Investing in Records Management
$1.1 billion settlement against a carmaker over safety concerns.
$2.4 billion levy against a financial institution for securities fraud.
$368 billion payout by the tobacco industry.
You’ve seen the headlines. But what you don’t see are the unspoken costs of the litigation process. A 2010 Report (pdf) presented at a Duke Law School conference found the outside litigation cost per respondent for Fortune 200 corporations reached $115 million in 2008, an increase of 73 percent in eight years. A major driver of this expense is the discovery process — as much as one-quarter in outside fees. Yet the same study showed that only one of every 1,000 pages of documents retrieved during discovery was used in the courtroom.
The lesson is clear: A more efficient records management system means a less expensive and more useful discovery process. That’s one way to measure the return on investment (ROI) from a robust records and information management program.
“Cost reduction has been an attainable objective of systematic records management for over half a century,” writes William Saffady in his book, Records and Information Management: Fundamentals of Professional Practice. “When justifying costs, money saved is the same as money earned. Efficient recordkeeping contributes to profitability by lowering the cost of doing business.”
Saffady goes on to give specific examples where investing in a solid RIM delivers ROI:
- Increased revenue through new business opportunities and market growth when information is readily available
- Reduced records volume, storage and cost through proper retention and defensible destruction;
- Reduced labor through better cataloging and retrieval; and
Reduced risk (and related consequences) of loss of vital records.
“From a value chain perspective, an organization with effective recordkeeping practices must enjoy a competitive advantage over an organization with less effective or ineffective ones,” he writes.
Making the business case for an effective RIM program starts at the senior executive level. Those leaders will want facts and figures on current records management policy (if any), compliance performance and cost-to-benefit comparison. The latter can be challenging because the benefit is primarily cost avoidance, which is often difficult (but not impossible) to predict.
Here are some guiding principles for defining ROI:
- Include relevant financial factors. That means looking at internal costs and benefits in addition to external impact. Internal elements will include the amount of time employees spend on managing files under current and proposed systems, training and communication, and projected productivity improvements. External factors will include benefits of improved legal and regulatory compliance, cost factors of better document retrieval, and potential savings from reduced records volume and storage needs.
- Show the financial benefits over time. It’s not unusual for RIM investment to be high at the start, so you will need to demonstrate both short-term gains and the financial benefit over multiple years. Charting this for senior leadership will strengthen your chances of gaining support.
- Use examples to make the case. In a 2011 study of six higher-education institutions in the United Kingdom, investment in better records management systems drove down costs over a five-year period. In contrast, five affiliates of ING Groep NV were hit with a total of $1.2 million in fines by the Financial Industry Regulatory Authority for poor email storage and review practices. Use real-life examples like these to show how a solid RIM strategy can improve the business while mitigating risks.
- Include benchmarks for measuring progress. You need more than just support on the front end. A successful records management program is embraced for the long term, which means you will need to show the ROI on an ongoing basis. Every time you can demonstrate the business rationale for RIM, you strengthen top-level support and cement its place in the organization’s strategic plan.
Playing matchmaker between records management and return on investment will summon the support you need to get an effective RIM strategy off the ground.
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Abraxas brings strong business sense and collaboration to generate the best ROI in records management. We provide clients with tailored records and information management solutions, delivering the business intelligence that matters most — and we do it more efficiently and reliably than anyone else, particularly in highly regulated industries. To learn more, email firstname.lastname@example.org or call us: 866.535.0016 (toll-free) or 269.226.0016.