Coordinated Business Systems Blog

Quick Tips to Calculate ROI From Document Management

How will my business benefit? 

If that's the first question many companies ask themselves when considering an IT implementation, the second is almost always “what's the return on investment?”

Sometimes, that's hard to answer as there might not be direct financial benefits – better collaboration and faster customer response are definitely benefits, but they can be hard to quantify.

Document management software delivers a range of benefits to your office and business (I break them into the four Cs in this blog post).

Some of the benefits (like collaboration and faster customer response) are “soft” and difficult to quantify.

Other benefits aren't and we can fairly easily calculate and quantify the ROI from a potential investment (or an existing one) into document management.

Here are some quick ROI calculations based on time saved and reduced storage costs after implementing a document management system.

ROI – Storage Costs

Office space is always at a premium. Paper documents in filing cabinets take up valuable space in offices, hallways, and even entire file rooms that could be used for nearly anything else (larger break room for staff even).

To calculate the cost of the mere existence of your filing cabinets add up the number of filing cabinets you have in your office multiply that number by 15 (that's how much space a standard 4-drawer filing cabinet occupies, plus the space needed to for access – 15 square feet) and then multiply that number by the cost per square foot of your office space. That's how much it costs to have paper files stored in your filing cabinets.

Do you have off-site paper storage. Add up the costs of:

  • Monthly storage fee
  • Access costs
  • Costs to transport documents to the the storage facility
  • Staff time spent searching onsite for documents off-site

Let's say you have 10 onsite cabinets and cost per square foot of office space is $10. That's $18,000 for the year. Additionally, you're paying $200/month in off site fees and it's costing you $1,710 for a $15/hour employee to spend 2 hours each week retrieving offsite files.

If you simply improve access by 50% by digitizing the most active paper files, that's a $10,000 saving in a year.

ROI – Access Time

How many of your office workers take time to retrieve paper documents?

How much do you pay them?

How many hours per day do they retrieve, use, and refile documents?

Do the calculations and you'll see how much that costs you in productive time. Assume that a document management system reduced the need to access paper documents by 50%. That's good ROI.

ROI – Moving From Shared Drives to Document Management

Document management places all electronic documents into a single repository for fast, easy access. Many companies have their documents spread across different network shared drives, stored locally on PCs and laptops, and maybe even on a cloud storage service like Dropbox.

That's an inefficient mess! 

To get a real glimpse at the value of ROI, think about how much time it takes to find information in such a jumble of locations:

  • How many employees access documents via the network?
  • How many minutes per day do they spend searching for the right document?
  • Documents get lost – how much time is spend recreating documents – both those that already exist and ones that simply can't be found (maybe they were accidentally deleted)
  • How much time is spent trying to figure out which version of a document is the right one?
  • What is the average hourly wage of all of these employees?

The costs of poorly managed digital documents adds up quickly!

Of course, any numbers we use here are only to give you a ballpark idea of cost savings and ROI. Depending on the cost of the implementation, the need to convert paper documents, and other factors; ROI will vary by company.

That said, EVERY company has documents. EVERY company wastes productive time trying to find information.

Document management software puts information at your employees fingertips.


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