Saturday, August 9, 2014

Digitizing Critical Company Documents - Saving Resources, Improving Efficiency

Natural calamities can strike anytime. Infrastructural challenges can aggravate the impact of these calamities. Ever wondered the hardships one would face if there was a sudden flood or earthquake that damages important business documents physically stored at a particular location. Loss of insurance policy documents, bank statements, property papers, agreements etc? There can also be disasters due to sheer unintentional human error like fire or short circuit of cables. Seepage is also a factor that hits old storage areas in companies. There can be willful misconduct too. And can you negate the menace of rodents and rats? Whatever be the reason of loss, recovering the data is nearly impossible and lot of manpower and resources are lost in resolving the queries of statutory bodies, banks, stakeholders etc. 

It is about time we look into these issues and start thinking of digitizing business data even personal ones. It is a connected world. There has been huge advancement in how we conduct our daily lives and business in the last 15 years. This is the age of digitalization. We are connecting digitally with our customers, suppliers and even employees as well as third party service providers. Slowly we are inching towards digital engagement with the government and its statutory bodies. This engagement should be expanded.
The table gives a brief overview of the amount of business data that needs to be maintained.

Retention Years
Sales Tax
Assessments will take place. If there is an appeal than the data has to be retained till it is resolved. There are some cases in which assessments might not take place but the minimum years of data retention is a must. This data retention means all company data and not just the sales files.
Income Tax
Provident Fund
Excise and Service Tax

Storage and maintenance of stored documents is a huge concern for most SMEs. Take the example of our regular box file. The size of a box file 11 X 9 X 13.5 inch – Average 24 such files for sales and maybe 2 copies each. Add to that purchase, expense files, bank book, petty cash voucher, statutory payments files, purchase order files, customer order file, ARE 1 register. All these to be maintained for 7 years! Calculate the cost of paper, cost of storage space and cost of maintaining them so that they do not get damaged. Do your math. Compare that to the following devices which can store much more documents in the digital form.

Western Digital products like My Cloud EX2 come in very small size (3.90 In X 6.10 In X 6.75 In). They have “build your own data cloud” option and possess very good energy saving features like auto power recovery and scheduled power on off. 8 TB space means 1,600,000 photos or 615 hrs of movies.

There are other alternatives like Dropbox. It allows to access documents anywhere. The site has good encryption, two-step verification and remote wipe option. The plans are good for individual personal users. The charges for professional or business use are $15 per user per month for as much space as needed while giving you security and support.
Digitization is nothing but converting any physical or analog data to digital into an acceptable format like image or portable document. We have already started using emails extensively. Quotations are being sent through email and so are the purchase orders. Payment is done online through NEFT. Many large companies are connecting their supply chain with their small scale suppliers through the web-enabled modules of enterprise resource planning applications.
Today we need a digital strategy more than ever. It is time that the business and operational data is seamlessly integrated with the statutory requirements, one that is self certified and available at the click of a button. The new Companies Act also should focus on these infrastructural and procedural reforms instead of insisting on details of relatives and printing CIN on every possible company document.


Digitized data has lot of benefits two of them being increased productivity and reduced cost of resources. Consider a case of sales tax audit. You are asked to gather certain 5 year old documents and present them. Estimate the time it takes for you to retrieve the files, search for the relevant documents, segregate them, make copies and then deliver it to the sales tax office. Compared to that if you have indexed digital copies; you can simply retrieve them with few mouse clicks and email them to the concerned sales tax auditor. This is what our government should be facilitating in the coming years instead of letting human interference at our work place thus creating ideal grounds for corruption and mismanagement. Few corrupt people make money, wrong practices continue and the government loses revenue.   


For a small company a good quality scanner can do the job in the short term with a dedicated computer. However, for governments to start accepting digitalized data; vault system like banks will be required where data security will be established and maintained. Companies should be given a format in which all data should be submitted in these vaults.
Many companies are coming up who provide document management services. The ideal model of service is quite straight-forward. 

The challenge really is not the digitization part. The obstacle is acceptability of these digitized documents, their authenticity and validation - whether a scanned copy will be accepted by the relevant government departments and statutory authorities as well as the banks and other financial institutions.


By the year 2020, an entire generation, Generation C (for “connected”), will have grown up in a primarily digital world says Pricewaterhouse Coopers in one of their digitization web pages. They say that economic benefits are turning this subtle shift into a tide. This is due to all pervasive technology solutions and its steady embedment in our lives. Luckily many organizations are poised for this transformation but the governments and policy makers are yet to evangelize this shift and create avenues and platforms for rapid adoption. There is also the issue of legal framework to safeguard the data as well as infrastructural fallacies which inhibit a fiercer acceptance of this phenomenon. There has to be a convergence of business and statutory data. The same data should be able to provide business intelligence while helping the government to ensure compliance. Mindless storage of documents and data in the physical format has to be thrown out of the window.
Look at how Kindle type devices are revolutionizing the reading experience and storage as well as sharing of e-books while saving trees too though people might start arguing about carbon footprints of e-devices. And 8000 photos of 3 MB each can be stored in a small 1. 2 X 1 sq. inch SDHC card that costs less than Rs. 1000.
For governments, digitization means ability to trace documents and links across companies to establish chain of compliance without incurring huge human resource cost. With Mr. Modi on the PM’s chair and his penchant for technology, the time is just right for a huge digitization push for businesses. Technology infrastructure is fairly ready. Bill books are rapidly giving way to computerized billing software even at the local Kirana level; there are instruments for credit card payment at almost any shop something that was far and few some years ago. And technology adoption, absorption is steadily on the rise. The comparison of how many years it took for telephones to reach households and the number days it took Facebook to have more than a million users is often cited to make a case for digitization. And not everything needs to be scanned and kept as image or documents; sales bills can be saved through uneditable software format directly from the billing application. An output file of a specified format with all relevant data can be uploaded to the authorized government portals for posterity.
Digitization will also create huge business opportunities for SMEs as service providers. Companies can start providing data digitization, record management services, supply of digitization products like hardware or software, networking solutions, innovative products to simplify adoption of the concept and efficient means to implement them. There will also be need for Intellectual Property Rights and other legal binding for service providers and clients alike to protect from any data theft or malicious use. Audit of information security and certification will gain prevalence. 

The opportunities and advantages are aplenty. The question is how soon our government can set the ball rolling and realize acceptable milestones in a defined time frame. Move towards paperless office sounds futuristic and is still far away but we can at least aim for it. We have to create more synergies in today's world rather than live in isolation. Digitization will bring that much needed connect.
And on a lighter note I have not been paid by Western Digital or Dropbox to write this article. I use the free version of Dropbox and find it useful. WD has been used for representative purpose only to prove a point.

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