The latest Paper Wars research from AIIM shows slow progress towards paperless processes. James Goulding spoke to Doug Miles, director of AIIM Market Intelligence, to find out why so many organisations still rely on paper and what processes one should digitise first?
Our conflicted attitude to paper is laid bare in the latest Paper Wars survey conducted by AIIM, the independent information
Two thirds (68%) of the 450 business people surveyed for Paper Wars 2014 – an update from the battlefield said that ‘business-at-the-speed-of-paper’ will be ‘unacceptable in just a few years’ time’, and around half said that the biggest single productivity improvement would be to remove paper from their organisation. However, only one in five respondents has a board-level endorsed policy to reduce paper use; and in one in five (21%) organisations paper use is actually increasing.
Overall, 44% of organisations are only 10% towards their goal of paper-free processes and 23% have yet to make any progress whatsoever, including 22% of the very largest organisations.
Businesses that do manage to reduce paper report increased productivity and enhanced customer service as a result, with 60% achieving ROI on their paperfree projects within 12 months and more than three-quarters seeing ROI within 18 months. Why, then, are organisations so slow to drive paper from their business?
Doug Miles, director of AIIM Market Intelligence, says that progress is taking place, but believes its speed is being hampered by lack of management drive. “Progress is being made on paperfree processes and in a number of areas, specifically invoice processing, it’s moving really quite quickly. But whenever you attempt to change a process within an organisation there are more people who will give you reasons why not to do it than will give you reasons to do it,” he said. “It tends to be when a process comes up for review that people decide it’s time to get rid of paper, rather than having the initiative from above or having it writ large on the operations department wall: How do we get rid of paper in this process? What’s the next candidate? What’s the candidate after that?”
Ripe for digitisation
According to AIIM’s 2013 Paper Wars study, the most popular candidates for digitisation are internal HR (e.g. expenses, timesheets, on-boarding), cited by 65% of respondents, followed by accounts payable (62%) and customer correspondence (62%). But how do you decide what process to address first?
Miles advises businesses and consultants to focus on processes that are hampering their ability to respond to internal and external customers. “Any process in which the time cycle is dictated by how long it takes to get a piece of mail from the customer or from a branch office to head office or from head office to employees should be reviewed. The one thing any process analysis should ask is how much core work is there going on in this process? Well, it’s three days. How long is the end-to-end process taking? It’s taking 20 days. Why is that? Because things have to go backwards and forwards. How do they go backwards and forwards?
On paper. If you can send them backwards and forwards electronically, you might be able to get the process time back to the core objective of a few hours,” he said. Miles says that doing so may not improve out-and-out productivity, but it will enable you to provide better customer service and will give you greater visibility, which in the case of invoice processing is often a greater benefit than faster payment processes.
“Your ability to manage your cash goes up enormously when you know just how many invoices are at point of payment. You don’t have to pay them any sooner, but knowing you could if you wanted to is one of the bigger benefits,” he said. “The other big benefit is from consolidating accounts payable duties. If you have branches all over Europe or the US and each has an accounts payable function with a clerk, a financial controller and two or three process people, you could instead receive all invoices electronically to one spot and process them electronically.”
Invoice processing is a good workflow to make paperless: a) because on average, 44% of invoices already arrive in electronic form (PDF, Fax, EDI) – even though 59% of these will end up as a paper copy, mostly printed prior to manual processing (39%); and b) because it is the one you can get closest to not having to re-key any information.
“Once you’ve worked out the different lay-outs, you can OCR an invoice and pulloff the customer number, invoice number, line items ordered. If you’ve got the delivery note, you can check that against the invoice. A big proportion of that can be hands-free. If you’ve got a three-point matching, as they call it in SAP, then you can pay without needing any handson. That’s where you get a lot of pure productivity benefits,” explained Miles. “The other processes in which we see much quicker progress are things like insurance claims: the assessor can be out there and take a photograph of the damage and submit it by mobile phone; the form gets filled in on a tablet and the whole thing is in process within hours, rather than days.”
Miles points out that the benefits of electronic processing are equally valid for less defined case-based processes.
“Case-based processes tend to involve less predictable routes and less predictable participants. For example, a claims benefit payment might involve input from a number of different people and you may have to present several people with the contents of a case folder. Doing that on paper, although people feel it’s more secure, restricts the whole collaboration. The person who has the case folder sitting on their desk can see it, but no one else can. That’s not very conducive to getting the thing done. As soon as it becomes paper-free, everybody sees the same content,” he said.
Lack of imagination
Digital mailrooms, the scanning of documents ‘at the door’ and then routing them to the recipient electronically, seems like an obvious way to reduce paper use. Yet, according to Paper Wars , just one in four organisations has such a strategy. “A lot of it is due to lack of imagination. I went to my solicitor to hand in some proof of identity documents. It’s a branch office in Tewkesbury, about 20 miles from the head office. She took my passport and utility bills behind the counter and when she brought my passport back, I said: ‘Just out of interest, did you scan or photocopy it?’ She said: ‘I photocopied it: I’ll send it to the head office and they’ll scan it there.’ So many organisations scan paper at the end of a process, because they have to reduce the amount of floor space taken up by records. Why not scan it at the start of the process and put it through the process electronically so it moves so much faster?”
One reason why there is still so much paper in business processes, second only to a lack of management initiatives (cited by 47%), is the perceived need for physical signatures (44%). “People like to have a hard copy,” explained Miles. “People assume you need a wet ink signature in order to make it legal, but you don’t. It’s valid to use digital signatures, to use bitmap signatures. We’ve been using signatures on faxes for years.”
Other reasons why people might be slow to digitise processes – and where resellers can make a difference – are lack of awareness and the existence of more pressing tasks for the IT department to focus on. “Often people don’t understand the opportunity and are not familiar enough with what could be done both from a legal and a technical point of view,” explained Miles. “You also have the attitude of ‘We always use paper, so why change?’ And, in some cases, changing a process has lower priority than other things they need to do in IT. Anybody who has changed a process realises that you need to know the process you are changing pretty well before you go down this route. A lot of people have the attitude of ‘If it ain’t broke, let’s not fix it’ because they know perfectly well that their processes are a little bit convoluted, tricky or live in somebody’s head and have never been properly written down or aren’t followed anyway.”
This, says Miles, raises the issue of compliance, which is much easier to achieve if processes are electronic. “If the process flow says you need to store a record of a form in the records management system and the records management system is a filing cabinet and you rely on someone to take a photocopy and pop it in the filing cabinet, nobody will know if it didn’t happen. Whereas with an electronic workflow, you can ensure it happens and block the workflow or flag up the workflow as non-compliant if it doesn’t,” he said.
Nor, says Miles, should we ignore the basic issue of self-preservation as a reason to stick with the status quo. “One of the benefits of digitisation is the ability to change location or outsource the process, as once it’s electronic it doesn’t matter where in the world it happens. That exposes a lot of local line of business people to the fact that their job could be resourced somewhere else,” he said.
Partly for this reason, Miles says that the best person to take ownership of the change process is the chief operating officer (COO). He or she will be able to ensure that the interests of the organisation are put before those of its line of business managers and, just as importantly, will provide a strategic overview and thus avoid the duplication that can occur if processes are digitised in a piecemeal fashion. “What often happens is that people put in some scanners and electronic workflow and get rid of the paper in one process. Of course, the kit you put in for that one process is perfectly capable, if you choose wisely, of running multiple processes. But instead people will buy an invoice processing solution from their finance solution provider and they’ll go to Concur for the expense claiming and buy the kit over again or buy the service over again. If it was done with a holistic view to drive paper out of every process, then you would dimension what you do. That is where the digital mailroom comes in: it moves things one stage closer to the door. Scan the stuff as it comes in and send it on for processing. Then everybody gains.”
The next stage, says Miles, is to get customers themselves to do the scanning. “We know we can pay in a cheque by getting it scanned in a machine in the bank. We can do that ourselves, and extend it to mortgage loan applications and things like that. Doing it at a selfservice booth in a bank has all sorts of benefits: for example, it could immediately identify if a utility bill is not valid because it doesn’t have your full address or if you’ve scanned the wrong page of your passport – the sorts of things that take days to correct if wrong from the start. The closer you get the scan point to the start of the process, the quicker you pick up errors.”
A word of warning, though, implementing paper-less electronic processes is not a panacea. “Even when everything is electronic, some stuff will have value and some stuff will have nil value, and trying to separate the stuff with nil value that we pay a lot of money to keep is the next huge issue within electronic record keeping and electronic processing,” warned Miles.
Paper Wars 2014 – an update from the battlefield is free to download at http:// www.aiim.org/Research/Industry-Watch/ Paper-Wars-2014.