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Find a Solution Small Business Solutions

Document Management Systems: A Buyer's Guide

Choosing the right document management solution can be difficult. Our guide will help you understand the different types of document management systems, the features they include and the benefits they offer, to help you determine which is best for you.

  • Document management systems are electronic filing cabinets that provide a framework for organizing all digital and paper documents.
  • These systems work in tandem with scanners, which convert paper documents into digital versions.
  • Through sophisticated search engines, document management systems allow for quick access to any document or file.

The functions you can use these systems for include:

  • Storing various document types, including word-processing files, emails, PDFs and spreadsheets
  • Searching an entire library of files by individual keyword
  • Restricting access to certain documents
  • Monitoring who is viewing documents and when
  • Tracking edits being made to documents
  • Retrieving previous versions of edited documents
  • Controlling and regulating when out-of-date documents can be deleted
  • Accessing, editing and sharing documents via mobile devices

What the experts say: Jeff Pickard, CEO of Lucion Technologies, a provider of document management solutions, said these systems help businesses organize all of their paper and digital files in one central location, where everyone in the office has access.

"It's a challenge for companies to keep up with all the paperwork and electronic files that come into a home office or business every day," Pickard told Business News Daily. "It generally starts slowly — an email here, a receipt there, incoming invoices and customer correspondence. And before you know it, you've got a mountain of paper and no way to find the documents you need."

Now that you know what a document management system is, you have to decide which type — a self-hosted or cloud-based solution — best fits your needs. Both systems offer the same features, however they do have several key differences.

Editor's Note: Looking for a document management system for your business? If you’re looking for information to help you choose the one that’s right for you, use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:

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  • All of the software is stored inside your business on your company's own servers.
  • Self-hosted systems allow you to store as many documents and files as your server allows.
  • The software comes with a one-time cost that's based, in part, on the number of users. Self-hosted systems typically cost at least several thousand dollars. Some systems charge an initial fee for the software, as well as license fees for each user. In addition, some charge an installation fee.
  • With self-hosted systems, there is also an optional yearly charge for ongoing support and software upgrades.

Pros: The biggest benefit of a self-hosted document management system is that you are always in control of your system and not relying on anyone else to keep it up and running. You're not dependent on the Internet, either. If you your online connection goes down, you still have access to all of your documents.

Cons: The downside comes in the large up-front costs, as well as the extra yearly expense of having to pay for software updates. In addition, it's also up to you to make sure you have a proper backup system in place, since your files aren't being automatically saved in the cloud. Another possible negative is that not all self-hosted systems work with both Windows and Mac computers. Many are compatible with only one or the other.

What users say: Sean Wingad, founder and CEO of BuzzCouponCodes.com, said self-hosted document management systems are a good solution for small to midsize businesses. He said he uses self-hosted systems because they reduce administration time, increase productivity and save money, all while giving him full control over his critical data.

  • All of the software is hosted by your provider and accessed online.
  • You can log into these systems from any computer or mobile device connected to the Internet.
  • You pay a monthly fee for each user. Costs can range from a few dollars to close to $100 per user, depending on the provider, the number of features you choose and amount of storage you want.
  • The system's provider, for no additional cost, handles all of the software upgrades and maintenance.

Pros: The biggest benefits are that you don't need an IT team to install the software and keep it running properly, and that there aren't any large up-front costs. You also can tap into these systems from anywhere that has online access, and you never have to worry about backing up your files since they are automatically saved in the cloud.

Cons: The downside is that you are at the mercy of your provider to keep the system up and running. If your provider has a problem with its data center, it could prevent you from accessing your files until the situation is resolved. In addition, if your Internet connection fails, you won't be able to get to your files. Cloud solutions also have a storage limit.

What the users say: Sara Sutton Fell, CEO and founder of FlexJobs, said storing all of her files digitally and in the cloud allows her to get her documents anywhere she is, which is especially important because she works remotely.

"Having access to all our documentation, no matter where we're physically working from, is amazing," Sutton Fell said. "I know that if I go to a conference or even just the coffee shop to work for the afternoon, all my documents come with me."

Still unsure about exactly what a document management system does? No problem. Here are some questions and answers that may provide some more clarity.

Q. Are document management systems valuable only to large organizations, or can small businesses benefit from these too?

A. Although they likely don't have as many files and documents as larger organizations do, small businesses can also find a lot of value in using document management systems, said Benoy Tamang, CEO of eFileCabinet.

Tamang said document management systems allow small business owners the freedom to work from anywhere.

"They are no longer tied down to a location," Tamang said. "At any point in time, whether they be on their iPad or their smartphone, wherever they are doing business, they can access and provide the safe transmittal of invoices or client information and they don't have to be locked down at the office."

In addition, document management systems can also help small businesses improve efficiency because they are using less labor to search, find and transmit documents, Tamang said.

Q. I often see references to document management systems, document management software and document management solutions. What are the differences?

A. Despite the different names, they all accomplish the same tasks. Mary Williams, marketing communications director for DocuWare, said the differences are a matter of semantics.

"Our industry does a good job confusing the general public, because there are many terms out there that are interchangeable," Williams said.

Q. What's the difference between cloud storage and cloud-based document management systems?

A. Cloud storage is simply storing your documents in the cloud, while cloud-based document management systems offer storage, as well as robust search options, file versioning, check in and out options, regulatory compliance security, workflow and digital signatures, Tamang said

"Cloud storage is akin to personal use, and [document management systems are] for business,” he said.

Q. How do you get documents stored in the system?

A. There are several ways to add files, including by uploading them from your computer and by scanning paper documents directly into the system.

Pickard saidscanning capabilities are a huge part of a system.

"Now, scanning takes just seconds, and if you get the right technology package, you can automatically create editable, keyword-searchable files in a universal format, like PDF, while you scan," Pickard said. "A good scanning solution even makes bulk scanning easy, recognizing where separate documents begin and end in a stack and sending them to the right folder, like a virtual file clerk."

Q. How do you find documents in the system after they're filed away?

A. These systems offer a number of ways to quickly locate documents, including by searching the file's title, the name of the author and when it was added into the system. In addition, many of these solutions allow you to search for content within each file.

"If you find a solution with integrated search features, you can simply conduct a keyword search to pull up documents in seconds [and receive] a preview to make sure you've got the right file before opening it," Pickard said.

Q. Do document management systems work with other programs I am already using?

A. While most systems feature integrations for Microsoft Office, Salesforce and a number of other popular programs, some also include an application programming interface (API) that allows for customized integrations.

Tamang said this allows businesses to essentially connect their document management system to any program, whether it be accounting software or an email client, they are already using.

This connection simplifies the process of filing and opening documents. Tamangg said these integrations allow small businesses to file documents away with one click of a button and open documents directly within the document management system without having to take the extra step of actually opening the program the file was created in.

"It just makes it so much more efficient," Tamang said.

Q. Besides keeping you more organized, can document management systems help you get work done in other ways?

A. Yes, and one way is with work-flow tools, which help businesses keep assignments and projects on track. These tools, which are included in some systems, notify employees when it's their time to work on certain assignments and help ensure that tasks never get lost in an employee's in-box, said Errick Anthony, project manager for LSSP Corporation, a document management system provider.

"Work flow means the ability to let a person or group of people know that action needs to be performed on a file to complete the process," Anthony said. "Work-flow management also contains the ability for the tracking and managing of those files by a manager."

Q. With document management systems, do all users have access to every file?

A. Most document management systems have security restrictions that can control which employees have access to which files. This ensures that employees are seeing only the documents they should.

"Security has such a vital role in the document management system," Anthony said.

Q. What happens if a disaster strikes my business? Are the files and documents stored in the system lost for good?

A. A big benefit of the cloud-based solutions is that your data is safely being stored off-site.

"Document management systems enable an instant business-contingency plan, as your backups are stored off premise in the rare case of damage or destruction to your location," Anthony said.

Businesses we spoke with reported a number of advantages to using these systems. Here are some of the largest plusses they pointed to:

  • Easy access: John Bustrum, CEO and founder of My403bCoach.com, said having such software in place means he's no longer forced to stockpile loads of files on his desk. Instead, when clients call, he can instantly find the documents he needs on his computer.
  • Easy to search: Being able to easily search through her company's documents is a huge benefit, said Karen Walker, founder of One Team Consulting. She said the ability to quickly search for and retrieve presentations and notes is invaluable.
  • Better collaboration: Getting rid of hard copies of documents makes it easy for employees to work with each other, said Gary Tuch, founder of the Professor Egghead Science Academy. When multiple employees are working off of one document and editing is constantly happening, document management systems ensure workers always have the most up-to-date copy, he said. Employees waste no time on printing revisions or double-checking to make sure they have the current version, Tuch added.
  • Added security: Increased security is a huge advantage of using document management solutions, said Andrew Southard, general manager of the Indiana-based Data Management Shredding, Inc. The technology has given his company the option to track who is viewing and editing each document, and designate which employees have access to which files, he said.
  • Saves space: Exchanging paper documents for digital versions can save a tremendous amount of physical space, said Randy Jourgensen, owner of Digital Office Solutions. Since transforming his office to a paperless environment more than 15 years ago, Jourgensen has been able to convert space that was formerly used only for file storage into space that can generate revenue, he said.
  • Disaster recovery: Businesses that have all of their documents stored in physical filing cabinets face the risk that these papers might be destroyed, or that the business may lose access to them should a disaster occur, said Alan Baker, president and chief consultant at Spitfire Innovations. If a water pipe bursts or there is a fire, business owners can still operate with little impact, since their critical documents are stored online and spared from any destruction.

We asked our experts to highlight what they think are some of the most important features and functionalities that small businesses should look for when choosing a document management solution.

  • File structure: The system should offer an easy-to-use file structure that makes sense to users, such as a cabinet-drawer-folder approach.
  • Searching: You want a wide range of options for quickly finding files. You should be able to search not only by the file's name, but also by the content inside the file.
  • Ease of use: The system should be simple for employees to use. If it is too difficult, you won't get complete buy-in from the staff, which will make the system less effective.
  • Mobile access: You want a document management system that is accessible via smartphones and tablets.
  • Integration: The system should easily integrate with the programs you're already using, such as your email client and customer relationship management software.
  • Scanning: The solution should be compatible with a wide variety of scanners.
  • Security: The system should allow you to restrict who can see specific folders and files. You should be able to set access permissions by employee.

Now that you know the types of document management systems available and what each offers, you need to determine which solution is best for you. To help you narrow down your choices, check out our best picks roundup page.

Editor's Note: Looking for a document management system for your business? If you’re looking for information to help you choose the one that’s right for you, use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:

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Chad  Brooks
Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.