DOCUMENT OUTSOURCING
HOW – AND WHY – TO EXPLORE OUTSOURCED DOCUMENT
MANAGEMENT
By Jeff Zbar
Consider this proposition: If your company manufactures products or consults on management solutions, should any process beyond your true core competency be internally managed? From facilities management to shipping to document production, any non-core process often better serves the company bottom line when outsourced.
For many businesses, such is the case with document production. Between employing staff to manage an internal copy reprographics department (CRD), to leasing equipment, renting additional office space to house the CRD, and striving to stay atop the latest in technological advances, companies that run their own CRDs often find themselves mired in a money-losing process.
Document outsourcing can lead to convenience and flexibility through scalable document delivery operations. In short, off-site print services can deliver unsurpassed CRD benefits – with out the expense in dollars and productivity typically associated with on-site CRD operations.
Yet how can such an organization release itself from the way business has always been done to capitalize on a new solution?
Many large corporations, and even paper-intensive companies like larger law firms or accounting practices, have made the move to document production outsourcing. Upward of 60% of enterprises outsource some part of their document output needs, according to Gartner, the Boston research firm. Yet many don’t handle the process well. To wit, by 2005, some 75 percent of organizations that fail to properly manage the outsourcing process across its life cycle will not fully realize the benefits the process can deliver, including improved service quality, cost controls and realized objectives, Gartner notes.
Unlike the “outsourcing” that conjures negative connotations in the media, document outsourcing is removing some or all paper document production from a company, and outsourcing it to a domestic external provider. These companies may be located nearby, or in the case of national providers, in many locations nationwide, thereby providing production and logistical benefits unattainable from an internal CRD.
Small to medium businesses (SMB) increasingly are joining Fortune 500 corporations in exploring document outsourcing as a solution to several issues, notes Greg Greenberg, a senior analyst with research consultancy AMI Partners. A confluence of events and motivators, especially in the SMB space, has joined forces to create a suitable climate for change. They include:
Limited qualified staff to manage increasingly complex CRD technology and software solutions, or the need to focus existing staff on other, more important processes.
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A desire to focus on the company’s core competency, as opposed to such resource-consuming and non-core processes as printing.
An overall trend to improve print quality, which traditionally could not be accomplished with devices priced reasonably for the SMB organization. Outsourcing or applying leading-edge printing applications “can enable an SMB to look more like a larger firm by showing a certain level of quality at a lower cost,” Greenberg said. And A move away from creation of static documents, including marketing materials, presentations and brochures, which often are printed once in large quantities, then becoming dated or “stale” as they lie awaiting distribution from costly storage facilities. On-demand digital printing provides for just-in-time printing, eliminates need for storage facilities. Documents or parcels then can be drop-shipped directly from a print vendor’s location – without client personnel touching, packing or shipping the materials.
By applying outsourcing or advancements in printing technology, a company can grow – and grow its CRD applications – without hiring new staff or professional CRD managers internally.
Though prices for such devices, especially in the color laser category, have dropped to the sub-$30,000 range, the hard cost doesn’t reflect the actual cost related to an internal, self-managed CRD. Those include the persquare-foot cost of additional space to house the CRD, staffing costs related to operating the department, and the need to ensure the organization has the latest in reprographics hardware and software solutions. And with the move to color for Page 1 of 2 Copyright The Outsourcing Institute 2004.
internally-produced, professional marketing brochures and collateral materials for client outreach and new business development, production and binding equipment needed to put an impressive finish on the documents requires significant capital outlay.
Hence, the initial stages of a move to document production outsourcing begins with the realization that such outsourcing is no longer a tactical cost savings opportunity, but a strategic business practice. The company can free up assets and capital, and pay only for those services actually used – including printing, binding, stapling, boxing and/or shipping or distribution – in the variable-cost model.
THE MOVE TO OUTSOURCED DOCUMENT PRODUCTION
The move to outsourced document production requires careful planning from the top down. The process often is initiated and championed by a C-level financial, operational or information technology executive, who then appoints an individual to oversee solution research. Gartner Research calls this post the “production czar.”
This czar would be tasked with performing a thorough assessment of the company’s existing print production functions and facilities. Typically, when color press runs consistently exceed 1,500 copies per run, analysts believe this is an appropriate occasion to consider outsourcing the process, said Peter Grant, Research Vice President of Gartner’s Digital Documents Imaging Group.
Such an assessment can be accomplished by existing internal staff, or with the guidance of a vendor known for such review and applications. Under this review, tally the number and type of existing equipment, output volume of each device (with specific numbers for color and black and white output), as well as service and supply costs. The goal is to assess the current equipment, service and supply costs on a per page basis, and use those costs as a basis for comparison against the outsourcing proposal. Additionally, this review should reflect where the company is with regard to document outsourcing, as well as where the czar and other champions want it to be.
Though rewards can be achieved, document outsourcing is not without its risks, Grant warns. Among the greatest risks are possible security breaches of documents being produced off-site. For some organizations, production of sensitive documents, which typically represent a minority of print output, remains within the internal CRD or individual copy stations. Disruption of office culture or end-user control also is an issue. This is especially true for those employees unaccustomed to outsourcing print jobs, not physically overseeing the process, or simply walking to a CRD down the hall to fetch a printed job.
Yet rewards found with outsourcing can be numerous and ongoing. The average company spends three percent of its revenue on document output and handling, Gartner notes. Outsourcing can control such costs. Moreover, the client enjoys assistance in managing output needs and an end to technological obsolescence found with purchasing or leasing long-term document production equipment. Internal facility space is freed up as equipment and functions are moved off-site.
And finally, and for some, most importantly, the company is able to focus on its core business – which almost certainly can generate more money for the business than overseeing a CRD.
Moreover, an outsource solution can allow an expansion-minded company to grow more rapidly following mergers and acquisitions. By integrating an existing unified, holistic document outsource solution into the newly acquired operation, duplication and waste is eliminated and operations are streamlined.
REGULATIONS SPUR DOCUMENT OUTSOURCING
As increased state and federal regulations control how certain companies and industries operate in the 21st Century, appropriate use of document outsourcing can play a critical role in ensuring rules and regulations are adhered to.
The spate of corporate malfeasance that led to the Sarbanes-Oxley Public Company Accounting Reform and Investor Protection Act of 2002 now require greater document management and internal control. Additionally, the Health Insurance Portability and Accountability Act of 1996 requires control and tracking of patient records, with strict adherence to patient confidentiality. Variable data printing options, when combined with bar-coding and database management, ensure that patient data is protected, while the organization is able to capitalize on cost benefits found with document outsourcing.
The variable-cost pricing model of outsourced document production allows organizations to meet these regulatory requirements, while also improving bottom-line results.
For many companies, outsourcing also delivers significant production and workflow benefits over internally operating a CRD. Print technology deployed by external vendors often easily outperforms those used at an internal CRD.
These machines allow for heavier production schedules and volumes, more complicated printing applications and more powerful technology overseen by skilled and dedicated staff.
Finally, depending on the vendor selected, all phases of job management, from submission to revisions to job monitoring, are handled online via password protected sites. This allows for creation of variable-data printing solutions – at variable-cost printing prices – formerly unattainable from traditional outsource printing vendors. The use of such data allows documents to be personalized with specific customer data, which therefore can improve customer satisfaction.
When married with client expectations and contracted applications and services, the relationship becomes more productive and rewarding.
“That’s the innovation that’s occurring with technology,” Grant said. “It’s just rethinking what we’re doing. It’s a transformation play. Why do you want to go to outsourcing? Because I’m changing the way I compete in business.”
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