Almost every company claims that “going paperless” is a priority.
But what does that term really mean?
What people truly mean when they talk about going paperless is more technical; implementing a document management system (DMS) to create 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.
What is a Document Management System?
A document management system, often shortened to DMS, is a software or bundle of software that is designed to store, catalogue and manage data captured from documents. They can be as basic as a shared drive on your server or cloud storage drive or advanced enough to read documents and perform complex automated workflows based on the content and context on the document.
As there is such a broad range of solutions that can all fall under the umbrella category of “document management systems” it’s important not to confuse the particular software or solution selected with the concept itself. For example, here at Office Interiors, we use a software called Laserfiche but with the right manual processes in place, Google Drive could just also be considered a simple document management system.
How a Document Management System Works
The first step to using any document management system is to convert physical documents into digital documents using the scanner widely available on most manufacturers’ business multifunction printer (MFP) 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 considered documents as well. ISO 12651 defines a document as “recorded information or [an] object which can be treated as a unit.”
The role of the DMS is then to act as the 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 catalogued for storage and retrieval using Metadata and/or data captured by Optical Character Recognition (OCR). 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 will read the document and convert most or all text into searchable data.
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 can also improve productivity by streamlining or automating workflows. Once the documents are captured electronically, they can be distributed electronically for approvals and processing.
For example, most organizations require that employee expense reports receive manager approval before being processed and paid. When using a DMS, the expense report can be automatically distributed to the manager and electronically approved from anywhere with internet access.
Think about all of the business processes in your office that involve paper documents, how many of those processes could be improved to increase speed, reduce bottlenecks and decrease time spent on data entry or document handling? It’s rare that a business can’t find ways to improve productivity and save money when implementing a DMS.
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, equivalent to a cost of between $72 and $108 per year (based on Halifax office space rental rates).
In addition, many of these documents are removed from file cabinets annually and moved to long-term storage either elsewhere within your facility or offsite at an additional cost 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.
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 (do you have remote or mobile staff)?
- 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 and digital rights management systems that ensure only the right individuals can access the right versions of a given document
- 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
Possible Concerns With 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 and preparation of the team involved.
The System Factor
Examine how possible DMS functions will apply within your system. For instance, very complicated document workflows require equally complex DMS programming. The complexity of your existing business processes will determine the complexity of implementing a DMS.
The Supplier Factor
Vendors who supply DMS solutions sometimes operate without a defined scope of work (SOW) or take on projects that are too large or too complex for their software to handle. Be sure to prepare a detailed SOW and implementation plan with your chosen provider.
By addressing these concerns before implementation, you can ensure that the implementation process is smooth, efficient, and straightforward. The key to a successful rollout is to gather detailed, accurate information about your current system and then design the solution that best achieves your goals.
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 either mirrors or improves your current document workflows and is also designed for an easy step-by-step transition.
Should You Invest in Document Management?
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.
Considering all of these positives and the primary downside of using a DMS primarily being the one-time, upfront cost and effort of implementation, we have a hard time not recommending a DMS to any of our customers not already using some form of digital solution to manage their data.
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.
Director of Marketing & Inbound Business Development