What Imaging VARs Need To Know About Records Management

My personal finances are a good illustration of the difference between document management and records management. I am extremely efficient at getting the bills paid, and with a couple clicks of a mouse, I can display my online check images or a check register complete with graphs. On the other hand, if I were asked to reconstruct my purchase history from a year ago, I would be hard-pressed to prove if my payments to Discover can be attributed to business travel or my extensive shoe wardrobe. The answer lies somewhere in the random collection of shoeboxes dating back to my college days where receipts, remittance stubs, and assorted other important papers are "filed." Similarly, many imaging VARs handle only part of the information life cycle, processing documents, but not documenting the process for how those documents originated or what happens to them afterward. According to Kay Palumbo, president and CEO of records management VAR United Business Systems (Orlando, FL), document management VARs need to learn more about information life cycle management, the legal issues end users face, and how to accommodate paper documents in an integrated strategy.

Since its inception in 1968, United Business Systems has provided solutions such as mobile shelving and filing systems for management of physical records. Several years ago, United Business Systems began to integrate management of digital records with its physical storage solutions. Imaging and records management software sales are a growing part of United Business Systems' overall revenue, increasing by 40% in 2002.

Regulatory Requirements Drive Demand For Records Management
Most of United Business Systems' customers have a unique requirement from a regulatory standpoint or a corporate/procedural standpoint, so understanding physical records management has been a key differentiator. "The customers we deal with want to tie together their needs for retention with the ability to be organized and efficient," says Palumbo. "Documents have been lost; items have been discarded that shouldn't have been. When document management VARs approach these customers, their main objective is often to scan and index documents, but that doesn't address the entire need." End users need records management to track what happens to documents after they have been imaged.

Increased regulatory pressure combined with lack of market penetration make this an excellent time to begin offering records management solutions. In the 2002 white paper "Getting It Right In Records Management" prepared for AIIM International (available at www.aiim.org/all_docrep.asp), Cohasset Associates, Inc. reported that only 24% of end users rated their records management strategy as "great" or "excellent." "Lots of companies have neglected records, and few have records managers," observes Palumbo. "It's surprising how many large companies don't know about records management or have a resource for understanding it."

To meet the needs of the 76% of end users who believe their records management strategies aren't ideal, Palumbo contracts with certified records managers. This designation is administered through The Institute of Certified Records Managers (www.icrm.org). It is often referred to as an ARMA (American Records Management Association) certification because the nonprofit industry organization provides training for the certified records manager test.

Document Processing Versus Life Cycle Management
The goal of most document management systems is to increase productivity, cut costs, and improve customer service. Records management workflow also addresses retrieval requirements that affect productivity and customer service, but the emphasis is on managing the life cycle of the document. "Records management requires an organizational assessment to review the unique situation," says Palumbo. "For every document, a records manager has to ask up front what is the best format, who is going to access it, how frequently will it be used, and what retention policies will be applied to it." In the absence of a records manager, responsibility for information life cycle management often falls to IT, despite the fact that 73% of the respondents in Cohasset's study don't think their IT departments understand the concept.

Palumbo points to the example of one century old, family-owned export business. It has accumulated documents ranging from marketing materials to historical archives. What it doesn't have is a records manager. United Business Systems' consultants went through each department's documents and designed a plan for how to manage them. This involved organizing documents and making appropriate ones active through online archives. Retention schedules outlining when and if a document should be purged were created. Some documents can be scanned and destroyed. Others are scanned, stored for a period of time required by law or company policy and then destroyed. Items such as contracts or trademark documentation are scanned for day-to-day use, but the physical documents are placed on legal hold, which means they are kept indefinitely.

Courting New Customers In A Litigious Society
Growing regulatory pressure and the possibility of litigation in virtually every vertical market increases the demand for records management. "Legal requirements have changed considerably," says Palumbo. "And retention isn't just about saving everything. Sometimes having what you shouldn't have costs money, too." Litigation or government investigations could require a company to reconstruct events that happened more than five years ago. Yet 68% of the respondents in the Cohassett study were "not at all confident" or only "slightly confident" that they could demonstrate records are accurate, reliable, and trustworthy many years later. While imaging VARs help preserve documents, failing to discard documents that weren't covered under a regulated retention policy can be a liability in litigation if they contain damaging information.

Another area in which records management differs from document management is management evidence. Under regulations such as the Sarbanes-Oxley Act of 2002, it is no longer sufficient to produce documents. The kind of accounting and auditing oversight required by Sarbanes-Oxley, for instance, requires organizations to prove that a policy and process for managing records was in place. To do so, a company must have auditing capabilities to prove that these guidelines were followed. In a second quarter 2003 Management Barometer survey by PricewaterhouseCoopers, 41% of CFOs indicated complying with Sarbanes-Oxley would require the purchase of new tools and technologies.

The Paper Chase
"Businesses won't give up paper entirely," asserts Palumbo. "Records management demands a strategy for dealing with it. The costs of sending employees to the record room or calling Iron Mountain [a giant in the outsourced document and asset storage market] to pull documents will lead customers to imaging for everyday use." However, Palumbo points out that many processes aren't legally acceptable without paper. Would you scan the deed to your home or your car registration and throw away the originals? Of course not, and neither would the mortgage holding company, which depends on leases and agreements as proof of corporate assets. Some analysts believe that as much as 80% of all paper documents are preserved.

VARs can offer consultation about storage of physical records, from in-house systems that integrate with digital solutions (See sidebar on page 70.) to outsourced solutions. However, the storage of documents is more than a logistical issue; it can be downright expensive if mishandled. For example, United Business Systems' analysis of one customer's paper document repository found that 800 of 1,200 boxes of documents could be destroyed. As a result, the company was committing three times the resources necessary to maintain paper files. Going forward, it is monitoring retention policies for paper using software that alerts users when a box of documents can/should be destroyed.

The current market is teeming with opportunities for VARs who combine imaging expertise with records management know-how. According to the Cohasset survey, 53% of organizations don't include e-records in their records management strategy. Yet 97% said the process for managing e-records is "important," "quite important," or "very important." "I can't overemphasize the importance of using a customized approach," says Palumbo. "Don't just take out-of-the-box software and say 'this is the answer to your problem.'"