New scanners touted as 'fax machine of the 1990s.' (electronic filing systems) (Special Report: Computers)

Number of users expected to increase tenfold by 1997

Only one or two years ago, companies were viewing the concept of an "electronic file cabinet" with great interest. But few could justify the $100,000-plus price tag to buy such a system, said computer experts.

Now a whole new generation of low-cost products are cropping up that can electronically scan information from paper into computers. And that has many computer vendors predicting that "document imaging systems" will soon become as

prevalent in the workplace as fax machines.

Document imaging systems, which hit the scene in the late 1980s, allow companies to transfer all their paperwork onto computers through scanners.

The new generation of such products will drive the number of people in the United States and Canada using these systems from just 50,000 in 1992 to 500,000 by the year 1997, predicted Bruce Silver, director of document imaging management at BIS Strategic Decisions, a consulting and market research firm based in Norwell, Mass.

Silver said even the price of high-end document imaging systems has dropped to the mid-to-low $20,000 range per user, or work station, down from $30,000 to $40,000 per user two to three years ago.

The per-user price is derived from the total system price divided by the number of work stations in the system.

Also, a whole new line of low-end products are now being offered for $4,000 to $5,000 per user.

Silver said one of the major players in this fast-growing low-end market is Torrance-based Compulink Management Center Inc., which sells a document-imaging software package called LaserFiche Lan. That software package can automatically index every word in a file, so documents can be retrieved in their entirety by merely inputting a key word or group of words.

The cost is $1,495 for a one-user package; $2,495 for a two-user package; $4,995 for a five-user package and $7,995 for a 20-user package.

"I've been in the computer business for 10 years and seen it all," said Kala Devan, president of Viatron Systems, a Torrance-based consulting firm specializing in document imaging.

"I've just been waiting for something like this to happen," he said, referring to affordable document imaging systems. "This technology is going to creep in like the fax machine."

The larger deals Devan said he has closed with L.A. companies include a 20-user document-imaging system to Avon Products Inc. in Pasadena and a 170-user system for Providence Investment Council, also in Pasadena.

He said Viatron also has deals pending with several other major companies, including Armor All Products Corp. in Orange County, Gillette Co.'s stationary products division in Santa Monica, the Port of Los Angeles, and a string of law firms. One of those law firms, Buchalter Nemer Fields & Younger in L.A., is stockpiling 30,000 boxes of paper, Devan said.

But major companies are not Viatron's only customers. Devan said he even sold a $25,000 system to a one-man law office in San Francisco. He said the lawyer already has scanned 1 million pages of information into his system.

Devan said a single optical disk can store 20,000 pages of information, which is the equivalent of five full file cabinets.

The equipment contained in a document-imaging system includes an optical drive, scanner, software and a computer.

Devan said scanners have the ability to electronically translate as many as 60 pages a minute.

Although companies are increasingly investing in imaging systems, computer experts said, the highly publicized concept of a "paperless" office is still a bit too futuristic, especially since court cases require original copies.

"Because the technology is so new, companies are running a parallel system," said Devan. "Companies are just waiting for the court system to recognize imaging systems."

Devan said already lawyers are making copies from their imaging systems to use in court; therefore, it's just a matter of time before courts recognize imaging systems.

It's not just getting rid of paper that companies are interested in, said Devan, but getting control of information.

The City of L.A.'s Hyperion Construction Division, which oversees construction of the city's waste water plants, has had a low-cost imaging system in place for a year and a half, said Perry Saupe, manager of Hyperion's systems section.

When the office was set up in 1982, a logging system was developed to track the mass of information relating to its construction projects, Saupe said.

"The file room became such a clutter, employees couldn't find documents, even though they were filed," he remembered.

The office now has three floors of space housing 275 employees, who are involved with hundreds of projects. Each project is assigned a team, and that team keeps all paper information pertaining to that project. If anyone else wants to see a document relating to that project, he or she needs to go ask the engineer, Saupe explained.

The office's imaging system has eliminated pre-existing problems with finding information and eliminated the need for a duplicate filing system.

What's more, he said, people can ask the database questions, such as: "How many projects are having a problem with the under-strength of concrete?"

Richard Crone, senior manager of consulting at the L.A. office of Big Six accounting firm KPMG Peat Marwick, warned companies against investing in an imaging system that only has optical character recognition of machine-produced type.

Such systems merely acts as vacuum cleaners, he said, by sucking up what's on a page. They don't enable much productivity gain.

For bigger gains, companies should invest in systems that have intelligent character recognition, meaning the systems can not only read handwriting, but they can discern the type of document the information is on, such as a personal check vs. a commercial check.

Crone said companies need to further streamline their process by eliminating manual entry altogether.

The biggest gains, Crone said, will come by getting rid of doing business on paper, such as can be accomplished by networking personal computers.

But even Crone conceded that society is still "married to paper."

Even the document-imaging industry's largest trade group, the Association of Image and Information Management, has not yet divorced itself from paper. At the group's trade show last summer in Santa Ana, the 30,000 to 40,000 attendees were given five volumes of information on paper, Crone said.