Reducing Costs with Cloud Computing and Paperless Document Solutions
(#4 in a series.)
In our last installment we discussed the top 3 business drivers of Cloud Computing and The Paperless Office: Cost, Speed and Security. Let's dive deeper into the impact of these solutions on costs.
Studies have exposed some startling statistics regarding the costs associated with handling paper at work. Consider these facts as reported by the Journal of Accountancy: Filing or retrieving a single document costs on average $20. 7.5% of all documents are lost or misfiled, and finding a misfiled document costs $125. Professionals spend 50% of their time looking for material and only 5%-10% of their time actually reading it. Recreating a lost document can cost as much as $250. Another study found that it costs $25,000 to fill a 3-drawer file cabinet & $2,000/year to maintain it. Using those numbers and doing the math in your department can be a sobering experience!
With Cloud Computing there's no infrastructure, no provisioning of servers; no need for excess capacity to handle peak demands; no version updates, patches, or administration. With the on-premises model you have a high initial capital expenditure in Year One followed by maintenance, upgrades and training costs in subsequent years. With the Cloud model provisioning is fast with minimal internal effort and annual costs are on a subscription basis and therefore very predictable over time. McKinsey & Company found that companies realize a 30% lower total cost of ownership (TCO) when using a software as a service (SaaS)-based solution instead of using on-premises hardware and software.
One of the key cost factors driving the move to the cloud is the avoidance of large capital expenditures to purchase servers and software. In these days of tight budgets, even if there's a tremendously high return on investment, it's often very difficult to get approval for a capital expenditure. The great thing about Cloud Computing is it's delivered as a service, a pay-as-you-go kind of proposition. You pay only for the capacity you need, and it integrates seamlessly with your internal systems.
One of our customers, a large telecommunications company with over 6,000 employees, created a task team to study the potential savings from a variety of potential projects and prioritize the projects based on value. They determined that they could save $100,000 per year in paper and distribution costs alone by putting pay stubs online in the cloud. They are realizing many other benefits beyond those easily quantified results such as reduced personnel costs by providing a secure employee self-service portal to personal documents.
Regis Corporation is in the glamour business and has salons in the U.S. and Europe. Just by putting their employee W-2s on line in the cloud for employee self-service they are realizing an annual savings of $75,000/year. Now they don't have to handle requests from employees for reprints whenever a W-2 is lost or an extra copy is needed for a loan application or home refinancing. Employees can opt-in to have their W-2s delivered as digital documents which eliminates printing of the original document altogether.
Once a cloud document management solution is implemented for a single solution it can be leveraged for storing other documents and records from any department. Context sensitive from enterprise applications to related documents stored in the cloud can be provided through connector interfaces allowing customer service representatives to retrieve and deliver documents while interacting with a customer rather than having to go through the extra steps of pulling the documents from file storage and copying and mailing or faxing them to the customer.
It's easy to see why cost reduction is the top business driver of less-paper business solutions and cloud computing. Next time we'll talk about how the speed of business is accelerated by paperless business solutions and cloud computing.