James Bourke, CPA, CITP, of the regional New Jersey accounting firm Withum- Smith+Brown, saves his staff and himself hours of rummaging through filing cabinets filled with thousands of clients' files by searching for forms using a document management system.Once a tax return has been completed at one of the nine offices in Bourke's firm, the form is scanned or saved electronically; the image is turned into a searchable PDF using optical character recognition software; and then Bourke uses the interface or the DM application to search for a file. For instance, he can use the name, number or address of a client, the tax type, or the year that the form was completed to find the correct form - and he can do it all from his handheld device.
"Most importantly, [OCR] allows us to access a huge amount of content immediately," said Bourke. "We have thousands of clients and over 300 staff, and there are manual file rooms spread throughout our offices. With OCR, we can search one electronic database for the content we want."
As costs for document management systems and hardware continue to dip, and with the toll of the compliance bell still ringing in the ears of accountants, more small to midsized businesses and CPA firms are discovering a tool that many Fortune 500 and Big Four firms have had for years - an easy-to-access document database.
Document management systems are comprised of a number of layers: a scanner, OCR software, a database management system, and the DM interface or search mechanism. When a document is scanned in using an optical scanner, the OCR software converts the document into a searchable PDF file that is then stored in the database management server library or archive system and is searchable using an interface or search mechanism.
Using OCR software for a 10.5-point font, typed or printed document will almost guarantee 99.9 percent accuracy, claimed Troy Sarmento, engineer manager at ExperVision, an OCR and imaging developer based in Fremont, Calif. However, with a form or document with script or handwriting, or that has been faxed, or the quality of which has been compromised in any way, the accuracy rate of the OCR system starts to diminish significantly.
"There are many problems with an OCRed file," Bourke said. "It's not 100 percent. I'm sure someone will come up with the technology one day to make [script and handwritten documents] 100 percent accurate, but not in the near future."
Perceptions of inaccuracy for typed and clean documents are one of the biggest hurdles that content management providers like ExperVision, Interwoven Inc. in Sunnyvale Calif., and Hyland Software Inc. in Westlake, Ohio, have to overcome when trying to sell to a new client.
"If they've never used it before, they have a concept that it's not going to work," said Carole Sarmento, sales manager at ExperVision.
Another hesitation that many SMB executives and small accounting firms have is change; whether it's spending more money on different hardware or software systems to keep them up to date, or letting go of their old paper filing systems.
"To be comfortable getting rid of paper - it's a mental hurdle," said CPA and industry manager for compliance and back-office systems at Hyland Software Tim Ansberry. "They don't realize that storing documents electronically is actually much more secure than a filing cabinet."
Expanding need
But with an increased awareness of compliance legislation such as Sarbanes-Oxley and the decreasing costs of electronic filing solutions, many large enterprises started using DM systems several years ago, and SMBs are following suit.
The growth of DM as a whole has increased about 20 percent in the last five years, and is expected to grow even more, said Chris Strammiello, director of product marketing and the productivity applications division at ScanSoft, a Burlington, Mass.-based supplier of speech and imaging systems.
Other developers of DM software and systems agree with Strammiello, reporting sales growth of anywhere from 17 percent or higher for the industry as a whole, and a range of 10 percent to 25 percent growth for the SMB market.
"They're seeing it's not such a scary place after all, with increased accessibility, security and cost savings," said senior director of marketing at Creative Solutions Teresa Mackintosh. "No more searching for lost documents that were left with a client, in a briefcase or on the floor. With a DMS you can e-mail your client, send it out in a portal; there are time savings all over the place, and hard-cost savings too, with toner, paper and actual storage space on the floor for filing cabinets - it's very significant savings."
Dexter, Mich.-based Creative Solutions has a calculator tool for accountants looking to determine the cost savings of switching to a DM system at
But for accountants, the hard-cost saving is just icing on the cake, said Joe Harpaz, executive vice president at Immediatech, the providers of GoFileRoom - a DMS geared for accounting firms with a staff of 15 CPAs and higher. "You don't implement a document management system for that [savings]. It's still cheaper to store boxes in a warehouse than to implement and maintain a document management system. What the real benefits are are that you work faster, smarter, and can be more organized - but those are more difficult to track as far as return on investment."
Some, like Strammiello, and Carole and Troy Sarmento from ExperVision, also attributed the growing adoption rate in this market to the decreasing costs of multi-functional hardware systems like the Xerox WorkCentre devices, which can copy, e-mail, fax or scan a document within seconds. Previously, only companies with large budgets could afford such advanced and expensive hardware. Now a black-and-white WorkCentre from Xerox can run as low as $449.
Costs for software and DM servers are also dropping, causing SMBs and small firms to rethink their paper filing systems.
"All the big companies already have a DM solution, and very few large companies are running a paper-based accounts payable process," said Packy Hyland, chief executive officer at Workflow.com, a Web-based content management provider. "It's more cost effective and easier to implement, and smaller companies are starting to take advantage without risk."
For accountants trying to follow an audit trail or comply with SOX or Basel regulations, the uptake of these DM systems, for both hardware and software, is making it easier for them as well. A standard feature in DM systems is an archive for scanned documents, e-mails and other files that is completely searchable.
And many of the systems have a feature called document retention and disposition, or versioning. This allows the administrator of the system to set a document's expiration date, so that it can be expunged from the system after a number of years, and also allows users who are granted the appropriate access to view documents and make changes. The DM system then keeps a log of the changes made to each document, who made them and when the changes were made, and saves the updated document as a different version for a completely traceable document trail.
These features could save an accountant hours of rifling through papers, trying to track down files and forms if an error or a compliance issue occurs.
"Clients expect you to react so much more quickly nowadays than in the past," Bourke said. "DM systems allow us to react more quickly to a client's needs. It's sick how quick you can react."
Budget management
However, smaller accounting firms still do not have the resources to pay for many of the DM systems in the market.
For those accounting firms with two to four CPAs on staff, Intuit's Lacerte Document Management System and FileCabinet CS from Creative Solutions offer economic solutions to paper overload.
Although neither features the OCR capabilities of the larger DM systems and document revisioning tools, they each offer search capabilities by client name for such files as personal tax returns or mortgage forms.
"What we found our customers are asking from us is simple storage and retrieval," said Neal Humphreys, DMS product manager at Intuit. "Most of our customers are not even using the workflow or activities log we've built in for them."
These two products, however, are built specifically for accountants with the smaller market in mind. "That's one of FileCabinet's greatest benefits," said Mackintosh. The electronic filing system within CS's DM solution files documents in much the same way that an accountant would file his paperwork - by write-up, tax work and name, and with strong security options to control access.
"Eventually, people will say they need it and know they need it," said Harpaz of Immediatech. "Like with e-mail, no one analyzes the ROI on it, you just go and get it. For an industry so document-driven as accounting, the end result is you produce documents for your clients, so you can't live without it."
