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The Financial Impact of Digitization

Posted by Tricia Gopi on Mar 3, 2020 12:15:00 PM

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There is a lot of talk in the business world about digitization, but many businesses don’t feel inclined to switch from the comfort of paper to a new system. As technology evolves and software becomes more comprehensive, digitizing documents offers more benefits than hardcopies can. Digital documents have been developed to be more secure and be easier to access. One of the biggest impacts of an electronic documentation system is the significant cost reduction in comparison to traditional document management. 

How does digitization save money?

Space

The more physical documents companies keep, the more space they need to store it. Space comes at a cost. In some of the largest North American cities the cost of commercial space is on the rise and vacancy is low. Since 2015 the cost of office space increased 14% and has been rising annually. In 2019 office space in Toronto averaged more than $30 per square foot, in Midtown Manhattan and San Francisco it averages around $70 per square foot. So, around 100 square ft of storage for paper can cost up to $7000 every month.

Businesses that don’t account for storage in their office or inevitably run out of space often end up using offsite storage services where they still have to pay for the space they’re using and additional service fees.

Hardware

A business doesn’t just pay for the cost of actual paper, they must pay for additional hardware. Most hardware associated with paper like printers, filing cabinets, shredders, and fax machines require maintenance, organization, and often need to be replaced. Filing cabinets cost around $2000 every year to maintain. The average lifespan of a laser printer is 3-5 years and replacing ink cartridges retail at around $100 each. Instead of paying for hardware, electronic systems enable emailing and cloud storage which requires minimal space and easy accessibility.

Productivity

Digitization enables productivity. Electronic document management cuts file processing down by roughly 4 days every month. When documents are online, employees get more done in less time which saves businesses from paying salary of more team members – the highest cost businesses incur.

Electronic documents increase productivity by facilitating communication and decreasing interruptions. Without a digital system, one person typically spends approximately 2 hours every day looking for files and managers spend on average 4 weeks searching for misplaced and lost information. With electronic document management, retrieving files comes down to a quick computer search.

Paper/Distribution

Paper and printer related costs are the third highest operating costs businesses face. On average a single office employee uses 10,000 sheets of paper annually. In addition to the exceptionally high cost of buying reams of paper itself, businesses have to spend on the distribution of paper as well. It’s estimated that for every dollar spent on printing a piece of paper, $6 is spent on handling and distribution.  Packaging, mailing, receiving, and filing documents all increase the cost of being paper-intensive.

 

While every business has a different relationship with paper, it’s important to consider the objective cost of paper and how an electronic system can minimize overall spending.

Topics: Technology, Business Growth, digital security, Budgeting, Digital, Portal, Organization

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