Unlock the data in your documents to transform processing

Intelligent document processing (IDP) is coming out of the shadows of robotic process automation (RPA) with its promise of reduced manual effort and faster, more accurate processing of the data in documents. Dozens of vendors now bang the IDP drum to a variety of different beats—from mimicking simple data entry tasks to freeing data from documents to drive better decision making across process transformation. This HFS Market Scan helps enterprise leaders understand the range of IDP capabilities on offer and explores which of the 42 vendors we have considered cover which industries, functions, and use cases.

IDP takes data beyond the document to create value across the enterprise

IDP usually refers to intelligent document processing, though at HFS Research, we think there is a case for referring to the category as intelligent data processing—it’s the data the documents contain that the enterprise needs to process, not the documents. Taking that data out of the document and into decision-making processes can drive process transformation, and new value across the enterprise.

IDP is used as a catch-all for a range of capabilities. An example is basic data entry tasks, where optical character recognition (OCR) technologies “read” highly structured digital forms, extract data from pre-defined fields, and replicate that data in an enterprise database. But IDP can also mean handling the complexities of less-structured data to drive a straight-through process from document receipt to outcome delivery without human intervention.

Beware the difference between data entry and straight-through processing

Advanced IDP uses machine learning (ML), natural language processing (NLP), and artificial intelligence (AI) to read unstructured data. For example, most businesses receive invoices in a wide range of formats. The most advanced IDP can find the “right” data on most forms, regardless of layout; apply ML, NLP, and AI to learn which data is relevant; find it; and extract it based on learning the context in which it can be discovered, such as the use of relevant phrases or the juxtaposition of words and numbers.

At the advanced end of the IDP scale, the potential for straight-through processing gets closer. Use cases include accounts payable, mortgage processing, and insurance claims handling. Most IDP systems can’t do these tasks alone; they must work with other workflow technologies, such as RPA. Some vendors offer both, though the market focus among many emerging IDP players is to emphasize their specialization, appreciating that many enterprises already have alternative workflow and RPA deals.

Choose an IDP that matches your digital and automation maturity

Enterprise leaders should be careful to understand how advanced the IDP they intend to buy is, the use cases it can deliver, and the return on investment on offer. There is a big difference between replacing the rote task of data entry and the capability to understand the context of unstructured data.

The value you can extract from IDP will depend on your current automation use and data strategy maturity. There is little point in signing up for the most advanced IDP if you don’t already have long experience with automation and an advanced approach to using data throughout your working processes. To understand where you are on your data journey and for guidance in moving forward, reference the HFS report, Focus on more data-centric new ways of working and decision-making.

IDP’s hot-or-not relevance for your industry, function, or use case

HFS considered 42 current IDP vendors to create the following datasets. They show which industries, functions, and use cases are getting the most attention from the IDP community, providing enterprise leaders with a quick guide to whether or not IDP is something you need to pay attention to for your specific needs—if you aren’t already.

With the caveats regarding organizational and technological maturity identified above, our market data shows where competition is hottest. Here you can expect there to be more specific and custom solutions available. The focus and volume of documents already processed where competition is fierce also mean the “training time” required for machine learning is likely to be shorter, and a wider range of configurable and modular solutions are likely to be available to enable customization to your specific workflows and use cases.

Document-reliant industries and functions have been early adopters, such as banking, insurance, and healthcare providers. Shortening application delays and increasing on-time payments are among the drivers of uptake in customer experience (CX) functions.

Which IDP vendors have your challenges covered?

The following exhibits list the 42 vendors we cover in this market scan with their coverage of use cases (Exhibit 2), functions (Exhibit 3), and industries (Exhibit 4). While most IDP providers will argue their coverage can be extended into many areas, each has some degree of focus, reflected in go-to-market materials such as representation on company websites. To generate these coverage reports, we researched vendor websites and other marketing collateral, referred to previous analyst interactions with the vendors in question, and followed up with a series of direct requests to each provider to validate our findings.

While you shouldn’t dismiss any from your consideration if they do not currently show a focus on your industry, function, or use case, you can be more certain of a quick start with those who already actively target your specific IDP challenges.

To draw up an IDP vendor shortlist, prioritize those who can tick your use case, function, and industry boxes.

Vendor coverage of the 10 most regularly applied IDP use cases

Most vendors’ offerings fall into one or more of the 10 use cases we define in Exhibit 1. We have grouped specific use cases into broader summary use cases and detailed these in the definitions shown in Exhibit 1. Regulatory compliance, for example, covers a range of use cases including application of IDP in legal or regulatory processes – where it may be used to ‘read’ forms, extracting data and alerting expert humans to focus on a short-list of exceptions and outliers.

Exhibit 1: HFS definitions of 10 most regularly applied use cases currently delivered in IDP

Source: HFS Research, 2022

Exhibit 2 shows which vendors are actively providing IDP to deliver against which use cases. Broad coverage is an indicator of ambition and maturity, but we have not rated or ranked the quality of offering provided. In some cases vendors which are focused on a more limited number of use cases may offer advantages of specialization.

Exhibit 2: Ensure the IDP vendors you are considering can deliver against the use cases that matter to you

Listed in order of extent of coverage
Source: HFS Research, 2022

Vendor coverage of the 11 most popular functional areas for IDP

Most vendors’ offerings fall into the 11 functional areas HFS defines and applies in its regular Pulse surveys. If your functional area isn’t covered in these 11, vendors covering “other” functions may bear fruit for you.

Exhibit 3: Look out for IDP vendors who are already working across your function

Listed in order of extent of coverage
Source: HFS Research, 2022

IDP vendor coverage of the 16 industry verticals analyzed in HFS Pulse surveys

Most IDP offerings fell in the 16 industry verticals HFS defines and applies in its regular Pulse surveys. Those claiming coverage of “other” industry verticals will be worth your consideration if your industry does not fall in one of our 16 verticals.

Exhibit 4: The best fit IDP vendor for you is likely to be specializing in your vertical, too

Listed in order of extent of coverage
Source: HFS Research, 2022

The Bottom Line: Don’t think of IDP as a simple document reader. Place it at the heart of your process transformation

As with all technologies, understanding what IDP is, is just the beginning. All enterprises have business-critical processes they must do to trade. But doing them does not add value. Automating elements may save some human labor costs, but no one goes into business to save money. IDP can best support value creation if you see it as a part of your process transformation, freeing data from documents to deliver insight at the point of decisions, directed at better outcomes for the end user.

Look out for a deep dive into IDP vendors in the HFS Horizon planned for May 2023.