Can’t live with ‘em, can’t live without ‘em – the documents and records your business runs on (what did you think I meant?), and the need to process, store, and archive those documents and records for a variety of different reasons. While small businesses have been quick to embrace digital technologies to reduce costs, speed up business processes, accomplish more with less, and meet the digital communications requirements placed on them by customers and regulators, many have a dark shadow lurking over their operations: thousands of archived pages of paper files and their continued reliance on those archives for many business transactions. Some small businesses, while operating on mostly digital documents day to day, persist in printing a lot of pages, and often still rely as much on the manual filing and storage of printed documents for archival purposes as they did in the pre-digital era.
For a small business owner, digitizing that growing row of file cabinets always seems like a terrific idea — but the idea usually goes on the back burner while fighting today’s fires and closing that big account. Michael Miller, solutions architect for Fujitsu, a leading scanner solutions provider, explains, “The bulk of [small and medium businesses’] expenditures typically go toward costs in real estate, office furnishings, and equipment, with document scanning as a ‘to do.’ Often, they see document scanning as one more process to implement instead of viewing it as a way to simplify the burdensome processes that they already have to deal with.”
One major reason why business owners don’t take the initiative to digitize their paper files is they seldom comprehend the real or “hidden” costs of keeping (and adding to daily) those iconic file cabinets. Those costs include statistics such as:
• On average, according to scanning solutions provider Visioneer, it costs $5 to file a paper document, and then $20 to find it later.
• According to PricewaterhouseCoopers, a company spends $25,000 on average to fill one five-drawer file cabinet and an additional $2,100 a year to maintain that cabinet.
• AIIM reports that 3 percent of paper documents get misfiled, while 7 percent get lost completely; it costs $120 in labor to find a misfiled document, and $220 in labor to reproduce a lost document.
Miller summarizes the costs of staying with paper: “When you look at the costs of not going digital, you have to factor in the time it takes to process and file paper documents, the cost to find lost or misfiled documents, and the cost to store documents long-term. In some professions like health care, duplicate documents and records can represent costly errors.” Dave Doucette, VP of capture for Novitex, says, “There have been a lot of good benchmark [research] studies … that have measured and understand the cost of owning a document through its lifetime … such as filing it, maintaining it, putting it in a [storage] box.” Those independent research studies help service providers and business owners calculate the ROI of a records digitization project.
The Impetus to Digitize
Even if most business operations and transactions in small companies are digital, it is not uncommon for them to maintain paper files either out of habit or because they believe paper records are necessary — so the problem keeps growing. Just as in the other operations of their business, digitizing any paper files and archives makes good business sense, but most small businesses haven’t taken that step yet. Eliminating paper file-based errors is a key goal, says Miller. “The main reasons to digitize paper are to reduce paper storage, and all of the manual and human errors associated with it, as well as to improve access to the business critical data embedded in that paper,” he says.
Understanding and listening to the customer is critical, says Doucette. “The first step in the process is … understanding how you use [the paper records], why you use it, why you keep it … how the business operates, how it behaves.” A side benefit, he explains, is identifying what files to get rid of. “We can help them identify what they don’t have to keep, what can they destroy now, what can they destroy next year.” Doucette recounts the moment during a recent site visit where the client finally understood that they didn’t really have a storage problem: “He told me ‘we have a printing problem … we are addicted to printing,’ and thus, all of the aftereffects of managing and dealing with that paper.”
According to Mitch Taube, co-founder, president and CEO of New York and New England-based Digiscribe, it can be very hard for a small business owner to let go of their paper files. “We run into that [mindset] every day,” he observes. “The triggers that cause many small (and medium) businesses to look at digitizing their paper records come from both inside and outside the company. Major business events, such as an audit, a move or relocation, downsizing, an acquisition or merger, a sale of the company, or a significant lawsuit all force a company to have to deal with their paper files and archives.”
Cost of physical space is always high on the list of motivators to digitize, says Doucette, though he is quick to add that “security and control of those records — frequently mandated by compliance standards — are important also. [Business owners] read about a competitor that has a security breach, or one of their employees walks out with a file … or a company that gets sanctioned … and that raises the whole concept of security and control,” he says.
Fujitsu’s Miller observes, “The pressure to digitize is twofold: internal cost/resource savings and increased productivity for a competitive edge, and external security and compliance statutes. Industry, state and federal regulations affect SMBs, as they must comply with the laws just as large enterprise-level organizations do.”
Compliance with government regulations is a major trigger for looking at digitization in many vertical industries, Miller says. “For example, all health-care organizations must follow the Health Insurance Portability and Accountability (HIPAA) act, all financial organizations must comply with Sarbanes-Oxley Act, and all government agencies must comply with the Freeze the Footprint act, no matter how small of an organization they are.” Miller cautions all businesses, “It is important to note that no industry is exempt from regulatory compliance,” and adds that the ability to secure data becomes more and more critical for SMBs in industries that produce and collect large amounts of private data, such as personal health or credit information.
“A lot of small businesses don’t grasp the concept that they are subject to the same laws and regulations … that apply to companies one hundred times their size,” says Novitex’s Doucette. “The same [compliance] laws that apply to General Motors apply to the small distributor with 40 employees.” He notes that small business owners shouldn’t feel completely singled out in their challenges, however. “There are a surprising number of enterprise-level organizations that are still challenged by this [issue],” he says.
When faced with a problem or obstacle such as cabinets of old and unwieldy paper files, many small business owners — a DIY lot with a strong belief in their own ability to “get it done” and a penchant to control internal processes (or save money) — can be easily lured into launching an internal project to scan reams of files. Of course, there is nothing inherently wrong with that approach, but most small companies don’t have large IT staffs — or any IT staff at all — with competency in image capture and processing, tagging, indexing, categorization and reliable archival data storage practices. The investment in an internal imaging/scanning capture system requires a significant capital expenditure, not including the cost of staff to train, operate, support and manage it properly, and a secure space to perform the function. Fujitsu’s Miller remarks: “When it comes to document scanning, they (SMB) need the same type of technology in their capture solutions that enterprise-level businesses do, yet they don’t often have the same budget or IT capabilities of larger corporations. … They need to work with manufacturers and solution providers who have resources to assist them in the implementation, deployment and support phases of their document scanning processes.”
If the firm is storing a document in the first place because it is important, then properly scanning and storing those scanned images so they are usable and accessible when needed is important also – any business that has had to endure a sales tax audit or the like will vouch for that. Consider: a five-drawer file cabinet, at 2,500 pages stored per drawer, represents 12,500 pages to scan – not including any document that contains duplex content. Such a task is not for the faint of heart. Taube notes, “They think simply buying a scanner and getting some college students or interns to image the files is the answer … terabytes of [scanned] data don’t matter if they can’t find what they need.” Doucette calls what those kinds of well-intentioned but ill-equipped projects produce “digital landfill.” He adds, “[Small businesses] just don’t have the [technical] expertise … to take on a project like that.” As with other IT infrastructure projects and processes, small firms have to rely on the expertise that dealers, service providers, imaging consultants and VARs offer, whether they decide to scan in-house or outsource the process to a professional document scanning and imaging service. “Unfortunately, we get called in to clean up a lot of [in-house] disasters,” says Taube.
The Learning Curve
Small business owners are recognized as a no-nonsense and pragmatic lot, so when it comes to digital scanning and archiving, it helps if they are realistic about their staff resources and capabilities. Digiscribe’s most effective sales tool, says Taube, is showing prospects the exact details of the document preparation, scanning and indexing processes — how Digiscribe does what it does. “Once they see what it really takes to do this properly, they don’t want anything to do with it,” he comments. He also explains that for documents to be stored and later retrieved effectively, the scanning process can require knowledge of the document content and classification for logical archiving. Users also greatly underestimate the proper document preparation process, a facet that is critical in ensuring a clean and usable document scan and one that requires training and judgment.
“Show them the results,” says Doucette, which makes understanding the benefits very clear. Outsourcing scanning tasks removes the complex document imaging responsibility, along with its inherent risk, from small business office teams — a group that may already be under pressure from multiple deadlines and priorities, and focused on serving the company’s customers.
A small business with numerous field-based employees confronts a simple physical productivity issue: paper-based business files aren’t readily or cheaply available to those workers, forcing them to return to the office or request someone else to search the file cabinet when they need historical information about an account. In the evolutionary scale of information storage, relying on a filing cabinet is the equivalent of using a floppy disk in a competitive world embracing the distributed data access of cloud computing. Fujitsu’s Miller remarks “The cloud is becoming more and more popular and a very efficient tool for SMBs. As more SMBs embrace BYOD and remote employee deployment, the cloud provides a way for everyone to access the documents and data needed to perform their duties anytime, anywhere.”
Digital information technology is a transformational force that has revolutionized almost every aspect of how we do business daily. Putting the apparent costs of everyday paper use aside, businesses of all sizes face real business data storage problems that have to be addressed:
• Security. Let’s face it, paper isn’t a very secure medium for sensitive data storage. Paper records can (and do) walk out the door, get copied/scanned, get lost/misfiled/misplaced/unintentionally shredded, or doused with Jimmy’s coffee. File cabinets, even with locks, aren’t really secure – they rely on erratic human behavior such as everybody making sure they are locked when they are supposed to be or that unauthorized staff don’t get their hands on access keys. Compare those risks with digital, encrypted and off-site cloud storage, where complete system monitoring of who accessed what files and when they did it are readily available to management.
• Cost. If there are any arguments about the comparative costs of storing cabinets of paper records (on your site or in external storage) versus the cost of maintaining digital files with either in-house storage or in the cloud — there aren’t any serious comparisons. Digital is vastly cheaper, and getting even more so every day.
• Disaster recovery. You can store paper records in safe external facilities (not for free), but the superior safety of digital files in the cloud is about as safe a proposition as any other available. This is another one that is not a close comparison.
• Instant access. Anytime, anywhere cloud-based storage capabilities reflects the hard reality of business in the 21st century; file cabinets are 17th century technology at best.
• Compliance. Digital, cloud-based storage records are better able to meet compliance regulations, security regulations, and drastically reduce the cost and pain impact of any potential business audit process.
• Generational considerations. While small business owners are 50.3 years old on average, many of their younger employees (millennials) don’t like dealing with paper — consider these statistics from a Western Union survey:
• 21 percent of millennials have never written a physical check to pay a bill
• 30 percent of millennials use apps and mobile tools to make bill payments and view statements, and 43 percent use apps to view bills and transaction histories.
Paper archive records may feel comfortable and familiar to a 50-year-old small business owner, but their employees are the people most likely to be dealing with those records. Usually, those younger employees don’t like – or “get” – the paper paradigm, and yet business owners rely on those employees to make their company run.
A small business owner may be understandably daunted and fearful of a project to digitize cabinets of company records – but the potential costs and risk of an exhaustive audit of paper files, the liability and legal cost risks of non-regulatory compliance, a loss of sensitive paper information to a competitor, or an unforeseen disaster such as fire or flood, all are serious and pragmatic business reasons to take a hard look at working with an outsource service provider to finally get rid of all that old paper. If you are a small business owner, we are guessing you’ll be glad you did, and you won’t be one of those owners who has said, “Oh how I wish I had.”