FORGET THE TREES – PAPER IS KILLING YOUR BUSINESS!
Still dreaming about a ‘Paperless Office’? You heard the promises and for years we have touted the benefits from a extensive study (Accelio) : it costs $160.00 to process a typical paper-based transaction but only $6.00 if that same transaction was all digital – a $154.00 savings per transaction! You also heard that “green is the new black” and by removing paper you would be greatly contributing to save our environment. No longer is ‘going paperless’ the mantra for tree- huggers alone (Mortgage Bankers Association – “for every mortgage we kill a tree”), now, companies, regardless of size, can simply enjoy immediate and substantial savings without any large upfont costs!
As electronic signatures continue to go mainstream we have come to realize that most enterprises still don’t have a clue what ‘paper’ is actually costing them in the long run. This white paper will address what most managers already surmised but never took the initiative to quantify – the actual costs around these current but soon to be antiquated processes.
Wikipedia: A paperless office is a work environment in which the use of paper is eliminated or greatly reduced. This is done by converting documents and other papers into digital form. Proponents claim that “going paperless” can save money, boost productivity, save space, make documentation and information sharing easier, keep personal information more secure, and help the environment The concept can also be extended to communications outside the office.
Let’s begin with the end in mind – paper is expensive and killing your business! In the early years of electronic commerce, the sentiment that caught most attention was “if your not on the super-information highway, you will be road kill alongside it!” and today, “if you don’t migrate to pure digital and 100% paperless workflows your competitors will drive you out of business with price and efficiency” or better understood, you just won’t be able to compete. Almost a decade ago, at a real estate tech conference, I was asked, “Do you think technology will replace the real estate agent? ” I responded “No, but someday soon the real estate agent with technology will replace you.” Same holds true today, regardless of Industry segment.
Companies of all sizes and sector are understanding that reducing their paper is not just good ’corporate socially responsibility’ but the actual realized cost savings is immediate and provides efficiencies for all stakeholders. Elimination of the associated paper friction and costs such as copying, printing, postage, disposal, recycling and storing can be as much as 30 times the purchasing cost. In other words, a typical ream of paper that costs $5.00 could actually cost up to $150—not including labor.
Ok, back to the real cost of paper, we have scoured the research, analytics and the numerous ways to measure all the factors, including, faxing, scanning, delivery, receiving, non-public information compliance, copying, toner, environmental impact, handling, overnighting, labor, misfiling, keying/re-keying, storage and on and on. So let’s break it down to simple and understandable components.
Just the Facts - According to Gartner and others:
• It costs $20 to file a document.
• $120 to search for a misfiled document, that is if you can find it.
• It costs approximately $250 to recreate a lost document.
• The average document is copied 9 times.
• Gartner Group reports that Corporate Information is doubling every 2.5 years.
• Gartner also says pages per employee is increasing at 10% per year.
• Organizations now maintain 30 times more data than in 1999
• The U.S. annually spends $25-35B filing, storing and retrieving paper.
• The number of pages consumed in the U.S. offices is going up at the rate of 20% per year.
• Typical office workers spend 40% of their time looking for information.
• Professionals spend over 500 hours annually reviewing & routing files, and another 150 hours looking for incorrectly filed documents.
Cost of Handling Paper
For example, a survey published by www.futurelawoffice.com with regard to a modern law office shows:
• 90% of documents is paper
• 70% of time is spent processing paper
• 7.5% of documents is lost
• 15% of documents is misplaced
• 30% of documents contain obsolete information
• One four drawer file cabinet holds 15K-20K of pages, costs $25,000 to fill and costs $2,000 per year to maintain.
The Real Cost of Paper (RCC Consulting)
“..When you consider the real cost, paper is extremely expensive. A number of factors must be taken into account to measure the cost of paper and the savings that can be achieved by implementing a paper reduction program. These factors include copying, faxing and storage costs. Let’s look at a typical office with 100 employees to calculate the total cost of paper. Let’s assume that this office purchases approximately 10 million sheets of paper or about 50 tons. This seems like a lot but if you look at your own purchases you will find that 10,000 sheets of paper per person is a reasonable number and could even be conservative for most offices. The cost of this paper is relatively minor at .003 cents per sheet for a total cost of approximately $30,000.00. Now let’s look at how that paper is used. Generally this paper is used for photocopying (45%); printing (35%); faxing (5%) and mailing (5%) with 10% being wasted. Approximately 30% of this paper ends up in filing cabinets. 95% of this paper will have to be disposed at some point.”
Now let’s look at the costs associated with each of these activities:
- Photocopying and printing generally costs about 3 cents per page. This price includes the capital cost of the equipment, toner, and maintenance but not necessarily the time spent waiting at the copier for your turn.
- Fax costs can vary depending on the distance the faxes are sent but in most organization fax costs can be about 40% of the monthly telephone cost. In our office let’s assume the annual telephone cost is $50,000. If fax costs are 40% this would be about $20,000 per year. Since 5% of the paper or 500,000 sheets are faxed annually this equates to 4 cents per copy for telephone costs.
- 5% of the paper or 0.5 million pages are mailed or couriered. If we assume that 10 pages are included in each envelope this would be 50,000 envelopes sent out each year. Assuming that 90% are mailed and 10% sent by courier this means 45,000 are mailed with an average postage cost of 60 cents and 5,000 sent by courier at an average cost of $10.00 per delivery. In addition the cost of each envelope is 5 cents.
- Then there’s storage costs. Let’s assume that each drawer of a filing cabinet holds 7,500 sheets of paper. One year’s worth of paper could be stored in 100 filing cabinets. This is calculated by taking the total paper times 30% divided by each 4 drawer cabinet which would hold 30,000 pieces of paper. Each filing cabinet takes up 3 square feet and let’s assume that office space leases for about $60.00 per square foot. This comes to a total cost of $18,000.00. Adding the cost of filing folders and tabs etc., our cost might be $20,000.00 or approximately .0067 per sheet. This assumes that the filing cabinets are cleaned out each year and replaced with new files. In most offices, files generally have to be kept for seven years, however some files can be moved to archives. Since this cost is relatively small, let’s assume the long-term cost of storage is $10,000.00 per year, for an average of 5 years for a total life cycle cost of $50,000.00. This gives an average cost of .0167 for the 3 million sheets in long term storage. Assume disposal costs of .001 per sheet for the total 10 million sheets.
||Activity Cost Per Sheet
||No. of Sheets
|Short term storage
|Long term storage
|Totals $447,000 2001 RCC Consulting
IMPORTANT: The above table shows the total cost for 10 million pieces of paper as $447,000 or approximately $4.47 cents per sheet. This does not include the labor to purchase the paper, photocopy and distribute the documents, retrieve the printed paper from the printer, apply a signature and take it to the fax machine, place the documents into an envelope and place postage on it or filing, retrieving, archiving and disposing of documents. In addition, if an electronic copy is desired, the cost of scanning the document back into the system. Costs may vary in different offices, but the cost of paper is clearly significantly higher than first appears. Even without attempting to determine the cost of labor a paper reduction program can have significantsavings for any organization. A reduction program should easily achieve a 50% savings in paper within the first three months. In our typical office of 100 employees this means well over $200,000 in savings in the first year. The first step in implementing a paper reduction program is to determine the baseline for measuring the savings. A proper baseline measurement will help to obtain employee buy-in to the program as well as justify any software purchases to achieve the full benefits of a paper reduction program.
Calculating and Cutting The Cost of Enterprise Printing
Printing has become a costly area of IT operations for today’s large enterprise. According to Gartner, “Printers, the supplies associated with them and the support required to keep them operating represent 5 percent of the typical IT budget.” Furthermore, printers combined with other output devices – copiers, faxes and scanners – represent a significant portion of not just IT budgets, but also total annual revenues. Gartner estimates that “These output equipment fleets could cost an enterprise between 1 percent and 3 percent of revenue.” Many professionals in large enterprises may find this surprising, because few realize just how much they spend on printing or, even more important, what they can do to reduce these costs. A study by Lyra Research indicates that few network managers and IT departments track printing costs at all. But, an accurate assessment of costs is essential to reducing them. By carefully evaluating the total cost of owning printers and other hardcopy solutions – the cost to buy them, plus the cost for supplies and support over the life of the devices – the large enterprise can establish a solid foundation for a plan to significantly reduce costs. CAP Ventures goes further, concluding that, “It is those companies that cannot consider hardcopy to be a core asset, but nevertheless produce large volumes of hardcopy, that are in the greatest danger of wasting money by not considering a total cost of ownership model in relation to their hardcopy output devices.”
The cost of paper in today’s enterprise, regardless of size, is likely to be far more than the enterprise estimates. To accurately calculate paper total cost of ownership, the enterprise must take into account a variety of factors that represent both direct and indirect costs.
So if you’re dreaming of a paperless office? Settleware will get you closer – in real-time!
- Use the Internet for business rather than paper
- Better overall customer experience and loyalty – “Making it easy for your customers to do business with you”™
- Do more with less
- Instant delivery and arrival of information
- Contracts, agreements or applications signed, tracked and stored in one single step
- Low costs – no need to bring parties into the process because you can securely send direct to an email – protecting non-public information
- Simple to learn – Simpler to use™
- Cloud Computing: No downloads, installations or IT staff required
- Increase revenue by having more time available for more business and closing business faster
- Socially accepted – your customer is already using e-Signing- making purchases on Zappos, Amazon or at their local supermarket, even filing their tax returns.
- Competitive advantage and marketing positioning
- System maintains an audit trail and helps your organization comply with regulations
- 24/7 access to your secure e-Vault and files with visible audit history at your fingertips
- Supports both electronic and handwritten signatures