Statistics suggest that a typical enterprise will spend between 6 and 15 per cent of its operating revenues on document production (Source: PIRA). When viewed at this level, it can appear that a simple document production service would be sufficient to improve performance compared to internal print and mail operations. However, there is a significant “iceberg” effect in understanding the end-to-end communication process, as opposed to looking simply at production. Estimates such as that from PIRA only consider the visible elements, from material costs and origination services through to production and postage.

The true cost of business communications which are printed and distributed is often hidden because there is no unified reporting of the cost to the organisation of all the process elements involved. In a landmark study carried out by InfoTrends and CAP Ventures, called “Cost of Business Communications: A Look at the Business Document Lifecycle”, it emerged that for every 1 Euro spent on print, 6 euros are spent on other functions.

It is easy to miss the deep truth of this finding:

• What appears to be a 1 Euro activity is in fact a 7 Euro cost.

Focusing solely on trying to squeeze additional cost savings from the visible part of document production - by looking to print management contracts, global print sourcing and the like - ignores the potential for dramatic performance improvements by focusing on the end-to-end process as a whole. With print margins falling by 4 per cent year-on-year (source: PIRA), there is little further room for savings. However, document processes have yet to undergo automation, lean management and efficiency improvements which will undoubtedly drive out costs.

Document Process Outsourcing (DPO) adopts a broader view of the cost to the enterprise of existing document management. In particular, the opportunity costs of failures in the existing process should be taken into consideration.

Consider the impact if an invoice print run cannot be scheduled due to systems down-time. Even a delay of a few days can have a major impact on cash flow, interest payments, even shareholder dividends if the error occurs at year end.

• Working with an external supplier which is able to guarantee a totally resilient service eliminates these risk factors and potential costs from the document process.

Return on investment for marketing communications is usually calculated as a simple ratio of value of sales achieved compared to cost of activity. Yet this ignores the impact on customer satisfaction which poorly targeted mailings, incorrectly addressed items or inaccurate statement/product holding data can have. Customer satisfaction directly correlates with higher profitability as a result of longer relationships, deeper product portfolio holding, and higher price premium tolerance.

• An outsourced process with full measurement and reporting from end-to-end can enhance the value created by customer communications.

It is estimated by Gartner that some 50-60 per cent of customer service queries in financial services require supporting documents to be sent to the caller, whether for marketing or for regulatory reasons. Delays or errors in sending these documents can lead to lost sales, lower revenues or potential fines for breaches of regulations.

• Outsourcing document processes with guaranteed service level agreements optimises the value of customer contacts.

Document re-engineering can yield added revenues from sunk costs in legacy documents and content. The time and cost associated with enhancing existing platforms and technologies to allow this are usually too extensive for in-house investment. Performance-enhancing capabilities from new generation document process environments include automated document tracking and reprinting, address pre-sorting and cleansing, repurposing from print to Internet, printing on demand documents that were previously pre-produced and stocked, introduction of colour and personalised messaging into transactional documents, leading to uplift in returns.

• DPO allows a “generation jump” from legacy systems to leading-edge process management technology.

DPO is in its infancy, but is set to grow exponentially over the next five years. That growth will arise out of a fundamental shift in business thinking about document production and its management. Critically, there will be a shift from viewing the business need as simply for a print and mail service for specific document types (transactional and marketing) towards a recognition that the entire end-to-end process can be outsourced.

Current levels of spending on document production are estimated at around 38 per cent of the amount spent on IT in any given year. That is a sufficiently large sum to demand top level attention on how to extract the maximum efficiency, achieve cost reductions and added value, while also improving overall management. This is what outsourcing of the document process can provide.