Editore"s Note
Tilting at Windmills

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August 30, 2004
By: Kevin Drum

DOCUMENT IMAGING MAGIC....My professional specialty is in the mind-numbingly boring area of high-volume document imaging and document management. I've been waiting two years for some excuse to put that knowledge to work on this blog, and wouldn't you know it the opportunity comes up while I'm on vacation.

Still, this is kind of amusing: apparently Arnold Schwarzenegger's commission on improving the performance of California's government includes a recommendation that we adopt "integrated document management" more widely. The report suggests that this would cost $1.3 million and save $100 million, a 75:1 payoff. Where do these numbers come from? As Professor Tax notes, they come from a piece of sales literature that appears to claim a potential savings of 75% in filing costs, a 50% savings in shipping expenses, etc. etc., if you use the company's software.

That brought back memories! I used to write this stuff! Although, frankly, I never had the balls to write anything quite so obviously bogus. If I were in full-bore pushing the envelope mode I might have claimed a 5:1 payoff, and in more thoughtful moments I would have just told the truth and suggested that the payoff is more likely to be 2:1 or 3:1.

Which isn't bad, really. Document management really is good stuff in a lot of cases and has the potential to both save money and improve customer service.

But 75:1? Not in anybody's lifetime. If this is the level of due diligence being performed by Arnold's blue ribbon team, I'd recomend dividing all the rest of his alleged savings by about 25 in order to get closer to the actual truth. In other words, we might save a billion dollars over the next five years. Yippee.

UPDATE: Fairness compels me to note that the sales literature in question, from a company called Open Archive, doesn't actually make the 75:1 claim. In fact, they pretty carefully avoid making a specific ROI claim. Schwarzenegger's team, however, somehow took the numbers in their document and magically calculated that an IDM system would cost $750,000 an absurdly small amount and would allow them to get rid of 3,000 (!) state employees. They obviously just pulled these numbers out of their asses, so it's sort of unfair to blame Open Archive for any of this.

Kevin Drum 1:39 PM Permalink | Trackbacks

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