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OCR and IDP – Capabilities, Features, and Benefits of Each

by | May 28, 2021

For most organizations, the difference between Optical Character Recognition (OCR) and Intelligent Document Processing (IDP) has been a subject of debate. With numerous similar acronyms floating around, most company owners and decision-makers wonder whether IDP is an advanced OCR iteration or a new solution by itself.

In addition, most IDP solutions leverage OCR deployments in various aspects, making it even harder to distinguish the two properly. 

This comprehensive guide differentiates the two technologies and offers insights to help you decide the appropriate solution. 

Background to OCR and IDP.

One of the most commonplace tasks for IT functions is the extraction of data and business insights from documents. You have three options to complete the task:

  • Extracting the data manually
  • Using OCR
  • Relying on IDP

Extracting the data manually is tedious and could lead to numerous inaccuracies. OCR is a better alternative to manual processes, but it has limitations. The technology only transcribes documents and offers images’ text representations, but it doesn’t provide the appropriate content to the downstream process.

Also, it can be difficult to process certain document types through OCR. You may experience challenges with colored backgrounds, improper data structuring, and glaring, and that’s why most organizations are now turning to IDP. This advanced methodology goes beyond OCR’s capabilities and is designed to identify different forms of business data and push through real-world hurdles of any document type.

So what do OCR and IDP entail, and which are their key distinction points? Read on to explore.

What is OCR?

Optical Character Recognition is an age-old technology that has been around since the early 80s. Since its inception, the approach has come a long way and plays a vital role in generating digital versions of paper-based documents. In essence, it converts the paperwork into editable data and searchable digital files.

OCR technology can work on documents like paper files, passports, invoices, business cards, printouts, letters, and images. You can use the approach to convert all these into scanned papers, CV files, PDFs, Excel sheets, MS Word and editable and searchable photos captured using a digital camera.

Organizational benefits of OCR solutions.

The key to customer retention is optimizing their satisfaction, and OCR document processing can facilitate this in different ways. Here are its key benefits:

  • Improved operational efficiency: OCR technology helps convert unstructured material into searchable content, hence improving customer experience. Going through image texts simplifies value extraction from content to enhance decision-making.
  • Company vehicle tracking: OCR technology can capture vehicle images and retrieve the license or number plate. Automatic plate recognition capability uses algorithms like plate location, character segmentation, and sizing and orientation to translate the captured image. It lets it convert images and handwritten content into text, pdf, and other editable forms. This helps in tracking and tracing company vehicles.
  • Postal code and parcel tracking: Noting down the details like parcel numbers and postal codes can be tedious. Fortunately, OCR can quickly track and scan the numbers to speed up and track preparation, processing, shipping, and delivery at lower costs.
  • Invoice automation: OCR’s offers invoice automation which lets you categorize your invoices accurately and adequately. The technology simplifies accounting functions in organizations by redirecting scanned invoices to finance systems and accounts. Since the documents aren’t manually edited, human error will be minimal.

OCR technology is ideal for any company that wishes to do away with handwritten documents. It’s suitable for entities across all sectors, including healthcare, food, banking, mortgage, trading, and financial services.

What is IDP?

IDP is the next frontier of automation, an advanced system that can recognize and extract data from vast complex files. IT combines traditional document scanning with artificial intelligence technologies like computer vision, natural language processing, machine learning, and deep learning to identify, categorize, and extract relevant data. IT also validates the extracted info.

Intelligence Document Processing is gaining traction among organizations because of its disruptive solutions for automating initially complex or impossible data extraction. Companies can now use the technology for seamless data integration into their workflow automation, including support automation. It also offers numerous advantages over legacy systems.

  • Effectiveness:  IDP can effectively reduce manual interventions in document-centric workflows. The technology lets you capture, convert, index, sort, and route data from paper-based documents to their destined locations in structured formats. Automation makes the process efficient and streamlines daily workflow.  
  • Speed: Perhaps the most apparent benefit, IDP processes large volumes of data way faster than manual processing or using legacy technology. There are limited errors and complex activities that disengage workers.
  • Cost savings: IDP solutions substantially reduce the overall processing time and cuts labor costs by up to 30%. What’s more, automated data processing takes a shorter time to complete a tranche of tasks, saving operational costs.
  • Simplified compliance:  The advanced technology substantially automates complex processes like data entry and validation and file sorting, simplifying compliance. Thanks to automation, IDP solutions leave digital trails that you can use for auditing and ensuring compliance. It also maintains system security and upholds data credibility to help you avoid compliance issues.  
  • Scalability: IDP solutions are process-agnostic and can serve various applications in vast areas. No installation is required, and the platform can scan and process different document formats, including faxes, images, and excel sheets. This makes it a highly effective and scalable solution.

OCR and IDP side by side: What’s the difference?

Both data handling technologies alleviate the manual, repetitive tasks that are prone to human error. However, they have differences in capabilities and areas of application.


OCR is ideal for companies with simple structured documents, but IDP technology is perfect if you handle complex documents containing pictures, tables and lots of variations.


OCR is mainly focused on data extraction, but IDP goes ahead to comprehend the context, information, and insights and come up with a narrative.

Core technology.

OCR uses the OCR engine as the defining technology, while IDP is founded on an AI-centered platform that leverages machine learning as the core technology.

Accuracy improvement.

OCR is a manual process and might require tool guidance, but IDP uses ML techniques to learn and continuously improve.

Template use.

OCR uses templates, which can be costly to create, manage, and maintain, but IDP is template free and eliminates unnecessary costs.


OCR is focused on cutting human labor for simple documents. At the same time, IDP comes with plenty of business benefits to help you extract more insights and data and achieve more significant ROI.

Processing volume limits.

OCR technology doesn’t have a lower processing limit and covers 100 pages every month. IDP, on the other hand, could be limited to 5,000 documents per month.

The best way to know how IDP and OCR solutions can improve your business is by trying them out. Capacity is here to offer you a taste of both experiences and help you decide wisely and get the most from your document processing investment.