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Here’s the reference model we use to explain how ECM works with ERP systems to improve Accounts Payable (AP) and other processes.

The reference model here is specifically for AP but it can apply to many similar processes. It breaks the process down into 9 different activities, requiring different ECM capabilities. The different colors (green, red, yellow, blue) show which types of ECM systems are best suited for each of the 9 different activities:

• OK, Blue isn’t a type of ECM system but rather the ERP system itself – such as SAP, PeopleSoft, Oracle, JD Edwards, Microsoft Dynamics, etc.
• Green stands for the activities that are the core strengths of Capture-centric solutions – such as ABBYY, AnyDoc, Captiva, Datacap, Kofax, Parascript, ReadSoft, etc.
• Red stands for the activities that are the core strengths of ECM-centric solutions – such as Documentum, FileNet, Hyland, Metafile, OpenText, SharePoint, etc.  
• Yellow stands for the activities that are adequately provided by advanced solutions in both the Capture-centric and ECM-centric categories.

It’s now easy to see – literally see – why Hyland bought AnyDoc. This is simplifying too much perhaps, but Hyland’s differentiating core strengths are the red areas. AnyDoc’s differentiating core strengths are the green.  Both are adequate to very strong in the yellow. But AnyDoc is weak in the red areas and Hyland is comparatively weak in the green areas. So: an ECM acquisition that actually makes sense.

The purpose of a reference model is to help explain a complex situation -- like how a complex business process (AP) can be decomposed into different activities, which in turn can be made more efficient by applying different ECM capabilities, which in turn can be addressed by the products of different vendors. I just used the Hyland-AnyDoc acquisition as a salient example to exercise the model.

But it can also be used to explain the strengths and weaknesses of all the capture and ECM vendors I mentioned above.  And you can use it when you’re figuring out your own ECM-enabled ERP strategy. Here are some simple examples:

• If your primary requirement is advanced ERP integration, then you can pursue either a Capture-centric or ECM-Centric approach.  Why? Because ERP Integration is Yellow.
• If your primary requirement is advanced capture (with advanced document and character recognition for the invoices), then you should go with a Capture-centric approach or supplement your ECM system with a third party capture partner – unless your ECM vendor has acquired an advanced capture vendor.  Why? Because the two Capture activities are Green.
• If your primary requirement is just to digitize the invoices and other documents, without fancy OCR or IDR, and get them into a managed repository that staff can access from the ERP user interface, then you can go with an ECM-centric approach. Why? Because the Repository-related activities are Red.

Let me know what you think of this simple reference model. Is it useful? Is it accurate – or rather accurate while still being simple and clear? The arrows in such diagrams are always a challenge. You have to oversimplify or it starts to become a mystical model, where everything is connected to everything else.

Overview of the Typical Target State AP Process (and explanation of the Reference Model)

Here's a more detailed description of the process and reference model. The typical target state of an AP process that’s been improved by ECM looks something like the following.

• First, paper invoices and related documents are captured. Electronic invoices are also ingested. Let’s call the relevant capability Capture (#1 in the model above).
• Then documents are sorted into relevant categories, relevant information is extracted from them, and the documents are indexed with metadata. This is done manually or automatically, using IDR (intelligent document recognition) and OCR. Data from ERP systems is often used to identify and validate the documents and data. The relevant capabilities are OCR, Indexing, and Validation (#2).
• The metadata and digital documents are released into the managed ECM repository. The relevant capabilities are Repository Services (#3).
• The software also transfers a subset of the data extracted from the documents into the ERP system. The relevant capability is ERP Integration (#5).
• Typically, if there is a complete match between the invoice and the purchase order in the ERP system, it is automatically posted for payment. If not, the invoice is routed in workflow to the correct AP specialist. The relevant capabilities are ERP Integration (#5) and Workflow (#4)
• AP specialists can use the familiar ERP UI for accessing documents. Depending on the ECM solution and how it is implemented, AP specialists and non-accounting participants may use other UIs as well for accessing documents and participating in workflows. The primary relevant capabilities are User Interface (#6) and Search (#7). But the documents are also managed by the ECM system (Repository Services -- #3), which is integrated with the ERP system (ERP Integration -- #5).
• The workflow is provided by the ERP system, by the ECM tool, or both. Workflows are usually designed for exception handling, matching, and approval processes. The relevant capability is Workflow (#4).
• The ECM system provides records management. The relevant capability is Records Management (#8).
• The ECM system provides reporting, audit, and analysis. The relevant capability is Reporting (#9).