It seems there has been a renewed interest in the concept of outsourcing lately. According to analyst firm Evans Data, 65% of enterprises outsource at least some of their business functions. Document management is one area where companies are using outsourced services with positive results.
In the healthcare industry, for example, insurance companies are discovering savings on multiple levels by outsourcing healthcare claims documents. Traditionally, healthcare providers billed insurance companies, and insurance company analysts had to manually process the claims. Analysts had to compare the services rendered to the services covered by the patients' insurance plans, and they would accept the claim as is, reject it, or modify it and send it for payment. "By using outsourced document management services, insurance companies can process healthcare claims about 400% cheaper than it costs to pay an analyst," says Michael Riley, corporate executive VP and president of Imaging Services and Products Division at business process service provider Lason (Troy, MI). One reason service providers are able to reduce costs so significantly is because they use high-end document capture solutions which would be too cost-prohibitive for many companies to implement and maintain on their own. Besides document scanning, these solutions offer such functionality as OCR (optical character recognition), indexing, and workflow. By adding business rules to this process, service providers are able to quickly scan documents, identify key fields on forms, and process claims quicker than most insurance companies can manually.
There are cost savings associated with using a document management solution on a rental basis and never having to worry about ongoing maintenance and hardware and software upgrades. But, there are other reasons businesses choose to outsource document scanning and processing tasks. Consider a common scenario in which a company runs an ad to fill a job opening. "The company may get 500 resumes from its newspaper and Web ads," says Riley. "By the time a human resources [HR] manager combs through all the resumes to pare down the choices, weeks of time may have passed. Not only was the manager's time taken away from other job requirements, but also there is a good chance some of the prime candidates for the open position may have already found employment elsewhere." By turning over the 500 resumes to a service provider, resumes can be scanned, key words and phrases can be identified, and the HR manager can have their top 10 interview candidates in a day or two as opposed to a week or two. And, what do you think the candidates who get a call within a week of submitting their resumes think about this company?
Outsource Non-Core Competencies
Another reason companies are turning to document management outsourcing is to focus on their core competencies. As industry regulations such as HIPAA (Health Insurance Portability and Accountability Act) and Sarbanes-Oxley force companies to comply with strict document management standards, some companies are turning this responsibility over to other parties so they can stay focused on the key tasks associated with growing their businesses. "Since service providers represent many clients, it's more cost-effective for them to devote resources to staying on top of various industry regulations compared to each client hiring a person or group of persons to stay on top of these legal requirements," says Scott Swidersky, manager of Information Systems Division (ISD) at Quality Associates (Columbia, MD), a document capture service provider.
Can Outsourcing Give You More Security?
Another primary factor that affects why companies outsource is security. While it may seem backwards to say it is safer to outsource than keep documents in-house, consider the following reasons. "Because service providers make their livelihood by managing data, they invest in security solutions that would be cost-prohibitive for many companies to buy themselves," says Hank Boggio, director of sales and marketing for document archiving vendor Archive Systems (Fairfield, NJ). "Such solutions include encrypted VPNs [virtual private networks], redundant storage devices, and disaster recovery solutions. Also, because service providers usually make content available via the Internet, most have a failover ISP [Internet service provider] in place in the event the pipeline from the primary ISP goes down." How many companies - especially companies in the small- to medium-sized category - have all these data security measures in place?
The fact that service providers are familiar with a host of document management solutions and file formats offers other reasons users may consider them. When companies go through mergers and acquisitions, one of the primary IT challenges they face is dealing with disparate enterprise applications and conflicting business processes. "Because service providers are familiar with different document management solutions and various digital formats such as PDF [portable data format], TIFF [tagged image file format], and JPEG [Joint Photographic Experts Group], they can more readily help these companies choose the format that works best," says Swidersky. "Or, companies can turn over their documents to the service provider, and the service provider can scan the documents and put them all in a common format." By using a hosted document management solution, documents can be brought together under one virtual repository and accessed via a Web browser. In this thin client scenario, companies never have to concern themselves with hardware or software upgrades. They only pay for their monthly service costs to the service provider, and the service provider handles the rest.
In today's economy just about every company is looking for ways to streamline production, eliminate unnecessary expenses, and do more with less. By outsourcing document management services, enterprises are finding they can accomplish all these goals and focus on the tasks that help them grow.