IS YOUR BUSINESS AT RISK?

Facts You Should Know about Three Aspects of Document Management A BancTec White Paper

INTRODUCTION
Companies handle a huge amount of business-critical and sensitive information every day. Many lack standardized processes, state-of-the-art technology, and personnel trained to manage the document flow in an optimal manner. Consequently, some operate with a high level of risk resulting in three major impacts to their business: Constraints in ability to make effective, timely decisions Inability to reduce and control costs Business liability due to lack of compliance and confidentiality Essentially, document management is a breeding ground for business risks. There is another area of risk. Although, increasingly, companies outsource various document-management processes, some achieve less-than-satisfactory outcomes because they approach the initiative with common approaches to outsourcing, but these are not the best way to approach document management initiatives. This paper discusses important facts companies need to understand about three aspects of document management: The enormous risks of inefficient document management How outsourcing document management can yield a high return on investment The best-practice approach to outsourcing document management that enables successful outcomes

A PAPER DOCUMENT IS THE SINGLE SOURCE OF FAILURE AND LIABILITY

Misfiled Lost Damaged Takes too long to retrieve Security risk Expensive Doesnt interface with computer systems New regulatory reporting and retention rules adds to the burden of handling paper documents Doesnt age well 96% of all invoice-processing time is keying data from paper

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DOCUMENT MANAGEMENT: BREEDING GROUND FOR BUSINESS RISKS

The demand for timely, accurate information for decision makers has never been greater. In addition, executive accountability for handling sensitive information has reached new heights due to increased legislation. Lacking quick access to customer information leads to significant customer dissatisfaction. There are also corporate imperatives to achieve a higher return for all expenditures with quicker and larger paybacks on capital investments. In the midst of such demands, todays businesses also must do more with less while trying to grow market share. In such an environment, an organizations approach to document man agement is critical to minimize risks and maximize competitive advantage. However, many organizations lack well-designed and well-executed document management processes. Typical inhouse approaches to document management simply cannot keep pace with the heightened demands. Consequently, operational costs and risks rise dramatically. Such risks are illustrated below.

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THE POWER OF OUTSOURCED DOCUMENT MANAGEMENT

Case Study #1: Processing Mail and Business Records Business situation: Provider of credit management and debt collection services already employed 20 clerical staff to manually process incoming mail and anticipated a significant rise in data capture requirements The company had limited physical space and did not want to increase its staffing Solution: The outsourcing partner provides a full mailroom solution including: o Receiving and opening mail items daily o Processing 2,000 new business records and 1,200 field agent books weekly o 1,500 payments and 3,000 moved away letters daily All data collected is transmitted to the companys headquarters for incorporation into the companys management reports and used to generate the next weeks field agent books Value Delivered: The solution is designed to handle peaks and troughs of activity, which can vary by 30% The outsourcing provider is handling more mail and processing more payments but at a lower cost. Significant improvements in the process of input rates of new business and in the processing of moved away mail Eliminated time and expense of maintaining technology Ensured its remittance processing equipment would not be out of date

Document handling has a real impact on a business but, for most organizations, document management is a non-strategic, overhead function. Thus, any resources dedicated to document management are a distraction from the core business and a drain on resources. Some key points to consider are: Risks associated with typical inefficient in-house document management processes are avoidable by outsourcing these processes. Outsourcing document management places the process in the hands of experts who focus all their attention only on that process and who will definitely consider it to be strategic. Outsourcing not only achieves process improvements but also accelerates change. Organizations use business process outsourcing (BPO) to drive change, as it forces a higher level of organizational discipline and requires better planning. Outsourcing providers have the resources to accommodate special organizational needs cost-effectively. An outsourced document management solution will yield a measurable, high return on investment (ROI). Typical benefits include the following: Efficiency gains from digitizing documents This makes information access easier. An electronic document is easier to find, share, and review. This ensures more timely and comprehensive decision making and increases customer satisfaction because of quick access to information. In addition, disc storage is less costly than filing cabinets. Organizations have two choices when dealing with paper and computers. They can rely on employees to process paper in an ad hoc way as it comes across their desk, or they rely on an optimized process that digitizes paper at the earliest possible stage which is how a BPO provider handles it. Ability to cope with sudden surges in demand Extra capacity is on tap to address problems and sudden needs without substantial increases in capital expenditure. Technology gains Access to the latest technology enables greater cost and efficiency gains. Scanning equipment requires maintenance, and technology evolves quickly. In-house investments in the wrong equipment or maintaining hardware that will rapidly become obsolete is a serious financial risk.

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Case Study #2: Processing Healthcare Documents Business situation: The company administers Medicare programs in every state in the U.S., processing more than 130 million Medicare claims per year, plus images of medical records, enrollment applications, and correspondence The company bid through an RFP for new scope of services; as part of the bid, it sought a subcontractor that could provide: o Mailroom services o Imaging and OCR of paper claims and support documents and medical records o Data correction, formatting and transmission o Imaging and manual keying of paper claims that cannot be processed with OCR o Ability to handle tens of millions of documents while meeting stringent HIPAA security and information regulations Solution: The company outsourced the work to a BPO provider with expertise in document management services and a HIPAA-compliant processing and imaging facility. Value Delivered: The company was able to win the additional scope of work Enabled the company to expand its claims-processing capacity Allowed the company to reduce the cost of processing millions of paper documents

Risk Reduction o A BPO provider invests in the technology systems, business processes, and skilled personnel to ensure compliance with U.S. regulatory requirements such as Sarbanes-Oxley, SAS 70, and HIPAA and similar requirements in the European Union surrounding the sharing, storage, and retention of documents. o The provider implements role-based access control to sensitive information and assures an audit trail. o A BPO provider applies industry and process best practices as well as automation to reduce human error. Strategic growth activities Outsourcing document management makes it easier and faster to implement change as an organization grows and enters new product or global markets. It also facilitates post-merger/acquisition (M&A) activities and changes in business structure. Case study #2 is an example of outsourcing document management to enable gaining new business. Business continuity and disaster recovery A BPO provider has the resources and facilities to ensure a cost-effective solution for storage and recovery of documents in case of disaster and ensure that the document management process resumes smoothly and efficiently. Cost benefits In addition to cost reduction from improved processes, outsourcing eliminates unpredictable capital expenditure and non-core employee costs. Service costs are predictable, controllable, and based on service level agreements. Efficiency gains from end-to-end outsourcing Companies achieve significant efficiency gains by optimizing their document management end to end. This resolves or minimizes multiple issues including: o o o o o o o o o Lost or misrouted documents Late delivery of documents Typing errors from invoices Need to forward hard copy Poor audit trail Poor security and privacy Mismatched data to invoice Slow processing of payments Need to create multiple copies

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Case Study #3: Preserving Irreplaceable Documents Business Situation: A Catholic diocese sought to preserve its sacramental documents for 125 parishes in 25 counties to protect against paper decay and destruction in case of a disaster More than 120,000 images needed to be microfilmed and digitized The Diocese wanted a local provider to avoid shipping the irreplaceable sacramental books elsewhere for digitization Solution: Microfilm was chosen as trusted source for preservation provided hard copy in secure facility and digital files for the parishes for easy access. The outsourcing provider broke the project into 11 phases over one year. Each page of the hardbound books was microfilmed. Value Delivered: The Diocese now has redundancy for its sacramental records, with the original handwritten records preserved in a secure location on microfilm and on several sites as digital files. Searching the digitized records now takes minutes instead of the days to search the original hardbound books.

Outsourcing of non-core but critical processes is a proven strategy for maintaining a competitive edge. Moreover, a process that is recognized as overhead expense can be the engine that drives transformation and maximizes shareholder value. Document management has emerged as an area of high potential for providing the benefits of outsourcing.

THE APPROACH TO OUTSOURCING DOCUMENT MANAGEMENT IMPACTS SUCCESS

While outsourcing document management is a highly successful strategy for business efficiency and risk mitigation, the outcomes can be unsatisfactory if the appropriate approach is not taken. Lift-and-shift. A common approach to outsourcing is where labor arbitrage is often used in lieu of process transformation. Avoid this method if youre looking for long term, sustained or increasing economic value especially if the service provider is not planning to transform the process. Change management. Companies also need to bear in mind that outsourcing document management involves a high degree of change management. Thus, deciding to outsource high value-add function(s) first is likely to be a high-risk approach since those functions are likely to undergo a high degree of change; this approach carries a risk of failure. The best-practice, low-risk approach to outsourcing document management involves these rules of thumb: 1. Dont start by outsourcing a decision-heavy process that requires a lot of human interaction. 2. Start by outsourcing the function with the least value added, most repetitive, and most easily automated processes, and work up from there. 3. Dont make decisions based on whether the function is a revenuegenerating activity; this carries the risk of turning the initiative into a Blevel activity. It is much easier, for example, to outsource data entry and scanning of application forms than it is to outsource loan decision-making. This approach, together with a clear understanding of the companys business objectives and drivers, will present a decision framework that yields the desired ROI, whether the company wants to start with point solutions for various functions or begin end-to-end process transformation at the outset. Siloed approach. It is also important to recognize that optimizing the document management process requires eliminating a siloed approach. Such an approach often ends up with the initiative not being perceived as high priority; thus, it risks achieving less-than-anticipated outcomes.

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Case Study #4: Bank Check Imaging Business situation: A European banks check images were stored on microfilm, which resulted in several challenges: Security and interoperability issues Document retrieval was a manual process requiring individual branches to send copy requests to operators in the central management center More than 20 staff members were retained to manually locate microfilm, obtain copies, and dispatch them to the branch Each request for check copies took between 24-48 hours to fulfill, impeding customer service Quality of images varied Solution: The outsourcing provider replaced the microfilm library with a hosted digital archive at its facilities and a mirrored archive at the bank Value Delivered: Seamless backup for business continuity in case of a disaster Bank branches staff have instant access to images via a Web-based interface Speeds cycle time for lending and pay/nopay decisions Ensures customer records are secure Increased customer satisfaction Reduced costs Eliminated capital outlay for ongoing technology upgrades Significant improvement in quality of images

In many organizations, different departments have their own capture, imaging, and archival implementations. Optimizing the end-to-end process requires someone at a higher level in the organization who can envision benefiting from consolidated operations. Risk/Reward Model. Companies can also benefit by considering a risk-andreward model in which the provider is rewarded for benefits delivered. A shared risk-and-reward model also helps to ensure the client company will perform its responsibilities that enable the provider to achieve the objectives. Financial incentives are a highly effective strategy for maximizing the value that is possible through outsourcing.

RECOMMENDATIONS FOR SELECTING A DOCUMENT MANAGEMENT OUTSOURCING PARTNER

Maximizing the value outcomes from outsourcing requires not only taking the right approach at the outset but also selecting the right partner. The selection strategy should involve finding a partner that can meet the following criteria: Superior track record of dealing with high-volume business-critical documents Has a superior track record in transition planning and staff acquisition Has a superior track record in reengineering business processes and in rationalizing process-oriented operations, which leads to performance improvement, improved customer service, and cost reduction Can help its client understand the risks as well as the benefits Will conduct a risk assessment, reviewing paper flows and business processes up front to assess the impact of outsourcing various functions Has a rigorous framework and methodology that serves as the foundation for well-documented processes Has leading technologies Uses software tools that provide rapid integration, scalability, and flexibility Adheres strongly to corporate governance, SLAs, and controls Uses quality metrics and continuous improvement methods Provides complete business continuity in the event of operational disruptions Has a proven track record for incorporating flexible results-oriented pricing methods. Todays business environment has more disruption to established business processes and more risks than ever before. Leveraging the resources of a document management outsourcing partner is a key enabler to turning the disruption and risks into a competitive advantage.

2010. BancTec, Inc. All Rights Reserved.

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FOR MORE INFORMATION

BancTec helps clients around the world simplify the process of managing their information. Founded in 1972, the company provides a wide range of solutions for automating complex, high-volume and data-intensive business processes for clients in the financial services, healthcare, manufacturing, government, and services and utilities industries. BancTecs offerings include business solutions, business process outsourcing, and infrastructure services. Headquartered in Dallas, BancTec serves clients in more than 50 countries. For more information on how BancTec can help you optimize information management, visit www.banctec.com or call 1-800-BANCTEC.

2010 BancTec, Inc. rights reserved. All 2010. BancTec, Inc. All Rights Reserved. BancTec is a registered trademark of BancTec, Inc. Other brand or product names herein are the property of BancTec, Inc. or their respective owners. Specifications are subject to change without notice. 05DS-0310-101

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