To maximize your return on investment when implementing document management software, it’s important to develop a sound business strategy with specific and measurable goals based on key metrics. We recommend you start in a single department, identify key metrics, implement the document management solution, and then compare the results against the key metrics to determine your return on investment.
Human Resources Is A Good Place to Start
When “enterprise content management” (ECM) started catching on, the concept of rolling out document management on an enterprise-wide basis emerged. As with many large enterprise resource planning (ERP) systems these implementations were complex, prone to scope creep, and often ended in failure.
Today, a more effective and less risky strategy for implementing document management software starts with selecting a department where the cost and time needed to process paperwork is high, such as in human resources.
Kyle Healy, vice president of corporate development at NFP, told us the reason to start with HR is that it’s a department where risk management can have a direct impact on the rest of the business. That is, staying away from avoidable risks in your HR department (non-compliance fines, for one) is a straightforward way to regulate your business’ bottom line.
Evaluating Your Human Resource Processing Costs
Here are a few key metrics that will help you identify how much time and cost is involved in paper-heavy HR processes:
- The number of hours staff spends capturing, processing, tracking, and handling vacation request forms, T&E forms, benefits enrollment forms, employee review forms, and supporting documentation
- The personnel cost needed to manually enter data into your HRM system
- The error rate affiliated with manual data entry and the cost of potential liabilities due to erroneous data
- The amount of time and staff needed to locate retired employee payroll records for estimating pension and benefit calculations, taking into account the time needed to retrieve those documents from off-site storage facilities
- The cost of penalties incurred for compliance violations
- Costs affiliated with records storage and retrieval for I-9s and other documents you must retain for 7 or more years
- The cost per square foot in your office taken up by filing cabinets and storage boxes with employee records and other related documentation
Setting Your Goals
Once you know your costs related to managing your HR documents, you can set goals to reduce them and simultaneously improve efficiency throughout the department. Some examples are:
- Cut the time and number of staff needed to process new employee paperwork, T&E reports, vacation requests, or any other HR related documents by x%
- Eliminate compliance fines by ensuring secure and reliable access to digital archives of employee records that must be kept for years, such as I-9s
- Reduce real estate and retrieval costs by eliminating document storage in your office and at off-site storage facilities
Analyzing Your Success
Once your document management software is implemented, you’ll want to measure these metrics over time and compare them with your baseline numbers to evaluate the degree of improvement and related costs savings. From there, you can estimate your return on investment. You can also analyze other non-monetary benefits such as employee satisfaction and ability to focus on value-add services vs. clerical work.
ROI & Expansion into Other Departments
Once you’ve determined the ROI of implementing document management software in one department, it will be simple to roll out the system to other business units and/or departments, such as order fulfillment, customer service, and invoice processing. You can transform the lessons learned from your foray into document management into best practices that will make for smooth sailing as you continue to automate other areas of your business.
We touched on a few ways automation can boost your business, but there are plenty more! Check out our infographic to learn 6 key reasons your business should start using automation ASAP.