Justifying investment in new technology

It can be hard for a small company to rationalise technology expenditure when cash flow is tight. Alison Jackson reveals how businesses can make it add up.

It can be hard for a small company to rationalise technology expenditure when cash flow is tight. Alison Jackson reveals how businesses can make it add up.

Virtually every small business owner asks me the same question, ‘I know document management could benefit my company, but can I justify the cost?’

I am going to address the question by borrowing a quote from Oscar Wilde’s Lady Windermere’s Fan; it goes something like this, ‘What is a cynic? A man who knows the price of everything and the value of nothing.’

I have used the aside not to dismiss the question but to open up the whole discussion about technology and the need for companies to at least try to keep pace with the level of change, because things are changing and will continue to change. This is not survival of the fittest. This is survival of the best informed, most efficient and truly customer-focused.

Let me explain my approach to the question of justifying any investment in new technologies, in this case a document management system. From my experience, it should be a phased process; a process that can be applied to any forward-looking organisation, large or small. It starts with a key phrase, again borrowed, this time from F1 boss Ross Brawn, plan, align, plan align and plan again. In other words know your organisation, know its systems/processes, understand resources, recognise where the company is going, and align best of breed processes to meet requirements.

Any forward-looking, dynamic organisation should always be reviewing its processes to see where improvement and savings can be made. Any company reviewing its document management process should consider needs in terms of current use / future use, and what benefits an electronic process would bring to my organisation and customers.

We have worked out all the costs of running an office in terms of document management and these include:

· Filing cabinets costs

· Floor/office space costs

· Documents produced

· Document management / retrieval costs

· Document usage (how many times a document is copied etc)

· Document loss/damage/human error

· Accessibility 24/7 / remote working

· Version records/audit trails

· Document silos

· Legacy documents

· Legal requirements

· Email integration

· Control over document access/protection

· Client centric requirements

· Profiling and text indexing requirements

This may seem daunting, but all of a sudden you will have a picture of time, resource and costs incurred in a traditional document management process – the bigger the organisation, the higher the costs.

Do the maths. Lets look at a typical small firm. Assume that by implementing a document management system that each user saves a minimum of 20 minutes per day, or over four weeks a year.

Add to that sample document management related costs complied by Gartner, including

Copying a document £12.00 per doc

Filing a document £13.50 per doc

Document retrieval}

Lost /damaged doc} £80.00

Document management £5,000 per person

Printing /copying machines £1-3 per cent of annual revenue

And you begin to see how the most basic traditional document management process costs time, money and resource. All of a sudden the benefits outweigh the cost, and the plus factor of payback starts to appear over the horizon.

Now we come to the crux, and the reason for the Oscar Wilde quote – ‘the price of everything and the value of nothing’ – review requirements in terms of the additional benefits you can offer to your customers, your employees, suppliers, with the installation of an integrated accessible, accurate, secure document management system that could be charged per month.

The additional benefits and added value are considerable. Documents can be captured from existing applications, for example, Word/Excel, emails can be automatically filed and in-bound post scanned and stored in seconds. All documentation can be constructively filed in a centralised, secure and accessible filing system. Searching for documents takes seconds.

Technology is changing the way in which organisations manage and use documents. Some predicted the paperless office, however, the rise of globalisation, inter-office transactions, and information process has led to more documentation not less.

Every company needs to develop a document management strategy, where cost is weighed in terms of value.

Further reading on technology in business

Alison Jackson

Alison Jackson

Alison is founder of Lindenhouse software, a document management provider in the UK to the SME marketplace.

Related Topics

Computer & IT Business

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