK-based OmPrompt, which specializes in automating business processes for large firms all around the world.  Their services are based on transaction volume and are very inexpensive relative to software modifications or building your own system.

I favor outsourcing the job not so much because someone else can do it better (although that is true) but because you cannot predict what is coming down the road in terms of new business requirements.  You need an open system, an infinitely-adjustable capability, if that is possible.  And firms that make their living on being adaptable to requirements like yours will always have more value to offer.