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Assessing & Benchmarking Document Costs: Developing a Document Strategy

Introduction

The proliferation of output devices such as printers, copiers, fax machines, and scanners has significantly contributed to the dramatic increase in document output volume and cost over the years. While the majority of today’s organizations acknowledge the potential savings from better document management, many still lack the understanding and expertise to address the problem. Third-party providers including office equipment manufacturers, document outsourcing firms, and independent service providers are offering assessment services that focus on identifying costs and inefficiencies around document output.

InfoTrends/CAP Ventures’ new White Paper entitled Assessing & Benchmarking Document Costs: Developing a Future Strategy serves as a baseline tool for individuals within corporations that are tasked with assessing the current state of their enterprise document systems and developing a future document strategy.

The report discusses document trends, levels of assessments, benchmarking, processes, costs/potential savings, and corporate barriers. It also identifies elements that make up today’s typical assessment services.

Perception vs. Reality

A recent InfoTrends/CAP Ventures Study indicated that organizations perceived that they spend an average of 3% of their annual revenues on copying, printing, and fax-related costs. In actuality, our research reveals that overall document expenditures (including hardware, supplies, and “people” costs) averaged 6% of annual revenues across all industries. This total burdened document cost varies widely by type of industry and size of the establishment.

Typically, only 10% of the office document burdened costs relate to equipment, supplies, and service expenses. For every $1 spent on equipment, supplies, and service, another $9 is spent on other burdened costs. These burdened costs include IT support and infrastructure, procurement and facility costs, end-user interaction time, and document management expense. These costs are fragmented in budgets and processes across the organization. Only about 10% of the real document costs are typically exposed by an assessment, which means that 90% of the actual costs are being ignored. In many cases, “Total Cost of Ownership” (TCO) is not even close to the real “Total” cost.

Figure 1: Total Burdened Costs per Page Range
From .52 - .70 ¢

Organizations are often faced with conflicting requirements to cut costs, increase productivity, and improve client and employee relationships. These requirements have driven organizations to continuously evaluate their overall business processes in the search for further cost savings and increased efficiency. One area that has been increasingly scrutinized is the unmanaged cost of document output in the office environment. The proliferation of output devices such as printers, copiers, fax machines, and scanners in the office has significantly contributed to the dramatic increase in document output volume, its clutter, and more importantly its cost over the years.

While there tend to be a number of figures used in the market today, the majority of organizations acknowledge the potential cost savings and efficiency that can come from the better management of office equipment and its output. At the same time, however, many overlook or are still having difficulties in realizing costs (direct and indirect) within a document lifecycle.

Traditional View: Levels of Document Assessments

While the majority of the respondents from our Document Tracking Study considered tracking, monitoring, and managing document output to be an important issue, less than half claimed to have some sort of document tracking solution. Additionally, less than half are familiar with document assessment services. Today, we see vendors offering assessment services with varying degrees of complexity. Many have acknowledged document output assessment services as integral to the sales process and have focused on building these services into credible, discrete, and self-sustaining consulting practices.

Because vendors offer varying approaches and models to document assessment services, we have defined three levels of assessment categorized by complexity, level of detail, and cost:

• Level I:    Assessments at this level are mostly conducted internally with very limited scope and assistance from a third-party provider. Analysis on this level of data results in a preliminary understanding of the cost per page (CPC) that all considered devices generate based on specifications and usage.
• Level II: Assessments at this level are made up of services performed by third-party providers. These third-party providers typically take basic company information combined with secondary research, and compare the information about the organization being considered with the general population of a similar specific business type or vertical industry.
• Level III: This is the most involved and sophisticated level of document workflow assessment. This type of assessment typically takes anywhere from a couple of weeks to three months and involves a high level of collaboration between the user organization and the assessment provider. Depending on scope, some assessments might take place outside the office environment, in places like in-plants/CRDs or commercial print environments.

Overall, each level of assessments raises awareness of printing costs throughout the market. A clearer understanding of what document-related processes actually cost elevates organizations’ perceived needs for more advanced devices. More importantly, it makes the document lifecycle an issue that organizations can no longer ignore.

Critical Components of an Assessment

Service providers in the market use varied terminology for their respective assessment methodologies, but the underlying architecture of the process remains relatively constant. Below are a few critical components user organization needs to be aware of when embarking on a document assessment project:

• Planning the assessment : A clear process needs to be in place when conducting a document assessment.
• Building an Organizational Support Structure: Before starting a document assessment process, the appropriate support structure is in place internally. There should be a champion at the executive level that will back the project.
• Scoping the Assessment: Once the internal support structure is in place, the user organization needs to understand why the assessment is important and worth pursuing. Understanding of the big picture will help organizations to scope the assessment project and review the assessment provider’s capabilities.
• Data Gathering: Once the planning phase is completed, the organization can begin gathering data. The purpose of this phase is to obtain information on the cost/performance of the organization’s document lifecycle.
• “Current State” Assessment: This phase involves the compilation and analysis of gathered data. During this phase, workflow inefficiency, potential bottlenecks, sources of lag times, and technology obsolescence are typically identified.
• Deciding on “Future State”: Based on the current state assessment, most vendors will offer one or more possible scenarios for creating a future state that addresses the waste uncovered by the project. The scenarios will usually include a mix of recommendations regarding new office equipment hardware, software, and workflow processes, as well as procurement options like an outsourcing or managed services engagement where the customer can shift the burden of ownership to a third party.

Conclusion

There is a general confusion when it comes to estimating true document output costs, and this is driving the interest in assessment services. Most general approximations tend to overestimate the costs for copying, printing, and faxing as a share of an organization’s revenue or operating budgets. At the same time, however, internal/self assessment projects tend to underestimate the total costs associated with documents. As a result, many organizations have ignored the cost savings opportunity of document assessments due to the limited incentives associated with implementing such a project.

Organizations are increasingly aware of and receptive to assessment services. Vendors’ ability to demonstrate a tangible ROI has certainly helped to increase demand. In a situation requiring a request for proposal (RFP), for example, more and more user organizations are beginning to include assessment services as a prerequisite for proposal submission. In a nutshell, vendors will eventually need to offer these services just to be invited to the party. Furthermore, as more organizations address document-related costs, the gap between those who are utilizing efficient processes and those who are not will widen, creating core competitive advantages in operating efficiency.

The preceding is an excerpt from InfoTrends/CAP Ventures’ White Paper entitled “Assessing and Benchmarking Document Costs: Developing a Future Strategy.” This white paper is available immediately at no charge. To receive your free copy, visit our online store or contact Scott Phinney at , ext. 123 or  .