Recently, we wrote about document management systems, what they are and how they should work. We also touched on cloud-based document management systems and how they differ from their on-premises counterparts. In this blog, we want to focus on the cloud-based versions and go into detail about the benefits they offer over on-premises solutions.
What is a document management system?
Before starting, a short recap of the previous blog:
- What are document management systems? A document management system is digital software that lets the user store, track, and manage electronic documents and pictures of documents. DMS solutions today are often full-service tools that allow the user to do much more including managing various processes and tracking & distributing documents.
- What types of DMS exist? There are five main types of DMS: content management systems, records management systems, digital file systems, cloud-based systems, and private server systems.
- What functions should DMS solutions have? While systems vary, a strong DMS solution should support the following:
- Version control
- Regulatory compliance
- Data security
- Management of inventory
Managing documents in the cloud
The most advanced document management system is cloud-based. While still relatively nascent, cloud-based document management systems are seeing rapid adoption rates. The world over, companies large and small are opting for cloud-based document management systems as the benefits increasingly outweigh any costs incurred from migrating from on-premises alternatives. Closer to home, we’re seeing the same trend with our own clients. As we continue to optimize our cloud-based Hyarchis Document Management system, more and more of our customers – like De Hypotheker – are opting for this version opposed to our on-premises document management system. There are multiple drivers of this shift.
Saving cost and space
There are multiple reasons for this growing shift towards a cloud-based preference. One of the most immediately apparent benefits is cost versus money saved. Cloud-based document management systems eliminate the need for on-premises computers, servers, and external memory for document storage. At the same time, the need for traditional document storage (read: filing cabinets) is also removed as all storage is now hosted on the provider’s storage servers. Similarly, cloud-based document management systems effectively occupy zero space for the user as no physical, on-premises storage is needed, digital or traditional.
Scalability, efficiency, less required maintenance
Cloud-based document management systems also bolster efficiency. They are often turnkey products, meaning users just need to sign up and pay. This means that setting up in-house document management systems is no longer necessary. The time this saves, especially for SMEs and smaller is immeasurable. Cloud-based document management systems are also more scalable than their traditional or digital, on-premises alternatives. As a business grows and revenue increases, increased costs are likely to be incurred. As the customer base enlarges, so too does the required equipment capacity. If that growth then requires maintenance upticks and more on-premises equipment, these costs can quickly outweigh the increased revenue. Cloud-based document management systems can counteract this.
The productivity boost
One of the most compelling benefits of migration to cloud-based document management systems is the increase in productivity they make possible. A document management system in the cloud enables users to access documents from anywhere at any time. Additionally, they can boost the speed at which employees can collaborate by increasing workflow efficiency, making collaboration more result oriented. This, in turns, saves working hours, allowing employees to spend more time on other business-critical tasks.
The cost of ineffective data management
A main driver behind cloud migration is the increase in data/document security cloud-based DMS solutions offer. We’ll elaborate more on that later but first we want to talk about why data security has become such a crucial element of modern business.
Regulatory pressure has shot through the roof in in recent years and for good reason. Poor data management is costing the economy a fortune and data breaches causes irreparable reputation damage for companies that fall victim. In 2015, it was predicted that data breaches would cost the global economy as much as $2 trillion by 2019. Then, in 2019, it was revealed that that estimate was off by around $1 trillion, with the costs of data breaches sitting at $3 trillion. These costs are estimated to surpass $5 trillion by 2024.
Looking at the global economy is one thing, but the evidence is even more damning when the impact on individual businesses is brought to light. As of 2020, the average cost of a data breach was $3,86 million, a small fortune for many companies. Aside from the financial loss, company image is often tarnished, and customers lose trust, sometimes permanently.
Why are data breaches so frequent?
A lot of companies struggle to comply with regulations and laws such as the GDPR as is. These legal frameworks are complex and complying with them more so. Especially for smaller companies that lack the technological infrastructure to expedite compliance efforts is this the case. As leaks and breaches become more frequent, the stringency and quantity of regulations increases. When new regulations are added, compliance becomes even more challenging for organizations, setting in motion a complex cycle. Combined with the fact that companies often have a reactive approach to regulatory compliance, only acting after a leak/audit/fine, data management ostensibly isn’t given due priority on corporate roadmaps.
The problem has serious, far-reaching implications. Between 2008 and 2019, financial institutions were fined $36 billion for noncompliance. At the same time, an estimated $3,1 trillion is leaving the American economy alone due to poor data management, every year. Finally, poor data management causes an estimated annual $2,1 trillion to end up in criminal activity.
Cloud-based document management and data security
One solution that many companies have turned to with the aim of minimizing data risks is cloud-based document management systems with strong security features. Cloud-based document management systems like Hyarchis Document Management are increasingly being chosen as data management solutions not only for the compliance and financial reasons mentioned above but also for the data security they provide.
Cloud-based document management systems are considerably safer than their on-premises or digital counterparts. Cloud-based DMS solutions are encrypted and protected by defensive algorithms and firewalls. They also come with redundancy protocols which ensure that data is backed up in case of a disaster. Additionally, cloud-based document management systems can help manage user-generated risks. Some cloud-based document management systems come with access control and audit trailing. These systems can also allow a company to limit certain users to specific documents or folders, ensuring that sensitive data is accessed and seen only by those pertinent. Finally, cloud-based document management systems allow users to keep a clear audit trail, ensuring that document edits and changes are tracked. These systems often allow companies to set custom and automated alerts for document activity as well.
There is one feature that sets some cloud-document management systems apart from others – regulatory compliance functionality. These cloud-based document management solutions mostly come with AI-based features that help companies stay compliant with regulations. An example of this is optical character recognition technology, or OCR. OCR is an AI-based technology that can scan documents within an archive in seconds and blur out sensitive customer data that isn’t relevant to employees. Other examples include AI tools that can classify documents by document type, ensuring that customer files are stored in the right place. The features of AI-enabled, cloud-based document management systems are many but at the core, they help companies save time and money all while ensuring full archive availability and regulatory compliance.
Hyarchis Document Management
At Hyarchis, we have developed a state-of-the-art document management system that is fully cloud-based and AI-enabled. Thousands of users and hundreds of companies use HDM to manage their customer data and documents in accordance with regulations and with maximum data value as the priority.
Curious to learn more about HDM or document management? Please don’t hesitate to get in touch with us. Alternatively, we’ll be hosting a joint webinar with Accountancy Gemak on the 4th of March during which we’ll talk about Hyarchis Document Management and compliance. Registration is free so we hope to see you there. Follow this link to register.