My topic today is a couple of basic administrative capture applications that we often see in organizations. Call them the Digital File Room (aka Bucket o’ Docs) and the Digital Office, respectively.
Bucket o’ Docs is the scenario where folks scan the documents, but then rarely access them. The docs themselves may be scanned as soon as the firm receives them, or at the completion of the business process the docs are part of, after the important processing is completed. Either way, though, the images are rarely accessed. Usually they’re archived or managed by Records Management, and the few instances they are retrieved are for purposes such as customer service research, or for audit or litigation discovery.
The second scenario, the Digital Office, involves scanning the documents before they enter the business process workflow, before the important processing takes place. In this scenario, the imaged documents are actively used within the business processes, possibly with workflow technology to move them through the process. There are lots of retrievals and much work done using these imaged documents – all the activities that previously were done with paper.
Doculabs has developed a calculator that can be used to model various capture scenarios. The model uses a total of eight (8) variables that affect the return on investment (ROI) an organization can achieve with an imaging initiative – any imaging initiative. These variables include line items such as the cost of storing the original paper documents and the cost of clerical staff to handle the paper documents, as well as a number of metrics around document-based activities of your staff – e.g. time spent for activities such as retrieving documents, looking for lost documents, recreating lost documents, etc.
So let’s take each of these two scenarios and see how they stack up in terms of ROI, looking at the hard-dollar costs and the hard-dollar benefits and calculating how long it will take to pay off the investment for each. We’ll base it on a cost of $425,000 to implement the technology, for an operation that captures 100,000 documents annually.
Digital File Room (aka “Bucket o’ Docs”)
Of the two classes of applications, Bucket o’ Docs clearly gets the prize for boring. You’re just digitizing paper documents and storing the images; of the resultant electronic documents, the vast majority will never again see the light of day (in the form of access and retrieval). Boring though it may be, however, we see many organizations rolling out imaging in exactly this scenario, as a way of eliminating all the paper that would otherwise be stored on the back end.
While Bucket o’ Docs does capture an organization’s documents, it does not significantly reduce any of the document labor – typically because 1) the docs are scanned after the important work is already done, or 2) the docs are scanned early – maybe in the mailroom – but the organization doesn’t take steps to ensure the necessary behavioral changes (e.g. training and implementation of policies), so folks are still using paper, doing screen shots, printing and squirreling away documents at their desks, etc.
Bucket o’ Docs does eliminate storage costs – but those are typically among the lowest cost components of document-related processes. The biggest costs are the labor costs, and Bucket o’ Docs implementations have almost no impact at all on them.
Result? We run the numbers through Doculabs’ calculator, and our $425,000 investment in imaging technology will save the organization a grand total of $16,000 per year, the bulk of it in storage costs – which means the investment will pay off in 318.8 months, or 26.6 years (a little over one generation).
It also means that by the time your Bucket o’ Docs implementation does pay off, you’ll have retired to your active adult community in Scottsdale, Arizona, and won’t be around to take the credit – or the blame.
Digital Office
In contrast to Bucket o’ Docs imaging applications, Digital Office applications target areas that require lots of document-handling activity (e.g. imaging applications for Accounts Payable or Customer Service). In these applications, the digitized documents are subject to a lot of retrievals, re-retrievals, and searching; because a number of people are actually working with these docs, there’s also a high potential for document loss, which leads to a need to recreate lost documents — activities that all involve costly human labor. Capturing the documents involved in these processes decreases the handling time as well as the time spent on all those document-based activities, which means an organization is likely to achieve significant reductions in the associated labor costs – and a much quicker return on its investment.
Let’s see how we do this time around with our $425,000 imaging investment. Assuming 100,000 images per year as before, we calculate savings of $534,875, the bulk of which is in reduced costs associated with lost documents – and an ROI in 9.5 months. And that’s assuming just 100,000 images per year. For operations involving more — say, 500,000 images per year — the ROI will be even more dramatic.
I’d say that nine and a half months is more than enough time in which to become the rock star of administrative capture applications at your organization.
The moral of the story is: You won’t achieve adequate ROI if you’re doing capture just for archiving or for records management.
Some General Observations
In closing, let me make a few observations about these two species of administrative capture applications:
First, your business case will be far more compelling if you can tie it down to a particular process (e.g. Accounts Payable or onboarding new hires within HR), where time and labor are both measurable and recoverable. It’s not so convincing to say, “We have a total of 1,000 employees at this location, and if each of them saves 10 minutes per day accessing documents, then we’ll save X dollars,” because that time isn’t necessarily recoverable. After all, those employees may wind up spending those 10 minutes a day on Facebook (which may be a great use of time, but that’s a different story — and another blog post).
Second, what’s great about this business case is that you can achieve a very impressive ROI mostly with digitization alone, without implementing much workflow – beyond what’s required to quickly and accurately scan in the paper documents, that is.
(But speaking of workflow: Don’t throw it into the mix right away, by automating processes. We’ve found that from a change-management standpoint, it’s better to do workflow in two steps: Let folks live with the digital environment for awhile, getting used to the idea of working with imaged documents as opposed to paper, before you go making significant changes to their processes. [Because, let’s face it, you will want to revisit and redefine your existing processes before you automate them with workflow.] Otherwise, you risk failure and the prospect of being stuck automating the inefficient, pre-existing, paper-based processes.)
Third, if you want to use capture technology to lower your costs for document handling, then you also have to do the necessary change management: i.e. training, as well as defining and enforcing policies and procedures around the use of imaged documents. Yes, this change management comes at a cost. But you need to do it to ensure there’s no slippage back to paper handling.
And finally, fourth: Modeling, measurement, and evaluation are important. A flawlessly executed Bucket o’ Docs will probably not get you ROI. Or maybe it will – but there’s no way of knowing unless you model your proposed application and measure first!