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How to Explain Document Imaging Cost Savings to Customers

June 14, 2017

How to Explain Document Imaging Cost Savings to Customers

The best way to explain the ultimate cost savings to customers is to discuss ROI, or return on investment. In other words, if the customer spends X dollars on document imaging, then they will save Y dollars. In order to create an ROI, Y must be greater than X. The ROI equals Y minus X. Pretty simple, right?

Well, it’s not as straightforward as it seems. When it comes to savings, there are both hard and soft returns that must be considered. Elements like a labor reduction or the ability to convert a file room into an office can be considered “hard” returns. However, there are also “softer” returns to be considered, like improved customer service due to quicker access to documents. By “softer,” we mean that the ROI is harder to calculate, but that doesn’t mean it shouldn’t be included in your analysis.

Where are the savings?

Let’s look at some of the specific areas of cost savings associated with document imaging:

  • Reduced printing, copying, faxing, and mailing costs: A document being stored electronically should be able to be shared with anybody worldwide without incurring extra costs. Some distributed implementations involving time-sensitive documents can pay for themselves in reduced fax and overnight delivery charges alone.
  • Reduced storage space: Especially in geographical locations with high real estate costs, scanning paper files can enable users to save money by converting file rooms into usable office space.
  • Reduced labor: There is a popular study from the late 1990s quoted by industry marketers that states: “Companies spend an estimated $20 in labor to file a document, $120 in labor to find a misfiled document, and $220 in labor to reproduce a lost document.” Whether these numbers remain accurate has come into question, but the gist of their message remains true: Finding information in a document management system is a lot more efficient than finding paper documents. In addition, applying optical character recognition in order to automate data capture can greatly reduce key entry costs. Of course, it’s important to stress to customers that the technology is designed to reduce, not eliminate, labor.
  • More efficient processes: Aside from improving simple document retrieval processes, document images can be used in order to implement automated workflows for processes like invoice approval and enrollment services. An automated process can greatly reduce turnaround time and improve collaboration, which creates improvements in efficiency and customer service.
  • Improved compliance, disaster recovery, and e-discovery processes: Here’s a case study about a business that rejected a proposal for a $175,000 document imaging system and ended up spending $1.5 million on recovering documents lost and damaged during Hurricane Katrina. Enough said. In addition, well-organized, electronically stored documents can also be more efficiently retrieved for audits and potential court cases.

The common costs

On the other side of the ledger, here are some of the costs associated with a document imaging implementation:

  • Software: Probably the most expensive component, although there are several options. Recently, software as a service has emerged as a popular way to deploy document imaging, which can reduce up-front costs and enable customers to account for their system as an operations expenditure versus a capital expenditure. For on-premises deployments, a 20 percent annual maintenance fee should be factored in.
  • Professional services: Someone has to set up the software, a task that typically falls to the reseller. Professional services costs can range from 20 percent to 50 percent of the cost of the software, and sometimes more, depending on the level of customization required. Outsourced backfile conversion is another potential service to be considered.
  • Hardware: It’s no secret that document scanners continue to improve in quality while falling in price. Don’t be afraid to overbuy slightly in order to enable customers to grow into their imaging systems. Especially if users are dealing with uniform documents, multi-function printers are also a scanning option in today’s market.
  • Training: Don’t forget to include time for training on a new imaging system, as it increases adoption rates, which can be the key to the success of an imaging implementation.

After you put all this together, hopefully the first set of numbers outweighs the second, at least over a two-year period (labor costs, for example, increase with time). Typically, an acceptable ROI period for a document imaging installation is between six months and two years.