By Mallory Hendry – How do you calculate the return your firm will get from investing in a document management system (DMS)? Forgetting productivity gains for the moment (which is the source of soft ROI), “to make financial sense in the here and now, partners must first make good, data-driven decisions with hard, objective numbers about the real cost savings that a DMS adoption can bring,” says Peter Zver, Director of Tikit Americas, Advanced.

“An ROI on time savings requires a conversion of time to dollars, and every managing partner has a different view of the formula for that conversion,” Zver, author of a free white paper on the subject, says. “An ROI based on assumptions, although valid to a degree is open to debate, especially when even small increments of time savings lead to disproportionally high ROI. The hard ROI deals with actual cost reduction using factual evidence — expense line items on the P&L — and although the ROI is much lower, it’s more credible and defendable.”

Advanced conducted a hard cost ROI exercise with several firms, and findings show that a mid-sized firm can save between US$400k and $600k over the first five years of DMS adoption. Just the exercise in surfacing costs tied to physical file storage and paper are costs often not reviewed and taken for granted, Zver notes the results, “…were quite eye opening and the opportunity in reducing these costs were quickly evident.”

Often, it’s the administrator/comptroller that puts forth a business case, and staying in the “hard cost” zone with a focus on those savings — “Often referred to as the ‘low hanging fruit’ for the ROI,” Zver adds — stays within the realm of their expertise and empowers them in defending the case. Whether the calculation is based on hard cost savings or soft cost savings due to improved productivity, every firm should put together a business case for a DMS that takes ROI into account and should also address how a DMS contributes to improved client service delivery, compliance, security and employee well-being. But at the end of the day, there’s an even more straightforward argument for its adoption. Reading On: