Actually, having been in many sales meetings throughout my career, the second question is sometimes the one that gets asked first by a prospective client. And when this happens, we know our chances of providing a solution for them have gone way down. Why is this, do you say? Couldn't you just educate them on all the reasons why they couldn't live without an EDMS in 2012? Well, yes - we CAN educate them and we DO our best to talk through all the legitimately good reasons they should consider using an EDMS solution. However, they must come to the table with one of two mindsets before we even start our pitch. First and foremost, they must have a business problem that an EDMS can solve. Without this, the chance of signing a contract is almost nil. They may or may not be aware that an EDMS solution can solve their problem, but they definitely must have a problem that needs to be resolved. The second mindset just builds on the first - they know they have a business problem, and they already know that implementing an EDMS solution will solve the issue. At this stage, usually it is not a matter of IF they will buy an EDMS solution, but WHO they will buy it from. At this point, I could write an entire article on the sales cycle of an EDMS solution, but I want to stick to the subject of this post: The reasons why businesses are choosing to move from a paper-based system to a digital one.
Cost reduction
Costs are usually broken down into two main categories; hard costs and soft costs. Although soft costs are real and measurable, it is usually the area that gets the most contention. For example, this might include "lost productivity". Think about the time difference it would take a worker to find a paper document in a file cabinet versus pulling up an electronic record on his or her computer. I'll spare you the calculations (and variable assumptions), but this might equate to a saving of $0.66 every time a document is retrieved with a time savings of 2 minutes by retrieving that document electronically. And, that's assuming the paper document was filed correctly in the first place. I could extrapolate that out to a month or a year and come out with some pretty large numbers, but I can see the eyes rolling already. And therein lies the point of contention I already mentioned.
Let's talk about something more tangible: hard costs. This might include shipping costs, copy machine related costs, storage costs - onsite and offsite, etc. Pick up one piece of paper and look at it. Feel it. Throw it around. Seems pretty insignificant, huh? Now pick up a ream of paper and do the same; a case of paper; a file cabinet; you get the picture. Moving paper around and storing mounds of paper costs money - a lot of money. I remember implementing a scanning solution for an HR department because they literally had no more room to move in their area. They couldn't squeeze another file cabinet in the room if a life depended on it. They would have had to sign an agreement, a costly one at that, with an offsite storage company to handle their overflow. Instead, they partnered with my company, The Windward Group, to implement an EDMS. Not only, did they not have to pay a lot of money to store their documents offsite, but they were able to get rid of most of their file cabinets. Now they retrieve documents from their desktop faster than ever before. Now THAT'S increased productivity at a lower cost!
Increased efficiency
This can be linked to cost reduction, but let's look at this from a slightly different perspective. Imagine you own a company with a call center to provide service on the products or services you sell. Now imagine your service reps having instant access to all the electronic records they need to do their job quickly and effectively. Having documents at your fingertips is near impossible with paper documents, especially if these documents are shared among a group. It's hard to put a price on good customer service, but it makes sense that your customers' happiness is inversely proportional to the amount of time they have to be on the phone with a service rep.
Also, it is much easier to misfile a paper document incorrectly. Managing paper is costly and inefficient.
"An average company spends 400 hours per year searching for lost files" - Pricewaterhouse Coopers.
If a document is stored electronically and the technology is configured appropriately, then it can be accessed anywhere in the world, at anytime of the day, by anyone who has the proper security clearance to do so. This is irrespective of whether the information is stored on internal servers or in the cloud via a hosted solution. EDMS solutions can be setup to take advantage of either topology. Compare that to a document, for example - a contract, that needs to be viewed and edited by several people. If that contract was stored in a file cabinet, then it would be pretty difficult to collaborate on it when only one copy of the document exists. This issue is magnified if the team members live in different geographical areas. Even if each team member had their own copy and each was performing some revisions, then everyone's document immediately becomes out of sync. This is true even if the documents were scanned and emailed. Just because documents can be sent digitally, doesn't mean they are managed effectively. Most EDMS systems these days have built-in version controls and utilize features like CHECK-IN, CHECK-OUT, and REVIEW-ONLY modes. This allows for a much more systematic way of tracking changes to documents that are collaborated on my multiple people.Compliance
Sarbanes-Oxley (SOX), HIPAA, DOD 5015, FDA CFR 21, Gramm-Leach-Bliley Act, Patriot Act, Freedom of Information Act, ISO 9001, and the list goes on and on and on... There are more government regulations and industry standards than you can shake a stick at. Some of these are voluntary certifications or standards, but most of them are NOT optional. If an organization is mandated by law to follow certain rules and regulations, it becomes the responsibility of that entity to act in accordance with the laws set forth that regulate them. For example - health care related organizations are required to adhere to HIPAA regulations that, among other things, set forth standards for keeping patients' health information private.
SOX affects the financial side of corporations as well as IT departments and defines rules on how financial and other business records are managed, which records need to be stored, and for how long these records need to be kept. Non-compliance can result in significant fines, imprisonment, or both. Managing processes in a paper based environment is time consuming and difficult at best. Keeping audit trails becomes a manual process and can easily be compromised. In an EDMS environment, many of these processes are automated. For example, a system can be setup to automatically create an entry in an audit log every time a document is searched, opened, modified, and/or deleted. This occurs without any user intervention. This occurs on top of the security model implemented or whether it is user, group, or role based. Individuals that shouldn't have access to certain document types are easily locked out by applying the proper privileges to their user account. It's not hard to see that managing processes and business rules become easier and more thorough in an electronic environment, thereby achieving much higher compliance targets.Risk mitigation
Along with noncompliance, mitigating risks and liability can keep a company owner up at night. Other than keeping a business solvent by continuing to bring in revenue and make profits - protecting the assets of a business or corporation ranks high on their list of priorities. Some of the most valuable assets a company has are the very documents that are used to run the day to day operations of the business. What happens if a fire, flood, tornado, or other disaster strikes and destroys these documents? How will you know what your receivables are or who owes what? If your paper gets destroyed, chances are there are no backup copies. However, that is one of the beauties of having your documents digitally stored - backups can be scheduled to offsite locations with relative ease. In fact, there are plenty of good backup software packages that can perform these functions on a timed schedule and in an automated fashion. Being able to recover your documents; accounting documents, tax information, HR records, trade secrets, intellectual property, etc could mean the difference between recovering from a disaster or going out of business.
One other area involving risks revolves around the information you do have on hand. Most records are not meant to be kept forever and do have a legal lifespan. Example: even though you are only required to keep certain A/P documents for 5 years - if you have invoices from 1964 and are involved in a lawsuit, these documents might be able to be used in a courtroom. Note that this is just an outrageous example that may or may not be factually true. The message is what's important: If you have the records in your possession, then you may be held liable for the information contained in those records. If you were legally able to destroy certain documents that met their lifespan, then you obviously can't be held liable for information that you don't have. Records retention is another key feature of modern EDMS systems. Retention policies can be applied to documents as soon as they are stored in the system. When that policy expires, these documents get flagged for destruction or deletion. Along with creating retention policies, retention holds can be placed on documents. For example, a court may subpoena certain records involved in a court case. The records in question can be placed on "retention hold", therefore even if the retention policy would trigger to have them expire - they would not expire and remain indefinitely on hold unless the retention hold is removed. Please note my disclaimer: I am not a lawyer and am not trying to give specific legal advice on what documents must be kept or for how long. You must consult your legal counsel for the rules and regulations that apply to your company or specific industry.
With all that said, what would be a few reasons why you wouldn't want to implement an EDMS solution? I don't care who you are or what you are selling, there is NO product, service, or solution that is right for EVERYONE. The first thing that comes to mind is - you have no money. ROI is important and must be factored in, but if you must spend $100K to setup a solution that will save you $50K per year, thereby realizing your ROI in two years, but you don't have $100k to spend or have two years that you can tie up that much money - then maybe it is not the right time to implement an EDMS solution. Another important factor in a successful implementation is having owner or "C-level" (CEO, CFO, etc) buy-in. If there is no support from the top, then the chances of a successful implementation are pretty low. If you have other business critical issues that are your highest priorities at the moment, then it probably isn't a good time to make such a drastic change to the way your company does business. Even if now is not the right time to make the change to an electronic document platform for your company, just keep in mind that one day - that could change!
This post turned out much longer than I thought. If you made it this far, I thank you for sticking with me and I hope you found this information informative. Please leave any questions or comments you have, and I would definitely be interested if YOU were involved in the purchase of an EDMS system and what were your reasons for implementing such a solution - especially if your reason for purchasing was NOT on my list above.
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