Tracking ROI: Is Your Document Management Service Meeting Expectations?
If you’re using a document management system (DMS) to help organize and store your documents, you’re already well ahead of the productivity game. You’re cutting purchasing resources, time spent finding documents, warehouse space and money spent remedying the mistakes that can occur when things are handled by hand. However, are you getting everything you wanted from your current DMS? Each software company is different, and the software itself has its own strengths. This post can help you see if your current DMS is delivering the highest level of productivity possible for your healthcare organization.
Let's Talk ROI
At its simplest form, return on investment is how much profit you’d expect from implementing a new system. It’s a simple calculation that looks like this:
ROI = [(Financial Value - Project Cost) / Project Cost] x 100. How does this translate to the ROI of a document management software platform? Here’s how to evaluate to how well your current document management service is performing:
Paper and Storage Costs
One of the largest cost savings opportunities for a document management service is in physical storage space. By digitizing documents, you’ll cut back on a number of expenses, including the following, which you used before implementing the software. If you add these up, you can calculate your monthly storage savings:
- Printers: Cost of ink, maintenance costs
- Paper: A ream of office paper costs approximately $5. How many reams did you use in a month?
- Filing Cabinets: Multiply your previous storage square footage (using about 12 ft.2 per cabinet) by the average office square footage space cost for your area to determine how much you spent per month.
- Offsite Storage: Add monthly storage fees, as well as any monthly shipping costs you incurred, and fees for information retrieval.
- Total Annual Storage Costs: Add these to get your total, and then multiply by twelve for your annual cost.
Document Management Costs
Now we’ll quantify the procurement of printed materials and distribution throughout the hospital:
- Staff Power: How many people devoted time to managing clinical documents?
- Staff Hours: How many hours daily did staff spend finding and filing paper documents?
- Staff Costs: What was the average salary for the staff managing documents?
For the annual total, you can use this formula:
hours spent finding and filing documents x number of people x average hourly salary x working days per month x 12 months
Add this to your print, paper and storage costs.
Related: “What is a Document Management System and Why Do You Need One?”
How Does the DMS Compare?
To see how the DMS improved your productivity, you can calculate its ROI by taking the total annual DMS cost, and subtracting it from the cost you calculated above. The DMS cost will include several components:
- Hardware that runs the DMS software
- All costs associated with implementing the software, including any training costs
- IT support costs
- Software license costs
- Document access costs: These can be derived from an equation that looks like this, since finding documents will take less than half a minute with DMS search capabilities:
Add these numbers together for your annual cost.
With the cost of the old paper-based system calculated and the cost of your newer DMS, you can plug the numbers in to the following equation to determine the true ROI of your DMS:
ROI = [(Financial Value - Project Cost) / Project Cost] x 100
In this case, if you take the old system costs and subtract the DMS costs—and then divide them by the DMS costs and multiply by 100, you’ll see the percent savings, or ROI.
A positive ROI is always a good thing, but experts recommend shooting for an ROI of around 20% or better.
This is a simple way to evaluate the effectiveness of your current document management services. It is not perfect, however. There are many other factors that are difficult to measure. The level of security, for instance, is increased with a DMS. So is the ability to share documents, protect them with permissions, and save time and ensure accuracy with prefillable forms.
Is your DMS living up to its promises? If not, we can help. DigiDoc has helped one large national hospital system save $11.4 million by moving to a DMS, and on average, we’ve helped companies cut their printing costs by 60 percent. A DMS can deliver real savings. Learn how to leverage yours for even greater returns.