Part 2: Document Management Systems Cost – Where Does it Come From?
Posted by Melanie Aizer on Mon, Apr 04, 2011 @ 02:32 PM
When evaluating a document management solution it is critical to identify and focus on those attributes of the paper transaction which contribute to cost and generate inefficiencies.
Typically these attributes are:
- Speed – how quickly can you complete a business transaction? Faster is better.
- Quality – how many errors (and of what type) make their way to your paperwork? Less is better.
- Time and effort – how much data entry is involved? How much quality control and document reviews? Less is better.
In Part 1 of this 2-part article series, we discussed the Document Process Costs, including documents requiring completion / sign-off and documents NOT requiring completion / sign-off, for estimating the current cost of paper-based processes.
In Part 2, we review the Indirect Costs, for estimating the current cost of paper-based processes.
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Opportunity Cost (time kills all deals)
Beyond the basic hard costs involved in document processes there are other, sometimes more critical, costs. Since paper-based document processes take time to complete – more so if an error is discovered – there is a significant opportunity cost involved, especially when acquiring new clients.
Opportunity costs include:
- Client walking away before the transaction is completed,
- Funds not being invested while accounts are being set up,
- New brokers who bring their book of business may walk away if the process takes too long,
- When trying to win over clients from another firm time is everything – the more time the other firm has to engage the broker or the client, the lower the likelihood of winning over their business.
It is often the case that opportunity costs exceed the hard operational costs, and have a more strategic impact on the business, as well as on the firm’s image in terms of customer service and responsiveness.
Document Errors (get it right the first time)
We typically identify the following issues with paper documents:
- Completion problems - the document is missing a required item such as signatures, a date, or an amount. These problems typically occur at document completion, and are preventable when using Agreement Express. The system will not allow a document to be signed unless all required information has been entered. The system will not complete a document until all required signatures have been obtained.
- Content errors - information retrieved from the document is incorrect. This usually happens during the data-entry phase. Is that a 1 or a 7? Is that 100 or 10.0? A simple data-entry typo can throw a transaction off-course. This is eliminated when using Agreement Express, since the data is extracted directly from the documents, with no need for manual re-entry.
- Transmission/delivery errors - illegible fax incomplete fax, lost mail, etc., are completely eliminated by using Agreement Express.
- Storage/filing errors - improper filing of paperwork, improper tagging of scanned documents. A simple filing error can be extremely costly down the road. Eliminated with Agreement Express, as documents can be automatically filed based on pre-defined criteria. Documents are also searchable (both the document and the information it contains), and can be retrieved at any time.
The cost associated with errors involves dedicated data entry and QA personnel, the time spent on correcting errors, the impact on deal making (abandonment rates), the customer service impact, and the potential legal liability/compliance issues due to document errors.
Agreement Express by Recombo is contract management software designed to have a material impact on cost/quality/time on a transaction by-transaction basis. Processes take less time, consume fewer resources, and achieve higher quality.
