The Cornerstone of Digital Transformation — OCR (Optical Character Recognition)
What is OCR(Optical Character Recognition)?
OCR is a technology which can recognize text on image or documents (such as pdf), users can set the specific requirement and extract the elements needed for further use. The potential application scenario will be auto data entry, image recognition, documents saved in digital version, and search element of scanned documents.
How can this technology help your company?
Currently, lots of companies still rely on manual work and paperwork for data entry process, however, it might be cost benefit in the short-term but will lose competitiveness in the long-term. Therefore, OCR is a great solution for your company to survive and become better under this digitalization trend. There are plenty categories of OCR technology from the software provider, and users, can choose your needs based on specific industry demand. For instance, retailers can use receipt OCR or purchase order OCR to further optimize process precisely.
When it comes to data collection, I think hiring process may be a good example to demonstrate that OCR can enhance user experience on external side. By using OCR tool, candidates can upload their resume on the website, afterward, OCR will auto detect and entry the information for the candidate, which save lots of time and effort.
To sum up, for internal process optimization and external user experience improvement, OCR is a great solution under both circumstances.
How to evaluate the value of this technology?
It’s very hard to evaluate the value of using a technology as well as process optimization. Therefore, we can start the decision-making process from the market size of this application. Based on research wrote by Grand New Research, OCR market size is 10.65 billion USD in 2022 and expect to reach 33.50 billion USD by 15.4% CAGR. And the key segment in this market will be B2B business which account for about 75% market share. According to this result, there is a lot of room for improvement in the penetration of this technology.
On the other hand, speaking of the cost, there is a more convincing and logical reason for us to take actions. We all know that the more mature and popular a technology is, the lower cost and higher efficiency to apply this technology. Conversely, the labor cost will be higher as time passed. Although digitalizing your process may not make huge impact of your business immediately, it will play an important role to attain more competitiveness in the long-term scheme.
Cost and Benefit Calculator
To further evaluate the cost and benefit of OCR project, we need to make some assumptions first.
1. The saved time of using OCR will be 50%. (Because we may still need human examination and the learning curve concerns)
2. Each worker can input 40 pages data in an hour.
3. We’ll use pages needed as the key factor to calculate current cost and new cost.
4. All the direct cost and indirect cost take market information as a reference and slightly revised by author.
5. Because some OCR suppliers provide their service bundled with online cloud platform, the price will have some difference with the actual situation.
Based on these five assumptions, we can calculate the breakeven point and try to explain the result of this calculation. For companies with fifty document handling workers, it’s probably not realistic to transfer the manual key-in to OCR according to higher cost occurred.
However, for companies with lots of manual work, it’s important to rethink about this solution and make a better decision under different cases.
Summary
Although there are lots of advantages to using OCR to replace manual work, the digitalized process contains some risk meanwhile. Data security, API connection, training of new system, unexpected error, document storage and handling, and service supplier policy are all the potential risk we have to prevent and control. Notwithstanding the drawback, under the digitalization trend, higher competitive market environment, and higher value of data, OCR is the indispensable cornerstone for a company to achieve their goal easily and become the market leader in the industry.
Cost & Benefit Calculator link: https://reurl.cc/xQl5Y
Special thanks to Eddy Chung and Ting Yu Liu.
