Magazine Article | March 1, 2000

Paperless Payments

Source: Field Technologies Magazine

The Pennsylvania Treasury Department annually handles 8 million checks - a gargantuan responsibility. Add to that task microfiching each check five times and manually archiving all associated paperwork - then you've got serious issues… unless you find a document management solution.

Integrated Solutions, March 2000
What if your business was cutting checks to individuals who were out of business? You probably wouldn’t be in business for long, right? Somehow, though, the Pennsylvania Treasury’s Bureau of Unemployment Compensation Disbursements (UCD), stays afloat. Then again, government agencies don’t work under the same compulsion for profit as corporate businesses. But, just like any other business, the UCD has to satisfy customer needs. That’s why the Bureau implemented a new document management and scanning solution - to keep those customers happy.

Vanishing Act: Microfiche & Hard Copies
The UCD is responsible for processing all the unemployment compensation checks and workers compensation checks for the commonwealth of Pennsylvania. The 40-employee department works from 7:00 a.m. to 5:00 p.m., Monday through Friday, processing 7 million unemployment compensation checks and 1.1 million SWIF (state workers insurance fund) checks annually. One might imagine that processing so many checks entails an extensive paper trail. When pressed to answer if that premise is true, Rose M. Marquardt, director of the UCD, responds emphatically, "Oh my goodness, yes! Imagine over 8 million checks and all the necessary paperwork. You wouldn’t believe how much paper passed through this office - really. And, all of it was manually archived."

The paperwork alone was a problem that was yelling, screaming, and kicking like an angry child for attention. In June 1997, however, the UCD also learned that its current system was not Y2K compliant, nor could it be upgraded. That knowledge was the point of no return in the agency’s mission to find a new system for handling paperwork. At this point, State Treasurer, Barbara Hafer, charged Marquardt with leading the department into the new millennium with a more efficient and cost-effective document management solution.

Needs Determine Document Management Solution
Once the UCD learned it had to replace its old system, the agency launched into a year of planning. When asked where the agency started to plan and whether it was hard to keep up with paperwork, Marquardt and her project team all respond with laughter. "Yes," quips Marquardt. "And I’ve found that, if you want to improve the system, you go to the workers. The people in the trenches will give you insights into systems and processes that you can’t find elsewhere."

To make sure the project team assimilated all of the employees’ insight and knowledge, Marquardt appointed three project heads (Tom Esposito, Ted LeGore II, and John Noll), rather than one. She wanted to divide responsibilities to ensure a high-quality and timely implementation. Perhaps the thought of a vigilante mob without their compensation checks also motivated the agency to get on task.

By October 1998, the UCD had developed a request for proposal (RFP) based on employee input and the laws that govern the agency’s operation. The resulting RFP was sent to five vendors, only one of which the Bureau felt fit its needs: Hyland Software, the Cleveland, OH-based developer of electronic document management solutions. The UCD chose Hyland’s OnBase software solution, which combines electronic document management, document imaging, and workflow in a single, integrated solution.

Growing Pains: Software Installation, Paper Removal
Most installations involve some growing pains, and the UCD had its share. "It was frustrating at times," explains Marquardt. "We had very few problems with the system itself. Our biggest headache was running the new system parallel with the old system for six months." The agency purchased OnBase in March 1999 and officially started using it in July 1999. For the six months that the UCD ran parallel, it continued to archive paperwork and scan and microfiche checks. The agency literally did everything twice, once on the old system, and again on the new system. The agency wanted not only to ensure that the system ran correctly, but also to wait until after Y2K before making a complete transition.

The new OnBase system is Windows NT-based and was installed in conjunction with a new Oracle database. Marquardt describes training employees on the familiar Windows-based system as "easy." "Training the administrators was more difficult, though," she remembers. "It wasn’t because the system was hard to use. It was just such a dramatic change for them. All of our systems and processes had been completely revamped."

More Work Without More Labor
The best analogy for the UCD’s job would be balancing a checkbook - a checkbook with 7 million loose checks floating around and tons of pressure to make sure the ledger balances perfectly. Anyone who has ever cursed their own checkbook could identify with the agency’s plight - and everyone has cursed a checkbook. It’s only natural.

The new system begins by printing the UCD and SWIF checks. As those checks are printed, a pre-audit collects the information needed to reconcile financial figures: number of checks to print, the amount of funds for those checks, and the number of checks that will be mailed. From there, the checks are mailed to recipients with the exception of those that are deposited electronically (direct deposit), a feature available only since the installation of the new system.

Next, the UCD receives all the relevant information about cleared/cashed checks from the Federal Reserve Bank (FRB) via an electronic transfer line (referred to as the Fed line). The agency also receives a tape from the FRB that contains scanned images of all cashed checks. At this point, the UCD transfers TIFF images of the checks into the OnBase document management system. This step is the equivalent of receiving your personal returned checks from the bank. The only distinction being that the OnBase system replaces hard copies with the scanned images. The system then goes through a reconciliation process (this is the painful step that should rekindle checkbook memories). OnBase then notes any exceptions or suspect checks - oftentimes the agency mistakenly receives personal, welfare, or corporate checks. After the books balance, the process starts again and repeats itself with new batches of checks.

Another new feature with the OnBase system is multiple check consolidation. This option is related to the new direct deposit feature. Many times, the Bureau sends compensation checks directly to the lawyer, doctor, or pharmacy of the check recipient. Often, these payments include multiple checks - sometimes up to 10 or 20. With the direct deposit feature, these payments are consolidated in a single electronic funds transfer, which is accompanied by a complementary e-mail.

New Document Management System, Immediate Payoffs
The installation of the new system doesn’t seem noteworthy - until you compare it with the old system. Every check printed on the old system had to be microfiched five times. When the checks were returned to the Bureau, there were no scanned images, only hard copies - all of which had to be run through a document sorter to extract information. This extraction took six to eight hours. Today, it takes two hours to download the same information from the FRB tape into the new system.

Beyond improving processes for its own department, the OnBase installation has also unified data that was once maintained in three separate databases. The UCD now shares its Oracle database with the Department of Labor and Industry and State Workers Insurance Fund.

Although the UCD has only been using the system exclusively since the first of January 2000, it has already begun to calculate an ROI (return on investment). Receiving scanned images of the checks via the Fed line immediately saved the UCD $500,000 by avoiding the purchase of additional document sorters. The maintenance that would have accompanied those scanners has saved the Bureau an additional $85,000. The UCD invested roughly $1,000,000 in the new system, and only three months into use, the agency has recouped just over half its investment.

Aggressive Web-Based Upgrades Improve Business
The UCD doesn’t plan on being complacent with the success of the new system, though. When asked if she plans on upgrades, Marquardt responds, "Absolutely. We just finished installing an Internet feature that enables check recipients to review their check status through the Web. We also hope to have all 70 local unemployment offices connected to our main office via the Web. We are working on that right now."

The agency finished the pilot Internet installation in its Scranton office at the end of February. By the end of spring, all local unemployment offices should be connected to the main Harrisburg, PA office. According to Marquardt, the UCD will continue to aggressively implement new technology at the Bureau. "My ultimate goal," says Marquardt, "would be a paperless office."

A paperless office is a noble goal, but it’s unlikely that people will ever completely relinquish their paper. Nevertheless, document management and scanning solutions will continue to aim at reducing the number of hard copies a business handles. Whether your business is successful with such technology is dependent upon how you approach the installation.

Henry David Thoreau, a man who didn’t know his way around a mousepad, once remarked, "Men have become the tools of their tools." He was as much as referring to the people who bumble integrated solution installations. On the opposite pole, you have Marquardts’s project team, who knew how to make the technology work for them. Heed the example of the UCD installation and the implicit warning in Thoreau’s quote: don’t let the technology control you, use the technology to control the future of your business.

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