July 10, 2023

Is digital document management cost effective for your business?

Is digital document management beneficial for your business?

Is digital document management cost effective for your business?

If your business is like most typical mid-sized companies, a digital document management solution can help you reduce or eliminate many of costs currently associated with creating, using and storing various business documents.

To determine cost-effectiveness of your solution, you need to compare cost of your current system with cost of implementing a new enterprise content management (ECM) solution.

Running costs to consider typically include:

Document storage: fees for document storage rooms, storage areas, filing cabinets, folders, shelves and other related equipment.

Document Creation: Paper and toner supplies, postage, shipping, and printing costs.

Document Handling: cost of manually transferring paper documents within an organization, such as by mail or courier; include additional costs for document maintenance and destruction of obsolete information.

Employee time: The productivity burden of employees who have to constantly store and retrieve documents, taking a long time, especially if they are stored away from office.

The other side of cost-benefit ratio is cost of a new document management system. They may include:

Implementation: The initial cost of licensing document management software and purchasing additional hardware such as scanners. Additional costs for changing business processes, integrating records management solutions with existing infrastructure, and possible business disruptions during implementation.

Usage: Training and education for users and system administrators, and temporary loss of productivity for employees as they learn new software.

Maintenance: Data backup and hardware maintenance.

Weighing these current and potential costs is important as you try to figure out if digitization is cost-effective for your business. But they are not only factors.

Too often, companies only consider these major costs and conclude that digitalization is not worth it. Using digital document management can end up saving you $400 to $500 a month on these projects. But unless you have extremely paper-based business processes and operations, these savings alone won't deliver a compelling ROI.

Introducing Soft ROI

Much of value of document management comes from smooth return on investment that comes from improved efficiency and productivity. As a result, ownersSMBs and other decision makers need to look beyond basic costs when considering records management decisions and estimating value of long-term investments.

For example, let's say that implementing a document management system helps you quickly provide accurate information to your customers, thereby increasing customer satisfaction. Keeping customers happy is a good thing, and purpose of investing is to keep those happy customers so that they continue to buy products and services from your business.

The question is, how do you quantify value of better customer service? What does improved customer retention mean for a company's bottom line? For example, if improving customer service can increase your revenue by 10%, document management will cost thousands of dollars a month, not hundreds of dollars in austerity.

Finally, to accurately assess cost-effectiveness of enterprise records management, you need to determine return on investment (ROI) for improving business process efficiency and information availability. Quantifying time savings, informed decisions, and other benefits can help you make smart investments in technology that will help your company grow.

5 Criteria Companies Use to Evaluate Document Management Solutions

1) Value for money

70% of companies rated this criterion as most important, indicating that they have chosen system they believe will provide best ROI.

2) Availability

The overall usability of document management software was cited by 65% ​​of respondents as one of criteria for choosing a document management system.

3) Cost of Ownership

Sixty-four percent of respondents consider ongoing operating costs after implementation of system, including maintenance costs.

4) Flexibility of software

61% of respondents took this factor into account. The main requirement for successful document management is ability of software to integrate with company's existing infrastructure, including ERP, CRM or other business applications.

Another measure of software flexibility is its ability to scale. This is especially important for growing midsize companies that want to invest in a system that grows with them.

5) Function

Only about half of respondents (52%) indicated that specific functionality of system was main selection criterion.

Is digital document management cost effective for your business?

These five criteria can serve as a starting point when choosing a document management solution for your company. The problem is that (particularly for companies that are new to a workflow system) marginal ROI associated with these benefits is sometimes difficult to quantify. Using less formal assessments, success of a documented system implementation depends largely on building a relationship with a trusted ECM provider.

A good ECM vendor should help design a solution that fits your business needs and provide you with robust use cases and value propositions that reflect day-to-day realities of your organization. The supplier must also work with you to develop a plan to achieve a high ROI in a reasonable amount of time.

If you would like to learn more about Enterprise Content Management (ECM), please leave a message in comment area or PM me