Setting up a paperless office.

Early in 1992, Larry L. Clark, vice-president and controller of Chaparral Steel Co. in Midlothian, Texas, realized his company was awash in paper. Clark suggested the company consider moving toward a paperless office. The goal was to convert all new paper documents and some of the old ones into electronic images and eventually close a warehouse clogged with old documents--invoices, purchase orders, accounting reports, tax records--without losing access to the information they contained. With a computerized system, it was reasoned, all the company's past and future documents could be stored in a fraction of the space needed for paper files. Such a system would allow his staff to gain access to images of the documents almost instantly, no matter how hard they were to identify.

Management approved the move--by paper memo, of course. Two years later, the project is well under way, saving the company money and improving operations.

The company, a subsidiary of Texas Industries, Inc., operates a high-technology mill that produces bar and structural steel by recycling scrap. Its parent is a Fortune 500 company.

MAKING DECISIONS

Right from the start Clark realized that no off-the-shelf imaging and retrieval product perfectly suited the finance department's needs because in addition to converting paper to electronic images, he wanted to automate the paperwork flow. As a result, he had no choice but to cobble together a computerized system.

At Chaparral, as in many other companies, documents move from one department to another, with various actions taken along the way. For example, a requisition is created and forwarded to management for approval. Then it moves to the purchasing department, which creates a purchase order. When the goods are received, a receiving report is created and forwarded to the accounting department for matching with the invoice and for subsequent filing and payment. The goal was to integrate this part of the operation into the system.

Clark sought support from his staff--the people who would use the system. Five departments (credit, purchasing, general accounting, treasury and cost accounting) with about 35 people report to him. Initially, some staff members were skeptical and resistant to change. Clark decided to win them over by involving them as much as possible: by keeping them aware of what was going on, including them in planning and decision making and providing comprehensive training in the use of the technology.

The approach worked: The employees' resistance faded and they even began to boast how easy it was to locate accounting documents. "The new system clearly beats the old way of storing and retrieving documents," said Karen Dennis, a senior administrator who manages the system.

One of the most important decisions to be made initially, Dennis explained, was how to organize the filing system and the indexing scheme--the database that would locate and retrieve all the documents. It became clear that success hinged on document retrieval--how each document would be coded for searches. Developing an indexing system, they soon realized, was as important as the planning that went into setting up a chart of accounts. Unfortunately, when the company first launched the system, the indexing scheme was designed as if the accounting and purchasing departments were two separate entities because that's the way business had been done in the past. As a result, some documents were "lost" in the system and some attempts to link related documents--for example, purchase requisitions to purchase orders to receiving reports to invoice to check--were futile. When the staff reconsidered the indexing system, it decided on a design that organized the documents using "file cabinets," "drawers" and "folders" (for more on this approach, see "The Paperless Office," page 73). All the departments received their own file cabinets in the system's electronic storage space. The lone exceptions were the accounting and purchasing departments, which, because they now worked together, shared the same cabinet. Within the cabinets the departments made their own file drawers for vendors, aging analyses, transaction reports, etc. The vendor drawer, for example, was organized into folders: purchase orders, receiving reports, packing lists, freight bills of lading, invoices and checks. In a typical situation the accounting department would have its own file cabinet (see exhibit 1, below). File drawers would be designated for activities such as payroll, accounts receivable and payable, inventory and general ledger. File folders would be earmarked for customers, aging analyses and transaction reports. The documents would be labeled with an index code. For example, a sales order would be SO1234 and a shipping manifest would be SM3456. Or a letter would be indexed either by the topic, the name of the recipient or the date of the letter--or a combination of that information.

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THE SHOPPING LIST

The hardware choices were easier. To scan and index documents initially, Clark set up two input stations (computers plus scanners) in the accounting department (for more information, see the sidebar, "The Hardware Chaparral Uses," page 78). Depending on the resolution needed (some documents require high-resolution scanning for clarity), the scanners can be set to 200, 300 or 400 dot-per-inch (dpi) resolution. At low resolution--200 dpi--they scan about 25 pages per minute; at 400 dpi, speed is cut by about half.

THE HARDWARE CHAPARRAL USES

Chaparral installed the following components as part of its document image system:

* For its two input stations, where documents are scanned, the company chose Compaq 386 personal computers with 19-inch color monitors. The scanners are Fujitsu M3093E models with automatic document feeders.

* The index is stored on a Compaq 486/33 with a 1-gigabyte (Gb) hard drive.

* The optical storage devices are a Panasonic LF-5080A 47-Gb Autochanger (a "jukebox" with two internal drives) and two single Panasonic write-once-read-many (WORM) LF-5090 optical disk drives, each with 940-Mb capacity.

* Two additional Compaq 386/33s with 80-Mb disk drives act as servers to control the printers, the faxes and the jukebox.

* Twenty Compaq 486/33 workstations are situated throughout the accounting department for document retrieval.

Documents are organized by transaction so that, say, all documents relating to a particular purchase are scanned consecutively. The software allows the clerk to preview a scanned image and rescan it if it is not readable. Reports that come from the accounting information system, such as journal listings and financial reports, are sent to a spool (software that temporarily stores files awaiting an operation--in this case scanning) and imported automatically into the imaging system.

The computer-generated reports are stored as text and can be searched and retrieved based on the words and numbers they contain--an operation similar to any word processor text search. Documents are indexed as they are scanned. Once the input clerk is satisfied with the quality of an image, it is transferred electronically as a file to the appropriate cabinet, drawer and folder.

With some exceptions, images and documents are stored in optical drives because, although they are not as fast as hard drives, they can store far more data. However, when speed is a priority, the hard drive is used. The index database, for example--from which all retrievals are triggered and for which speed is a priority--usually is kept on a hard drive. The company reserves a fast computer with a high-capacity hard drive to accommodate the index, which already takes up 400 megabytes (Mb) of disk space and continues to grow. The optical storage devices are write-once-read-many (WORM) optical disk drives, each with 940-Mb capacity. They are operated by a "jukebox," a device that stores, retrieves and "plays" disks much like a regular jukebox. It can handle as many as 50 optical disks.

The company upgraded 20 computers throughout the accounting department to image-retrieval and viewing stations, so there are plenty of places where staff can retrieve documents. Once a search is initiated, the database server extracts the requested index keys and tags the requested documents. The jukebox server then retrieves the documents from the optical disk drives and sends them to the requester's workstation. Electronic documents can be displayed on a workstation screen, printed, faxed or exported to another computer system on the company's network.

A high-quality laser printer is necessary to print document images with graphics. Text-only documents, which do not require high resolution, can be printed by faster printers, such as line or dot-matrix printers, which are especially appropriate for long accounting transaction journals.

MOVE IN SMALL STEPS

Clark's advice to companies planning to install a document management system is to "move in small steps." They should plan and install one operation at a time, fixing any bugs that arise before moving on. The index scheme--the linchpin of such a system--must be planned carefully. Finally, by including the staff in the planning stage, companies can encourage employees to accept the system and make the most of the opportunities it offers to increase productivity and improve the quality of their work.

EXECUTIVE SUMMARY

* CHAPARRAL STEEL CO. installed a document imaging system two years ago. Despite some early mistakes in the way documents were filed and indexed, the system is up and running and has saved the company about $18,500 a year. This doesn't include productivity gains that result from having ready access to stored documents or the value of vastly improved customer service.

* RIGHT FROM THE START the company realized it needed more than an off-the-shelf imaging and retrieval system; it needed a system tailored to its needs that could automate its work flow.

* THE EXECUTIVE IN CHARGE of the project also realized he needed support from his staff--the people who were going to use the system. He decided the best way to win them over was to involve them as much as possible: to let them know what was going on, include them in planning and decision making and provide comprehensive training in the use and operation of the technology.

* THE APPROACH WORKED. The employees' resistance faded rapidly and they even began to boast how easy it was to locate accounting documents.

* ONE OF THE MOST important decisions was how to organize the filing system and the index scheme. This step was as important as the planning that went into setting up a chart of accounts.

* FOR DOCUMENT RETRIEVAL, the company set up 20 workstations throughout the accounting department so there are plenty of places where staffers can gain access to documents.

WHAT YOU NEED TO KNOW TO GET STARTED

The first step in launching a document imaging system is to determine your needs. First, some questions to ask:

* How many documents will be processed? Are the documents one-sided or two-sided? In color or black and white?

* Must documents be passed from one department to another?

Only when the document path is clear should you shop for a software vendor. Remember, your needs will grow, so select software that can grow with you. A list of vendors is shown in exhibit 2, page 84.

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Since most document imaging software can handle images from multiple sources (faxes, data imported from other computers and scanner output), special hardware must be set up to accomplish this. What's needed is an input workstation--a computer, scanner and a fax machine (or a fax board in the workstation). The workstation should be at least a 386 computer with 4 megabytes (Mb) of RAM and at least a 200-Mb hard drive. A high-capacity hard disk is needed because scanned documents must be stored in the workstation before they can be transferred to optical disks. (See exhibits 3 and 4 for hardware costs for stand-alone and networked systems, respectively.)

EXHIBIT 3

Document imaging hardware costs for a stand-alone system

Stand-alone workstation
for scanning, indexing,
database storage, search
and retrieval and display:
  386/33 with 8 Mb of RAM and a 200-Mb
  hard drive                                                $1,150
  NEC MultiSync 4FGe 15-inch monitor
  with 1024-by-768 resolution and a 76-hertz
  refresh rate                                                $755
  ATI Graphics Ultra Plus
  2-Mb video accelerator card                                 $310
  Internal optical WORM drive
  (5.25-inch, 940-Gb Panasonic
  LF5010 with adapter)                                      $2,470
  250-Mb Conner Tapestor
  internal tape backup for the
  index database                                              $150
  Hayes fax-modem board                                       $200
  Hewlett-Packard ScanJet IIP
  grayscale scanner with feeder                             $1,000
  Texas Instruments Microlaser
  Plus printer with 300-by-300
  dot-per-inch resolution                                     $850
Total                                                       $6,885

EXHIBIT 4

Document imaging hardware costs for a networked configuration

  2 NEC MultiSync 4FGe 15-inch monitors with
  1024-by-768 resolution and a 76-hertz
  refresh rate                                              $1,510
  2 ATI Graphics Ultra Plus
  2-Mb video accelerator cards                                $620
  2 internal optical WORM drives
  (5.25-inch, 940-Gb Panasonic
  LF5010 with adapter)                                      $4,940
  Hewlett-Packard ScanJet IIP
  grayscale scanner with feeder                             $1,000
Total                                                       $8,070

With this setup, documents can be previewed and, if necessary, rescanned if their quality is not acceptable.

For only slightly more money, consider a workstation more powerful than the one described above: Invest in a 486 computer with 8 to 16 Mb of RAM and at least a 500-Mb hard drive; its speed will be worth the extra investment.

Give the monitor special attention--after all, it's the viewing instrument, so it's critical that it be of the highest quality. While a 14-inch model is acceptable, it's better to get a 17-to 21-inch model; larger screens generate larger images, making them easier to read. The monitor should have at least 1024-by-768 resolution, a 76-hertz refresh rate and a 0.28 dot pitch; it should be noninterlaced. Expect to pay a street price of between $300 and $700 for a 14-inch monitor, between $400 and $850 for a 15-inch model and at least $900 for a 17-inch unit. Also, consider adding a high-quality graphics accelerator video board with at least 2 Mb of on-board memory. Such boards range from about $150 to $800.

Be sure the software you settle on is compatible with a wide variety of scanners. This is important because you may end up buying several scanners, with each doing a specialized job. The scanner should allow for variable resolution--for example, from 200 to 400 dots per inch (dpi)--because different documents often require different resolutions to reproduce well. Depending on the scanner brand and the level of resolution, scanning speeds vary from about 6 to 50 pages per minute. Scanning takes longer when the operation is done at higher resolutions.

Scanners come in color or black-and-white models. Color models are slightly more expensive. Be sure to select a unit with an automatic document feeder; it's a great time and labor saver.