Expanding Your Business with Document Imaging

by P.J. Heller

Document storage and shredding companies that want to grow their business by entering the document imaging market need to start by putting their best image forward.

In this case, though, it's not a scanned image that's important. Rather, it’s being able to sell clients on the value of document imaging and the benefits of how it can help their business.

Successfully selling imaging services can pull in ongoing jobs that can average more than $1,000 a month, with one-time jobs bringing in $10,000 or more. The revenue potential from such sales makes document imaging sales worth pursuing, especially in comparison to shredding or document storage services, industry officials say, not to mention the fact that businesses are trying to be more environmentally friendly by reducing their paper usage.

Unfortunately, many of those in the document storage/shredding business aren't well versed in selling imaging services, according to John Becker, president of Fort Docs in Santa Rosa, Calif.

"I find where people really need help is on the sales side," Becker says. "It's a very different sale in that you've got to be able to go out there and do a complex sale. You need to go out there and help people understand their pain. You have to help them quantify their pain, and then you need to be able to help them understand the benefit of the solution you're proposing.

"People in the document storage and document shredding business don’t do that," he says, noting that the vast majority of sales simply involve providing proposals for additional storage space or shredding services.

"You're not spending a lot of time helping people understand their problem," he says. "In document storage, people can store a box for well under $5 a year. It will typically cost close to $200 to scan those documents. Based on that, you have to be able to add 40 times more value in the sale.

"It's definitely an expensive service," he adds.

Since purchasing Fort Docs in 2000, Becker has been doing just that. The Sonoma County company, located about 55 miles north of San Francisco, today has grown to some 20 employees with a focus on document storage and scanning.

Becker also has helped other document companies launch imaging services and will be among the speakers at a "Fundamentals of Imaging" workshop Oct. 6-7 sponsored by PRISM International.

Becker, who holds a master's degree in business administration from Columbia University and has worked in sales and marketing for companies including Clairol and Levi Strauss, will lead a session on selling scanning services for accounts payable and medical records.

While the workshop will also address the important issue of imaging scanners and software, Becker says that concerns about equipment are trumped by the need to actually sell the service.

"You have to be able to sell it," he says when asked for the one piece of advice he would offer document firms wanting to make the plunge into imaging services. "Once they sell it, they can figure out how to produce it. Maybe they'll do it real inefficiently at first, but they can eventually figure it out.

"But if you can't sell it, you’re going to have a really hard time producing it," he adds. "There won’t be much to produce. That would be my first thing: to really focus on the sales side."

Among the keys to getting the sale is showing customers how they can save money and how they can become more efficient. Justifying the cost of electronic document management is easiest when dealing with customers who may need to access documents frequently, access them from multiple locations and who may also need to distribute them, Becker says.

At recently launched SecurScan in South Burlington, Vt., a sister company to SecurShred, officials there have found that selling electronic content management services requires them to connect with the right people.

"It's not the easiest concept for people to grasp," says SecurScan general manager David Van Mullen. "You really need to talk to someone who knows a little bit about basic computer and database management."

That person may be the IT manager or chief financial officer, rather than the operations or plant manager who was the previous contact for shredding or storage services.

"You need somebody with a technical background who understands the concept," Van Mullen says. "You can teach people, but the sales process is a lot longer. People get shredding right away."

Another selling point for some companies is the fact that they can dramatically reduce their risk from having paperwork go missing. Nowhere is that risk greater than companies who may be monitored by state and federal agencies.

The focus on hardware and software plays a lesser role.

On a four-day visit to a client, Becker says he will usually spend a day-and-a-half on production with the rest devoted to sales.

"They think I'm going to come in and spend the whole time doing production," he says. "But the reality is we spend one-and-a-half days on it and two-and-a-half days on sales."

Such an approach makes imminent sense, since not only is it impossible to show everything a client would need to know about scanning in such a short time span, but also because there are numerous ways to produce work for a variety of jobs.

"We'll help them do the production afterwards," Becker explains. "You can't show them enough when you're there. You can’t show them every possibility... Basically we try to give people an overview of what can be done and then come back in and help them when they actually get the jobs in to help them get started."

Van Mullen agrees that the sales effort requires more work.

"There's definitely some education and training involved," he says. "There's so many different types of software systems that people are using and when you're talking about exporting information, there are different processes in place."

While customers can easily grasp the concept of scanning documents, they have more difficulty understanding electronic content management, he says.

"You have to train them on how scanning their information makes it more useful in their day to day documentation process," Van Mullen says. "That's the real benefit that can save people money and make their business run smoother." With a myriad of hardware and software choices, Becker suggests that document shredding/storage companies wanting to enter the imaging marketplace consider hiring a consultant to help them get started.

"I believe there's so many pieces to this that there's a very high return by having someone come in and help you get started," he says.

That's exactly the approach SecurScan took, hiring Becker to come in for about two weeks to help it get started. "John's help was definitely instrumental in getting us ramped up," Van Mullen notes.

SecurScan took Becker's advice and purchased a medium-speed scanner — that can handle 50 to 60 pages per minute — and which sells for about $7,000 to $8,000.

Becker advises against high-speed scanners because they cost two to three times as much as their medium-speed counterparts. It may also be difficult for an operator to keep those high-speed machines humming at peak efficiency which is necessary to justify their cost.

"Your speed in scanning is generally determined by how much time you take between scans, between stacks of paper to put in the scanner, rather than how fast the scanner can go" Becker explains. "If you're feeding in 50 pages at a time and then pause for 30 seconds to put in the next 50 pages, it doesn't matter if you have the world's fastest scanner or not because you're not going to get that productivity."

From a cost perspective, he says unless a company has enough business to keep the scanner going all day, "it's not worth spending three times as much on a piece of equipment."

At Fort Docs, it took five years before the company purchased its first high-speed scanner. It now operates three of them but still utilizes its medium-speed scanners for jobs better suited to those machines.

A typical job may break down this way: 25 percent of the time spent scanning, 50 percent of the time doing prep work — preparing documents for scanning by doing such things as removing staples and paperclips — and another 25 percent doing data entry.

More intensive jobs may require 80 percent of the time be devoted to document prep, with 10 percent of the time spent scanning and 10 percent devoted to data entry.

"If you've got a box of documents to scan and it's an 80 percent prep job, you need eight hours of prep for every hour of scanning, that’s why people think they need a big scanner," Becker says. "But the reality is you just don’t have enough work to justify spending $20,000 for a high-speed scanner rather than $7,000 for the medium-speed scanner."

Add to that amount another $6,000 or so for a production software package. The main emphasis should be on choosing software that allows fewer keystrokes to enter data.

"The less you type the more accurate you’re going to be," Becker notes.

The ideal employees to do the scanning and data entry need to be more focused on production — how can they do the job faster or more accurately — than on computer science.

"I thought I needed a computer geek the first time I hired somebody," Becker recalls. "That was a big mistake." While a computer geek might not be necessary for production work, employing such a person in-house or on a outside consultant basis is important, Van Mullen insists.

"I would say it would be a priority to have somebody with IT knowledge," he says. "You definitely need an IT referral. You're going to have a lot of questions. If you're not a computer geek and you’re trying to get the thing up and running, you’re going to need somebody to call.

"You might not have the ability to hire that person on your payroll, but you're going to want to plan on spending some money on an IT consultant," he says.

As far as choosing equipment, two of the major players offering document imaging systems are Digitech Systems, headquartered in Greenwood Village, Colo., and Kofax, located in Irvine, Calif.

"In the end, what it really comes down to is retrieval," Becker notes, "What you're selling is faster, better access and retrieval."

That retrieval can be as simple as handing a customer a DVD of their files or being able to access information online as pdf files in folders to as sophisticated and pricey as retrieval integrated into the back end of an Oracle system.

Most customers of Fort Docs prefer an online retrieval system which is password protected and provides some type of search methodology. Some systems include an audit trail to track who has looked at a document. Most systems incorporate such features as e-mail and printing capabilities.

"They just pay for how much they have online," Becker says of his online customers. "They don't have to worry about installing software. They don't have to worry about backing it up. They don’t have to worry about managing it.

"A lot of companies don't have IT staff and these are their core documents, so to know that someone else is caring about them is kind of nice," he says.

Rather than search for new customers, Becker recommends that document storage/shredding companies seek out their current clients for imaging services. That can result in ongoing work, rather than the large, one-time job which may attract bids by several imaging companies.

"From both a sales and a production standpoint, it's really nice having recurring jobs where you know you've got work that’s going to come in every month or every day or every week versus the ones that come all of a sudden where you’ve got to hire 10 people and you've got to pump out all this work in three months," he says. "Then all of a sudden you've got to let those people go. You've got nothing to follow up on. The big jobs are a huge production challenge... You need to really understand what you're doing if you happen into one of these bigger jobs."

Van Mullen agrees that recurring jobs are preferable but says it's difficult to turn down a big job when it comes along.

"Like the shredding industry, you have bulk purges and recurring service," he notes. "The same kind of thing happens with document imaging services. You love the recurring jobs because you can count on them but it's hard to turn away the big jobs."

Van Mullen also notes that large SecurShred customers may not be the best sources for imaging services, since they may already have those services in-house.

"What I found was that our best shredding customers may not be good candidates for document imaging services," he says.

"They may have a lot of documents to shred but not a lot to scan. They may also currently have electronic content management in place because they're such a large company. I think that ECM systems would be best placed in a small to mid-size company looking for something new more so than a very large established company."

Becker is a firm believer in handling imaging work for customers at his office, rather than setting up at a customer's location. He even offers a lower price for work handled at his site.

"We basically try to talk people out of it," he says of off-site work. "We don't want to take that scanner away. We don’t want to take the software away. We don’t want to send the people out."

Van Mullen says SecurScan will handle imaging work either in-house or at a customer's site.

He adds that the company is feeling its way along as it gets more and more into imaging.

"It's not like when we added hard-drive destruction or plant-based shredding," he says. "This is a whole new beast."