OCR software versus intelligent document processing solutions

When we talk to commodities companies about automating their business processes, they sometimes tell us they’re all set — they have OCR software that digitizes information for invoices or other documents. In other cases, they’ve just started exploring their automation options, but aren’t sure what’s a better fit for their needs — an OCR product or an intelligent document processing (IDP) solution. And much of the time, they aren’t clear how the two choices differ.

Understanding the differences between OCR and IDP is vital, because taking the wrong technological fork in the road can ultimately hold you back from achieving your goals.

Read on to learn exactly how OCR and IDP differ.

OCR versus IDP solutions: What’s the difference?

Optical character recognition (OCR) solutions

OCR is an optical tool that converts an image of text into machine-readable characters. Traditional OCR software solutions only capture data — they do not have the “intelligence” to put context around that data so it can become actionable.

Every unique document handled via OCR software must be manually set up using a template before data can be captured. The technology usually works well with standard typefaces, but typically can’t convert normal handwriting or cursive writing to characters with any type of accuracy.

In addition, OCR often can’t distinguish between characters that look similar. For example, it might interpret the number “1” as the letter “l.”

OCR products may be sufficient for companies dealing with a very small number of documents and document formats, however, the manual effort required to set up templates and correct inaccuracies usually becomes very burdensome for enterprises with large volumes of documents received in multiple formats.

Most OCR software solutions are focused on handling documents for one specific business function like invoice or transaction processing. Capturing data for additional business functions usually requires purchasing a new solution.

Intelligent document processing (IDP) solutions

IDP solutions use OCR as well as artificial intelligence (AI) technologies (e.g., computer vision), natural language processing (NLP) and machine learning to automate data capture and processing. According to Deloitte, IDP “automates the processing of data contained in documents — understanding what the document is about, what information it contains, extracting that information, and sending it to the right place.”

Essentially, the inclusion of artificial intelligence (AI) and other “intelligent” technologies provides IDP solutions with the ability to do significantly more than capture data. Manual template creation is not required — IDP automatically categorizes documents by type, extracts the required data using pre-defined rules, validates it, then enriches it with data from other systems before pulling it into a workflow or integrating it into other systems.

Accuracy is maximized because the IDP software will use whichever technologies are most effective for each document regardless of the format: structured, semi-structured, unstructured, digital or handwritten — IDP solutions can process them all. Staff only need to get involved when exceptions are detected, which helps companies achieve straight-through processing.

Some IDP solutions like ClearDox® offer reconciliation functionality that will further validate extracted data against data in other systems, and flag discrepancies so they can be immediately resolved.

A head-to-head comparison

Each solution’s name gives a clear indicator of its functionality — and potential:

  • OCR products are optical tools that recognize characters within images.
  • IDP software uses multiple technologies alongside OCR to intelligently capture and process data from all types of documents so it becomes actionable and can be used by other systems.

The following chart compares OCR and IDP solutions so you can see the differences side by side:


Optical character recognition solutions

Intelligent document processing solutions

Document types processed

Only handles data that is locked in an image. Cannot convert handwriting to machine-readable text.

Structured, unstructured, semi-structured. Handwritten or digital. Simple or complex.



Captures/extracts data.


Classifies, extracts and validates data, then enriches it with data from other systems. May also reconcile data against data in other systems, and integrate cleansed data with ERP, CTRM, A/P and other downstream systems.



Depends on the quality and logic of the OCR engine. May have trouble distinguishing between characters that look similar.


The use of OCR alongside other technologies such as AI maximizes accuracy.

Manual effort required

Each unique document format must be manually set up with a template before data can be captured. Staff must validate extracted data against system data manually.

Once the solution is properly “trained” using AI and other technologies, data is automatically captured from any document — no template setup needed. Some solutions will validate extracted data against system data, so staff only need to get involved when there is a discrepancy.


Not scalable

Typically limited to one functional area, e.g., accounts payable. Automating new processes can require purchasing a new solution.

Highly scalable

Can typically scale to automate processes across multiple functional areas.


The IDP edge

The key thing to remember when comparing OCR software to IDP solutions is recognition versus intelligence. It’s the difference in skill — and results — between someone who can recognize written Greek and someone else who can read and make sense of it. One person simply recognizes the letters, while the other person processes the letters intelligently as a language.

Which solution is right for your business? If you have a very limited volume of documents that simply need to be digitized and don’t anticipate your needs changing over the coming years, then an OCR software solution may be fine. For any other situation, it’s hard to beat the power and versatility of IDP.

Staying competitive requires the ability to make the right decisions at the right time, and the agility to quickly scale operations to support new initiatives or take advantage of new opportunities. This is where IDP shines:

  • It ensures you have the accurate, timely data you need to make critical business decisions — where and when you need it.
  • It’s capable of automating processes throughout your enterprise.
  • It’s built to scale as your business grows and document requirements increase.

The intelligence is what gives IDP — and the companies that use it — an edge. Leveraging AI and other advanced technologies in combination with OCR provides the accuracy, flexibility and scalability commodities companies require to succeed.

Request a demo of ClearDox to explore how your business can benefit from an intelligent documentation automation solution.

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