All_Associates-EDAM by Managed Print Services Association

EDAMÂŽ White Paper for Decision-makers Involved in Document Transformation Projects

A whitepaper created by ALL Associates Group December 2004

Prepared for IKON Office Solutions, Inc.

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EDAM Tools Disclaimer

The intellectual property including copyright, trademarks, trade secrets and other forms of intellectual property is owned and reserved by ALL Associates Limited and ALL Associates Group, Inc. (hereinafter collectively referred to as ALL Associates Group) in respect of this White Paper and its contents and the Expert System known as EDAM® – Enterprise Document Assessment Methodology and derivative Predictive Modeling Tools.

The EDAM Predictive Reports referred to in this White Paper are generated by an Expert Predictive Modeling System called EDAM® (Enterprise Document Assessment Methodology) developed and maintained by ALL Associates Group. ALL Associates Group uses exhaustive research and robust statistical techniques to combine government data on employment and industry types with their proprietary databases and algorithms on fully burdened costs of document systems.

The EDAM products, services, technologies, methodologies or processes described in this White Paper are subject to the intellectual property rights owned and reserved by ALL Associates Group. No license is granted in respect of those intellectual property rights.

The predictive reports referred to in this White Paper are generated from the use of EDAM Predictive Modeling Tools and are intended to be used for general guidance and discussion purposes only and should be verified using your company’s own data and mode of operation.

Except where stated, the information in this White Paper is the copyright of the ALL Associates Group.

General Disclaimer Please note that while every effort has been made to ensure that the information contained in this White Paper is correct and up-to-date, ALL Associates Group accepts no responsibility for errors or omissions that may occur. No person should place reliance on information derived from this White Paper where such reliance may result in loss, damage or injury. In these circumstances, specific enquiries should be made to ALL Associates Group to obtain verified information from authorized officers. This White Paper may include references to web sites operated by organizations other than ALL Associates Group and ALL Associates Group accepts no responsibility for any content on these sites or liability for any loss or damage caused by accessing these sites.

Additional information or details concerning this report should be referred in the first instance to: ALL Associates Group, Inc. 3737 Glenwood Avenue Raleigh, NC 28712 Telephone (919) 573 6115 Fax (919) 845 7444 E-mail: edam@allassociates.com

This White Paper—prepared for IKON Office Solutions, Inc. by ALL Associates Group, Inc.— provides an in-depth description of EDAM® (Enterprise Document Assessment Methodology), the underlying system that supports the IKON Document Efficiency AnalyzerSM (IDEA). IDEA is an online tool designed to reduce document output costs and enhance workflow productivity. To learn more, visit our web site at www.IKON.com/IDEA and use IDEA to get a better handle on your document expenses and a clearer idea of how much you can save in the process. Or call IKON at 1-888-ASK-IKON for more information.

Table of Contents 1.1

What is a System? . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.2

What is Systems Thinking? . . . . . . . . . . . . . . . . . . . . . 1

1.3

What is a Document System? . . . . . . . . . . . . . . . . . . . 1

1.4

EDAM Origins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.5

The EDAM Methodology . . . . . . . . . . . . . . . . . . . . . . . 5

1.6

Documents, People and Processes . . . . . . . . . . . . . . . . 14

1.7

From Predictive Theory to Action . . . . . . . . . . . . . . . . . 15

1.8

Taking the Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . 17

1.9

Removing the 10 Major Barriers . . . . . . . . . . . . . . . . . 17

1.10 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

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The background and explanation of EDAM® – Enterprise Document Assessment Methodology, created and maintained by ALL Associates Group

1.1 What is a System?

ALL Associates Group uses a Systems Thinking approach to understand the dynamics of documents. Like any system, the document system is a whole made up of parts. Each part can affect the way other parts work and the way all parts work together will determine how well the system performs. This is a fundamental challenge to traditional management thinking. Usually, both customers and vendors have focused on the separate pieces of the document system (photocopiers, printers, fax machines, supplies, filing cabinets, postage, document management solutions integrated into information technology, etc). Managing in this way always causes sub-optimization, where parts may achieve their goals at the expense of the whole.

The performance of a system depends on how well the parts fit together, not how well they perform individually. In addition, systems do not operate in a vacuum. Understanding how they interact with other systems is also important to maximizing overall performance.

The following section describes the fundamentals of ALL Associates Group’s approach to understanding the ‘big picture’ of document systems that can lead to extraordinary transformational change and competitive advantage.

A System is a whole, which consists of interdependent and interacting parts and a defined purpose. A system is not the sum of its parts – it is the product of their interactions. When disassembled it loses its essential properties as do the parts.

We live, work and play in a multi-systems environment, such as transport systems, hospital systems, planetary systems, the human body, an orchestra, a corporation, etc. The document system is one more example.

1.2 What is Systems Thinking? Systems Thinking is a way of thinking about life, work, organizations, processes, etc. based on the importance of relationships and interconnections of its components, be those physical resources, organizational or cultural dynamics. Systems Thinking also provides a language and a scientific technology for understanding and dealing with complexity and change.

A technology for modeling complex situations underlying business, economics, scientific, and social systems. ■

1.3 What is a Document System? Many people are aware of the parable of the blind men and the elephant, based on ancient Hindu teachings. The story tells of a group of blind men who are asked to describe the whole elephant based on their experience of touching just one small part (e.g. the ear, the tail, the tusk or the foot). Each person has a different experience and no one can explain the true appearance of the whole animal. The same holds for document systems. If you asked 100 people to describe their document system, you would likely receive 100 different answers. Most people can only describe the part they touch. The consequence is that without an understanding of the whole, there is significant potential for waste and dysfunction across document-centric activities that run through every business process.

A set of principles and theories for thinking about the whole and the interrelationships of the parts;

This potential for waste is a common phenomenon within the document world. Historically, control and management has only focused on individual parts of the system, involving many different decisionmakers, influencers and budgetholders – often operating discretely, with no overall view of the whole.

A language for understanding change, uncertainty and complexity, including diagrams and tests to

In 1997, ALL Associates Group developed a methodology to provide (i) individual organizations with a ‘big

The foundation of Systems Thinking is built on three elements: ■

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explain non-linear cause and effect relationships;

EDAM White Paper picture’ view of their own document system and (ii) enlightenment on the potential scale of improvements in efficiency and effectiveness. We use the following high-level definition and purpose statement for a document system: A document system comprises resources, technologies and human activity, which through their interaction allow for the creation, exchange, distribution, retention and management of paper-based and electronic documents. An organization requires a wellexecuted document system to enable its internal and external stakeholders to communicate, exchange and record information necessary to meet the objectives of the organization. If you think of an orchestral concert as a system, we all recognized that it is comprised of many components, including different types of musical instruments, musical compositions, musicians, a conductor, a concert hall, music stands, an audience, stagehands, sound managers, microphones, lighting, and so on. However, in this example, we can all appreciate that the parts do not equal the whole. The reality is that synthesis between the parts creates a truly breathtaking performance. Even if you had purchased the best musical instruments, one tone-deaf musician could create havoc during the concert. Alternatively, insufficient rehearsals and a poor conductor could undermine the best symphony orchestra. However, the symphony orchestra has a massive systems advantage.

2 Through the mind of the composer, the written music, the specialist musician skills and the guidance of the conductor – every participant has a common vision of the whole performance. They share a common mental map and a clear picture of excellence. ALL Associates Group’s methodologies seek to provide the same common vision and insight that is inherent in symphony orchestras but typically absent in document systems.

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1.4 EDAM Origins

Level 2 Framework – Burdened Costs

The real voyage of discovery consists not in seeking new landscapes but in having new eyes.

Burdened costs extend beyond the Base Costs to include other directly associated expense that is often fragmented or hidden within an organization. This includes associated information technology costs, procurement, distribution, storage and other document management activity. In the office environment, it also includes the end users’ time interacting with office equipment.

~ Marcel Proust

In 1997, ALL Associates Group created their Expert System called EDAM®, standing for Enterprise Document Assessment Methodology. EDAM is a complex statistical modeling tool that rapidly generates reasoned estimates about document systems based on minimal input of base data. The underpinning databases, algorithms and metrics that support the statistical and predictive modeling are updated every year and EDAM is now in its 8th Edition. EDAM uses three interlocking frameworks to generate reports that can cover multiple scenarios that extend over office, production and commercial document environments. Level 1 Framework – Base Costs Base Costs reflect the basic components used to create a printed page. In the office environment, this includes hardware, supplies, paper, maintenance and power. In the production and commercial environments, the cost of dedicated print shop workers and facilities is also included. The marketplace often refer to these costs as the cost per page (CPP) or total cost of ownership (TCO) or total cost of printing (TCOP).

The mix and type of burdened costs vary by commercial, production and office document environments. Each has a discrete set of components and expense lines. For example, commercial print activities will involve warehousing, inventory management and distribution that are not present within the office document silo. ALL Associates Group refers to burdened costs as EDAM costs – the terminology is comparable. Level 3 Framework – Sustainability Costs An increasing number of organizations have recognized that there are additional interconnected costs and externalities that have to be considered beyond the Base Costs and Burdened Costs. These have an impact on the overall document system and, therefore, need to be visible during the decision-making processes related to document solutions or document strategy development. For example, the burdened costs within the office space do not include people’s time creating, reading, manipulating and managing documents. While these additional costs

may need to be factored in to the equation, it also raises potential personnel issues, such as the growing number of knowledge workers that have to deal with greater volumes of electronic and paper-based information. Numerous international studies have identified that this increasing information overload may create workplace stress and work/life balance issues. Other issues may also need to be taken into account. These can be described as externalities. For example, there is increasing external pressure and regulation to conduct business in an environmentally responsible way. Many companies and public agencies have now adopted overarching principles to guide their activities and decisionmaking. So-called green buildings, zero waste manufacturing and energy conservation are common examples of aligning company policies with operational decision-making. Blending in the economic, social and environmental costs is often referred to a Business Sustainability or Triple Bottom Line accounting. Leading companies, such Citigroup, The Bank of America, Pfizer, Dupont, BP, Shell, Starbucks and BASF have extensive business sustainability programs and report annually on their progress. A company’s documents system also involves considerable use of labor resources, natural resources and a liability for toxic waste.

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Therefore, our Level 3 Framework for sustainability costs additionally factor in: Overall employees’ time related to creating, reading manipulation and managing electronic and paper-based documents; ■

■ A set of predictive measurements for the environmental impact associated with the entire document system.

The chart opposite shows how these three interacting and interrelated frameworks combine to create ALL Associates Group’s overall view of a document system. We use the shorthand STAR to describe the Level 3 Framework. STAR stands for Sustainability Team for Action & Return based on a collaboration between ALL Associates Group, The Natural Step (environmental scientists) and The Jensen Group (organizational psychologists). The STAR Initiative was launched in 2003 to determine the combined triple bottom line impact of office documents (i.e., economic, environmental and social impacts). Further details on STAR can be found at the following web link: www.allassociates.com/starproject. Today, many document-related decisions are taken at a sub-silo level. To overcome this propensity, we developed the nested three level frameworks to help decision-makers at any level benefit from an understanding of a wider view. For example, individuals involved with decisionmaking for one or more base cost elements can now see other related base costs and their associated burdened costs. Likewise, individuals

already involved with decision-making at the burdened costs level benefit by seeing the extended sustainability costs. Wherever the decision-making process currently lies, there is always an advantage of a having a broader picture. With this objective in mind, the following criteria guided the creation of our tools and methodologies to deliver personalized and tailored models rather than generic factoids: Personalization to individual companies or organizations;

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Office, Production and Commercial Document environments;

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Segmentation by 390 industry classifications;

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Segmentation by geographical distribution;

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■ Scalability to any economic frame of reference; ■ Scalability to different decisionmaking dialogue levels; ■ Special extensions for environmental and social document dynamics; ■ Special extensions for business process document dynamics; ■ Comparative and competitive reports between companies and industries.

EDAM White Paper This unique, science-based EDAM approach affords an ‘instant’ predictive analysis of complex document systems that are otherwise ‘out-ofview’. Without a holistic ‘big picture’ assessment, it is increasingly difficult for companies and organizations to make informed decisions on: ■ Prioritization of specific documentrelated improvement projects; ■ The development of an enterprisewide document strategy; ■ The quantification of potential savings, efficiencies and new value creation; ■ The development of performance measurement metrics for continuous improvement.

1.5 The EDAM Methodology “If most companies have neither a whole view of their document system nor full details of all of the components, how could you objectively and scientifically model an individual organization?” ~ Jim Hurst

In a 10-minute health check, 41-year old Fred was told by his doctor that he was 60 pounds overweight, had a predisposition to diabetes and needed to correct his diet and take more exercise to extend the quality and duration of his life. Hopefully, reasonable people would listen and act on the advice. Alternatively, if you heard a 20second ‘sound byte’ on CNN reporting an increase of diabetes in North America and that more people should

5 take regular exercise, maybe you would not take this as a personal call to action. The first scenario contains key ingredients for positive change: (i) a personal view on your condition (ii) a prescription for potential improvement and (iii) the potential benefits. The second scenario does not. ALL Associates Group used the same type of thinking to devise a 10-minute document health check to: (i) statistically model the document fingerprint for an individual company, (ii) identify potential areas for improvement and (iii) scale the size of potential benefits. This initially required the design of an elegant and robust set of statistical tools and proprietary algorithms that interact on a core set of two databases, enabling an expert to generate a well-reasoned predictive report. We found a metaphor in DNA.

Although DNA (deoxyribonucleic acid) deals with far more complex issues than document systems, we observed some useful parallels that guided our design of the EDAM Expert System. DNA is the code in which almost all genetic information is encoded. DNA as a compound has the form of a double helix, held together by sequences of the compounds guanine, adenine, cytosine and thymine. These four compounds are commonly referred to as G, A, C and T. Based on just these four base components, billions of individual sequences can be generated providing each of us with a unique genetic fingerprint. Like DNA, ALL Associates Group uses a double helix of interacting databases. The first database sets are called Econometrics, which deal with employment, industry types, economics and geographic distribution. The second database sets are called Documetrics™. They deal with the interacting components that make up the whole document system. Our equivalent connecting compounds are Employment (E), Industry classification (I), Revenue or revenue equivalents (R) and Geography (G) that describes the regional or country distribution. Using these four basic inputs in conjunction with our algorithms and both sets of databases, we are able to generate a unique document fingerprint for any organization, industry or geographical region.

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While the EDAM Expert System relies on our proprietary techniques and intellectual property, this high-level chart shows the basic process flow of systems thinking and statistical science used to generate reasoned predictive models: ■

Two interacting sets of databases

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Input of E, I, R and G.

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Mathematical reason

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Generation of Predictive Models

General descriptions of these key components are described in the following sub sections. Econometrics The first group of databases deals with the econometrics of a country, such as the USA. This includes extractions and analysis of employment data, occupational characteristics, industrial segmentation, company size dynamics and geographical distribution. As an example, in the USA, the base information is derived from such sources as: The Bureau of Labor Statistics on employment, wages, occupations and industries; ■

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Bureau of Economics;

■ The US Economic Census on business distribution; ■ National Center for Education Statistics, Institute of Education Sciences, U.S. Dept. of Education;

US Department of Defense Military Personnel Statistics; ■

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Fedstats;

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Environmental Protection Agency.

Based on this broad range of fragmented econometric data sets, ALL Associates Group has analyzed, consolidated and generated a consistent set of EDAM metrics to model companies by size, employment, industry and across single or multiple geographies. Additionally, these metrics are recorded on a timeline basis. By using (i) historic data, (ii) current state and (iii) future projections—the metrics allow trends and forecasts can be generated as well as dealing with today’s status. This timeline dynamic is important in helping to overcome a potentially dangerous phenomenon where historic data is often used to prescribe future requirements. In a rapidly changing technological world, too heavy a reliance on past experience can slow transformational change.

Individual EDAM metrics are maintained on a broad range of elements, including (but not restricted to): ■ 770 detailed occupations set out in the Standard Occupational Classification1; ■ 390 industry 4-digit level classifications within the North American Industry Classification System2; ■ Company and establishment employment size data from census data; ■ Special databases for educational and government agencies. 1 The Standard Occupational Classification system was devised by the US Office of Management and Budget (OMB) and includes some 770 detailed occupations comprised in 22 major occupational groups. 2 The North American Industry Classification System (NAICS) was developed by the US, Canadian and Mexican governments to replace the outdated Standard Industry Code (SIC) system.

EDAM White Paper Documetrics™ The second group of databases deals with Documetrics that describes the chain of interacting components that make up the overall document system. At the highest level, there are three major groups or silos: Commercial, Production and Office documents. These have then been broken down into six sub silos to reflect the different costs and activities that are involved in each. Commercial printing sub silo (1) includes flyers, ‘glossy’ brochures, marketing collateral, directories, annual reports, direct mail, booklets and packaging material, etc. Typically, professional printing and packaging firms undertake this type of work, using specialized commercial technologies such as lithographic print. The high-volume production silos include production printing (2) and production copying (3). This work includes, for example, the central reproduction centers, mainframe printing centers or external outsourcing to service providers and mailing houses, dealing with output and management of applications such as billing and statements or bulk reports. Like commercial printing, the production environment is ‘driven’ by professionals in document assembly, management and related services. Office documents make up the rest, where physical output is generated as: office copied pages (4) office facsimile pages (5) or office printed pages (6). Unlike commercial or production environments, the office document end-users comprise the broad range of occupations across a © 2004 ALL Associates Limited. All rights reserved.

7 company who create, use and manage electronic and paper-based documents as part of their daily jobs. Paper output is generated on convenience photocopiers, multifunction devices, personal and networked printers, facsimile machines. Each of these six sub silos of document costs have a different make up of components. Taking into account the evolving convergence between these historically discrete paper-based document silos and the continuous overlay of electronic and digital counterparts, we then broke each silo down to its components and mapped their interactions and individual costs.

The following fishbone diagram shows a high-level example of 1,000 components that make up the overall office document environment. This diagram is set to the EDAM or Burdened Costs Framework and excludes end-users time creating, reading, manipulating and managing documents.

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The Fully Burdened Costs of Office Documents 5% IT Support

5% Admin., Procurement & Facilities

End User Support

Document Storage & Archival

Facilities Costs

Device Mgt. Support

Contract & Billing Processes

Other

Computer Interaction Time Network Infrastructure

Equipment Consumables

Application Programming & Maintenance

Preparation, Collection and Finishing Time

Software & Licensing

Maintenance Other

Visible Hard Costs 10%

Fully Burdened Costs

Document Capture & Indexing

Other

page (100 %)

Document Distribution Internal Services Delivery

Network Mgt. Support

per hardcopy

Document Retrieval

Acquisition Processes

Output Mgt. Support

52¢ to 70¢

47% Document Management

Office Documents in Paper & Electronic Formats Output Equipment Interaction Time

Problems, Errors & Mistakes Other

IT Infrastructure 5%

Other

The fishbone chart is redrawn in the following table to illustrate the current US-level costs in five major groupings, embracing 1,000 interacting components. This covers the electronic and paper-based burdened costs representing 52¢ to 70¢ per hardcopy page generated within the office environment.

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Office Document Components

Cost

Visible Hard Costs – hardware, toner and inks, paper (plain and special), click- charges, services and maintenance, power, etc.

5¢ to 7¢

IS Support and Infrastructure – help desks, 2nd level support, installation and setup, asset mgt., assessment, testing, local support staff, training, print servers, network connections, mainframe conversions, print formatting software, pre-processing equipment., etc.

5¢ to 7¢

Administration and Purchasing – product and services selection, internal requisitions, orders, billing, RFP’s, storage, restocking, supplies service centers, inventory management, vendor relationship management, etc.

2.5¢ to 3.5¢

Document Production – end user production time/energy, futzing and waiting time, and intervention activity, hand finishing, walking to copiers, fax machine interaction, etc.

15¢ to 20¢

Document Management – the “before and after” costs and processes, including filing, storage, indexing, microfiche, COLD, scanning (and not 25¢ to 33¢ scanning), binding, folders, retrieval, postage, enveloping and distribution, mailroom, pre-printed forms, electronic forms, document creation, waste disposal, etc.

Total Burdened Cost

52¢ to 70¢

Similar systems maps for the component parts and burdened costs have also been developed for the production and commercial environments to reflect the different make up and distribution of costs.

context and form of national data sets may not precisely map to the EDAM Frameworks, we apply proprietary statistical adjustment techniques to ensure that there is a consistent and comparable perspective in the use of the modeling tools. Consumption and costing data is updated on an annual basis to reflect changing market dynamics.

Country-level Consumption Data Alongside the Documetric databases, ALL Associates Group maintains countrywide consumption figures for business, education and public administration to match the components described in the previous table. This embraces around one thousand consumption and cost figures that range from paper, equipment and supplies costs to filing cabinets, postage, and associated IT costs. Where possible, we use three independent sources for each consumption data point to avoid reliance on only one source. Additionally, as the

Actual Customer Data In addition to the myriad of databases and source information from which ALL Associates Group extracts, analyzes and modifies EDAM data sets, we have also been able to compare our statistical results against actual data collected from over 500 organizations.

This has provided an ongoing test of the EDAM statistical approach and resulted in only five minor adjustments to our methodology over the last 8-years. While client data is held in confidence, this ‘blind test’ against real data has demonstrated that the overall EDAM systems thinking and statistical thinking approach is robust. Interconnecting input and mathematics The next part of the EDAM process is to input minimal data that is easy to find and recognizable by everyone. The reason for this is simple. If the basic premise is that few organizations know what their own document system looks like – there is no point in asking for complex data that may be extremely difficult or time consuming to gather or even impossible to collect. This minimal data input can then be mathematically modeled against the two sets of core databases.

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Input As discussed earlier, we defined four basic input components: E = Employment This means fulltime equivalent (FTE) employees made up of fulltime and part time staff, plus an FTE equivalent for contractual or temporary staff. This common metric of an overall FTE equivalent is important as companies may have different human resources policies. For example, Company A may employ 1,000 people on payroll, 100 temporary workers from an employment agency and 100 directly contracted workers. Company B may employee 1,200 on payroll with no temporary or contractual staff. For the purposes of consistent statistical modeling, both of these companies employ 1,200 people. I = Industry The North American Industry Classification System (NAICS) uses a six-digit hierarchical coding system to classify all economic activity into twenty major industry sectors. Five sectors are mainly goods-producing sectors and fifteen are entirely services-producing sectors. This sixdigit hierarchical structure allows greater coding flexibility than the earlier Standard Industry Classification (SIC) and embraces new technologybased business types. NAICS allows for the identification of 1,170 industries at the six-digit level. ALL Associates Group primarily uses NAICS to the four-digit level, which identifies 390 industry classifications. For companies that operate in multiple industry classifications, then multiple NAICS codes can be used as

input together with an associated percentage of the total employees in each different classification. By inputting of any of these 390 industry classifications, EDAM can then precisely model the specific occupational mix based on 770 standard occupation codes (SOC). NAICS is a United States, Canadian and Mexican government initiative. For other geographies, ALL Associates Group uses local industry classification systems and translates them to the nearest NAICS equivalent. R = Revenue or revenue equivalent In order to provide an economic ratio of document costs, a company’s gross revenue is used as an input metric. However, many organizations do not have a traditional revenue figure, so appropriate ‘revenue equivalent’ figures are used that will be applicable to the individual organization. For example: Commercial Banks may use Net Interest Income + Noninterest Income

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Insurance Companies may use Gross Premiums + Other Income

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Not-for-Profit Hospitals may use their Annual Operating Budget

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■ K-12 School Districts may use Current Expenditure

G= Geography The final input is geography. This can be as simple as country or counties of operation or as detailed as a city or state, depending on the level of analysis required. As many costs vary by geography, especially wages, this input allows EDAM to factor in the different costs demographically. In addition, other country-by-country cultural differences affect document volumes and practices. Even simple issues such as paper sizes, weights and costs vary by country and region. Factoring in these variances is based on the geographical input. Finally, the geographical input allows EDAM to provide predictive reports and estimates on a regional or country level rather than for an individual organization or industry. This can deliver invaluable sales and marketing information and territory analysis for vendors or aid academic or political research related to document-centric activities.

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Mathematics The next step in the EDAM process is to liberate the inherent knowledge contained within the two set of core databases and four simple inputs by using the rigor of sound statistical and mathematical techniques. The result is to generate a reasoned predictive report for any given situation and provide insight on how the whole document system works. ALL Associates Group has developed a number of mathematical and statistical techniques based on tried and tested methods. These comprise four categories of analytics: Metrics, Algorithms, Causal Inductive Reasoning (CIR) and Patterns: ■ Metrics Using statistical techniques on the two core sets of databases, some 500 key metrics have been developed that provide a constant set of data points. Examples include, pages per employee by job type, number of help desk calls per pages printed, average costs of documents as a percentage of revenue by industry, etc.

These metrics provide a ‘sanity check’ when actual predictive models are run using input provided by a client. They can also be used a reasoned substitute if certain actual data is unavailable. ■ Algorithms Using a set of proprietary algorithms (a set of ordered steps for solving a problem, such as a mathematical formula) the EDAM tools process the four basic inputs and interrogate the EDAM databases to return appropriate values for a specific company, industry or geography.

Causal Inductive Reasoning (CIR) Causal Inductive Reasoning is concerned with establishing the presence of causal relationships amongst events. Using these techniques to map complex interactions of the overall documents system helps to identify where events of one sort (the causes) are systematically related to events of some other sort (the effects). As a result, it may become possible for us to alter a process by producing (or by preventing) the occurrence of certain kinds of events.

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The following fable helps demonstrate the potential value of using CIR techniques: “For want of a single nail, the horseshoe was lost. For want of a single horseshoe, the horse was lost. For want of a single horse, the messenger was lost. For want of a single messenger, the message was lost. For want of a single message, the war was lost.” Patterns Based on the year-on-year growth and annual updating of EDAM databases, patterns of consumption, behavior, technology change and regulation can be observed and act as a guide to potential future trends. Mathematical

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patterns are also used in the EDAM process to (i) measure the changing relationships between office, production and commercial document silos in relation to a company’s size and industry type and (ii) identify key interrelationships between components of the document system that give rise to significant negative or positive impact to the whole. These patterns, for say the overall banking industry, can then be applied to an individual bank during an EDAM modeling or assessment process. If the pattern affects the industry, it will probably affect the individual bank.

EDAM White Paper Predictive Output, Tools and Services The executable parts of the EDAM system occur by using our query tools and expertise to input data. This automatically generates specific output reports, calculated through the EDAM mathematics and databases described earlier. Documents may not be going away any time soon, nor should they! Like DNA, electronic and paper documents run through all of your company’s business processes. Our business is to help you to discover and understand the ’double helix’ patterns and your unique document fingerprint. To achieve this, we offer a number of EDAM-based services that fall into three categories:

12 lent employees, industry type, annual revenues (or revenue equivalent) and geographical distribution. EDAM Predictive Model Outputs: Executive-level summary containing: A summary view of the total enterprise costs for commercial, production and office documents;

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An indicative view of the direct and indirect costs of electronic and printed documents in the office document in six key areas – visible costs, IT support, IT infrastructure, administration, procurement and facilities, end user time and document management;

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Expert Services;

A reasoned estimate of the number of office output devices installed across your enterprise;

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Web Services;

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Ad hoc services.

Expert Services This EDAM services suite provide a consistent group of output reports for specific companies, industries or geographies. Our experienced analysts and consultants create these reports, which typically involve large and complex scenarios for major and international corporations. The services include: EDAM Predictive Model The EDAM Predictive Model provides you with an almost instant ‘reasoned estimate’ of your company’s enterprise-wide document spend and where the major costs occur. The model also provides metrics and insight to the potential size and scale of savings that may be available. Customer input requirements: minimal – the inputs are full time equiva-

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An indicative view of the volume (pages) of hard copy output across office and production output devices within your enterprise or selected establishments; An estimate of size, scale and location of potential “bottom line savings” and improved business efficiencies;

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An environmental impact report.

The Model will (i) enable a more informed business hypothesis to be made on efficiencies and improvements in the overall document system and (ii) provide a detailed view of the fragmented office document environment within your company. Equally, this EDAM approach helps develop a collaborative and system thinking approach that, in itself, is valuable. Experience has shown that the most successful and enduring document and print-related projects have occurred through collaborative endeavors involving cross-functional

teams, close supplier partnerships and a systems thinking mindset. Delivery time: Typically one week, following the initial customer input. Cost: $1,500 to $5,000, depending on complexity and size of thecompany. EDAM Collaborative Model The Collaborative Model is carried out with the same methodology as the Predictive Model. The difference is that the customer supplies much more actual detailed information—or at least as much as they can without incurring excessive time and expense. ALL Associates analysts will assist in the specification of the data types required, which normally includes: ■ In-depth financial details, business reporting metrics and fixed asset register files; ■ High level HR data, by job types and location; ■

Procurement records;

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IS architecture and deployment;

EDAM White Paper ■ Organizational structure and operational establishments; ■

Existing supplier-provided data.

Our staff, using the EDAM databases and algorithms as a base measurement guide, then analyzes this collection of disparate data. Missing or erroneous data sets are ‘corrected’ by using EDAM’s industry standard metrics. The resulting Collaborative Model report is based on, typically, 50% actual data and 50% predicted data – providing a new and holistic view of the customer’s entire document system. As more ‘actual’ data is used in the Collaborative Model, this approach produces convincing evidence for management’s consumption, without a significant demand on precious time and resources. In essence, ALL Associates Group can turn your company’s fragmented and apparently unconnected ‘data’ into tangible knowledge and understanding. In turn, this creates the wisdom to fashion new value for the business by pinpointing savings and process improvements previously ‘out-of-view’. Delivery time: Typically, two to three weeks, following completion of customer input. Cost: from $15,000 EDAM Rapid Assessment The EDAM Rapid Assessment contains all of the components of the EDAM Collaborative Model, but adds an ‘on-site’ review process by an ALL Associates Group engagement team. The rationale for the ‘on-site’ portion is to conduct a rapid physical assessment (typically one to two weeks) in selected parts of the enterprise. This

13 is most often appropriate after conducting a Predictive or Collaborative Model. The ‘on site’ work is typically used to establish: End-user attitudes and cultural/ organizational dynamics;

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Additional physical data collection through vendors’ assessment tools and or page auditing software;

■ Cultural and organizational dynamics that may need to be addressed; ■

A full environmental impact report;

■ Performance measurement tools and metrics to monitor and achieve projected benefits.

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Detailed IS Enterprise Application Integration issues;

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Detailed end-user support issues;

Robust mapping of key business processes and their associated document flows;

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A clear understanding of the critical business objectives and measurement metrics used within the Company against which any EDAM proposals need to be directed.

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The EDAM Rapid Assessment provides a very detailed enterprise-wide report, supplemented by a finely tuned insight into the area of the organization in which the physical audits took place. This whole process can also be conducted in collaboration with vendors or other service providers that you, the customer, should choose to nominate. The outcome is a firm set of quantified proposals and recommendations, including: Current enterprise-wide documentcentric costs and projected future costs based on the status quo;

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A shortlist of reasoned proposals, weighted and described by projected savings and benefits vs. levels of complexity to implement;

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Delivery time: Typically three to four weeks, following completion of a twoweek ‘on-site’ assessment process. Cost: Activity based and/or risk and reward sharing against projected savings. Benchmark or Comparative Reports Many companies require a rapid benchmark or comparative assessment against their major competitors. These are conducted by running several EDAM Predictive models involving your company and named competitors and comparing them across your overall industry sector. A matrix report of the companies is generated with a document efficiency index for each. Input: Minimal – primarily based on annual financial reports. Delivery time: Typically one to two weeks. Cost: Typically, $10,000 depending on the number of competitive companies involved. Metropolitan Statistical Area (MSA) geographical reports for the USA To aid sales and marketing activity or territory planning, geographical reports can be generated for any of MSA within the United States. This is available by industry and size of company and can be formatted to include basic costs, burdened costs or sustainability costs. Estimated page

EDAM White Paper

volumes for production copy, production print, office copy, office fax and office print are generated, together with the estimated number of installed office output devices by copiers, fax machines and printers.

Some examples of previous requests include:

1.6 Documents, People and Processes

A high-level report for the Fortune 1,000 companies;

Document systems are a bit like sausages. You roughly know what one looks like, but you may not know where all the contents came from.

Input: Name of MSA and economic frame of reference required.

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Delivery time: Typically one to two weeks. Cost: On request, based on specific requirements.

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Specific industry reports;

Current and future office printing related Helpdesk calls within the European operations of a global company; A report on total document costs within Greater London;

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Predicted volumes for two companies about to merge and identification of potential post-merger savings related to their document system;

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Web Services In January 2005, ALL Associates Group is launching a commercial web site that will provide access to a wide range of EDAM self-service tools and services. This will include self-assessment tools for the office, production and commercial environments, geographic and industry distribution models and special reports on the Fortune 1000 companies.

~ Jim Hurst

Having explained the overall methodology, ALL Associates Group does not consider that having a ‘black box’ to generate reasoned numbers is the primary purpose of EDAM. It is really about helping people to have a more informed dialogue about critical business issues.

Ad hoc Services

Today, the bedrock of information and knowledge-flow is based on trillions of electronic and paper-based documents that flow though every business process. The 21st century document has taken on an omnipresent form and chameleon-like nature. Documents exist is multiple places and formats at the same time. They constantly transform between electronic and physical states. Every organization has a critical dependency on these document systems, in both paper-based and electronic formats.

By nature, ad hoc services are ‘special requests’ for reports that can be specially prepared from the EDAM Expert System. Owing to the design of EDAM, the databases, algorithms and metrics act as a potential oracle of wisdom on document systems. Reasoned answers can, therefore, be provided to an almost endless set of ad hoc (but otherwise difficult to answer) questions.

Despite the importance of documents, few companies or organizations have a truly holistic understanding of their own document system. The components are fragmented and managed in sub silos. This can lead to dysfunction and sub optimization, which means there is considerable waste and missed opportunities for value creation.

Further details can be found at www.leandocuments.com or by contacting ALL Associates Group directly.

Estimated page volumes and equipment requirements for a major new headquarters building that was still under construction.

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The timing and costs for these ad hoc services are individually negotiated depending on specific requirements.

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Even though there are thousands of ‘generic factoids’ about paper-based and electronic documents, they refer to specific parts or components. While the data points may be true…they each share a common deficiency. None of them delivers a reasoned predictive estimate of what your organization looks like today and what it could look like in the future. That is what EDAM does. EDAM’s ‘systems thinking’ approach to complex documents environments illuminates the whole document system and the interactions between the various parts. Once understood, a World-class document system can be envisioned. This aids decisions on where to conduct in-depth assessments and ultimately implement the right document technologies to connect people and processes, creating exceptional business efficiencies and competitive advantage. EDAM then resorts to ‘statistical thinking’ so that current and future states can be measured, quantified and monitored in a continuous improvement process. Based on the American Society for Quality definition: “Statistical Thinking as a philosophy of learning and action based on three fundamental principles: (i) all work occurs in a system of interconnected processes, (ii) variation exists in all processes and (iii) understanding and reducing variation are keys to success” – the following chart maps the progress to excellence.

1.7 From Predictive Theory to Action Vision without action is a daydream. Action without vision is a nightmare ~ old Japanese proverb

ALL Associates Group is grateful to teachings on systems thinking and statistical rigor from individuals such as Dr. Edwards W. Deming, Dr. Jay Forrester, Dr. Russell Ackoff and Taiichi Ohno (the architect of the Toyota Production System). Their insight into managing complex systems has been profound. Equally, ALL Associates Group appreciates working with clients and vendors that have utilized the EDAM processes over the last 8-years. This includes direct clients such as PricewaterhouseCoopers, Royal Bank of Scotland, The Coca-Cola Company, GlaxoSmithKline, The City of Eugene, Exempla Health System, ArvinMeritor,

Newfield IT Limited and Transport for London (part of the Greater London Council). Through vendor participation, including IBM, Hewlett-Packard, Lexmark International, Xerox Corporation, Ricoh Corporation, Lanier Worldwide, IKON Office Solutions, Toshiba American Business Systems and FormScape, EDAM has been used by such organizations as Bank of America, DuPont, CA Insurance, Motorola Corporation, Caterpillar, Aventis Pharmaceuticals, Sprint, Bristol-Myers Squibb, Ford Motor Company, MBNA, Internal Revenue Service, United States Postal Service, ToysRUs, Morgan Stanley, Allstate Insurance, Wachovia Bank and BASF. EDAM Assessments have also been performed on a number of documentcentric vendors’ internal operations, such as Lexmark, Xerox, Ricoh and Hewlett-Packard.

EDAM White Paper Moving from predictive theory to action is the ultimate test. Everything else is irrelevant. The EDAM processes have aided many companies move to action. The following comments from clientele provide some insight: National Westminster Bank (Royal Bank of Scotland) "There was no cost centre for office documents. We were wasting millions of pounds a year on print of one sort or another, and that doesn't include the downstream cost of documents such as storage and distribution. If you keep all your costs in separate jam jars, you're not able to see where you're spending your money. The EDAM predictions were confirmed following a detailed analysis…without EDAM the issue would have remained invisible." David McCormack, former Head of Document Solutions National Westminster Bank (Royal Bank of Scotland). International Chemical Industries plc (ICI) Prior to an EDAM predictive assessment, Sir John Harvey-Jones, the former Chairman of ICI plc was originally unaware of the scale and importance of these numbers. However, once he had a clear understanding of where and how the expense occurred, he became a passionate ‘document’ ambassador. In his words, he indicated, “the board would have gone bananas if I had not taken this issue to them”. Life-saving Documents A healthcare agency in the UK was required by law to invite local

16 residents over the age of forty to participate in a free heart and stroke checkup. This involved multiple budget holders, decision makers and participants across the Agency – each dealing with their specific part of the process. The legal department confirmed the need to act under terms of government regulations;

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The preventative healthcare department drafted a standard letter to local residents;

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The IT department developed a program to search databases to find the right target group and generate invitation letters;

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The letters were produced on aging dot matrix printers with ink ribbons that had seen better days;

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The continuous paper was the cheapest and thinnest available;

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The letters were mailed out manually in date order.

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Technically, there was regulation compliance and each department had operated within their individual budgets. However, there was a problem identified through the EDAM process. In the absence of a systems thinking view of the document process, the following occurred:

excessive, making future changes time consuming and expensive; ■ The output was very low quality and further undermined the recipients attention; ■ The manual cost associated with mailing was expensive and no presorting or bulk mail discounts were available.

The overall result was that only 4% of people responded. This meant that 96% were not receiving the health check, which led to premature deaths for some and expensive hospitalization and intensive care for others. From a systems view, the healthcare agency was actually spending far too much from a consolidated budget perspective and delivering unacceptable services to the community. With a systems thinking perspective, the following solution was implemented: ■ A new document design was then undertaken by information design experts; ■ IT introduced some common middleware software that could be consistently used for multiple output tasks; ■ High quality laser printers and quality paper were introduced;

The preventative health department had no design or specialized communication skills, so the letter was not a compelling call to action;

■ Mailing was batched and presorted to gain postal discounts and automated enveloping.

The IT department created hundreds of ad hoc non-standardized document/database routines, of which this was only one. The development and maintenance costs overall were

The transformed results? A significant reduction in overall expenses; response levels skyrocketed; ongoing measurement metrics guided future improvements…and lives were saved.

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1.8 Taking the Next Steps

The result has been to:

"The Fifth Deadly Disease of Western management is running a company on visible figures alone"

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Drive significant hard dollar savings

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Enhance environmental stewardship

~ Dr. W. Edwards Deming (Out of Crisis page 121)

So what are the economics of delay? What is the downstream and upstream cost of not implementing? In reality, the cost of delay is the flipside of any return on investment calculation. Every month you delay or procrastinate will cost the enterprise the value of the delayed benefits for that month. Multiply by twelve (and adjust for the cost of capital) and you can estimate your annual cost of delay. The numbers may be staggering and demonstrate that deferring the implementation of enhanced office document solutions is an expensive decision. In short, inaction is a costly action. The EDAM tools deliver the first step in a process of enlightenment. They provide a reasoned estimate of your office document costs and the scale and location of potential savings. The figures are no longer hidden from view and you now have something to validate. Increasingly, leading companies are looking at the document system as a whole and reducing waste and increasing value at the same time. Bank of America and Citigroup are examples or major financial organizations that have focused holistically on their office document systems.

■ Develop easier document interactions for people involved in knowledge work and business processes – be they employees, customers or partners.

1.9 Removing the 10 Major Barriers Even though simple business improvements or even transformational change may sometimes appear daunting or complex–our evidence and experience shows that removing the blockages or barriers is the best prescription to ensure success. It also simplifies real change. Working with many major companies, ALL Associates has identified ten major barriers that the ‘best of breed’ companies initially identified and then removed. 1. No accountability There is no clear accountability for the entire document system; many decisions are taken too low in the organization and there is an element of fear still present in organizational hierarchies. 2. Fragmentation and Dysfunction Fragmented budget holders across fragmented technologies, resources and equipment have historically created isolated silos that sub optimize and cause dysfunction within the whole document system.

3. Turf Wars As convergence has occurred in equipment (such as copiers, printing, fax and scanning) the departmental silos have spent more time on internal ‘turf wars’ than collaboration. 4. No Common Maps Facilities Management, Information Technology, Procurement, Business Units and End Users have no common shared ‘map’ of the current or future document landscape resulting in resistance to change, ownership squabbles and more turf wars. 5. Price vs. Lost Value Without an experienced systems view of the holistic document system, RFIs, RFPs and final decisions on output hardware continue to be made at the iceberg level – at the 10% to 15% visible cost level. Price is the primary motivator and the broader tangible business values are ignored through lack of knowledge. 6. Combative vs. Collaborative Because of price vs. value relationships with multiple vendors and suppliers, few collaborative endeavors achieve extraordinary business value. The relationships remain combative, destroying the potential for true partnership value creation. In essence, the number of suppliers needs to be reduced…and partnerships increased. 7. No Shared Language There is no common shared language. Document Management, Electronic Documents, Paper-based Documents, Document Content, Document Solutions, Knowledge Management, Managed Print Services, Total Cost of Ownership, Forms Management, Workflow Tools, Document

EDAM White Paper Repositories and Indexing, Image Capture, Multifunction Devices, et al. They are too broad and generic and mean different ‘things’ to different people. Most are technology-based “promise everything” solutions but often under-deliver the value promised. 8. Office Document Crisis The office document landscape is the most out of control area, paradoxically heightened by increased volumes and workload from the digitally connected environment. This is fueled by the converging world of printer-centric and copier-centric companies colliding in both a common market space and historically fragmented internal decision silos. 9. End User Crisis End users, faced with growing workloads and new technologies, fail to leverage the promised benefits of new systems and document input, output and management tools. Knowledgeworkers fail to maximize the ultimate connection with information and knowledge that undermines ‘peoplecentric’ movement towards understanding and wisdom. 10. Environmental Crisis Environmental efforts remain at best focused on ‘after the event’ recycling of paper and cartridges. Print avoidance, smarter technology advantage, internal communications and education, eco-friendly document design, etc. have the potential for 4X to 10X economic and environmental savings.

18 1.10 Conclusions By removing barriers and taking a view of the whole…the potential synergies can be identified and quantified. This would deliver currently untapped savings. More importantly, it can drive business process improvements, enhanced productivity and enhanced brand equity. Finally, by embracing a holistic approach in respect of your document environment, invaluable learning and insight can be gained about ‘systems thinking’ in general and then crosspollinated to other operational phenomena. The real focus for document systems is on: 1. Improving the processes that underpin the delivery of distributed output services; 2. Improving the people interaction with the processes; 3. Establishing the right infrastructure and support for distributed output; 4. Enhancing the presentation and delivery of information and knowledge; 5. Creating new revenue creating opportunities; 6. Creating a continuous improvement cycle and effective performance management measures; 7. Reducing the overall environmental impact.

Items 1, 2 and 3 need to focus on efficiency and cost avoidance, while items 4 and 5 should focus on effectiveness and value creation. Item 6 provides the proof. Item 7 provides additional savings, brand equity and is simply the right thing to do! Additionally, the end-users and other stakeholders have to be presented with a credible proposal to change ‘old habits’ and ‘buy-in’ to potential changes in practice, process and procedures. This is where ‘psychology’ rather than ‘technology’ can help deliver the ultimate business benefits. Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted ~ Albert Einstein