What is Document Management and How Can it Reduce Costs?

Productivity Technology

What is document management?

Almost every company claims that “going paperless” is a priority.

But what does that term really mean?

The term that best describes what people truly mean when they talk about going paperless is more technical; Document Management Systems (DMS) are what organizations implement to achieve digital paperless workflows.

In this post, we will explain what a document management system is and how implementing it can help your business increase productivity and reduce costs.  

How a Document Management System Works

At its core, your DMS is a computerized system for storing, managing and tracking electronic documents for use within your company. To use it, you must convert paper documents into digital documents using the scanner widely available on most manufacturers’ business multifunction printer products. 

You also may receive documents electronically which can then be processed directly into the document management system without having to first press print.

Importantly, documents don’t always take the same form. You may first think of tax records, customer invoices, purchase orders and sales receipts as documents, but photographs, data archives, and email correspondence are all documents as well. ISO 12651 defines a document as “recorded information or [an] object which can be treated as a unit.”

A DMS is an electronic platform capable of organizing all of these various document types in a centralized manner. Instead of keeping paper documents in a file cabinet and forcing employees to dig through records to obtain information, they have immediate access to the data they need in a digital format. 

In a DMS, documents are stored using Metadata and/or they are OCR’d (Optical Character Recognition.  Metadata are key index fields from the document which you have defined such as Supplier Name, Purchase Order Number, Date, etc.  OCR is when the software converts the document into searchable text.

Using an Accounts Payable Invoice as an example, this would mean all of the line item detail on the invoice would also become searchable in addition to the Metadata described above.

Being able to search for documents by using the Metadata or other information captured through the OCR process eliminates problems such as finding paper documents that have been misfiled or physically removed for use by another person in the organization.

For people working remotely (from their home, on the road or a branch office) but still requiring access to this information, this provides significant benefits.

Document Management Systems also can improve productivity by improving workflows.  Once the documents are captured electronically, they can be distributed electronically for approvals and processing. 

An example would be employee expense reports which may require manager approval before being processed and paid.  The expense report can be automatically distributed to the manager and electronically approved from anywhere with internet access. 

When you think about all of the business processes in your office that involve paper documents, there are probably a lot of opportunities where a DMS could improve productivity and save money.

How a DMS can Reduce Costs

In addition to the productivity gains, there are a number of hard costs that are eliminated by a DMS. Documents that you receive electronically no longer need to be printed, reducing printing and paper costs.

Physical documents that you still receive are scanned and then saved electronically eliminating the need for filing cabinets and long-term storage.  Consider that a single filing cabinet takes up six square feet of office space and costs a surprising amount of money per year including the rent you pay on those six square feet of space. 

In addition, many of these documents are removed from file cabinets annually to long-term storage in your facility or at an additional cost offsite with a records management service.  Finally, at some point, a shredding service is hired to dispose of old documents or documents that are deemed unnecessary to save.

A DMS eliminates all of these hard costs.

Technology Considerations

A Document Management System can be hosted on-site or in the cloud.  Some things you may consider when deciding which approach is best for your organization may include:

  • What is your company’s approach to the other technologies you have employed? Do you currently have the infrastructure in place and host your business applications in-house, or do you utilize cloud-based services?
  • What is your strategy for data back up?
  • What accessibility to documents do you require?
  • What level of security do you require for document storage?

The trend is moving more toward cloud-based solutions versus investing and hosting infrastructure on site for a number of reasons.  Here are a few of the more prominent:

  • Cloud-based DMS solutions allow for digital copies of paper documents to be widely accessible via the Internet – encouraging simplified remote collaboration.
  • Cloud-based DMS solutions feature version control systems that serve to reflect the various stages of a document’s progress through the company.
  • Electronic records exist for each step that a document goes through in a DMS, leaving an audit trail that can be examined for errors.
  • Cloud technology is more secure than all but the most advanced and expensive on-site server solutions.

What to Look Out For When Implementing a Document Management System

So far, it is clear that digital document management can generate value for small businesses and enterprises alike. But what’s holding most companies back from implementing a DMS is not only uncertainty over the value it represents. Implementation concerns can often outweigh other concerns when it comes to changing long-established document workflows.

Ricoh notes three major risk factors when implementing a DMS system:

The People Factor

DMS implementations need to be planned well, given a sense of purpose and imbued with specific accountability to be successful. All of these factors rely on the professionalism of the team involved.

The System Factor 

Any executive interested in how to reduce paperwork needs to examine how possible DMS functions will apply in their system. For instance, very complicated document workflows require equally complex DMS programming.

The Supplier Factor 

Vendors who supply DMS solutions sometimes operate without a defined scope or take on projects that are too large or too complex for their software to handle.

By addressing these concerns before implementation, you can ensure that the implementation process is smooth, efficient, and straightforward. The key to doing this is by gathering detailed, accurate information about your current system and then designing a custom solution that reduces printing, increases accessibility, and boosts productivity across the board.

The formal approach of an experienced DMS vendor can be helpful in assessing your specific needs without relying on a one-size-fits-all approach. This allows for the creation of a system that not only mirrors and improves your current document workflows but is also designed for an easy step-by-step transition.

Invest in Document Management Today

There are multiple end-result benefits of implementing a cloud-based DMS. Whereas careless or inattentive employees can easily lose, misplace, or damage paper documents, digital documents are harder to manipulate erroneously. Keyword indexing and optical character recognition allow employees to search for documents based on their contents and metadata, like the date the document was created.

DMS users are also more flexible and secure, letting organizations process and retrieve files outside of the traditional centralized office environment. It allows for sustainable company growth while incentivizing cost-saving human resources decisions like outsourcing specific processes.

The environmental effect is also pronounced. Document management not only saves money, but it preserves valuable natural resources as well.

Are you interested in implementing a document management solution, but don’t know where to start? Talk to one of our experts about your DMS needs today

Cory Porteous
Marketing Manager
Office Interiors

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