Why is it important to improve your document management techniques? According to Coopers and Lybrand, 90% of corporate memory exists on paper. That paper document, on average, is copied 19 times. Organizations spend $20 to file these documents, $120 to find a misfiled document, and $220 to reproduce a lost document. And while a knowledge worker spends 5% - 15% of their time reading documents, up to 50% of their time is spent looking for the document itself. And if these numbers weren’t shocking enough, of the 4 trillion paper documents in existence, that number grows by 22% every year. A document management solution can address all of these costs, while improving customer service, reducing storage space, and eliminating unnecessary retrieval costs.
The return on investment for implementing a document management solution can be quite significant, even for a small company that considers itself to be operating very efficiently. I was recently engaged with an office of 10 employees. Each employee spent less than an hour of each day looking for electronic documents, filing and locating paper documents, and recreating “lost” documents that couldn’t be located. With an average salary of $30,000 per year, they were losing more than $20,000 in productivity. Note that this is a hard cost of salary here, and when you consider hourly production per employee the costs are even more significant.
Inside their office building, they used 10 filing cabinets to store their documents. With their lease at $12 per square foot, their 10’x14’ filing room was costing them more than $1600 per year. They were already cramped for space, so freeing up this room allowed an employee to have their own office. Eliminating the filing cabinets brought about a nice morale boost for an employee, and provided the space necessary for a new hire without requiring the company to move to another location next year.
When it comes to pulling files from their cabinets, there was another significant productivity savings realized. Their 10 employees spent about 15 minutes of time inside the cabinets each day. Scanning the paper to a document management solution netted another $8500 in employee time.
By taking a look at the cost of document workflows, we were able to show an annual cost to the organization of more than $30,000. Working with the business, we gained a thorough understanding of their needs and were able to build a solution that made sense for them. A follow up survey with the staff showed that handling electronic documents improved by 50%, and by 60% related to use of filing cabinets. The productivity savings to the organization was approximately $16,000 – half the cost of hiring their new employee in 2009.
It’s important to note that everybody’s use of paper is going to be drastically different. Paper intensive operations, like the mortgage, insurance, and health industries are going to see much higher document management costs than a retail or food service operation. But make no mistake about it, the costs associated with creating and managing paper add up quicker than most people realize.
If you haven’t taken it upon yourself as a business owner and manager to investigate this cost center, now is the time to do it. Finding a better way to address your document costs today can conserve cash flow while the economy is depressed. Improved productivity among your staff will improve their efficiency and reduce their level of stress. And by providing better customer service, you’ll retain market share and be in a great position to gain new customers more quickly once the economy improves.
Are you interested in taking a closer look at your document management costs? Inacom is currently offering a free document activity analysis. Our non-obtrusive study takes about two hours to complete, and it will uncover your current cost per page. We'll also provide a proposed solution to improve customer service and contain document creation costs. If you would like to participate, just let me know.