Document Imaging: The Origin of Streamlined, Effective Workflows John O Connor BenchMark Consulting International

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1 Document Imaging: The Origin of Streamlined, Effective Workflows John O Connor BenchMark Consulting International In the years since the early adoption of document imaging, an evolution has transformed this once trendy, expensive file storage and retrieval technique into the backbone of streamlined, effective workflow management. Document imaging, previously a technological alternative to paper files, is no longer an option; it is a necessity to doing business in the 21 st century. Early Document Imaging Twenty years ago, paper-centric businesses (primarily involved in banking, finance and health care) began investing in imaging as a means of document storage and retrieval. Although the magnitude of future potential stemming from document imaging was not yet known, the benefits sought and achieved from the investment were quantifiable and real and are still important today. Document imaging provides protection and control over legal, original and unique documents. According to industry sources, an average of 25% of misplaced documents are never found 1. Companies spend significant amounts of money to locate missing documents and even more so, $250, to recreate them 2. Physical documents are often not protected from natural and unnatural disasters. This lack of control also contributes to higher processing times, reduced service levels and diminished customer confidence. Document imaging enables organizations to protect physical documents (or even destroy such 1 DataPro, Gartner Group 2 Office World News documents, as legally permissible) without harming service and quality. Document imaging reduces facilities costs by eliminating the need for onsite file storage. Industry experts tell us that companies spend $25,000 to fill a four-drawer file cabinet and $2,100 per year to maintain it 3. File rooms that consume valuable square footage within expensive office space can be trimmed down or eliminated entirely. Physical documents can be destroyed or sent to centralized, protected, controlled, cheaper offsite storage facilities. Economies of scale can be achieved by multi-location organizations employing such methods in aggregate and document control can be put in the hands of experts. Document imaging reallocates headcount to valueadded activities and away from document library management. Staff that manages library-like circulation operations to catalog, deliver and retrieve files can effectively image documents one time and never touch them again. Through reduced touch, full time equivalents in file management can be reduced and staffing costs can be reallocated to other operational areas. Document imaging enables freedom of location through electronic availability and ease of sharing. Such documents are stored in hard copy files, often in various physical locations throughout the organization. Staff throughout the organization that requires 3 Gartner Group, Coopers & Lybrand, Ernst & Young 2006 BenchMark Consulting International, N.A., Inc. All Rights Reserved.

2 access to hard copy files often works best within close proximity of the documents. This leads to the movement of files increasing risk of loss or the movement of people increasing expense. Document imaging enables freedom of location while protecting critical documents by eliminating the need for people to be nearer to physical files. Document imaging improves service levels through task focus, reduced turn times and faxing capabilities. The amount of time spent by the average employee looking for the information required to perform his or her job is not insignificant and could be markedly improved with the simplicity and reliability afforded by electronic files. Furthermore, employee productivity is negatively impacted by switching between the tasks at hand, waiting for files to be retrieved and restarting the tasks. Each switch means the employee must re-acclimate himself with the situation which results in much more time spent on even simple tasks than truly necessary. The availability of electronic documents means that no time is wasted waiting for physical files to be found, delivered and returned. Staff can work through issues that are fresh in their minds and customers can be answered in one call, often the original call. In addition, most document imaging systems are equipped with faxing capabilities enabling documents to be faxed directly from the computer screen without printing and without taking employees from their desks and phones. Furthermore, imaged documents can be passed electronically to coworkers and even field groups that require such documents for their work with no need to print, fax or transfer through interoffice mail (which presents further risks to information security). BenchMark has observed high performing organizations that use document imaging and electronic workflows to achieve very high levels of efficiency. Work passes electronically, often in parallel, allowing for quicker overall processing times and greater throughput and service levels. Such organizations are able to manage level workloads and employee work environments are quiet and focused, with fewer employees away from desks and significantly reduced levels of distraction. Work is done more quickly, customers receive superior service and employee satisfaction is improved. However, despite the significance of these benefits, they humble in comparison to the high performance and service levels that can be achieved when document images are employed in electronic workflow management. Electronic Workflow Management Now, due to the availability of electronic document images, the benefits that organizations can achieve are well beyond what they may have originally thought possible. This new environment enables push versus pull workflow management that saves time and improves service. Information is routed directly to appropriate employees who no longer spend time tracking it down in response to issues. Rather than being located to aid a process, electronic documents actually make the process happen. Some areas that have traditionally been paper-based now can be approached in the following manner: Application processing and decision making can be improved by capturing electronic application data or forms. Applications can be completed by the customer and by bank field groups and submitted by fax directly into the image system that will capture the image without the need for rescanning. Data can be input into the application processing system; in some cases the data can be electronically entered through the use of OCR (optical character recognition) to aid data entry. The resulting document image becomes the first item in the electronic file and is used to populate the application processing system. No paper application forms or associated tax returns, financial statements and other customer data need to exist in paper form and be routed among data entry, BenchMark Consulting International 2 Streamlined, Effective Workflows April 2006

3 application processing and decision making personnel and the customer record is never lost or misplaced. The application and associated documentation are pushed into the process directly into the hands of ready employees. Follow up is timely and decision turn time is optimized, providing superior service to prospective clients in this crucial business area. Review, boarding and funding personnel can efficiently review and index imaged documents while creating loan accounting system records. Original loan documents, once imaged, need never circulate among staff and departments, resulting in reduced losses and improved turn times. Optical character recognition may be an option to automate the entry of data that exists solely on documents and cannot be fed into the loan accounting system from the application processing system. With electronic workflows, scanned loan documents initiate the review, boarding and funding processes. Logs that were previously relied upon to ensure timely and complete work can be eliminated because documents are pushed into the process rather than being searched for and the workflow management tools take over. Loans are reviewed, boarded and funded in the best time possible and loan document loss is reduced. Collateral management personnel can initiate lien recording and perfection and begin follow up measures immediately. Original documents are not physically required in review, boarding and funding and can be quickly accessed by collateral management teams through the use of image. Loan documents are pushed into collateral management queues and file management staff are queued automatically to pull and route originals as needed to collateral management teams who no longer need to request such documents. Risk of loss due to unperfected and unrecorded liens is minimized due to improved turn times and document control. New loan documents including revisions, correspondence or other critical items can be easily added and indexed into electronic files for immediate use throughout the organization. Incoming mail can be imaged, indexed and pushed into work queues for action by appropriate teams ensuring timely follow up and controlling physical documents. Loan revision documents can be imaged upon execution and immediately routed for inclusion in whatever physical document storage is employed in the organization. Risk of loss due to misplaced documents is minimized and appropriate follow up action is virtually ensured. Collections, asset recovery and loss recovery are aided through skip-tracing efforts improved by the ready availability of all customer documents. Personnel are not limited by the information captured in the loan accounting and collection systems. Data not captured can be viewed from electronic images providing additional contact information, previous addresses, references or other information that can be useful in locating missing customers and assets. Skip-tracing and collections are optimized through fast action resulting from capitalizing on available resources quickly. In fact, credit and legal file documents can be pushed into all of these processes and attached to queue entries to initiate processes or ensure needed information is readily available. Asset recovery is aided by the speed and reliability of electronic document sharing both internally and with outside vendors and wait time is minimized, improving collection results. Payout processing is improved through automated queue entry of loans paid out in the loan accounting system. In traditional payout processes, personnel in receipt of proceeds initiate account closure activities through both payment application and retrieval of original loan documentation. Original loan documents are requested for retrieval by payout staff who awaits return to complete appropriate processing, adding delays to the process. BenchMark Consulting International 3 Streamlined, Effective Workflows April 2006

4 Instead, the use of an image enabled workflow actually allows the payoff event to initiate the process through automated prompting of file management for original document retrieval upon receipt of payout proceeds. Documents are pushed into the hands of payout personnel who no longer need to request appropriate documents and await arrival before processing. In this scenario, the same system that alerts staff to payout activity also initiates the document retrieval to speed the payout process. One automated trigger initiates both segments of the payout process to begin simultaneously and to be completed with greater speed. Document fulfillment requests from customers, vendors and internal departments require little or no human intervention. With the proper controls and appropriate indexing, end-customers, on-shore and offshore vendors, internal departments, field groups and other company areas can request documents through the voice response unit, internet or intranet sites or links in credit, loan accounting, customer service, collections, recovery and other enterprise systems. Documents can be viewed, faxed, ed or even printed in response to requests and limited intervention saves time and enables staff to focus on value-added activities. Processes can be centralized or even outsourced due to the ease of accessibility of critical loan documentation. Operations can be managed from any location thanks to technology. Personnel can work from various corporate locations, from home offices or from the road. Electronic files enable redundancy supporting business resumption. Imaged documents also support outsourcing and off-shoring by making customer documentation available to anyone with the proper authority. Management is enabled through greatly enhanced information surrounding accountability, turn time and throughput. Progress of any and all tasks can be monitored, status is clearly visible, absenteeism is more easily managed, turn times can be minimized and volumes are readily available. All of these tools allow management effort to be redirected toward superior service and quality, achievement of service level agreements, fair and thorough performance management, preparation for the future and the assurance that all work is performed and all issues are attended to timely, accurately and in accordance with policy and regulation. Furthermore, the visibility afforded by electronic workflow management is a critical tool for internal customers. For example, branches and bankers can clearly see the status of applications in the pipeline and answer questions such as: who is working on the deal, how long have they had it, are there any open questions or issues, what can be done to help speed up the process? Initially such visibility can be the source of contention between departments but this contention will be quickly overcome when information flows more quickly with less follow up, decisions are faster and more informed, and telephones ring less. Asset backed securitization and debt sales are enhanced and monetary values are increased with the availability of electronic documents. The availability of electronic documents supports asset backed securitization and debt sales by increasing the prices that can be commanded for debt. In some cases, electronic loan documentation is required by buyers and investors. Whether it is required or not, investors and buyers will pay more for debt due to the protection, simplicity, reliability and ease of use that electronic document availability affords them. BenchMark Consulting International 4 Streamlined, Effective Workflows April 2006

5 Considerations Despite the vast benefits made available by document imaging and, now, electronic workflow management, numerous considerations must be evaluated to ensure that such a system is implemented properly for your organization. Questions should be asked and answered before the go/no-go decision is made and before technology is selected. Which original and new documents should be kept and which can be destroyed? How and where will kept documents be stored? Which departments, personnel and vendors will have access to which images? Will existing or only new loan documents be imaged (back-file)? What response speed is necessary for image access? How will the roll-out to the user community be scheduled? What bandwidth is needed to support user requirements? How much storage do we need? What metrics will provide timely readiness for technology upgrades? How will images flow between and be attached to various systems? How will imaged documents be indexed to support requirements? What policies need to be in place to support the success of this initiative? What performance indicators can be employed to demonstrate the positive impact on the organization? Next Steps The short list of questions outlined herein is only the beginning. Document imaging and workflow management are complex technological and procedural undertakings. Vendor selection, user community participation and project sponsorship are as critical in this endeavor as they are with any other. If your organization is like many others, document imaging is in place in some part of your organization. Taking it to the next level can turn your good processes into great achievements and give you the high performance you seek. But it must begin with an evaluation of current processes and the opportunities that exist for imaging and electronic workflows within them. How does your organization capture, store and retrieve documents? What is the actual flow of physical documents throughout your operational work areas? Follow these questions with the aforementioned considerations and you re well on your way to a successful deployment. BenchMark Consulting International 5 Streamlined, Effective Workflows April 2006

6 John O Connor is the Commercial Lending Practice Manager responsible for the sale and delivery of commercial banking engagements. He holds extensive experience in commercial banking management, reengineering and streamlining operations, product and project management, mergers and solidations. BenchMark Consulting International has specialized in improving the financial services industry since The company is a management consulting firm that improves the profitability of its financial services customers through the delivery of management decision-making information and change management services to realize the benefits of business process changes. BenchMark Consulting International s expertise is in the measuring, designing, and managing of operational processes. The firm has worked with 38 of the top 50 (in asset size) commercial banks, all 14 automobile captive finance corporations, several of the largest consumer finance corporations and many regional and community banks throughout the United States. Internationally, BenchMark Consulting International has worked with the five largest Canadian commercial banks, more than 40 European organizations in 11 different countries, in addition to financial institutions in Latin America, Australia and Asia. The company is a wholly owned subsidiary of Fidelity National Information Services, Inc., with clients in more than 50 countries and territories, providing application software, information processing management, outsourcing services and professional IT consulting to the financial services and mortgage industries. BenchMark Consulting International has dual headquarters in Atlanta, Georgia and Munich, Germany. For more information please visit BenchMark Consulting International 14 Piedmont Center NE, Suite 950 Atlanta, GA (404)