But I Like Paper!

Maybe so, but it’s getting tougher and more expensive to hang onto it. Even small companies are feeling the pressure to reduce the amount of paper they have and become more efficient.

“In the average office...

• 19 paper copies are made of each original document.
• 7.5% of paper documents get lost completely.
• 3% of the remainder gets misfiled.
• $20 in labor is spent filing or retrieving a document.”
  

—Inc. Magazine

The solution for a growing number of companies is to install an Electronic Document Management System to manage their files. In a nutshell, companies can use a standard copier with a scan function built-in, or a desktop scanner, and scan their paper files into their computer network. The resulting scanned images are ultimately sent to a password-protected “filing cabinet” on your computer network where they can be indexed and stored. Once inside this protective EDM System, your paper files can be “read” by the software using OCR (Optical Character Recognition) technology and you can later perform word-searches on your paper documents just like you’d search the internet on Google. And a good system will store more than just scanned paper—you can also store archived Emails, Excel, Word, Powerpoint, CAD files, or any other kind of electronic document. This is very important given the newly-enacted Federal mandate in effect as of December 1, 2006 requiring companies to implement a retention policy for their electronic data. Not only that, but this digital “filing cabinet” can be backed up to tape or dvd and stored in a secure offsite location for quick disaster recovery. Following Hurricane Katrina last year, many companies on the Gulf Coast were able to recover their documents quickly once new equipment was installed and the backed-up information was reloaded. Paper scanned from a full, standard 4-drawer filing cabinet can fit on one CD. A typical computer hard drive nowadays could store dozens of filing cabinets worth of information.

EDM Systems are becoming more than a luxury item purchased by large companies with big IT budgets. Document storage regulations are quickly making these tools a necessity for even small companies.

My first EDMS client was a small 3-person broker-dealer office that had been in business for only a few years. Due to regulations like Sarbanes-Oxley that required many of its documents to be stored on-site, this small company found itself drowning in paper. There were bankers boxes of files stacked 3-deep up to the ceiling. These entrepreneurs were ecstatic to learn that their paper documents could be scanned and stored electronically. Not only did it save space, but it made the documents more secure, faster to look up, and easier to transport. When a client called asking a question on the latest investment report, the broker could perform a quick search and email the pages while they spoke on the phone. That exercise previously required thumbing through manila folder files, creating a cover page, and faxing the pages—usually the next day.

But what if I get audited? Check with a local attorney on specific questions, but in general a properly stored electronic image of a document will comply with document storage regulations. For instance, in October 2004, Congress passed H.R. 4306 which allows an employer to store an I-9 form electronically rather than the previous requirement for a copy on “paper, microfiche or microfilm.” Similar provisions are in place for other kinds of documents. The government recognizes that as the amount of documentation we are required to keep continues to increase, it needs to allow the use of tools that make it possible to store that information.

What’s this going to cost me? As with anything, it depends. There are small EDMS systems available for only a few thousand dollars. Some organizations choose to go with an ASP (Application Service Provider) model for storing their documents. Rather than scan to their own computers or servers, an ASP provider will host a secure server with EDMS software running on it, and allow companies to “rent space” there for storing scanned documents. The documents can then be retrieved by entering a user name and password over a standard internet browser. There are also more full-featured EDM Systems you can install in your office that do more than just store your documents. For instance, they can automate a workflow process and attach an audit trail to the document. Then you can see how long the document took to make it through the process (how long was it at Janet’s desk?) and once it arrives in the archive: Who looked at it? When did they look at it? Were any changes made? etc. Depending on the system they choose, an organization will typically see a Return On Investment in less than 24 months. It is not at all uncommon to see the ROI in less than 12 months.

Things to know?

1. Watch out for systems that are hardware dependent—if you need the ABC brand of server to run the ABC Document Management software, you may be locked into buying more hardware when you otherwise would only need a software upgrade.
   
2. Make sure the system is scaleable. You may want to start with a small system, but be able to add on a little bit at a time as your company grows. Beware of the systems that are only small and don’t have many features available for the future. You may not need the advanced features in the beginning, but a few years down the road it will be nice to have the option.
   
   
3. Look for something that’s user friendly. A powerful system can still be easy to use, and installing a friendly system will ensure that your staff really uses it.
   
   

Here’s a good quote to sum it all up:

“By implementing an electronic document management system solution, a customer can:

• Double or triple his processing capacity by simply automating the present system.
• Free up staff time by up to 50 percent for redirection to other important tasks.
• Respond immediately to inquiries.
• Reduce document storage space by 60 - 80 percent.
• Provide a “fail-safe” system for safeguarding document files.”

—Ernst & Young, Profitability Bulletin

Andrew Dorn is the Electronic Document Management Specialist at Imaging Path, a Minnesota-based office technology company. He has been in the industry for 5 years, and specializes in providing document imaging solutions for organizations throughout the Midwest. Imaging Path was number 14 on The Business Journal’s list of 50 fastest growing privately-owned companies in 2005.

, Electronic Document Management Specialist
Imaging Path
612.230.3440