Electronic Approval: Another Step Toward a Paperless Office


Copyright 1992 CAUSE From _CAUSE/EFFECT_ Volume 15, Number 3, Fall 1992. 
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                           ELECTRONIC APPROVAL: 
                  ANOTHER STEP TOWARD A PAPERLESS OFFICE
                by Kenneth C. Blythe and Dennis L. Morrison

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Kenneth C. Blythe is Director, Office of Administrative Systems, at Penn
State, responsible for coordinating the design, development,
implementation, operation, and security of the University's student and
business information systems, and for managing Penn State's "private"
telecommunications network of 3,000 terminals. Before joining Penn
State, he was the senior advisor for statistics and computing to the
nation of Bahrain, a consultant to the U.S. Congress, president of
Software Options, and the director of computing for the United States
Information Agency and Department of Health, Education, and Welfare. He
is Vice Chair of the CAUSE Board of Directors.

Dennis L. Morrison has been a member of Penn State's administrative
computing team for the past twenty-one years. As a system project
leader, he is responsible for the design, development, and
implementation of financial systems for the University's central
administration. He is currently involved in the design of the Penn
State's new Integrated Business Information System (IBIS).

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ABSTRACT: Last year, Penn State University won top honors in the 
NACUBO/USX Cost Reduction Incentive Awards program for their electronic 
approval system, called EASY. EASY allows documents to be electronically 
generated, approved, and updated in the University's central database. 
The system heralds a new paradigm for conducting campus business that is 
faster, cheaper, more accurate, and more secure than paper approval.


Gene Roddenberry's Star Trek describes a world (or at least a starship) 
without paper. Interestingly enough, Star Trek viewers readily accept 
this fiction because they know, instinctively, that starships do not 
need paper. Those same viewers return to their workplaces overrun with 
paper without sensing a contradiction. Paper is thought to be convenient 
and cheap. It has a familiar touch and feel, and is a natural element of 
the modern bureaucratic landscape. It is so natural, in fact, that we 
are oblivious to the burden that it causes, physically, economically, 
and environmentally.

To better appreciate the burden of paper, imagine the reverse
scenario. Imagine yourself on the bridge of the Starship Enterprise,
making the case for paper. You are explaining to Captain Kirk that paper
is more durable and more easily transported than electronic documents.
Your arguments include numerous facts, such as that paper can be easily
retrieved from file cabinets and file cabinets can be distributed to
each department of the starship with its own storage area. File drawers
can be labeled and file folders can be indexed for quick retrieval. And,
by the way, you argue, copying machines can make paper copies that can
be cross-referenced by multiple topics in multiple departments. The more
Captain Kirk challenges, the more righteous you get about the case for
paper, but it is hopeless. Kirk's questions are overwhelming. What about
papers that are misfiled? What about papers that are removed and not
returned? What about security? What about the mindless workload of
paper--the extra staff required to type, copy, index, distribute, file,
track, retrieve, lick, label, sort, transport, archive, shred, burn, and
dump it? In the reverse scenario, the limitations of paper are obvious.

In the information age, paper is out of fashion. It is no longer a
reasonable medium for storing and distributing information. Paper is
most harmful to higher education because higher education is in the
information business. Unlike other bureaucracies, higher education works
full time at the task of creating, publishing, distributing, collecting,
searching, and teaching information, and the principal instrument for
doing this today is paper--in libraries, in classrooms, in publications,
and in administration. Small wonder that 70 percent of university waste
is paper. But someday, higher education paper mills will be as
antiquated as rusting factories in Eastern Europe.

Electronic approval is a paper alternative

Paper forms--such as purchase orders, general stores requisitions,
appointments, promotions, timecards, cash advances, and more--rank as
one of the most inefficient uses of paper in higher education. Millions
of these forms are shuffled about college and university campuses every
day, as the uncontested standard for conducting business.

In particular, paper forms are the primary means for gathering
routine administrative approvals. Millions of times each day, clerks in
higher education roll paper forms (one or more part) into manual
typewriters to record the basis of an administrative approval. After
typing, the forms are reviewed, checked, signed, transported, entered in
computer databases, filed, retrieved, archived, shredded, dumped, and
burned. The workload of paper forms is considerable.

This article is about an alternative to paper forms--an electronic
approval system that complements and enhances other electronic business
methods, such as electronic mail and office automation. Known as EASY
(Electronic Approval SYstem), the system has been in use at The
Pennsylvania State University since 1989. With EASY, paper and the
workload associated with it are reduced dramatically.

EASY allows documents to be electronically generated, approved, and
updated in the University's central database. The system comprises two
parts: a routing system and standardized electronic forms. The routing
system is controlled by predefined tables that automatically route
documents through certain paths. The system directs documents, which are
developed within established guidelines, to specified users, who may
view, edit, and approve a document within the computer system. EASY
allows for additional security for confidential data and provides a
complete audit trail for each document.

EASY forms are originated at the appropriate office and then
automatically forwarded to individuals whose approval is required.
Electronic approval has these unique features: (1) data are recorded,
validated, and corrected at the data source; (2) EASY forms have
mandatory/predetermined recipients for approval; (3) the mandatory
recipients are defined in approval grids (paths) which are maintained
apart from the form; and (4) once the form has passed the approval grid,
it updates central administrative databases electronically (without
reentry).

EASY is mandatory for anyone who wants to authorize employment,
issue purchase orders, reserve fleet vehicles, and perform other
administrative tasks. Thus the electronic approval system is expanding
the community of people using the network and bringing the entire
University into the information age.

How does electronic approval work?

Penn State processes approximately 992,000 business forms annually
that are gradually being converted to electronic approval. The
conversion from paper form to electronic form involves: (1) creating the
electronic format for the form, (2) preparing training materials, (3)
training the entire University in the use of the form, (4) establishing
approval paths for the new form and creating an approval designation
table (ADT), (5) authorizing access to the approval paths through
security procedures, and (6) terminating the use of the paper form. From
beginning to end, this process takes approximately one year. Almost half
of Penn State's business forms have been converted, with new forms being
added every quarter.

For an organization within the University to begin using electronic
approval, it is necessary to have up to three people authorized to
maintain the ADT. This authorization is accomplished with a paper form
signed by the organization head (dean, vice president, etc.). Note that
it takes a traditional paper form to start electronic approval because
paper forms are required until the ADT is in place.

The ADT is part of the security matrix surrounding EASY. It
indicates the individuals in the organization who may submit, add,
approve, or reject electronic forms. At Penn State, the responsibility
for establishing the ADT is that of the local financial officer (or
designate) as required by the University's signature authorization
policy. This policy requires approval at the level of budget
administrator and above. The approval paths may also extend below the
level of the budget administrators as long as the approvals at that
level are followed by the budget administrator at some point. Once
created, the ADT becomes the authority for approving electronic
documents. Individuals who appear in the table, and only those
individuals, can approve electronic forms for an organization.

Financial officers may create separate approval paths for each form
or, if they prefer, may consolidate many forms or all forms into one
path. However, each form can only appear in one path for each
organization. If a form is not specified as being in a path, it will
automatically default to a standard path within the organization. The
standard path allows forms to be added to EASY without additional
approval paths (unless specified otherwise, forms will be routed
according to the standard path). In this way, the standard path reduces
the number of paths that must be maintained.

An ADT may have as many as nine levels of approval with nine
individuals across each level. Most offices, however, use only two or
three levels with two or three individuals at each level. The entries in
the table are user IDs. The first user ID at each level is called the
default approver. Forms will automatically route to the default approver
unless the previous approver indicates another at the same level.

The ADT also provides for delegated approvals or proxies. Any
authorized approvers on the table may have a proxy within the
organization, but once designated the proxy cannot be further delegated.
This use of proxies corresponds to Penn State's signature authorization
policy. Although proxies may be used at any time, the practice should be
limited to instances where the responsible individual is absent.

Forms flow and the approval cycle

EASY forms may flow through as many as three phases of approval
before they are fully approved and accepted for processing. The approval
phases are established in advance. The first two phases are known as
administrative approval phases (phases 1 and 2) and the third is known
as the central action cycle (see Figure 1). In all three phases, the
form is validated and revalidated with information from central
University databases.

Forms are originated in the administrative approval phase at the
"source" and become permanently identified in the electronic approval
database. The form's name and budget number enable EASY to determine
which approval path to use.

The source of origination may be in phase 1 of the approval path or
in phase 2 if phase 1 does not exist (phase 1 is optional). As they are
approved, forms automatically advance from phase 1 to phase 2. Forms
cannot be forced past an approval level. Each approver has the
opportunity to change, approve, or reject forms. If forms are changed or
rejected, a "notepad" is provided to describe the reason. Forms that are
changed in major ways are rerouted automatically to the previous
approvers. Copies of a rejected form are sent to all approvers who
originally approved it for information purposes. Encumbrance occurs at
the approval level specified by the financial officer.

Once through the administrative approval phases, forms are
automatically passed to the central action cycle, where they are
approved by central offices. Individuals in the central offices cannot
change data (except in a few limited cases); forms are either approved
or rejected. When forms are rejected, their encumbrances are removed
automatically and messages are put in notepads, before the forms are
returned to each approver to let him or her know that the form was
rejected. After the central action cycle, information from the form is
used to update central databases and initiate the requested
administrative action.

What about security?

With the outcome of electronic approval being an expenditure of
University funds, Penn State auditors (both internal and external) had
to be convinced that electronic methods were at least as secure as the
paper method that they were replacing. This assurance was possible by
creating the "security matrix" of which the ADT is a part. The matrix
combines access control, functional authorization, approval
authorization (with the ADT), data authorization, and form processing
into a security shield that discourages unauthorized access. If users
attempt fraudulent actions the security matrix frustrates those attempts
and maintains an audit trail for follow-up. When fraudulent actions are
attempted, those actions are preserved in the electronic audit trail
even if the attempts are abandoned.

Even if access control is compromised, the security matrix prevents
the perpetrator from operating with impunity. The security matrix places
the "forged" user in an organizational and functional context. The
forged user ID is inherently limited in scope and organizational
context. If it happens that a criminal stumbles on a lucrative user ID,
the security matrix requires accomplices who must also approve the
action. The accomplices operate in their own security matrix. The
likelihood of reconstructing events for a complete approval path are
slim, indeed. The perpetrator would have to steal the user ID and
passwords of three to ten individuals. The chances of doing this are
much smaller than chances of forging signatures with traditional paper
forms.

With paper forms and manual signatures, it is infinitely easier to
commit fraud than with electronic forms. Anyone can type a form. Anyone
can forge signatures. The interesting thing is that people do not often
forge signatures because they know that it is against the law. With
electronic approval, the legal implications are compounded. There is a
set of computer laws governing computer activities beyond the
traditional laws which cover fraud. People are not encouraged to commit
crimes electronically any more than they are with paper forms.

Benefits of electronic approval

As a practitioner of information age communication, Captain Kirk
knows, instinctively, the benefits of electronic approval. He knows that
the most important benefit of electronic approval is source data
automation, meaning that data are captured one time at their source.
Source data automation improves organizational relationships. Paper
forms have an extended check-and-reject cycle, starting with typing
right through until the forms are keypunched and checked with central
computers. This check-and-reject cycle, which may last days or weeks,
results in conflict. When forms are checked by central offices with the
help of central computers, errors are detected. The central offices
blame the originating offices for the errors. This is natural. Central
offices develop an attitude of superiority and distributed offices
reinforce that attitude by depending on central office checking. At Penn
State, error rates of more than 30 percent were reported with paper
forms.

Source data automation empowers distributed offices by teaching
them to fish rather than giving them fish. It gives distributed staffs
the tools to check their own data. Source data automation includes
validation of data as they are entered--not after they are processed
centrally. In other words, electronic approval checks are made at the
beginning of the approval cycle rather than at the end. Not only are
errors thus detected at the point of origination, but they are detected
in the privacy of the originator's office without public humiliation.
Originators have the privacy and system support required to learn from
their mistakes.

Another benefit of capturing data at the source is that it reduces
the rate of error and increases the quality of the data. As distributed
offices become more proficient with electronic approval, they take
greater pride in ownership in their work and make fewer mistakes. The
irony of paper forms is that central offices do not "own" the intent of
the paper form; their goal is to merely validate the rules so that the
form can be processed. Electronic approval is far superior because the
originator of the form becomes the checker also. At Penn State, the
results have been dramatic. The rate of errors has declined by a factor
of 10 along with the workload associated with correcting those errors.
Electronic forms are processed correctly the first time and do not have
to be processed again.

In addition to easy correction at the source and reduced error
rates, here are some other important benefits of electronic approval:

  *  Electronic forms are preloaded with many relevant items of data 
which saves retyping or reentering that data. This is true, for example, 
with personnel forms where the employee's name, birth date, educational
attainment, salary, etc., can be preloaded from previous forms.

  *  Electronic forms can be typed only once. To appreciate this 
savings, it is helpful to understand that before electronic forms at 
Penn State, there were many instances of typing, retyping, entering, and 
reentering the same data from the same forms into multiple data bases. 
With electronic approval, these retypings have been reduced, saving 
workload and time.

  *  Electronic forms save the cost of filing because they are
automatically filed. As soon as the form is added it is permanently
filed in electronic file folders. One image of a form can be retrieved
in multiple file folders at the same time.

  *  Electronic forms eliminate the considerable expense of paper forms.

  *  Electronic forms save the cost of office space, file cabinets, and
file folders.

  *  Electronic forms are self-distributing. They do not have to be
stapled, folded, or addressed to get to the next approver. The
originator or approver merely indicates his or her approval of the form
and it is automatically forwarded to the next approver.

  *  Since electronic forms are transported electronically, they do not
require mail carriers.

  *  Copies of forms are sent to offices electronically for notification
rather than approval; these notification copies are generated
automatically.

In each of these important ways, electronic approval is
streamlining the workflow and reducing costs at Penn State. As shown in
Table 1, the cost savings and cost avoidance of EASY will increase as
more forms are added and as offices change their work habits to rely
more on the system. When it is fully implemented at Penn State
(scheduled for Fiscal Year 1994-95), electronic approval will save more
than $740,000 per year.

[TABLE 1 NOT AVAILABLE IN ASCII TEXT VERSION]

Even though EASY is now being used throughout the University,
unfortunately many offices are reluctant to give up their old ways of
doing business to adopt the simplified EASY procedures. These offices
have maintained paper files for so long that they believe they are still
required. Even though they do not have to, they are printing electronic
actions and filing them in paper file folders as they have always done.
In response, the University is working with each office on a case-by-
case basis to encourage alternatives to paper. Some situations require
quality improvement teams to examine underlying business processes so
that they can be changed along with the movement to eliminate paper.
Process changes such as these take time.

In conclusion

Although it uses many of the techniques of electronic mail,
electronic funds transfer (EFT), and electronic data interchange (EDI),
electronic approval is a new breed of business automation.

Electronic approval is a business management system that
facilitates day-to-day flow of internal business documents. With this
system, internal business data are recorded directly at the source,
providing all of the known benefits of source data automation and
validation. Furthermore, electronic approval provides the ability to set
up self-sufficient business units (campuses, offices, or departments)
removed in rank and geography from the dean's office or president. As
long as there is an electronic link, remote offices with electronic
approval have the same logical proximity as that enjoyed by offices next
door.

Electronic approval is a new paradigm for conducting University
business that is faster, cheaper, more accurate, and more secure than
paper approval.

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Electronic Approval: Another Step Toward a Paperless Office