- Document management systems help organize your digital records and allow teams to make edits on the fly.
- User permissions allow certain employees to view or edit documents based on their role in your company.
- Document management software comes in on-premises and cloud-based systems, so you can choose whichever implementation works best for your business.
- This article is for small business owners who want to organize their company documents for easy access and revisions.
Gone are the days of paper storage. A good digital document management system is essential to any small business. You can set your company up for success by storing your important documentation electronically and securely. But where should you start when choosing a document management system? After all, it’s a crowded field with many different vendors.
This guide will help you understand the basics of document management systems and provide you with a roadmap for the buying process. If you want a reliable short list of platforms to choose from, review our best picks for document management software.
What is a document management system?
Document management systems are essentially electronic filing cabinets your organization can use as a foundation for organizing all digital and paper documents. Any hard copies of documents can simply be uploaded directly into the document management system with a scanner. Often, document management systems allow users to enter metadata and tags that can be used to organize all stored files.
Most document management systems have a built-in search engine, allowing users to quickly navigate even the most expansive document libraries to access the appropriate file. Storing sensitive documents as well? Not to worry – most document management systems have permission settings, ensuring only the appropriate personnel can access privileged information.
Choosing the right document management system starts with accurately assessing your organization’s needs. The first choice you’ll make is whether you want an on-premises or cloud-based solution. Each type of system offers the same functionality, but there are several key differences in the way maintenance is performed and data is stored.
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Types of document management systems
When choosing a document management system, you will have the choice between on-premises and cloud-based software. So, which should you pick?
On-premises document management systems
An on-premises document management solution requires you to use your own servers and storage, which means you need to perform your own maintenance. You’ll also be responsible for the security of all your data, so you’ll need to back everything up. This option typically makes sense for larger companies with dedicated IT resources because of its higher technical demands, but it also places you in direct control of the system. Technical support and software updates from the vendor are usually contingent on whether you continuously renew an annual subscription package.
- Pros: The biggest benefit of a self-hosted document management system is that you are always in control of the system and won’t rely on anyone else to keep it up and running. You won’t depend on the internet either. If your online connection goes down, you will still have access to all your documents.
- Cons: The downside comes in the large upfront costs, as well as the extra yearly expense of software updates. In addition, it’s up to you to make sure you have a backup system in place, since your files aren’t 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.
Cloud-based document management systems
Cloud-based document management software is hosted by your system’s provider and accessible to your organization online. Typically, cloud-based solutions have a monthly or annual fee, which includes all maintenance and software updates. Depending on the system you choose and the features you require, pricing for cloud-based platforms can range from a few dollars to more than $100 per user per month.
- Pros: The biggest benefits are that you don’t need an in-house IT team to install the software and keep it running, and there aren’t any significant upfront costs. You can also access systems from anywhere with an internet connection, and you won’t need to back up your files since they automatically save in the cloud.
- Cons: You are at the mercy of your provider to keep the system up and running. If your vendor 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 typically have storage limits.
For greater control, on-premises document management systems are reliable if you have in-house IT staff. Otherwise, the low costs and maintenance support of cloud-based systems may better suit your needs.
Document management system features
These are some of the most important document management system features.
- Document storage: The most basic and critical function of a document management system is the ability to store your company’s documents safely and in an easily searchable manner.
- Keyword search: A sound document management system has a broad keyword search option so you can easily access any document based on specific keywords. Some systems include metadata and tags that make recalling a document or group of documents simpler. For example, tagging all your invoices as “invoice” makes it easy to review all documents of this type with a simple search.
- Permissioned access to certain documents: By creating tiered permissions, you can provide certain employees access to specific documents and bar everyone else from viewing or editing them.
- Document access monitoring tools: These tools allow you to monitor who in your company is accessing what documents. This is an essential security feature for small business owners to ensure their confidential documents remain private.
- Document edit history and restoration: A document management system should have edit history and restoration options so you can see who has edited a given document. Versioning allows you to recall old versions of documents that have been revised and to see precisely which changes were made at what time by which users.
- Auto-delete on outdated documents: Document management systems come with regulation controls for automatic saves and deletion to free up storage space.
- Mobile device access: You should be able to access your company documentation through your mobile device. Mobile document management capabilities typically include viewing, editing and sharing documents.
Benefits of using a document management system
There are several benefits to using a document management system. Overall, the system should be simple to implement, allow you to run your business more efficiently, and make your life as a business owner easier.
- Saved time: By using a document management system, you can devote the time you previously spent organizing and managing your documents to more critical parts of your business.
- Security: Cybersecurity is more important than ever. By backing up your documents in the encrypted cloud or a secure on-premises server, you can protect important and sensitive company information and protocols. [See our full cybersecurity guide for more information.]
Cyberattacks against businesses increased considerably in 2020, with even the World Health Organization targeted amid the fallout of the COVID-19 pandemic. A fully secured document management system can help thwart these attacks.
- Scaling: As your business grows, so can your document management storage and features. One of the major benefits of document management software is its ability to scale up and down to meet your company’s ever-changing needs.
- Easy document management: Keyword searches allow you to find your company’s important information quickly and easily. The days of rifling through file cabinets to find the information you need are over. Document management systems allow you to access any document more efficiently.
- Collaboration: Teamwork is the backbone of any successful business. Document management software can improve workplace collaboration by allowing multiple people to work on the same file at once, tracking who makes what changes and retaining your access to older versions of documents.
Document management system costs
Pricing for document management systems depends on which provider you work with and the type of service you sign up for.
On-premises systems are significantly more expensive than cloud-based ones. The pricing structure is usually a one-time setup fee, and then a subscription fee for the vendor’s services. These fees average around $1,000 per user. The annual subscription fee is usually 20% of the initial setup cost.
Cloud-based systems have a more familiar subscription-rate structure. Depending on the services you receive, you’ll pay a subscription fee ranging from a few dozen to several hundred dollars per month.
What to look for in a document management system
When choosing a document management system, keep an eye out for a few key features. Discuss your needs at length with any sales reps you contact, and get technical specifications and pricing in writing. We recommend ensuring any document management system you consider has the following features.
- Simple file structure: The system should have an easy-to-use file structure that makes sense to users, such as a cabinet-drawer-folder approach.
- Searching: You want a wide variety of options for quickly finding files. You should be able to search not only by the file’s name but also by content, the date it was last modified, file type and more.
- 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 your staff, which will disrupt your day-to-day operations and lead to confusion.
- Mobile access: You want a document management system that is always accessible via smartphones and tablets, allowing you to view, edit and share files from anywhere.
- Integration: The system should easily integrate with the programs your company already uses, such as your email client and customer relationship management (CRM) software. Ask about open APIs (which allow you to add your own integrations) when discussing any solution with a sales rep.
- Scanning: The solution should be compatible with a wide variety of scanners to upload paper documents. Check out our buying guide for purchasing a document scanner.
- Security: The system should allow you to restrict who can see specific folders and files. You should be able to set access permission by employee.
How to create a document management protocol
No two document management systems will have exactly the same setup process, but they’re all easier to use with certain internal processes in place. Here are some protocols you may want to implement as you set up your system:
- Designate someone to oversee your files. If you own your business, you might want to be the point person for files. Or you could designate a manager who identifies which documents each of your teams saves and deletes. This manager should also keep a written record of how the team processes its documents.
- Set rules for acquiring, storing, securing and deleting files. Before implementing your document management system, figure out how you’ll convert paper documents to electronic files. Create categories for your documents, decide who can and can’t access the files, and figure out when to delete certain documents.
- Be careful when deciding which files to delete. It’s best to keep certain files for quite some time. For example, the IRS often recommends keeping tax records for seven years. Write this requirement into your file deletion protocol. You can also clarify which documents your team can safely delete if you’re running out of storage space. Old, outdated drafts may be great options.
- Establish file-naming rules. Categorizing your files is a great start, but folders full of disorganized documents will get you nowhere. Instead, set file-naming conventions that neatly organize your documents. For example, if you create seven reports per month for a particular client, the file name could begin with the report’s number. The rest of the file name could describe the report in ways that clearly distinguish it from others.
Regardless of whether you purchase a document management system, you may want to use file management apps on your phone to stay organized on the go.
Document management system FAQs
Document management systems can be sprawling and complex. If you’re still unsure where to start, consider these answers to frequently asked questions.
Are document management systems valuable only to large organizations, or can small businesses benefit from them too?
Although small businesses may not have the vast number of files that larger organizations do, they can still benefit from document management systems, especially ones that deal with a lot of paperwork or create a lot of content.
I often see references to document management systems, document management software and document management solutions. What are the differences?
Despite the different names, they all accomplish the same tasks. The terms can be used interchangeably to describe the same platforms.
What’s the difference between cloud storage and cloud-based document management systems?
Cloud storage serves simply as a place to house documents in the cloud. Cloud-based document management systems are much more robust solutions to help businesses manage their important documents.
How do you store documents in the system?
There are several ways to add files. You can upload them from your computer, import them from an integrated solution, or scan paper documents directly into the system. [Learn how to create a paperless office by digitizing your processes.]
How do you find documents in the system after they’re filed away?
These systems offer many ways to locate documents quickly, including searching by the file’s title, the author’s name, and when it was added to the system. Many of these solutions also allow you to search for content within each file or by file type. Similarly, you can add metadata and tags to each document to aid retrieval.
Do document management systems work with other programs I am already using?
Most systems feature integrations for Microsoft Office, Salesforce, DocuSign, QuickBooks and several other popular programs. Some also include an application programming interface (API) that allows custom integrations.
Besides keeping you more organized, can document management systems help you get work done in other ways?
Yes. One way is with workflow tools, which help businesses keep assignments and projects on track. These tools are included in some document management systems. They can notify team members when it’s time to work on certain assignments and help ensure tasks never get lost in an employee’s inbox. Additionally, versioning tools allow users to view and collaborate on edits in real time, much like in Google Docs. The versioning function keeps track of changes over time and allows users to call up older versions of documents if needed.
With document management systems, do all users have access to every file?
Most document management systems have security restrictions that can control which employees have access to which files. This ensures employees see only the documents they should. For example, you could set personnel contracts to be available only to HR staff, rather than every member of the organization.
What happens if a disaster strikes my business? Are the files and documents stored in the system lost for good?
A big benefit of cloud-based solutions is that your data is safely stored offsite. However, on-premises solutions often rely on your own servers and storage, so it’s vital to back up all your data when using an on-premises server. We recommend looking into a cloud-based backup service to protect your documents. [Learn more about rebuilding your business after a natural disaster.]
Purchasing a document management system
A document management system is a worthwhile investment for your company if you’re looking to cut down on paper files, organize business-related content and foster efficient document collaboration. Before purchasing a document management system, do your due diligence by evaluating a variety of vendors and getting demos, if possible. For a head-start, consider our FileHold Express review and our review of Rubex by eFileCabinet.
Max Freedman and Matt D’Angelo contributed to the writing and research in this article.