Document Management Systems Have Negative ROI
Posted by Melanie Aizer on Tue, Mar 22, 2011 @ 12:20 PM
It is rarely the case that traditional document management solutions are implemented in order to achieve cost savings, ROI, or process improvement.
While this statement may sound counter-intuitive, it is nonetheless true. Document management systems are put in place in order to solve acute and important business imperatives – the need to store and locate important documents.
The need that is being resolved is driven by core business requirements: regulatory or corporate retention policies, an inability to efficiently locate documents in a timely manner, wanting to get rid of costly filing cabinets, and so on.
By the time a Passive Document Management System has been implemented, it typically solves these immediate needs, at an increased cost. The decision that most organizations go through can be summed up as “we are willing to spend more in order to solve our document nightmare”.
By the time you deploy scanners or any other devices, add an electronic document repository on top of your paper processes, and factor in ongoing costs around storage, retrieval, license fees, and the added cost per document on top of your existing processes, it makes little sense to talk about a “return on investment”. An analogy would be that of buying a new car – you do it because you need to, and it helps you with your business, but it represents cost, not savings. There is no ROI, only TCO (total cost of ownership).
Since the passive document management system does not alter the underlying business process, the system’s cost (as low or as high as it may be) is added on top of the cost for that business process.
It is important to realize this when just looking at pricing/quotes for different solutions. A passive document management system, quoted at $0.50 per document represents an increase in cost by that amount.
In contrast, a properly deployed Active Document Management System, quoted at $1.50 per document represents tangible cost savings (even after factoring the price)!
Unlike passive document management systems, Agreement Express by Recombo is designed to deliver positive ROI on each and every transaction processed by the system.
This means that each document or process, will deliver either (a) lower OPEX, (b) increase in revenue or (c) both. This net positive ROI is after factoring in the cost of the service itself.
Once implemented, an active document management system such as Agreement Express delivers tangible benefits that feed directly to your cost/revenue model:
- Shorter transactions (through automation, elimination of print/mail/fax cycle)
- Higher quality paperwork (through automatic validation and application of business rules)
- Lower transaction costs (elimination of courier/fax/mail and time spent entering data and checking documents for errors)
- Improved customer and employee experience
