How Credit Unions Can Create a Successful Document Management Strategy

Given the option, most credit union CEOs would elect to eliminate paper from their day-to-day operations. Many of the benefits of a seamlessly integrated paperless environment are readily apparent. However, beyond the elimination of paper, the full benefits of a successful document management solution have not been well understood by credit union executives. This is unfortunate, because the unrealized benefits are enormous, as reported in a Gartner Group report that addressed the impact of electronic document management in business. This report noted the following statistics regarding the management of documents through their lifespan: *It costs $18 to file each document; *It costs $108 to locate each misfiled document; *Approximately 25% of all documents are misplaced and will never be located; *From 80-85% of all information is stored on paper documents and not in the company’s computer systems; *Managing paper documents requires 40-60% of each office worker’s time; *Document management accounts for 25-45% of the total cost of clerical labor; and *Document management costs account for 12- 15% of total revenues. In addition to reducing the costs noted above, an effective document management strategy benefits credit unions specifically through: *The ability to dramatically enhance member service; *The significant reduction in the operational costs associated with teller operations; and *The ability to implement more efficient and effective disaster-recovery procedures. The typical document management system is implemented to store two basic kinds of documents. The first are computer-generated documents that are transformed into electronic reports using systems designed for Automated Report Management (ARM), also called Computer Output to Laser Disk (COLD). The second are paper documents that are converted into electronic format using document-imaging systems. Credit unions began adopting ARM/COLD systems within the last 10 years and document imaging systems within the last five-to-six years. Many of these document management initiatives have met with limited or no success. In many cases, one failed system has been replaced with a second failed system. As a result, it is not surprising that, according to industry studies, an estimated 60% of these initiatives fail to meet their stated objectives. The reasons for this appalling track record include: 1. Poorly defined goals and objectives, 2. Failure to establish meaningful measurement criteria for the system, 3. The relegation of these projects exclusively to the IT department, where there may be little knowledge of how documents are used in the credit union, 4. A lack of understanding of what the true impact of effective document management can be on costs, operational efficiency, and member service, 5. Lack of commitment and/or direction by senior management, 6. A lack of IT infrastructure and resources, 7. Disconnect between departmental user and IT requirements, 8. Fundamental misunderstanding of the importance and impact documents have on a credit union, and 9. Failure to involve the business users of documents during the vendor evaluation and selection processes. By adhering to the following three key tenets, credit unions can avoid many of the common pitfalls associated with implementing a document management solution. The Three Keys to Success The CEO must be committed to the success of the project. Leadership begins with the CEO. The CEO must understand and embrace the fact that an effective document management solution can dramatically enhance member service, improve employee productivity, and reduce operational costs. CEOs are often reluctant to get involved in the business of eliminating paper because they do not consider this to be a strategic initiative and therefore classify it as an IT project. This common misperception could not be further from the truth. In fact, creating a comprehensive electronic document management solution is a critical strategic imperative for the future survival and well being of all credit unions. Why? There are two main reasons. First, 80-85 percent of member information is not in you computers or if it is, it is just too difficult to locate. This information is typically only available as paper documents, or in “private” electronic formats such as MS Word. Second, competition in the future will not only include banks, but also other credit unions. As the credit union industry evolves, the winners will be those that are empowered to satisfy their members’ needs 100 percent of the time. A comprehensive document management solution will not only reduce operating costs and improve employee productivity; it will enable dramatically improved member service. Documents are as important as data. The majority of credit unions entrust their member documents to file clerks, while the VP of IT or the CIO manages the institution’s data processing needs. Name a credit union that has a Vice President of Document Management. That is a position that simply does not exist! A credit union’s electronic data is always safe-guarded by elaborate systems that provide data backup and disaster-recovery protection, while paper loan documents, arguably the credit union’s most important asset, are often stored in filing cabinets and can easily be lost or destroyed. It’s clear that these physical documents are at least as important as data. Therefore, it stands to reason that effectively and efficiently delivering the information stored in these documents will empower both your employees and your members. Information is knowledge and knowledge is power! Adherence to best practices ensures positive results. Dismal track record of those credit unions that have failed in their document management efforts has unfortunately deterred other credit unions from pursing a document management solution at all. Why? In most cases, it’s because institutions don’t understand that there is one right way and many wrong ways to implement a document management system. The right way involves strict adherence to well-established best practices that have been developed by professional records managers working in the document management industry over the past 20 years. There are no shortcuts to best practices. Document management systems that conform to best practices often demand more money on the front-end to ensure that processes and procedures are correctly implemented and adhered to over time. While the higher up-front costs may appear to be more expensive, they are guaranteed to deliver a much greater return on investment. As with most things that are worth doing, commitment, planning, hard work and money must all be applied in concert to guarantee success. The most important ingredient for success is the commitment of the CEO, the credit union-wide understanding and acceptance that documents are as valuable as data, and finally, the adoption of proven best practices.