It All Adds Up

Today, Apr 2004 by Terry, Jim

Calculation the Hidden Cost of Forms Processing

It is easy to overlook the hidden costs of manual data entry, expenses that are often rolled into the day-to-day business but impact the amount of manual labor that is needed to support it. In addition to an employee's hourly wage and benefits, other expenses such as overhead, training and administrative costs should be factored in. It's important to consider all these variables when calculating the cost of forms processing in order to develop a more efficient solution.

PROCESS AND INFRASTRUCTURE

To determine the overall costs associated with your organization's current forms processing, start by taking a look at your infrastructure. The key to improved management of information comes from within. Organizations should take into account every aspect of the workflow process-imaging, data extraction, data entry, verification, quality assurance and document management-as well as the people behind it. Traditionally, these components have been managed through costly manual processing.

CALCULATING COSTS

To find out how much you are spending on forms processing, first consider the activities involved in each step of the process-locating a form, entering data, reviewing, making corrections, and routing-and the length of time each activity typically takes to complete. Keep in mind other factors such as form loss, re-routing, hidden exceptions, data verification, manual data entry for invalid fields and final processing. Then, identify the number of people you have allocated to these tasks.

Based on this information, consider the hourly wage of each employee involved in the process. In addition to the hourly wage, factor in taxes, company bonuses, insurance, paid leave and other monetary benefits. These costs calculate to the hourly cost of your forms processing personnel.

You will also need to factor in overhead costs of running your business, which include office space, computer and office equipment, office maintenance and security. Finally, look at the administrative costs of hiring, training and overseeing data entry personnel. Based on 2002/2003 statistics, the combined costs of overhead and administration add an additional $5 per hour for each employee.

As a result, the annual costs of a data entry operator typically falls between $33,000 and $40,000.

PRODUCTIVITY

Once you have calculated salary, overhead and administrative costs, it is important to factor in the performance of your data entry operators. By assessing the number of fields a keyer can process per hour, you can determine how efficient they are and how quickly you achieve a return on investment. For field-intensive forms, companies face the pressure to process more fields quicker and with greater accuracy.

Forms with many different variations can also affect productivity. Having to collect separate forms into batches for scanning and possibly include slip-sheets between the various types further increases the labor costs associated with sorting forms before they can be processed.

For standard, high-volume forms, such as checks and healthcare claims, recognition software can be tailored to the unique structure and layout of the form to reduce manual processing and improve accuracy. Choosing solutions that enhance image quality can also reduce the amount of labor necessary to process a form. In addition, professional data entry software packages have the power and reliability it takes to speed up and spruce up production. These software packages allow keyers to process over 11,500 keystrokes an hour.

BACKLOG

The costs of backlog can quickly mount when a company's form processing procedures are less than stellar. Policing organizations in fields such as healthcare often impose huge fees for forms that are not processed on time. And entities that do not have access to important information may experience poor customer service. Automated data capture software-operating during regular business or scheduled during off-hours-can help companies capture information faster and more efficiently to eliminate backlog and improve customer service. In addition to managing backlogs, software can also help keep pace with the fluctuating highs and lows of the business.

ACCURACY

By minimizing the amount of human intervention, companies can achieve a higher level of productivity and precision during the process. For example, in a remittance-processing environment, OCR/ICR software can process over 80 percent of the checks automatically, translating into significant cost savings and faster turnaround.

To further increase efficiency on forms that require address data extraction, the use of address recognition software can capture address data and verify it against the most up-to-date U.S. Postal Service address database to improve accuracy. Healthcare companies can also use advanced techniques to compare items, such as diagnostic code with treatment, for greater accuracy and faster processing. These are just a few verification techniques that advanced recognition software deploys to speed processing and improve data accuracy and quality.