In a recent survey we conducted, a quarter (25.5%) of MAP readers said they plan on using imaging technology in their AP departments in the near future. For them, choosing a vendor to provide the technology will be a daunting task. Reason: There are many vendors out in the market. And, of course, they all purport to be the best.
How can you avoid being blinded by all the flashy marketing hype? Fortunately, two independent research organizations have analyzed the vendor landscape and have come up with what they consider the cream of the crop. MAP has no reason to doubt their findings, but we will add a few comments.
Consultant Mumbo Jumbo
As is their usual practice, consultants and vendors have come up with a bunch of acronyms that describe all or part of the imaging process, such as DM (document management), IDM (integrated document management), IWA (imaging and workflow automation), ECM (enterprise content management), WCM (Web content management), DC (document capture), DCC (document-centric collaboration), and several more. They will also toss around terms such as mapping, archiving, front-end, back-end, smart enterprise suites, and so on—enough to make your head spin!
Whatever they call it, the imaging process is simply this: Turning paper invoices into digital images that are stored in a Web-based repository for fast retrieval. The images are routed electronically for approval, and invoice data is extracted for posting to the general ledger. You can also query the system to find out about the status of invoices (for example, those that are pending approval or past due). Plus, you can extract data to use to develop performance metrics, such as average invoice processing time.
The benefits of an imaging process for AP are evident: elimination of paper invoices and a faster invoice payment process. This means reduced costs for document storage and staff, as AP departments can typically reduce headcount (or redeploy them to more valuable tasks). Also, faster invoice processing means a greater ability to capture early payment discounts and avoid late-payment penalties.
In one landmark case, General Electric used imaging and several other tools, such as e-invoicing, EDI (electronic data interchange), and ERS (evaluated receipt settlement) to streamline AP and slash incoming paper invoices. GE was receiving four million invoices per month and was able to reduce paper invoices from 85% of total volume in 1999 to 24% by 2002. Amazingly, it was also able to capture $65 million in additional early payment discounts because of the new setup and reduced AP staff headcount from 220 to 110 employees.
The ‘Magic Quadrant’
The Gartner Group (Stamford, CT) is a well-known and leading independent consultant in the area of business software systems. It investigates vendors and the markets for all types of automated applications.
Gartner is famous for its "Magic Quadrants," which map out how vendors stack up against competitors in the same market space. Exhibit 1 contains the Magic Quadrant for vendors of ECM (enterprise content management) applications. Vendors are placed in one of the four quadrants based on the interplay of two variables, completeness of vision (that is, the vendor’s strategic plan) and ability to execute (that is, whether the vendor has the resources to carry out its vision).
Vendors in the leaders quadrant are financially strong and have a complete vision for their products, which are comprehensive in terms of features and functionality. Visionaries have strong foresight, but their market performance hasn’t demonstrated good execution. Challengers have a substantial number of installations, but their vision is lacking. Plus, they don’t own all of the core components of the system they offer (they partner with third parties to provide certain components). Niche vendors have incomplete or very basic products but are seen as being valid contenders in this market.
The vendors that you see in the Magic Quadrant all have at least $10 million in annual revenue from imaging or document management applications, and they offer at least three of what Gartner considers the six core ECM components: (1) document management; (2) Web content management; (3) records management; (4) document capture and imaging; (5) document-centric collaboration; and (6) workflow.
Key point: These ECM vendors do not necessarily offer an AP-specific product, although some do (such as Hyland, FileNet, and Stellent). However, they all offer an overall document management framework or infrastructure into which AP can fit.
Gartner advises companies to consider an overall companywide solution, as opposed to a patchwork quilt of systems set up in various departments. Interestingly, it predicts that by the middle of next year, half of the vendors you see in the Magic Quadrant will merge or be acquired by others. Plus, by 2007, it predicts that the big guns (Microsoft, IBM, Oracle, and SAP) will make strides in this area—enough to control 50% of all new business.
Narrowed-Down Analysis
A second analysis of imaging vendors looks at AP-related solutions in particular. This analysis, done by PayStream Advisors (Charlotte, NC), results in a vendor map similar to—but less sophisticated than—Gartner’s. PayStream’s analysis (Exhibit 2) takes into account a vendor’s vision for IWA (imaging and workflow automation) as well as "market traction," which simply means the number of organizations using or implementing the vendor’s product.
You’ll notice that some vendors that appear here do not appear in the Gartner analysis (Kofax, BasWare, ReadSoft, LASON, and AnyDoc). This does not mean that these vendors should not be considered. Indeed, they may offer something more relevant for AP’s use.
We prefer Gartner’s analysis because it takes into account the vendor’s financial health and resources. After all, why pick a vendor with a lot of users but who may not have the deep pockets to survive?
Differing Opinions
Because of the inherent differences in the two analyses, it’s interesting to note how the two think tanks treat the three vendors that are common to both (Stellent, FileNet, and Hyland).
If you compare the two exhibits, you’ll see they both put Stellent at about the same place in the pecking order. However, they differ on where the other two vendors should be placed. Gartner considers FileNet a leader and Hyland a challenger. But PayStream thinks the opposite—giving Hyland better marks for vision and including it high in "market traction."
We should point out, however, that the two analyses look at two different pools of vendors. Plus, the variables are somewhat different.
Bottom Line
In any event, the vendors in both analyses should be on any company’s list to consider when shopping for an imaging application. Check with other companies in your industry to see what they’re using. Some industry associations may have some sense of this or may even endorse a product. For example, the American Hospital Association (AHA) has given its exclusive endorsement to Hyland’s system.
Plus, you may want to check out systems from vendors that, for one reason or another, did not show up on the two radar screens described above. They include DataServ (www.dataservsolution.com), Payable Systems (www.payables.com), Xign (www.xign.com), Archive Systems (www.archivesystems.com), and Image Integration Systems (www.iissys.com).
For More Information
The full Gartner analysis, Magic Quadrant for Enterprise Content Management, is available at www.gartner.com. The document ID is G00123392. Price: $495. For the PayStream report Efficiency & Cost Management in Accounts Payable: OnBase Imaging & Workflow Automation Solutions, go to paystreamadvisors.com or call 704-523-7357.
