Outsourcing in Document Management - All or Nothing?
When is outsourcing document logistics really worth it? And most importantly – what is profitable to outsource? Find here a cross-industry and global view of the benefits and character of an old new phenomenon.
When the major outsourcing wave swept over Europe and North America at the end of 90s, many firms also offloaded document processing. External service providers received the raw data and took care of the entire process – document creation, output and archiving. Mainly innovative industries, like telecommunications, were at the forefront. Back then virtually no supplier generated and mailed its’ own invoices. The resources were invested in the core business; after all, the strong growth spurred by the Internet and telephony boom needed mastering.
Meanwhile, the wave has long subsided. Faced with multiple channels and plunging print volumes, many companies decided to manage the new channels (digital mail, mobile terminals, etc.) themselves and brought document creation back in-house as well. The situations in individual regions and industries differ greatly. In Central Europe, especially Germany, Austria and Switzerland, financial service providers still do their own printing. But in the English-speaking world, it is quite normal to outsource document logistics in its entirety – particularly as data protection is less of an issue than in Europe. For example, over the years a culture of specialised outsourcing has emerged in the USA. A regular bulk process, like monthly billing, is outsourced to a specific service provider. A different provider is contracted for standardised and personalised mass mailings. The enormity of the American print centres, ten times larger than those in Europe, speaks volumes.
There are also differences within Europe, however. Scandinavia and Southern Europe are by tradition more open to outsourcing, the German-speaking countries less so. Skeptics argue that inadequate process security and the increasing complexity of compliance requirements are to blame. No matter where you go, word is that compliance demands you remain master of your own data. But let’s be honest. What service provider can afford to send a confidential document to the wrong recipient? Or use business stationary with the wrong logo? The damage to the company's image, in the worst case with heavy financial and criminal consequences, would be considerable. Data centers are in fact often better equipped in compliance matters than the companies themselves. Most of them are certified according to the highest security standards that exist (including ISO 27001, PCI DSS). Not only that, the companies are still free to contractually regulate how data and documents are handled.
Why Do Your Own Printing?
What is the downside to outsourcing in output management? Or rather, what should and should not be outsourced? The most important considerations are where the company's business is headed, what time-to-market flexibility is needed, and whether the relevant processes change frequently and fundamentally (also see box below). If you can answer these questions with certainty, you can define the right hand-off points. No matter the industry, outsourcing of printing services is probably the most efficient, and ergo easiest, strategy. Printing falls at the end of the processing chain and therefore has only one interface to the remaining processes – it is considerably less expensive when outsourced. Economies of scale occur particularly in high-volume colour printing, making it even more attractive for companies that shied away from the major investment needed.
As a result, full-colour transpromo and white-space marketing in bulk runs finally got a much-needed boost in Europe. By the way, scores of banks and insurers, even in more conservative Central Europe, have already moved to outsource colour printing for precisely those reasons. In Germany, Switzerland and Austria, for example, nearly every cooperative and Raiffeisen bank turned over their transactional printing to association or external providers. Sooner or later outsourced printing will catch on everywhere – especially because paper is increasingly becoming a premium product soon to be reserved for high-end items like catalogs, etc.
Not One Size Fits All
What about the other areas of document processing? They should be looked at on a case-by-case basis. Take archiving. It can also be outsourced, hardly a rarity these days – and it's more than reasonable considering the growing requirements for revision security. The larger the number of different, complex documents and the more rules, the more outsourcing makes sense. Who wants to tie up legions of resources for e.g., a potential financial audit, so all the required data can be prepared immediately? This topic fuels a great deal of controversy throughout all sectors of industry. Proponents are loud and clear: archiving belongs in the cloud, and if the server is within the EU, data privacy is not an issue. Meanwhile many large print service providers do offer archiving – not least because today's margins in the print business are not that great. Even so, the trend here is slow. Most companies still do their own archiving.
Finally, how much outsourcing will the output management (OM) structures of the company allow? It doesn't make much sense to outsource document creation if you're running an interactive web portal at the same time. It would be better to hand everything, including portal operation, archiving, and hosting the web server infrastructure, over to the external provider.
Outsourcing isn't Always Right
Flexibility is also a key. How quickly does the company's business change? How often do processes change and how often are new ones added? How quickly must the company respond to new market conditions and reconfigure workflows? As a rule of thumb, the more standardized the processes and higher the document volume, the more profitable outsourcing is. Any company that sends out regular high-volume mass mailings would do well to rely on a third party. The major service providers are known for managing large amounts of data extremely well and, because of the volume, are able to provide their services at a reasonable cost. Choosing the right provider is the second most important task (also see checklist below).
On the other hand, outsourcing all of the distribution logistics is not always right, depending on how closely output management is tied to IT. A company that has already integrated numerous OM components into its IT landscape via service interfaces may be ready for full outsourcing. At least the company has a very clear picture of its core competency and competitive advantage. Quickly switching to another output channel to accommodate a customer who suddenly wants monthly invoices electronically is certainly easier in-house than using an external provider specialised in high-volume transactional printing.
And another thing: creating documents is not the nerve-wracking and expensive task it once was. The available software solutions for formatting and conversion have become quite intuitive and easy to use – not to mention a lot less expensive than a few years ago.
Be that as it may, outsourcing output management is a complex issue requiring careful analysis of existing structures. Working with a specialised consulting firm is advisable. Internationally active suppliers like Compart are known for their holistic approach with a view toward overall document processing.
Find the best match – a checklist for selecting the right service provider
Any company looking to outsource all or part of document processing must first analyse its output management structures in detail.
The following questions are important:
- What is the company's document volume?
- What physical and electronic communications channels are used where and how intensively? What other media may soon join the mix?
- How quickly and substantially does the company's business change and how does that impact document processing?
- How often, and in what time frame, are new processes added and then require configuration?
- What output management trends play a role in my business?
Only then can the search for the right service provider begin.
Key questions include:
- How standardised is the business?
- How often do workflows change?
- How quickly must the company respond to new market conditions?
The following basic principles apply:
- The greater the flexibility, the smaller the service provider. Unlike large providers, smaller ones can establish new processes more quickly, such as temporarily switching to an alternative output channel for just a few documents
- If your document volume is generally low and you want to outsource as many processes as possible, a smaller but more broadly positioned provider is best
- However if processes are highly standardised and subject to little change, the bigger providers make sense – especially for bulk processing like high-volume, colour transactional printing (invoices, salary and pay slips, consumption bills, account statements, etc.). Because the large companies are specialised and extremely well equipped, they are able to better manage large volumes and offer better prices for their services, especially for colour printing (economies of scale)
The service provider should always communicate with the company on a peer level and offer the best available data security, certified if possible according to national and international guidelines.
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