Physical Records: The Elephant in the Room when Going Digital

Introduction Advances In technology, demands for agility and tightening regulatory controls are leading many organisations to invest in digital records and document management solutions. The marketplace has numerous offerings each claiming the resolution to the never ending quest to manage information thereby delivery productivity and risk mitigation. This all comes at a cost.

Much is made of our ‘Digital Age’ and the capacity to process, store and manage documents throughout their lifecycles. Unfortunately, reality has never quite matched the hype. The past 10 – 20 years have seen increasing reliance on soft copy documents and the Electronic Document and Records Management solutions (EDRMS) cater for this very well. Significant progress has been made but the struggle to manage organisational information continues with attention squarely focussed on e.intitiatives.

The Elephant in the Room

In the rush to e.deploy information management we often neglect the paper records holdings and, even worse, physical storage is perceived as a legacy of a bygone age to be forgotten. Just as we admit to trends of our past with embarrassment. Remember flares or WordStar anyone?

Our company, William Bethwey & Associates specialises in information management and has assisted many organisations develop the business case and acquire digital information management capability. The business case is almost always developed on the grounds of improved productivity, reduced risk and better document discovery. Very few consider the physical archive reductions as a real an immediate priority.

This is due in part because the physical stores, often off site are seen as legacy and something to tidy up later but as we all know later never comes, just like the tidying of the garage or that spare room – ‘out of sight out of mind’. But legacy physical holdings and associated costs can be the elephant in the room and can deliver significant ongoing savings.

How Big is the Elephant and how did it get there?

Let’s just examine this a little further. WBA has recently, worked with four organisations from the public and private sectors that have realised the vale in rationalising physical holdings. All came to the conclusion that annuity costs associated with physical holdings could be significantly reduced. In one case annual costs amounting to a six figure sum rolled over from one year to the next.

So how does it get to this state? Often this cost is simply overlooked when budgets are set. Operational costs (OPEX) with small annual increases tend to fly under the radar. It was an expense last year so why wouldn’t it be an expense in the coming year? We have all experience the pain and effort required to get new budget (CAPEX) but OPEX seems to be routinely rolled over.

The following scenarios are illustrative

Bank

In a large banking client this rollover amounted to an annual cost of over $250,000 for archive storage. When this was questioned and WBA conducted and audit of holdings it was found that over 90% of the holdings were uncatalogued and un-sentenced, i.e. content unknown, As many as 20% had been there for over 10 years, well over average disposal times. This was at a cost of:

OPEX $120,000 pa * 10 years *20% = $240,000

Further, investigation revealed that the Bank had needed to keep less than 2% of these holdings beyond a disposal period of seven years. Several boxes had been storage since 1997 and contained Christmas decorations! Needless to say this came as a shock and a subsequent review of holdings realised ongoing OPEX savings in the order of $350,000.

Public Sector

This Government Agency requested a review of off-site holdings. A sample of records was assessed to determine if sentencing had been correctly applied. With some significant exceptions the answer was generally yes. Sentencing had been applied under the correct Records Disposal Authorities however; there was a failure to act on the disposal authorities and a large volume of holdings had passed disposal dates by an average of seven years with some as high as 22 years.

Further, a cost reduction exercise to rationalise costs and storage suppliers several years ago saw a significant volumes contained in cartons and boxes physically transferred from one supplier to another. Hindsight now tells us there was no need as many records should have been disposed of prior to that time thereby avoiding further storage costs.

The underlying business case for a disciplined sentencing and disposal initiative is founded on cost avoidance in excess of $100,000 annually.

Energy Sector - Asset Management

This client provides managed services for many energy client assets, i.e. power stations, Manufacturing Plants, Docks, telecommunications etc. The corporate function of this distributed organisation was faced with difficulties in meeting discovery and compliance reporting requirements.

It commissioned WBA review the associated risks and to recommend a standardised approach for digital management across its operating sites. This review revealed great diversity in information management practices which exposed the client to significant operational and compliance risk. It also recognised the productivity value of cross organisational access to documentation for knowledge and expertise sharing.

Many holdings were on-site. Typically, held in sheds in various states of repair on the industrial sites where the storage environments left a little to be desired. Many of these were permanent records related to construction and operation of the assets and degradation was very apparent. There was very little evidence of any sentencing and cataloguing.

The business case was founded on the value of these records for asset management and the ability to meet ever-tightening compliance and regulatory interventions. The first steps were to assess the holdings to ensure record-keeping compliance obligations were met and develop record retention authorities in readiness for investment in an EDRMS. This freed up significant site accommodation to meet the needs of an expanding workforce that would otherwise have needed construction.

Close

Each of these scenarios indicates that consideration of legacy physical record holdings is an important part of benefit realisation in creating a digital capability. Investment in EDRMS is critical and often the focus of attention however, rationalisation of physical holdings also provides ongoing benefit and risk reduction. So during your next budgeting cycle look at the document storage costs as these provide real opportunity for cost savings. This does require short term investment in the review and sentencing efforts however; the benefits can be significant.

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