Getting the picture on document image management; new technology will affect many areas of a CPA's work.

A picture may be worth a thousand words. But what do you do when you have a thousand or more pictures--images of paper documents--and you want to conveniently store, retrieve and copy them?

This article examines the new optical image storage technology and describes how CPAs are applying it to make their work more effective--and more profitable.

Today's computers, using new image-processing technology, make it possible to store and retrieve a vast number of images--and at relatively economical prices. What's more, the technology also makes it possible to add text, data and voice to the stored information. In addition, the data can be transmitted effortlessly and instantly to other, distant computer systems.

Storage and retrieval of images is not new. Microfilm technology has been around since the 1930s, with hundreds of thousands of satisfied users. Microfilm's many advantages include

* Huge numbers of documents can be stored in a relatively small space.

* Material stored in this form is admissible as legal evidence.

* Microfilm can be stored safely for hundreds of years.

* Although microfilm needs special imaging, retrieval and viewing equipment, it's easy to work with, requiring little special training.

* Because the film size is standard, it can be transferred and accessed by users in many locations.

* It can be copied easily.

HOW IMAGE PROCESSING WORKS

In image processing, the contents of a document are captured by various photographic and scanning techniques. All the data--images of text and pictures--then are digitized so computers can manipulate, store and transmit them.

The main components of image-processing systems are scanners, facsimile machines, laser printers, copiers and optical-storage devices. And, of course, there's the various computer software that instructs all these electronic devices so they can work with one another.

Today's image processors take a big leap in technology. They use laser optical-disk storage technology, which provides a huge advantage over microfilm. Using this technology, they can store data at fantastic speeds--far faster than microfilm systems--and retrieve images equally fast. But their biggest advantage is their ability to integrate the data with conventional data processing, communication networks and other types of office automation.

WHO NEEDS THE NEW TECHNOLOGY

Image-processors are best suited for organizations that must be able to store and retrieve large numbers of images frequently and easily. CPA and law firms, for example, usually have that need.

When should an organization make the change from microfilm to electronic optical storage? There are no simple guidelines, but the deciding factor clearly is not merely the volume of stored images. It's also the frequency and speed of retrieval. In other words, if the information has a time value--where quick reaction is vital--then an image-processing system is a prime candidate for the job.

WHERE TO FIND EQUIPMENT

It isn't difficult to find a vendor of such equipment. Many electronics companies are in this new market. But be aware that new companies, with ever hotter new technology, continue to enter the field.

Prices of the systems range widely. Simple ones cost as little as several thousand dollars. But some of the more sophisticated gear can cost millions. For example, a system for check processing, developed for banks, costs around $6 million. As expensive as it is, banks that will use this design figure it will pay for itself in four years.

Sales of image-processing systems are just beginning to take off. While it's estimated there were fewer than 1,000 complete systems installed in the United States at the end of last year, analysts estimate the market will soar by 1995, with annual sales reaching as much as $10 billion.

OPTICAL-DISK TECHNOLOGY

An optical scanner looks and functions like an office copier, but instead of reproducing the actual image, like a camera, it scans the document and then converts each tiny element of color and shade of gray into an electronic code, which is then stored on an optical disk. Depending on its sophistication, a system's scanning speeds vary from 1 to 16 pages a minute.

What makes the technology so handy is that, after the image is stored and indexed for future retrieval, it can be added to or adjusted in a wide assortment of ways. For example, handwritten notes and even voice messages can be added to it. Also, the data can be manipulated for spreadsheet or word processing operations. And then, when all these jobs are done, the new, enhanced data can be transmitted by modem or cable to some other location for storage and later retrieval and review.

Because of their tremendous storage capacity and because they can be accessed innumerable times, these systems play an important archiving role.

Some 12-inch optical disks can store approximately 20,000 images on each side. The storage disks themselves can be stored in different ways. Small systems use manually inserted, stand-alone disks and can handle one disk at a time. Larger units use multiple disk drives and can house from 20 to 100 optical-disk platters. These are known as "jukeboxes."

Like music jukeboxes, these units use robotics to mount and dismount large numbers of optical disks. A jukebox can house as many as 100 disks and several drives, storing and quickly accessing millions of images. This whole operation often takes only a few seconds. In very large systems, a number of jukeboxes may be interconnected to provide on-line access to hundreds of millions of images.

FINDING THE RIGHT IMAGE

It's one thing to store the data. It's another to find the retrieve what's been stored. That's where a labeling, or indexing, system comes into play--coding the optical data with some identifying information so the stored item can be found using any number of identifying labels or attributes.

Until recently, such indexing had been a manual process. Today, the focus is on speeding the process by integrating another technology with optical storage: optical character recognition (OCR)--a proven technology already widely used in computers.

OCR, when used to automate the indexing process, in effect adds intelligence to the scanning function. It can request documents containing key words, phrases, numbers or any combination of them. It can request whole pages of unrelated text or data. In other words, the user can ask for data, using many different search criteria.

For example, documents in which the word "alpha" appears within seven words of the word "beta" may be searched for and retrieved. Or all purchase orders may be identified and retrieved by the name of the vendor or by dates or referenced to a certain invoice number.

Another important capability of OCR technology is that it converts information from an image into the standard data processing format, the ASCII code--the same code, for example, that is used in all word processing text files. This is particularly useful because information from a scanned and captured document--say an invoice or a check--can be recognized by an optical reader as letters, numbers and symbols and then processed by a computer. Also, the ASCII code can be used to automatically index the document being stored.

With OCR technology, much of the data-entry effort needed for data processing applications is reduced significantly. OCR will convert the image, which is a composition of different shades, into characters and numbers that can be translated by any data processing system--thus creating a "bridge" for integrating image and data processing.

HOW TO USE THE NEW TECHNOLOGY

The earliest business application of these imaging systems has been in high-volume document handling and records management. They are used now, among other applications, for handling checks and credit card charge slips and providing litigation support and claims processing by insurance companies.

It's expected that banks and other financial institutions will have to adopt imaging technology quickly over the next few years if they are to remain competitive. Eventually, stored images could be transmitted between banks. That would effectively eliminate the cumbersome and expensive process of sorting customers' checks between banks. Image-processing systems also are being used in accounts payable, payroll and inventory control.

To illustrate how this new technology is being applied in business and accounting, consider this scenario in which the entire process is handled electronically--without the use of paper.

Various vendors' catalogues are received (in image form, more likely on optical disk). Since they can be displayed easily, the material is accessible for simultaneous review by production and engineering people even though they may be at different locations. As a result, specifications of the products can be discussed by the different specialists. In addition, the groups can send written or voice messages to each other. They can even make handwritten margin notes or scribble rough drawings and point out various items of interest on the imaged specifications.

Once the purchase is decided on, an image of the purchase order is prepared and attached to the detailed order specifications. Drawings and even spoken messages can be electronically recorded on the image. Then the entire package--with notes, comments, drawings and order forms--again is available for immediate review by people in different locations and at the same or different times.

When the final purchase order is approved, it's sent to the vendor's computer by modem. Then, when the vendor's invoice arrives, it's examined and matched with the purchase order and receiving records. The transaction is then posted and inventory, job or customer records are updated.

Vendors' invoices are then selected and authorized for payment. Finally, payments are transmitted and related accounting entries are recorded.

All pieces in this scenario can be handled by computer. And while paper probably never will be totally eliminated, such a system has started many systems people thinking of ways to cut the paper trail.

IMPLICATIONS AND ISSUES

How is this going to affect the accounting profession?

Clearly, it will influence much of a CPA's job. The areas most likely to be changed will be the audit process, documentation, evidence, the manner of evaluating internal control, procedures and methods used to perform substantive testing and the preparation of working papers.

But as with any new technology, new problems must be addressed. For example, areas of security vulnerability will need to be identified. New hardware and software will have to be created or will evolve to safeguard data and control and prevent manipulation of documents.

Consider this: If a contact can be negotiated and signed by parties sitting at different stations, some important questions must be addressed. For example, will an electronic reproduction of a document or a document electronically created be accepted as court evidence?

Accountants who are considering this new technology must evaluate the many opportunities and efficiences that these systems will create.

ALI R. KAKHSAZ, CPA, is a principal of the accounting firm of A.R. Kakhsaz & Company, Woodland Hills, California. He is a former member of the American Institute of CPAs' information technology research subcommittee.