Quantifying the benefits and real costs of a digitalization project is the first step to take when you decide to make the investment in a digitalization project. In this whitepaper, we will guide you, step by step, through the process.
What Are The Drone Anti-jamming Systems Technology?
The Return on Investment of my Digitalization Project, Step by Step
1. understanding documents
The Return on Investment
of my Digitalization
Project, Step by
Step
Quantifying the benefits and real costs of a digitalization
project is the first step to take when you decide to make
the investment in a digitalization project. In these pages,
we will guide you, step by step, through the process.
2013, March
2. understanding documents
Defining the context
To explain the calculations that you should carry out, we’re going to propose some data. These figures are
for demonstrative purposes, but they also try to be as close to reality as possible.
DATA
Size of the business: 50 people
Documents managed per day: 100 documents
Number of filing cabinets: three cabinets
Dimensions of cabinets: 41cm wide, 104 cm tall, 50 cm deep
Number of people who work with these documents: two people
Number of people who have to find documents to carry out their day-to-day work: 10 people
NB: All of the workers in this example earn the legal minimum salary of 641.10 € in Spain.
STEP ONE: Determine the costs of the current system
Calculate the real costs of maintaining your current paper-based filing system. Keep costs like these in mind:
COSTS ARISING FROM WORK
Monthly salary
Prorated extra payments
Base for Extra Expenses
Social Security Costs (32% of base salary)
TOTAL MONTHLY COSTS PER WORKER
Price per hour of work
Price per minute of work
Number of documents processed per day
Average time (in minutes) spent processing each document**
Labor cost per document
Daily labor cost of processing documents
Annual document processing costs
(220 working days per calendar year)
641.10 €
* 106.85 €
* 747.95 €
239.34 €
987.29 €
4.11 €
0.07 €
100
6
0.41 €
41.14 €
9,050.20 €
3. understanding documents
* - Costs specific to workers in Spain. This assumes that the worker in the example is earning the legal
minimum salary; Social Security costs can range from between 32% and 35% of base salary.
** - Time estimated is taken from a Price Waterhouse Coopers study of the time it takes one person to file
a paper document in a well-organized filing system.
COSTS ARISING FROM STORAGE
This calculation of the square meters needed includes the space to open the drawers of the filing cabinet.
* - Average price per square meter in Madrid, Spain, in 2010, according to Cushman & Wakefield Real
Estate Consultants.
COSTS ARISING FROM LOOKING FOR AND LOCATING DOCUMENTS
Number of people who have to search for documents every day
Average number of documents searched for each day
Time taken to find a document each day (minutes)
Average number of documents lost each month
Time spent finding a lost document (minutes)
Time spent per month finding lost documents
Cost per minute of work
Daily cost of looking for documents
Annual costs of looking for documents
(based on an typical working year of 220 work days)
Monthly cost of locating lost documents
Annual cost of locating lost documents
Total costs arising from looking for and locating documents
5
10
6
6
10
60
4,620.00 €
0.07 €
21.00 €
4.00 €
924.00 €
5,544.00 €
Square meters occupied by a filing cabinet
Number of filing cabinets
Average monthly price/sq. meter of office rental space (*)
Monthly storage costs
Annual storage costs
0.3075
3
29.00 €
26.75 €
321.03 €
4. understanding documents
COSTS TO MAINTAIN THE CURRENT SYSTEM
Annual document management costs
Annual storage costs
Total costs arising from looking for/locating documents
Total annual costs for the current paper-based system
9,050.20
321.00 €
5,544.00 €
14,915.23 €
To simplify cost calculations, we have not included the cost of having, in many cases, to go back and
re-create or recover a document that’s been lost (for example, getting in touch with a vendor to see if he
can send us a copy of an invoice, or having to re-do a report that’s been misplaced, etc.)
Nonetheless, it would be interesting to do some more detailed number-crunching to see just how much
money lost documents are costing you.
Even by just including these costs, we can get a better idea of how much it costs your business to continue
to work with a paper-based model.
STEP TWO: Estimating the benefits of the new system
Make a calculation of the benefits that your business would get from a new digitalization system. Remember
that, to pick a system that is best suited to your needs, you will have to think about a multitude of factors, such
as the kinds of documents that you want to digitalize (structured or not structured), if you want to digitalize
groups of documents, what processes you want to automate and the degree of precision that the tool offers
you.
We will assume that our imaginary business chooses a system such as Athento for storage and capturing
information, together with a Fujitsu fi6130 scanner that can digitalize forty to eighty pages per minute.
That’s not small change if your business has to pay that, year in and year out.
“Managing paper documents is costing your business approximately
14,915.23 € every year.”
5. understanding documents
CHARACTERISTICS OF ATHENTO – DOCUMENT CAPTURE
Automatic classification of documents (accuracy rate)
Data extraction (accuracy rate)
98%
98%
With the new system, each new document would undergo the following process:
- One person is in charge of putting the documents in the scanner.
- Athento receives the documents in a monitored file.
- Athento applies the semantic technology (and other technologies) to recognize each document within the
monitored file.
- Athento extracts information that is relevant to each type of document.
- Athento digitally saves each document in the site that is relevant to what document type it is.
As you can see, in the case of Athento, the only thing you need one person to do is to feed the documents
into the scanner. This is one of the crucial factors that needs to be quantified. Another fundamental factor is
the accuracy rate, because if the system cannot recognize a document or extract its data, someone has to
carry out the process manually.
So, first, let us calculate the time that two employees would need to use the system to manage documents:
COSTS DERIVED FROM WORK
Price per second of work
Number of documents processed per day
Time (in seconds) it takes one person to feed documents into the
scanner *
Time (per day) used to scan documents
Daily costs of scanning documents
Accuracy rate of system extracting data
Documents in which data extraction could fail (2%)
Time spent on re-entering data manually (min)
Time spent (per day) on re-entering data manually (seg)
Cost of re-entering data manually
100
37,5
0.04 €
98%
0.21 €
2
1,5
180
0.00116666666667 €
37,5
6. understanding documents
Accuracy rate of system that classifies documents
Documents which have to be manually classified (2%)
Time spent classifying a document manually (in seconds)
Time spent (per day) classifying documents (in seconds)
Cost of classifying documents
Daily cost of scanning documents
Daily cost of re-integrating data
Cost of classifying documents
Total costs derived from working with the new system
98%
2
25
50
9.63 €
46.20 €
12.83 €
0.06 €
68.66 €
Square meters occupied by each filing cabinet
Number of filing cabinets
Average monthly square meter rental price *
Monthly storage costs
Annual storage costs
0.3075 €
0 €
29.00 €
0.00 €
COSTS DERIVED FROM STORAGE
0.00 €
* Since digital information storage does not require any physical space, this cost is reduced to 0.00 €.
* - This time is calculated with a base of 80 documents, which is the maximum number of documents that the
scanner can process in one batch. A person usually takes 30 seconds to feed a batch of 80 documents into a
scanner. Data extraction and manual classification is based on the accuracy rate, and if the system works well
only 98% of the time, a person will be required to manually do the work 2% of the time.
Let’s continue to consider other benefits. This time, we’ll look at those costs that we can eliminate when we
eliminate physical storage.
BENEFITS
Cost reduction for time saved in manual labor: 8,981.54 €
7. understanding documents
Cost reduction (labor and time spent) per year
Cost reduction (physical storage space)
8,981.54 €
$321.00
BENEFITS
Athento uses a feature called Autotagging which reduces the time spent searching for documents by keeping
them accessible and grouped according to categories in a cloud of tags. Finding documents this way reduces
search times to an average of fifteen seconds per document.
Let’s calculate the cost savings using this document search tool:
COSTS ASSOCIATED WITH DOCUMENT SEARCHES
Number of people who have to search daily for documents
Average number of documents searched per day
Time taken to find a document electronically, in seconds
Total daily time (in seconds) spent searching electronically
for documents
Average number of documents lost every month
Time taken to find a lost document (in seconds)
Average amount of time (in seconds) spent searching every month
for lost documents
Daily cost of searching for documents
Monthly cost of searching for documents
Yearly cost of searching for documents
TOTAL COSTS ASSOCIATED WITH DOCUMENT SEARCHES
Cost per second of work
Annual cost of searching for documents
(based on an average work year of 220 days)
5
10
15
750
10
0
0.00116666666667 €
0
0.88 €
0.00 €
192.50 €
0.00 €
192.50 €
8. understanding documents
BENEFITS
Cost reduction for work time saved
Cost reduction for storage space saved
Cost reduction for document searches
TOTAL ANNUAL COST SAVINGS
8,981.54 €
321.00 €
5,352.00 €
14,654.54 €
STEP THREE: HOW QUICKLY WILL WE GET OUR ORIGINAL INVESTMENT
BACK?
Now we’re closer to being able to calculate the ROI on our digitalization project; but before we do that, we’ve
certainly got to know how much money we’ll be investing.
ATHENTO iDM Package
Athento iDM
Athento Capture
Implementation
1st year support
Hardware
Fujitsu fi6130 Scanner
Server equipped with the necessary requirements
FIRST-YEAR INVESTMENT*
23,000.00 €
14,000 €
9,000 €
3,197.90 €
2,000.00 €
28,197.90 €
* While contracting a multi-year support service program is not mandatory, it’s strongly recommended for the
years following the original investment. These prices serve as a guideline and could vary according to the
different components added or to specific development requirements.
Once we know the total amount of the investment, we will be able to calculate the rate of ROI. Let’s do that
now, using a maximum period of time of five years.
INVESTMENT
With a new Athento-based document system, the business would reduce spending by
14,654.54 €.
9. understanding documents
ROI/Description Year 1 Year 2 Year 3 Year 4 Year 5 TOTAL
Savings Generated by the Project
Cost reductions – time saved, labor
Cost reductions – storage
Cost reductions – document searches
Total savings generated by the project
Project Costs
ATHENTO iDM Package
FUJISTU fi6130 Scanner
Support
Total costs generated by the project
Progression of cost savings per year
Server equipped with necessary
requirements
7,858.85 €
280.88 €
4,683.0 €
12,822.73 €
23,000.00 €
3,197.90 €
2,000.00 €
0.00 €
28,197.90 € 3,800.00 €
3,800.00 € 3,800.00 € 3,800.00 € 3,800.00 € 15,200.00 €
2,000.00 €
3,197.90 €
14,654.54 € 14,654.54 € 14,654.54 € 14,654.54 € 71,440.89 €
5,352.0 € 5,352.0 € 5,352.0 € 5,352.0 € 26,091.0 €
321.0 € 321.0 € 321.0 € 321.0 € 1,564.88 €
8,981.54 € 8,981.54 € 8,981.54 € 8,981.54 € 43,785.01 €
23,000.00 €
3,800.00 € 3,800.00 € 3,800.00 € 43,397.90 €
-15,375.17 € -4,520.63 € 6,333.91 € 17,188.45 € 28,042.99 € 28,042.99 €
In these calculations, we have also considered that it takes a month and a half to bring Athento up to full ope-
rational capacity. As such, the savings generated during the first year are calculated on a base of 10.5
months. These data show that our example company would recoup its investment starting from Year 3.
At the end of the Year 5, you will have saved more than 28.000€.
ROI
10. understanding documents
Total savings generated by the project
Total costs generated by the project
Return on Investment (over five years)
Year ROI payback takes effect
71,440.89 €
-43,397.90 €
64.7%
RESULTS
Year 3
Price per second of work
Number of documents processed per day
Time (in seconds) it takes one person to feed documents into the
scanner*
Daily costs of scanning documents
Accuracy rate of system extracting data
Documents in which data extraction could fail (2%)
Time (per day) used to scan documents
0.00116666666667 €
100
37.5
37.5
COSTS DERIVED FROM WORK
0.04 €
98%
2
An 64% return on investment means that we’ve made a great investment, not just getting the money invested
back, but also producing profit, too.
The solution I choose DOES affect my Return on Investment
Finally, we’d like to point out that not all digitalization projects are going to deliver the same results. Many
factors can affect the performance of the project; and, without a doubt, one of those factors is the decisions
that we take regarding technological acquisitions. That is not because different hardware or software solu-
tions have different prices. Rather, it is because not all tools are equally efficient – and this is especially true
when it comes to software.
For example: had we chosen a document manager such as Nuxeo, together with a capture application such
as Ephesoft, it would take us 45 seconds longer to find a document whose exact data we do not know or do
not have, and the auto-classification process of tools such as these only provides an efficiency rate of 75%.
If we consider that all of the other factors stay constant (costs associated with the previous system, the price,
time needed to implement the solution), the benefits would be reduced. Let’s take a look:
11. understanding documents
Time spent on re-entering data manually (min)
Time spent (per day) on re-entering data manually (seg)
Cost of re-entering data manually
Accuracy rate of system that classifies documents
Documents which have to be manually classified (2%)
Time spent classifying a document manually (in seconds)
Time spent (per day) classifying documents (in seconds)
Cost of classifying documents
Daily cost of scanning documents (220 working days per year)
Daily cost of re-integrating data
Cost of classifying documents
Total costs derived from working with the new system
1.5
180
0.21 €
75%
15
25
375
0.44 €
9.63 €
46.20 €
96,25 €
152.08 €
As you can see, this new system produces less savings related to costs derived from work.
Now, in the following table we will consider the cost associated with document searches.
12. understanding documents
COSTS ASSOCIATED WITH DOCUMENT SEARCHES
Number of people who have to search daily for documents
Average number of documents searched per day
Time taken to find a document electronically, in seconds
Total daily time (in seconds) spent searching electronically
for documents
Average number of documents lost every month
Time taken to find a lost document (in seconds)
Average amount of time (in seconds) spent searching every month
for lost documents
Daily cost of searching for documents
Monthly cost of searching for documents
Yearly cost of searching for documents
TOTAL COSTS ASSOCIATED WITH DOCUMENT SEARCHES
Cost per second of work
Annual cost of searching for documents
(based on an average work year of 220 days)
5
10
60
3000
10
0
0.00116666666667 €
0
3.50 €
0.00 €
770.00 €
0.00 €
770.00 €
As in the case of costs derived from work, savings associated with document searches are lower compa-
red to the savings produced by Athento.
Now, let’s calculate the ROI with the new system.
13. understanding documents
ROI/Description Year 1 Year 2 Year 3 Year 4 Year 5 TOTAL
Savings Generated by the Project
Cost reductions – time saved, labor
Cost reductions – storage
Cost reductions – document searches
Total savings generated by the project
Project Costs
ATHENTO iDM Package
FUJISTU fi6130 Scanner
Support
Total costs generated by the project
Progression of cost savings per year
Server equipped with necessary
requirements
7,785.68 €
4,177.25 €
€12,243.81 €13,992.92 68,215.49 €
4,774.00 €
8,897.92 € 8,897.92 € 43,834.59 €
-15,954.09 € -5,761.17 € 4,431.75 € 14,624.67 € 24,817.59 €
23,000.00 €
3,197.90 €
2,000.00 €
0.00 €
28,197.90 € 3,800.00 €
3,800.00 € 3,800.00 € 3,800.00 € 3,800.00 € 15,200.00 €
2,000.00 €
3,197.90 €
23,000.00 €
3,800.00 € 3,800.00 € 3,800.00 € 43,397.90 €
ROI
19,942.19 €
8,897.92 €8,897.92 €
280.88 € 321.0 € 321.0 € 321.0 € 321.0 € 1,564.88 €
4,774.00 € 4,774.00 € 4,774.00 €
€13,992.92 €13,992.92 €13,992.92
24,817.59 €
14. understanding documents
Total savings generated by the project
Total costs generated by the project
Return on Investment (over five years)
Year ROI payback takes effect
68,215.49 €
-43,397.90 €
57.2%
RESULTS
Year 3
As you can see, choosing Athento would mean that ROI would start a earlier than it would with the competi-
tion’s product.
We hope that we’ve been of help to you, but don’t forget that we’re always here to answer any questions that
you might have.
askourteam@athento.com
Twitter: @yerbabuenasoft
www.athento.com