What is Intelligent Document Processing - IDP Explained

In today’s fast-paced business environment, organizations are managing large volumes of documents - from invoices and purchase orders to contracts and shipping records. Manually processing these documents can slow down operations, increase errors, and reduce overall efficiency. While traditional tools like Optical Character Recognition (OCR) and automated document processing help reduce some of the manual burden, they have limitations when it comes to handling complex, unstructured data. This is where Intelligent Document Processing (IDP) stands apart.

In this article, we will explore what IDP is, how it differs from other automation tools like OCR and RPA, and why businesses should care about its capabilities. We’ll also dive into the key features of IDP, real-world industry use cases, and essential factors to consider when choosing the right solution for your business.

What is Intelligent Document Processing (IDP)?

Intelligent Document Processing (IDP) addresses these challenges by combining Artificial Intelligence (AI), Machine Learning (ML), and Natural Language Processing (NLP). IDP automates the entire document processing workflow, from extracting and categorizing data to validating it, providing a more comprehensive solution for businesses that deal with high volumes of both structured and unstructured documents. Unlike OCR, which relies on templates and only captures text, IDP understands the context of the documents and adapts to various formats without requiring predefined rules.

What Intelligent Document Processing is Not

Despite its advanced capabilities, IDP is often confused with simpler automation tools. Here’s how IDP differs:

• Not just OCR: While OCR can read text from images, it requires templates to interpret the extracted data and doesn’t understand the document's context. OCR can never fully automate the entire document process - it only tackles one step: text recognition. IDP, on the other hand, not only reads but also understands and categorizes the information, adapting to various document formats without templates.
• Not just Data Capture: Data capture extracts information but doesn’t validate or transform it. IDP, however, validates and transforms the data, integrating it directly into systems like ERPs or CRMs.
• Not the Same as RPA: Robotic Process Automation (RPA) mimics human actions to automate rule-based tasks, but lacks the ability to process unstructured or semi-structured documents intelligently. IDP brings intelligence to document processing, making sense of both the content and the context.

Another approach that is often misunderstood as IDP is automated document processing. While automated document processing and IDP share some similarities, such as speeding up workflows and reducing manual tasks, IDP is more advanced. Automated document processing typically handles structured data using predefined rules or templates, whereas IDP can handle both structured and unstructured data. IDP continuously learns and adapts to new document types and workflows, providing a more scalable and intelligent solution that automates the entire document lifecycle, from extraction to validation and system integration.

How Does Intelligent Document Processing Work?

Intelligent Document Processing (IDP) automates the capture, extraction, and processing of both structured and unstructured documents. The goal is to streamline document workflows by using AI, Machine Learning (ML), and Natural Language Processing (NLP) to achieve higher accuracy and efficiency. Below is a high-level breakdown of the typical IDP process:

Key Steps in the IDP Process

1.  Pre-Processing
   Before extracting data, the document undergoes a “clean-up” phase to ensure it's ready for analysis. This involves improving the quality of scanned images by removing imperfections like smudges or adjusting the document layout. This makes sure the system reads the document clearly, reducing potential errors down the line.
2.  Document Classification
   The system then identifies what type of document it’s working with - whether it's an invoice, a contract, or something else. By understanding the document type, the system knows which information to focus on, helping it decide the best way to process and extract the data.
   
3.  Data Extraction
   Once the document is classified, the system pulls out the necessary information. For example, on an invoice, it will identify the invoice number, date, and total amount. Technologies like OCR help in recognizing text, and the system can handle various formats, whether printed or handwritten.
   
4. Validation
   After extracting the data, the system checks if it’s accurate. For example, if it pulls a date from a document, it will make sure the date format is correct and matches expected values. This step helps prevent mistakes and ensures the data is trustworthy.
5. Automted Checks
   The system also runs automated checks on the data to verify it further, especially for repetitive tasks like cross-referencing numbers or double-checking fields. This removes the need for constant human intervention in routine checks.
   
   
6. Human-in-the-loop (HITL) Validation
   For documents where the system is unsure, a human reviewer steps in to double-check the results. These manual reviews are fed back into the system, helping it improve over time and reduce the need for intervention in the future.

Key Features and Benefits of IDP

Now that we understand what Intelligent Document Processing (IDP) is, the next question is: why should businesses care about it? The answer lies in the tangible benefits IDP offers for companies dealing with high volumes of documents. Whether you're in logistics, manufacturing, or finance, IDP transforms manual, error-prone workflows into streamlined, automated processes, saving time, reducing costs, and improving accuracy.

Let’s explore the key benefits and features that make IDP so valuable for businesses today.

Benefits of Intelligent Document Processing

• Automation: IDP drastically reduces manual work by automating document processing at scale, eliminating repetitive tasks, and freeing up teams for more strategic activities.
• Accuracy: By leveraging AI and Machine Learning, IDP minimizes human errors in data extraction and ensures that the data being processed is reliable, which is crucial for businesses where precision is key.
  
• Speed: IDP turns hours of manual document processing into seconds, speeding up workflows and enabling businesses to respond faster to customer needs or internal demands.
• Scalability: Whether processing a few hundred or thousands of documents, IDP scales effortlessly with minimal manual intervention, making it suitable for businesses of any size.

Key Features of IDP Technology

• AI-Powered Learning: IDP systems that utilize AI continually improve by learning from past inputs, allowing them to handle new document formats and layouts more efficiently.
  
• NLP Capabilities: Extracts context from unstructured data, such as emails or contracts, making it easier for businesses to capture relevant information from a variety of sources.
• Seamless ERP Integration: Some IDP solutions integrate directly into systems like SAP and Oracle, automating the transfer of data and reducing manual input in critical business processes.
• Human-in-the-loop Functionality: While most of the process is automated, with some solutions human intervention can be available for critical errors, ensuring an additional layer of accuracy and reducing the likelihood of mistakes.

Industry Use Cases of IDP

IDP’s ability to automate document-heavy processes makes it invaluable across a variety of industries. From logistics and finance to manufacturing and wholesale, IDP drastically improves efficiency, accuracy, and scalability, helping businesses handle large volumes of documents while reducing manual labor.

Logistics

In logistics, managing documents like invoices, delivery notes, and order confirmations is crucial to ensuring smooth operations. IDP streamlines these workflows by automating document classification and data extraction, allowing companies to process these critical documents much faster.

Finance and Accounting

For finance teams, managing high volumes of invoices, purchase orders, and bank statements is time-consuming and prone to human error. IDP automates the processing of these documents, ensuring compliance with regulations and improving data accuracy.

Manufacturing

Manufacturers handle a large number of documents such as purchase orders, supplier contracts, and invoices, and any delay can disrupt the supply chain. To combat this, many companies are turning to Intelligent Document Processing (IDP) to streamline document workflows and eliminate bottlenecks. A great example is CiS, an electrical manufacturer that used Workist’s IDP solution to revolutionize their order entry process. By automating repetitive tasks and drastically reducing manual effort, CiS was able to speed up order processing, improve overall efficiency and win back valuable time for their customer service.

Wholesale

Like manufacturers, wholesalers deal with significant volumes of documents from both the sales and procurement sides - handling purchase orders, order confirmations, and invoices for both clients and suppliers. IDP automates these repetitive tasks, improving speed and reducing errors.

What Problems Does IDP Solve?

Intelligent Document Processing (IDP) addresses a range of pain points faced by businesses across different industries. Whether it's dealing with overwhelming volumes of documents or struggling to maintain data accuracy and compliance, IDP provides solutions that reduce manual work, improve data consistency, and lower costs. Let’s explore some of the most common challenges that IDP solves.

• Manual Data Entry: Traditional document processing relies heavily on manual input, which is not only time-consuming but also prone to human error. IDP replaces this slow, error-prone process with AI-driven automation, enabling businesses to process thousands of documents in a fraction of the time.
  
• Data Inconsistency: In manual workflows, data inconsistency is a common problem due to varying formats and human errors in document handling. IDP ensures that the data extracted is consistently accurate by using AI to validate and cross-check information across different document types.
• Compliance Issues: Many industries, such as finance, healthcare, and manufacturing, face strict regulations regarding data handling and document management. IDP helps businesses meet compliance requirements by automating data validation and securely processing sensitive documents, ensuring adherence to industry standards.
• Cost of Errors: Mistakes in manual document processing, such as misplacing a decimal point or entering incorrect data, can have serious financial implications. IDP reduces these costly errors by automating the extraction and validation process, ensuring that the data is accurate from the start.

What to Consider When Choosing an IDP Solution?

Choosing the right Intelligent Document Processing (IDP) solution is crucial for businesses looking to streamline document workflows, enhance accuracy, and reduce costs. Below are some key factors to consider when evaluating different IDP solutions, ensuring that the chosen solution meets your needs and delivers maximum ROI.

• Integration Capabilities and Fast ROI: One of the most important factors to consider is how easily the IDP solution can integrate with your existing ERP or CRM systems, such as SAP or Oracle. A well-integrated solution ensures smooth data transfer, automates workflows, and enhances overall efficiency. Furthermore, quick and easy integration minimizes downtime and results in a faster return on investment (ROI). Look for solutions that are simple to implement without causing major disruptions to your business processes.
  
• Adaptability to Unstructured Data: A good IDP solution should be flexible enough to process both structured and unstructured data without relying on templates. This adaptability ensures the system can handle diverse document types, from invoices to contracts, without manual setup.
• AI and Machine Learning: The IDP solution should leverage AI and ML to continuously improve over time, learning from the documents it processes. This also means there is no need for prior training and the system can deliver good results from day one. Its intuitive ability to comprehend a variety of document layouts and file types allows for immediate, efficient processing without extensive configuration.
• Validation: Ensure the solution has the capability to validate extracted data. For example, master data validation, as used by Workist, ensures the data is accurate by cross-referencing it with internal systems or external databases. This reduces the chances of errors in critical documents.
• Human-in-the-loop Functionality: While automation is the goal, there are times when human intervention is necessary. The right IDP solution combines maximum automation with maximum safety, allowing for minimal but effective manual intervention when required. Human-in-the-loop functionality ensures that an employee can step in when necessary, providing an extra layer of security and accuracy.

By following these key considerations - ensuring seamless integration, adaptability to unstructured data, leveraging AI for immediate and accurate results, and validating data with minimal manual intervention - you’ll be well-equipped to choose the right IDP solution for your business. A well-chosen IDP system will not only streamline your document workflows but also set you up for long-term success by enhancing efficiency, accuracy, and scalability.

Conclusion and Key Takeaways

Intelligent Document Processing (IDP) stands out from traditional solutions like OCR, RPA, and other document processing technologies by offering end-to-end automation that combines AI, Machine Learning (ML), and Natural Language Processing (NLP). Unlike OCR, which only captures text, IDP understands the context of documents and continuously learns from the data it processes, adapting to various formats and layouts without requiring predefined templates. IDP also goes beyond RPA, which automates rule-based tasks but lacks the intelligence to handle unstructured documents or adapt to new document types.

The key benefits of IDP—such as its ability to automate at scale, improve accuracy by minimizing manual errors, and reduce processing times from hours to minutes—make it a game-changer for industries dealing with document-heavy workflows. By reducing manual intervention, ensuring data consistency, and enhancing compliance, IDP offers both operational efficiency and significant cost savings.

For businesses considering implementing an IDP solution, the return on investment (ROI) is clear: faster processing, fewer errors, and the ability to scale with ease. By automating document workflows, reducing manual intervention, and improving accuracy, IDP has the potential to transform how businesses handle their data across various processes. Whether it’s streamlining order entry, processing invoices, or ensuring compliance in procurement, IDP can help unlock new levels of efficiency. You can find more information on how IDP can benefit your operations - such as the traditionally time-intensive order entry process - on our website (www.workist.com).