The Secret Costs of Document Capture

If you think you know what you’re actually paying to keep your centralized document capture solution running, your ECM vendor is keeping secrets. He knows a lot more about the real costs than you do.

Here’s the truth: Capture vendors (and ECM vendors who might offer a bundled Capture product) purposefully do not want the market to shift toward Distributed Capture because it ruins their licensed revenue pricing models.

There, I said it. Truth hurts. Now that the cat is out of the bag, let’s break it down.

Per Click Charges. Legacy vendors want to maintain getting the per-click charges for each page scanned through those centralized, monstrous, money hungry IBML and Kodak scanners versus a compact, $400 desktop scanner. They pump out lot more paper than any desktop scanner can and you pay for page counts you didn’t know you had to pay for. Think of all those bar code, patch code and document separator pages that you need in a centralized environment to keep the scanners running at rated speeds. Also, if you happen to incorrectly scan a few hundred batches, or thousands of pages, rescanning will cost you additional software click charges.

Thick as a Brick. No, we’re not talking Jethro Tull, but how vendors encourage you to install thick client-based applications so they can get revenue for each seat license sold. Whether you use the capture application frequently or occasionally, they want that license revenue, and they will require you to pay for it. If there is no software to install, they can’t count the per seat user.

Licensee Sticker Shock. Speaking of licenses, if you haven’t priced them lately, be prepared. The vendor wants you to pump as much volume through their server as possible so they can drive that monthly or annual license volume through the roof. Even if by chance they do offer a Web client, it no doubt will be required to connect into their server backbone so they can implement per-click charge(s). That’s why the conversation early in the sales cycle from the manufacturer will quickly gravitate to the question, “Can you tell me what your expected monthly or annual volumes will be?” which directly equates to revenue recognition for them. Sound familiar?

The Bigger the Scanner, the Higher the Cost. Here’s an example where bigger is certainly not better. Because you might need a high-volume scanner, the capture software vendors penalize your business for the processing of all that paper through that big scanner, and charge you more for the software license and software maintenance.

Even More Costs. Consider these other elements and add-ons that surely will increase your costs: test development licenses; intelligent character recognition (ICR) and optical character recognition (OCR); advanced forms export modules; remote scanning indexing-only users; quality assurance monitoring administration; fault tolerance and other features; all on top of the page count and service license charge. Are you beginning to get the idea of what is going on here? Sounds like deficit spending.

Analyze that software maintenance agreement language carefully. It is not widely known that some vendors have introduced a concept of automatic CPI increases that usually range between 3 and 5 percent per annum. That means you can expect the cost of your software maintenance bill to increase every year, regardless of whether your volumes and usage of the software remain constant. (Pssst...want to obliterate CAPEX software and hardware purchases, maintenance bills, server hardware, etc., consider a secure Cloud alternative).

The bottom line: take a long look at the cost advantages of Distributed Capture. Even if you’re comfortable with the centralized option, ask some harder questions to see what you can take back from your vendors.

Distributed Capture vs. Centralized Capture? The Cost Matters.

Distributed capture or centralized capture? Deciding on which approach to use to cost-effectively manage paper and electronic documents is based on your processes for handling documents, and the technologies used. As cloud computing (SaaS) becomes as familiar a term as the word “social,” managing and processing company documents comes down to these two opposite choices.

Centralized Capture
In a centralized process, all document capture is done at one location. All the system components — clerical staff, software applications, knowledge workers, servers, scanners, repository, etc. — are typically located at corporate headquarters (the gatekeeper).

But if your company has multiple locations around the country, then documents are typically boxed up and periodically shipped to headquarters for processing. That can lead to multiple problems:

• Potential for lost or misplaced documents
• Delays in document processing and slow turnaround expectations
• Transportation/shipping costs
• Dedicated staff to process the volume of content arriving at the central office (creating a new cost center)
• Space, power and environmental requirements
• Equipment, software licensing, ongoing maintenance and support costs that are significantly more expensive than alternative approaches

Surprisingly enough, the centralized approach has traditionally been the favored model of today’s large corporations. Why? “Centralized” is thought to be the obvious way to solve business problems in the IT world. Corporations like the idea of “keeping control.” The solution conforms to a gatekeeper mentality, and the solution stays close to the ivory tower.

But there’s another reason why centralized scanning has been the de facto solution: Many IT staffers at large corporations maintain a preconceived notion that they can build a better mousetrap based on the rationale that “nobody knows our business better than we do”. Hence, they often build their own proprietary document capture systems.

What business is your company in? 

Therein lies the problem. Is your company in the business of X, or is it in the business of researching and developing, maintaining, and supporting document capture systems? These days, few, if any, organizations can legitimately justify the cost of building a complete capture application from the ground up, and then adequately maintain and support it, along with the user base, over the life of the application.

How can a proprietary system remain competitive with the fast-paced ECM industry, with all of the technological changes that occur — specifically in document capture, with all of its associated, granular subcomponents?

Distributed Capture 

In the distributed model -- capture done from any location – the software can be immediately deployed to serve the needs of internal users (rather than, say, 6 or 12 months from now, if your company’s lucky).

Distributed capture and indexing software enables users to input electronic documents, scan paper documents and input indexed data (or Metadata) from any PC at any location. The content can then be accessed anytime for further processing and/or retrieval purposes. Software for distributed capture is available in the traditional, installed-on-premise method, a pre-configured network appliance, or via the SaaS model, in which companies contract the service and all users access the software using a Web browser.

So, why isn’t everyone moving to distributed capture? 

Good question.  There is s still a number of people and organizations that think in terms of "centralized" rather than "decentralized."  One needs to look no further than our Federal Government to begin to understand why monolithic environments still exist and continue to grow even though we know decentralizing control promises to offer numerous opportunities to lower costs and improve efficiency.  Chalk it up to an ongoing, needed education process that a viable alternative exists.  It is similar to why some in the business community continue to remain skeptical about the Cloud alternative.  Despite the high costs to customers, the majority of legacy ECM vendors are still locked into the old way of thinking about software delivery – conventional installation on-premise rather than SaaS.

Neither is the ECM industry immune from the “centralized is the only way” trend. For years, many vendors downplayed the idea of distributed capture, saying it wasn’t practical because the technology wasn’t ready for prime time.

So far, we have yet to see where a distributed, web-based document capture solution could not perform similar tasks to that of the legacy, thick-client production applications that ECM vendors have been selling for a decade or two. In fact some things are actually performed better in a web environment rather than a thick client.  For example client driven database look ups in a web based environment are more secure because they don't require local ODBC or other methods of database connectivity be installed on the local workstations.

The other differential? Lower cost. It’s not unheard of for mid-market or enterprise organizations to incur costs for centralized document capture software systems (from traditional vendors) that exceed six or seven figures. That kind of money simply does not need to be spent on a document capture solution.

In an era where margins are constantly under fire, a distributed capture approach is where your organization’s primary focus should be today and for the foreseeable future. Because it’s no longer a question about capability, it’s about cost.