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Razorsight: Learning to Love the Paper Trail Once Again?

IBM tapped SaaS specialist Razorsight to help it transition to a mostly paperless infrastructure and deal with the paper remnants it just couldn’t eradicate.

• By Stephen Swoyer
• August 15, 2007

Egon Spengler—or Dr. Egon Spengler, of Ghostbusters fame—had it all wrong: print isn’t dead. More than 20 years after digital triumphalists first began touting the advent of a soon-and-inevitably-to-be-realized paperless society, paper—in a variety of different guises (including invoices, shipping manifests, records, checks, money orders, and cash itself)—is still with us.

This can pose problems for organizations that, to an increasing degree, are paperless. Electronic data interchange (EDI) is an established standard, after all, and most large (and even many mid-sized) organizations are longtime EDI consumers. Compared to paper, EDI is almost latency-free. It lets organizations store and manipulate data without having to manually enter it or scan it. Even more importantly, it facilitates reporting and analysis of data. That’s the business intelligence (BI) tip. It’s one of the most important reasons why organizations would love to shrug off paper records of all kinds and embrace EDI. Going from physical paper to digital data requires laborious scanning, special recognition software, manual oversight, and a host of other costly—and latency-inducing—processes.

Enter software-as-a-service (SaaS) specialist Razorsight Inc. Razorsight’s flagship product is a combined invoice automation and financial management solution, which it exposes as a SaaS consumable. Razorsight promises to help organizations transition to a mostly paperless infrastructure and deal with the paper remnants that they just can’t eradicate.

More recently, RazorSight launched an analytic service, dubbed AIM Enterprise. It promises improved insight into accounts receivable, the supply chain, and other bread-and-butter financial categories. Part of its attraction stems from the fact that it’s able to consume—often for the first time—information from invoices and other paper documents that wouldn’t otherwise have been available, either because organizations didn’t previously digitize their records or because they didn’t have the proper recognition and reconciliation software to parse and store that information once it was scanned.

In any case, paper is still too much with us, Razorsight officials say—and it isn’t going anywhere anytime soon. "I don’t think [paper is] ever going away entirely," says RazorSight CEO Charlie Thomas. "There is this general 30,000 foot view of the world where paper will become extinct. But it’s not going away anytime soon. I started off at IBM when I was an undergrad, in the early and mid-80’s, and we had just introduced the PC, and I remember sitting in seminars where they were saying paper would go away in a decade. That obviously didn’t happen."

To a degree, Thomas says, it’s a question of sheer probability. "If you think about a large company, or even a mid-sized company, let’s just say I’m Company X, a Fortune 500 company, they typically have 12,000 different suppliers. If you take it down to a mid-size company, say they have 5,000 different suppliers. Some percentage of these suppliers are still going to be using paper."

So how, exactly, does Razorsight do what it does? First, Thomas says, it gives suppliers Post Office boxes to which they can route invoices and other records. At one time, Razorsight did all of its document scanning itself; recently, however, it contracted with a specialty best-of-breed provider. "We actually signed a partnership with Affiliated Computer Services [ACS], a Fortune 50 company based in Dallas, and they do all of the scanning for us, because they have scanning centers around the globe," Thomas explains. "They convert those [invoices] to PDF or TIFF [formats] and do a file transfer back to us."

From there, Razorsight’s AIM Capture software parses and processes the data. "Our parsing software then converts that from an image file to a standard electronic output file—either XML or EDI, different formats for different industries," Thomas continues. "We’ll send that back to the client, and now, basically, in one day, once we’ve received the invoices from their suppliers, they’ve converted that paper to a very robust electronic format."

Razorsight has a guaranteed same-day-processing SLA with ACS. This helps cut down on latency further down the line, according to Thomas: "ACS has SLAs to us to do it the same day. They do it the same day, and so most of our clients will have a guaranteed SLA, typically 3-to-5 business days, but in fact, most of them are near one-day turnaround – near-same-day turnaround."

For analytics customers, Razorsight also feeds this data into its analytics platform. "That will do automated auditing; it will do automated workflow. So they come in, log in, and the audit has automatically been run, and now we identify via our automated software disputes and anomalies and other inconsistencies in the data," Thomas indicates.

Not all Razorsight customers use its analytics service, of course. To a degree, Thomas chalks this up to inertia: most shops already do some kind of analysis of their invoices—although frequently these just involve records that are already in the digital domain. Regardless, he says, organizations use a variety of ad hoc tools—especially Excel spreadsheets and Access databases—to do their analysis. It sometimes takes time to sell them on the idea of a best-of-breed analytics platform—although, Thomas stresses, once they’re consuming paper-to-digital data from the AIM Capture service, they often become a lot more amenable to Razorsight’s AIM Enterprise offering, too.

"There definitely is inertia. There definitely are a series of ad hoc systems, internal systems, mostly Access databases and Excel spreadsheets. There’s a lot of resistance to change. It’s human nature, if you’re comfortable and you’ve been doing something for a long time, generally it take a visionary to understand the potential here, and usually that comes from an executive, usually a vice-president or a CFO, looking to drive change," he comments.

Razorsight customer IBM Global Finance, a division of IT giant IBM Corp., reduced its volume of paper invoices by more than 50 percent since going live on AIM Capture several years ago. "In talking with our customers, our business partner vendors, and internally we came across a couple of pain points. For customers, they were looking for faster access to information on their orders. For our vendors, they were looking for more flexibility in how they sent invoices to us. Also, they were looking for data quality to improve accuracy and efficiency," says Craig Smith, worldwide solution project manager for IBM Global Financing.

When Smith and IBM Global Finance started on Razorsight in 2004, almost a quarter of their invoices were still paper-based. Since then, they’ve reduced that total by more than half. "Over 23 percent of the invoices that came into IBM Global Financing were all paper, as opposed to what we were doing electronically using EDI was only 77 percent," he explains. "As we brought Razorsight into the picture, integrated them into the process, we reduced that down to 11 percent. That was in March, and by now we are probably in the single digits, which was really the objective."

Elsewhere, Smith explains, Razorsight has helped shine a light on IBM Global Financing’s internal business processes.

"As we looked at our processes and integrated with Razorsight … we kind of found there are a lot of undocumented processes for handling invoices that were not seen in the original scope of the project, but there were certain handling [processes] for certain customers and then a limited time where we were converting certain systems that caused other workarounds for other invoices," he says. "You think the process is going to be A, B, and C, and then as you sort of open up this Pandora’s Box, you find out there’s other special handling going on and you can’t get everything going into Razorsight right away." IBM Global Financing also plans to make greater use of Razorsight’s analytic component. "Because of the size of the project, we have to transition more to the analytical side. People quickly embraced [the paperless aspect] of the project," he indicates. Part of it is simply coming to grips with the accelerated pace of information delivery, Smith concludes. "[In the past], by the time you got the report in your hand, it might have been somewhat dated, versus a dashboard [i.e., with Razorsight Analytics], it’s a more proactive-type behavior. You’re looking at your trends and your histograms and you can determine what actions need to be taken. So right now we’re looking at the data that’s coming out of Razorsight and deciding how to put the dashboard together and how we’re going to present this analytical information at the various levels."