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June 2012   An IDC White Paper sponsored by Ricoh            It’s Worse than You Think:            Poor Document Processes...
Executive SummaryFailures in Document-Driven Business Processes Are             Contents:Higher Risk and Costlier than Man...
high-probability/high-impact risks introduced by broken           •	   C-level executives should give strong consideration...
Busted Myth: Paperless means more efficient.                     FIGURE 1: Inefficient and Ineffective Processes          ...
In today’s information-driven economy, document-driven                          FIGURE 3: Over Three Out of Four Companies...
FIGURE 4: Percentage of Organizations Suffer-                                                     IDC estimates that the o...
“We live on the paperwork and on the                                            FIGURE 6: Process Inefficiency Not Necessa...
They are also investing a significant amount of money to                        Busted Myth: Responsibility for        add...
“[Fixing document processes is] hard to do;                      FIGURE 9: Improvement Activities Center on they are undef...
Since breakdowns in risk mitigation processes such as                         effective speaks to the urgency of addressin...
Unfortunately, companies are generally budgeting an                                                                       ...
Risks Are Pervasive Across Geographic                                     Looking at the type of incidents by geography, w...
Companies that depend on Chinese suppliers and business                     than-average reported rates of key employees l...
FIGURE 16: Organizations of All Sizes Are at Risk                          FIGURE 17: Improving Document Processes       o...
It's worse than you think poor document processes lead to significat business risk
It's worse than you think poor document processes lead to significat business risk
It's worse than you think poor document processes lead to significat business risk
It's worse than you think poor document processes lead to significat business risk
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It's worse than you think poor document processes lead to significat business risk

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Failures in document-driven business processes are higher risk and costlier than many executives think.

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It's worse than you think poor document processes lead to significat business risk

  1. 1. June 2012 An IDC White Paper sponsored by Ricoh It’s Worse than You Think: Poor Document Processes Lead to Significant Business Risk Angèle Boyd // Joseph Pucciarelli // Melissa Webster
  2. 2. Executive SummaryFailures in Document-Driven Business Processes Are Contents:Higher Risk and Costlier than Many Executives Think Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Many business executives understand that improving Essential Guidance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3their document-driven business processes — the processes in Companies’ Document Processes Are Broken. . . . . . . . 4their businesses that are governed and controlled by Process Failures Introduce Significant Risk. . . . . . . . . . 5 Investments Are Hindered by Lack of C-Level Focus. . . 7documents in electronic or paper format— can deliver Risk Mitigation Processes Are Most in Need of Help. . . 9operational efficiencies and drive cost takeout. What many Risks Are Pervasive Across Geographic Regions,may not appreciate is the degree to which document-driven Industries and Company Sizes . . . . . . . . . . . . . . . . . . .12business processes affect their organization’s risk profile: Fixing Process Issues Can SignificantlyThere is a high risk of breakdowns in these processes caus- Reduce Risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14ing severely negative business outcomes, and the costs of Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15these breakdowns are worse than many executives think. A recent global IDC study of 1,516 document-drivenbusiness process owners and information workers suggests Specifically:that the costs and risks associated with broken document- • 75.9% of respondents experienced serious business risk driven business processes are extremely high. Process and/or compliance issues as a direct result of ineffective owners reported that over one-third of document-driven document processes over the past five years.business processes are defective, and a staggering 75.9%of respondents —more than three out of every four • These failures had severe consequences for respondents: surveyed— reported that their organization experienced 36.2% failed to meet compliance requirements, 30.2% serious business risks and/or compliance issues as a direct lost key employees, 24.9% lost major customers, 24.8% result. had a major IT breach, 20.4% were pulled into a major audit, and 19.1% suffered a major PR crisis —Busted Myth: Inefficient or ineffective all due to document process deficiencies.document-driven processes carry low-impact • Depending upon the type of process, between 35.9% risks to the business. The sole benefit to and 45.3% of respondents reported that document- improving these processes is to drive down driven processes they had personal knowledge of were costs. not efficient or effective. Businesses around the world devote a tremendous amountIDC Finding: 75.9% of companies expe- of time, money, and attention to mitigating risks associatedrienced significant business risks and/or with low-probability/high-impact events. These risk factorscompliance incidents and suffered severe touch on areas of the business such as finance, legal/regu-consequences due to broken document latory, physical environment, and disaster recovery. Thisprocesses: IDC study suggests that not enough attention is being• 36.2% failed to meet compliance focused on high-probability events, which are also in many cases delivering high-impact and severely negative consequences requirements to the business. Many C-level executives don’t think of doc-• 30.2% lost key employees ument-driven processes in this category of high probability/• 24.9% lost major customers high impact. Although most businesses invest significant• 24.8% had a major IT breach resources to reduce low-probability/high-impact risk events,• 20.4% were pulled into a major audit• 19.1% suffered a major PR crisis 2
  3. 3. high-probability/high-impact risks introduced by broken • C-level executives should give strong consideration document processes are lurking dangerously below the to elevate, sponsor, and participate in document-driven corporate radar and merit C-level attention. business process investments to address the risks. Document-driven business process investments shouldAs significant as these direct consequences can be receive higher priority relative to other risk mitigation(see Busted Myth, page 2), the indirect and downstream efforts. Truly addressing the issues in document-driven consequences are even more expensive. IDC estimates that business processes requires active C-level participation,the overall cost of process failure (in terms of staff time not just sponsorship. While responsibility for addressingand executive oversight for activities such as required the issue is typically delegated to the VP/director level,rework and process reviews, as well as opportunity costs fully addressing the full scope of document-drivenassociated with lost customers) is at least 10 times the direct processes requires the active participation of an executive out-of-pocket costs (such as paying financial settlements). with the span of control that bridges different organiza- tions. Delegation to subordinates to identify and imple- Essential Guidance ment solutions is natural and expected, but decisions must often weigh concerns that are beyond the scopeThe commonly held belief that document-driven business of one department.This has limited the effectiveness of processes are a “back-office” challenge and that focusing many remediation initiatives. Effecting change requires on them can only yield cost reduction paints a woefully C-level attention.incomplete picture of the true challenge confrontingorganizations. While opportunities for cost improvements • Businesses should deliberately focus on addressing the exist, these research findings clearly paint a more complex underlying issues with deep expertise. Currently, the picture. Failures in document processes touch a wide most common fixes include leveraging existing staff and variety of areas. They jeopardize top-line revenue and intro- investing in new hardware/software solutions, but these duce business and compliance risk. approaches address only part of the problem. Technology improvements are good, but applied to broken processes, IDC believes the degree of risk introduced by inefficien- they only “lock in” the inefficiencies. The effectiveness of cies in document processes remains a significant blind spot internal staff members as change agents can be limited for many C-level executives. While there is good under- because they are steeped in current business culture standing of the significance of the issues at the individual and are not necessarily in the best position to make last- process owner level, most C-level executives have delegated ing changes to the underlying processes and workflows. this responsibility despite the fact that delegated owners do What is needed instead is personnel with deep expertisenot have the span of control to fully address the scope of in documents, a strong outside perspective, and thethe business process problem. wherewithal to implement the required changes.Specific areas of guidance are as follows: Document-driven processes — paper based or electronic — underpin a wide variety of core business functions. Although• Organizations should accelerate efforts now to improve it is understood that efficient and effective document- document-driven business processes. Inefficiencies and driven business processes provide organizations with the ineffectiveness in document-driven business processes opportunity to achieve greater efficiencies in back-office are rampant across industries, geographies, and company functions, IDC found that deficiencies in document-driven sizes. A large percentage of document processes are not business processes are costing companies in terms of fines, working properly, and the costs to the business are lost customers, lost employees, PR crises, and data breaches significant. Fully three in four companies surveyed — and these issues are occurring much more frequently experienced significant and costly risk/compliance, than is generally appreciated. These are high-likelihood, customer-facing, or non-customer-facing issues attrib- high-impact business risks that warrant C-level attention. utable to issues in their document processes. 3
  4. 4. Busted Myth: Paperless means more efficient. FIGURE 1: Inefficient and Ineffective Processes Exist Across All Areas of the BusinessIDC Finding: Having effective processesdepends upon the underlying workflows;the medium is not necessarily the problem. Risk mitigation . . . . . . . 45.3%This study found that in companies that are Non-customer facing . . . . . . . 39.0%fixing document-driven processes, paper isnot necessarily the culprit. Customer facing . . . . . . . . . . . . 35.5%Many processes continue to rely on paper — 0% 10% 20% 30% 40% 50%between 31% and 39% — but respondentsselected paper-based processes as some of Q3. Overall, given where you sit in your organization, how efficient and effective do you consider the document-driven business processesthe most effective and many electronically you have visibility into or oversight or ownership of to be? Percentage of respondents who indicated their processes were not/notbased processes as the least effective. at all efficient and effective Base = respondents who indicated involvement in document-driven business processes, n=1,516 Source: IDC’s Document Management Thought Leadership Survey,Companies’ Document-Driven Business February 2012Processes Are Broken Important Note: See the Appendix for a Complete List and Explanation of Document-Driven Business Processes.Fully 45.3% of respondents reported that their document-driven processes related to risk mitigation were inefficientor ineffective in this study (see Figure 1). 39.0% of respon- “It only takes one mishap to damage adents reported that their non-customer-facing document reputation.”processes were lacking, and just over one-third, 35.5%, – VP, MARKETING/PRODUCT MANAGEMENT,reported that customer-facing document processes were GLOBAL FINANCIAL SERVICES FIRMinefficient or ineffective. Clearly, respondents recognize theneed to improve. Document-Driven Processes Are the Lifeblood of the“Staff has been lost in recent years, recent Enterprise months. We’re seeing new business come A tremendous amount of the information in today’s enter- prise is captured in documents, including paper documents in and can’t absorb it as easily as we had, and documents in electronic formats. Documents are the and we’re looking through the processes primary medium through which employees share ideas and and seeing obvious improvement areas. information of all kinds — with other employees, custom- So that’s what we’re latching onto now.” ers, suppliers, partners, shareholders, and other stakehold-– VP, STRATEGIC PLANNING, LARGE U.S. INSURANCE ers. Research participants found that over 40% of business FIRM activities rely on information captured in documents, spanning customer-facing processes in sales and marketing; non-customer-facing processes in HR, manufacturing, and other back-office operations; and processes that manage risk around business continuity and information security (see Figure 2). 4
  5. 5. In today’s information-driven economy, document-driven FIGURE 3: Over Three Out of Four Companiesbusiness processes drive the enterprise. Across a variety Surveyed Experienced Risk/Compliance Incidentsof business functions, each step is driven by information Due to Document Process Failurescaptured in documents, and this information directly shapesbusiness outcomes. This is true in customer-facing activitiessuch as customer onboarding, non-customer-facing processessuch as HR processes, and risk mitigation processes such asmaintaining business continuity. None 24.1%“I don’t think there’s a process out there that doesn’t have some sort of document or Experienced risk/ documents attached to it.” compliance incident 75.9%– VP, GLOBAL IT, LARGE MANUFACTURER, COSMETICSFIGURE 2: About Half of Business ProcessesAre Identified as Document Driven Q37. In your opinion, which, if any, of the following incidents has your organization experienced in the past five years as a direct result of Risk mitigation . . . . . . . . . . . . 51.1% inefficiencies or ineffectiveness in one or more of your document- driven business processes? Base = respondents who have oversight of or visibility into businessCustomer facing . . . . . . . . . . . . 50.1% processes governing organizational compliance and risk mitigation or management, n = 396 Non- Multiple responses were allowed.customer facing . . . . . . . . . . . . 44.2% Source: IDC’s Document Management Thought Leadership Survey, February 2012 0% 10% 20% 30% 40% 50% 60% These failures result in significant costs to the business. Regarding compliance and governance, 36.2% of respon- dents cited failure to meet compliance or regulatoryQ11, 18, and 35. Of all the [customer-facing/non-customer-facing/riskmitigation] business processes you have visibility into or oversight of, requirements, 24.8% suffered a major IT breach, and 20.4%what percent do you consider to be document driven (i.e., are governed were pulled into a major audit. In the area of customeror driven by information captured in documents)? n = 1,516Source: IDC’s Document Management Thought Leadership Survey, loyalty and brand image, 24.9% said they lost majorFebruary 2012 customers as a result of document process failures, and 19.1% were pulled into a PR crisis. And in non-customer-Failures in Document-Driven Business facing functions, 30.2% said key employees had left theProcesses Introduce Significant Risk organization, 17.3% had paid a financial settlement of at least $50,000, and 15.8% had a lawsuit levied against themAll too often, document-driven processes fail, with down- (see Figure 4).side consequences that are much more widespread thangenerally appreciated. As our research found, failures andissues in document-driven business processes have led to “The client looked at us and said, ‘Youserious business risk and/or compliance issues in 75.9% — guys are idiots. I won’t do business withmore than three out of four — of the businesses surveyed you.’ And it was a major client.”(see Figure 3). – DIRECTOR, NEW BUSINESS DEVELOPMENT, NORTH AMERICAN BANK 5
  6. 6. FIGURE 4: Percentage of Organizations Suffer- IDC estimates that the overall cost of process ing Severe Consequences Due to Breakdowns in failure (in terms of activities such as required Document-Driven Processes rework and opportunity costs associated with lost customers) is at least 10 times the direct Failed to meet compliance ..... or regulatory requirements . . . 36.2% out-of-pocket costs such as paying financial Key employee(s) left the organization . . . . . . . . . . 30.2% settlements, with the indirect costs including Lost one or more major customers . . . . . . . . . . . . . . . . 24.9% staff resources, process reviews, and execu- Suffered a major IT security breach . . . . . . . . . . . . . . . . . 24.8% ..... tive oversight. Got pulled into a major audit . . . . . . . . . . . . . . . . . 20.4% Suffered a major PR crisis . . . . . . . . . . . . . . . . . . 19.1% CASE STUDY: BANK LOSES MAJOR CUSTOMER Paid a financial settlement of $50,000 or more . . . . . . . . . . . . . . . . . . . . . . . 17.3% OVER DOCUMENT PROCESS BLOWUP Lawsuit levied against us . . . . . . . . . . . . . . . . . . . . . . 15.8% None of the above/no incidents as a During a focus group, a major North Americandirect result of inefficiencies or ineffective- . . . . . . . . . . . . . 24.1% ness of document-driven processes bank described a blowup with one of its Asian 0% 5% 10% 15% 20% 25% 30% 35% 40% clients. Due to deficiencies in its document- driven processes, the bank had applied a U.S. Q37. In your opinion, which, if any, of the following incidents has your organization experienced in the past five years as a direct result of tax policy to the client’s Asian operations. inefficiencies or ineffectiveness in one or more of your document-driven business processes? According to the participant, “The client Base = respondents who have oversight of or visibility into business processes governing organizational compliance and risk mitigation or looked at us and said, ‘You guys are idiots. management, n = 396 Multiple responses were allowed. I won’t do business with you.’ And it was Source: IDC’s Document Management Thought Leadership Survey, February 2012 a major client.” These findings demonstrate that the costs associated with The bank considered this issue so important poor document processes are far greater than commonly that it formed a tiger team to reengineer believed. Not only is the percentage of companies affected the document-driven processes in question. incredibly high — three out of four companies — but the The team consists of 12 staff members, has consequences are extensive and significant: loss of custom- operated over a two-year period, and has ers, loss of key employees, lawsuits, fines, and major audits. spent more than $500,000 in out-of-pocket Driving Paper Out of Document-Driven costs. Tellingly, the bank did not feel the need Processes Does Not Necessarily Make to even perform an ROI analysis; instead, it Them More Efficient considered this project to be a strategic imperative to be fixed at any cost. In the A high percentage of business processes remain paper words of the participant, “Our management driven (see Figure 5). Respondents indicated that 39.0% of non-customer-facing processes, 38.4% of customer-facing essentially looked at the problem and said, processes, and 30.6% of risk mitigation processes are paper ‘If we can’t do this right, we’re not going to be based. Further, many processes jump “back and forth” able to bring on board clients. And if we can’t between paper and electronic workflows. bring on board clients, there’s no business.’” 6
  7. 7. “We live on the paperwork and on the FIGURE 6: Process Inefficiency Not Necessarily documentation for so many different Linked to Dependence on Paper aspects of the business.” – VP, HR, MULTINATIONAL IMPORT/EXPORT COMPANY 60% 50% FIGURE 5: Document-Driven Processes Are Still Paper Intensive 40% 30% Non-customer facing 39.0% 20%Customer facing 38.4% 10% Risk mitigation . . . . . . . . . . . . 30.6% % not fully efficient/ effective % paper based 0% 5% 10% 15% 20% 25% 30% 35% 40% 0% Business monitoring and controls (n = 143) Business continuity/ risk assessment (n = 133) Compliance/audits (n = 152) Demand planning (n = 133) Asset management (n = 139) HR (employee onboarding, benefits, dismissals) (n = 142) QS9. For each of the document-driven business processes you have visibility into and insight over in your business, what percentage of the documents would you say are paper (as opposed to electronic)? Base = respondents who indicated involvement in document-driven business processes, n=1,516 Source: IDC’s Document Management Thought Leadership Survey, February 2012 Figure 6 compares the percentage of respondents who indicated that their processes were not fully efficient or effective with the percentage those processes depend on paper for the six least efficient processes studied. For these Q3. Overall, given where you sit in your organization, how efficient processes, there is actually an inverse correlation between and effective do you consider the document-driven business processes you have visibility into or oversight or ownership of to be? the two measures: The least effective processes are also the Percentage of respondents who indicated their processes were not/not at all efficient and effective least paper based. This exposes the myth that simply driving Base = respondents who indicated involvement in document-driven paper out of processes necessarily makes them more business processes QS9. For each of the document-driven business processes you have efficient. Rather, the health of the process also depends on visibility into and insight over in your business, what percentage of the documents would you say are paper (as opposed to electronic)? deeper-level assessment of workflows and attributes of the Base = respondents who indicated involvement in document-driven process itself. Simply automating a broken process does not business processes Source: IDC’s Document Management Thought Leadership Survey, automatically fix it, and getting rid of paper alone is not February 2012 enough to ensure a robust process. Investments to Improve Document- Driven Processes Are Hindered by Lack of C-Level Focus As reflected in the study, businesses do have efforts under way to improve their document-driven processes. Over half of the project owners surveyed said their organizations had budgeted projects to improve the processes for which they were responsible (see Figure 7). 7
  8. 8. They are also investing a significant amount of money to Busted Myth: Responsibility for address these processes, with over $1.3 million budgeted document-driven processes should be per project for both customer-facing and non-customer- delegated underneath the C-level. facing processes and just short of $1 million budgeted for risk mitigation processes. But without the appropriate IDC Finding: Many document-driven C-level sponsorship, many of these projects are destined processes are cross-organizational, and to fail. without active C-level participation, efforts to improve have a strong likelihood FIGURE 7: Over Half of Project Owners Have of failing. Budgeted Projects to Improve Document-Driven Processes Over the Next 12 Months FIGURE 8: Responsibility Is Delegated Beneath the C-Level Customer facing . . . . . . . 57.5%Non-customer facing . . . . . . . 57.3% VP/director 38.8% Risk mitigation Manager . . . . . . . . . . . . . . 29.3% . . . . . . . . . . . . 53.3% C-level executive . . . . . . . . . . . . . . . . . . . 21.4% 0% 10% 20% 30% 40% 50% 60% Supervisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2% Q5. Does your organization have specific budgeted projects planned in the next 12 months to improve the efficiency or effectiveness of the Other (specify) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3% document-driven business processes you have visibility into or over- sight or ownership of? (% answering “yes”), n = 1,516 Source: IDC’s Document Management Thought Leadership Survey, 0% 5% 10% 15% 20% 25% 30% 35% 40% February 2012 When Delegating Doesn’t Work: Q9. What do you think is the level of management that would be Business Process Issues Require C-Level the most appropriate champion (rather than the approver) for improvements to document-driven business processes? Participation n = 1,516 Source: IDC’s Document Management Thought Leadership Survey, February 2012 Upon initial review, the degree of recognition of the problem by process owners seems positive. The survey IDC believes the risk associated with document processes showed that 50% of decision makers for document process is a blind spot for many C-level executives. They may believe improvements are located in the lines of business (with the they have addressed the issue by delegating it to subordi- other half in IT or finance), meaning this is not an issue nates, but, in reality, the decision to delegate reinforces that the business is simply relegating to IT and forgetting problems caused by lack of interdepartmental cooperation. about. It is receiving the appropriate attention from busi- C-level focus is required to provide the appropriate span of ness management. control and organizational clout. Many processes are cross- functional by nature, and individual department owners The problem is the level in the organization at which own- aren’t in a position or don’t have the authority to address ership of this issue resides (see Figure 8). C-level executives these cross-departmental issues. Delegation to subordi- are not taking ownership of this issue and instead have nates to identify and implement solutions is natural and delegated it to subordinates: Most of the owners of this expected, but then it must come back up to the C-level for issue are at the VP/director or manager level, and only 20% championing and rollout across the breadth of the organi- are at the C-level. zation. 8
  9. 9. “[Fixing document processes is] hard to do; FIGURE 9: Improvement Activities Center on they are undefined, and they cost a lot of Internal Staff, IT Investments money.” Business process– SVP, TECHNOLOGY PLANNING, LARGE U.S. BANK reengineering using . . . 53.1% internal staff Investments in hardware, software, and/or . . . . . . . . . . . . 45.9%Current Investments Are Addressing networking solutionsOnly Part of the Solution Hire new internal staff . .. .. .. . . . . . . . . . . . . . . 27.7% Hire systems integrator/Most of the investments organizations are making to technical consultants . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2% (e.g., IGS or HP Services)reengineer document processes involve using internal staff Hire general managementand making new investments in hardware, software, and consultants (e.g., McKinsey . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9% or Booz Allen)networking (see Figure 9); however, IDC believes that Hire business processthese investments go only part of the way toward the com- outsourcing provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8%plete solution. Investing in tools and technology is clearly Hire document management company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6%an important enabler to improving document processes, (e.g., Xerox or Ricoh)but addressing the underlying issues requires a deep focus 0% 10% 20% 30% 40% 50% 60%and understanding of horizontal and vertical processes;you can’t just expect a new piece of equipment to fix the Q7. What sort of activities does your organization have budgeted? Base = respondents who indicated organization has budget planned inproblem. Further, while investments in existing staff are the next 12 months for document-driven business processes, n = 1,516also clearly important, improving document processes Figures are average across all business processes tested. Source: IDC’s Document Management Thought Leadership Survey,often requires change to existing workflows, responsibilities, February 2012and even business culture. Because internal staff membersare already rooted in the existing business culture, they are Document-Driven Processes Governingoften unable to introduce lasting behavioral changes into Risk Mitigation Are Identified as Amongthe rest of the organization. Those Most in Need of Assistance Figure 10 shows the 23 document-driven business pro-Busted Myth: Fixing document-driven cesses covered in this study and the degree to which surveybusiness processes is best left to existing respondents who are involved in or have oversight of thesestaff or new hardware/software investments. processes rated them inefficient or ineffective; that is, the processes at the top of the list are those most in need ofIDC Finding: Reengineering processes assistance. Tellingly, three of the four least efficient/requires deep expertise and outside perspec- effective document-driven processes are associated with risktive, while simply adding hardware to mitigation: business continuity/risk assessment, businessa broken process can serve to simply “lock monitoring and controls, and compliance/audit processes.in” inefficiencies. In other words, the processes involved in each of these functions that are driven or governed by documents are among the most broken of the document-driven processes identified in this study. By contrast, customer-facing pro- cesses such as insurance/claims processing, sales, and new product development were rated some of the least broken. (Note that respondents were asked only about processes they had direct ownership of or insight into.) 9
  10. 10. Since breakdowns in risk mitigation processes such as effective speaks to the urgency of addressing inefficiencies business continuity and business monitoring and controls in document-driven processes. In fact, document-driven can introduce significant elements of risk, the fact that risk mitigation processes would be a good place to start for these processes (despite being highly scrutinized processes many organizations looking to overhaul their document- within most organizations) were still rated among the least driven processes. FIGURE 10: Least Effective Processes Center on Risk Mitigation Business continuity/risk assessment (n = 133) 50.0% Business monitoring and controls (n = 143) 49.7% Asset management (n = 139) . . . 48.3% Compliance/audits (n = 152) . . . . . 46.5% Demand planning (n = 133) . . . . . . 45.9%HR (employee onboarding, benefits, dismissals) (n = 142) . . . . . . . . . . . . . . . . . . . 43.8% Information security (n = 140) . . . . . . . . . . 42.8% Financial planning and reporting (n = 152) . . . . . . . . . . . . . . . . . . . . 41.8% Vendor/supply chain management (n = 134) . . . . . . . . . . . . . . . . . . . . 41.4% Billing and collection (n = 216) . . . . . . . . . . . . . . . . . 41.3% Engineering/RD (n = 155) . . . . . . . . . . . . . . . . . . . . 38.8% Legal (contracts, litigation, etc.) (n = 127) . . . . . . . . . . . . . . . . . . . . 38.0% IT infrastructure/desktop support (n = 148) . . . . . . . . . . . . . . . . . . . . 37.9% Change/problem management (n = 141) . . . . . . . . . . . . . . . . 37.7% Marketing/customer communication (n = 209) . . . . . . . . . . . . . . . . . 36.7% Customer service (n = 229) . . . . . . . . . . . . . . . . . . 36.3% Customer onboarding (n = 207) . . . . . . . . . . . . . . . . . . . 35.6% New product development (n = 206) . . . . . . . . . . . . . . . . . . . 35.5% Manufacturing (shop floor, inventory) (n = 122) . . . . . . . . . . . . . . . . . . . . 34.9% Sales (n = 214) . . . . . . . . . . . . . . . . . . . . . . 33.4% Medical (patient medical records, etc.) (n = 55) . . . . . . . . . . . . . . . . . . . . . . . . . . 29.9% Insurance/claims processing (n = 144) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.5% Distribution channel management (n = 103) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.5% 0% 10% 20% 30% 40% 50% Customer-facing processes Non-customer-facing processes % of respondents who rated a document-driven process they Risk mitigation processes are involved in or have purview over as either a 1 or 2 (not at all efficient/effective or not efficient/effective) (Scale of 1-5, where 1 is not at all efficient/effective and 5 is extremely efficient/ effective) Q3. Overall, given where you sit in your organization, how efficient and effective do you consider the document-driven business processes you have visibility into or oversight or ownership of to be? Percentage of respondents who indicated their processes were not/not at all efficient and effective Base = respondents who indicated involvement in document-driven business processes Source: IDC’s Document Management Thought Leadership Survey, February 2012 10
  11. 11. Unfortunately, companies are generally budgeting an the least effective: business continuity/risk assessment,amount to address deficiencies in document processes business monitoring and controls, and compliance/audits.that is the inverse of the degree to which processes require So even though risk mitigation and other ineffective pro-assistance (see Figure 11). In general, the more deficient cesses are receiving some investment, they are getting lessthe processes are, the less organizations are investing to than other processes despite the fact that they are the leastimprove them. This is true for the three “risk mitigation” efficient and effective — and arguably should be receivingdocument-driven processes identified as being among a large degree of attention.FIGURE 11: Inverse Correlation Between Process Deficiency and Amount Budgeted$ 2,000,000 60%$1,800,000 50%$1,600,000$1,400,000 40%$1,200,000$1,000,000 30% $ 800,000 20% $ 600,000 $ 400,000 Customer-facing processes 10% Non-customer-facing processes $ 200,000 Risk mitigation processes Amount budgeted $0 0% Linear (Amount budgeted) Distribution channel management (n = 103) Insurance/claims processing (n = 144) Medical (patient medical records, etc.) (n = 55) Sales (n = 214) Manufacturing (shop floor, inventory) (n = 122) Customer onboarding (n = 207) Customer service (n = 229) Marketing/customer communication (n = 209) Change/problem management (n = 141) IT infrastructure/desktop support (n = 148) Legal (contracts, litigation, etc.) (n = 127) Billing and collection (n = 216) Vendor/supply chain management (n = 134) Financial planning and reporting (n = 152) Information security (n = 140) HR (employee onboarding, benefits, dismissals) (n = 142) Demand planning (n = 133) Compliance/audits (n = 152) Asset management (n = 139) Business monitoring and controls (n = 143) Business continuity/risk assessment (n = 133)Q3. Overall, given where you sit in your organization, how efficient and effective do you consider the document-driven business processes you havevisibility into or oversight or ownership of to be? Percentage of respondents who indicated their processes were not/not at all efficient and effectiveBase = respondents who indicated involvement in document-driven business processesQ6. How much does your organization have budgeted to improve the efficiency or effectiveness of these document-driven business processes?(asked for each process; average amount budgeted)Outlier processes were excluded from the analysis.Source: IDC’s Document Management Thought Leadership Survey, February 2012 11
  12. 12. Risks Are Pervasive Across Geographic Looking at the type of incidents by geography, we noticed Regions, Industries, and Company Sizes some differences (see Figure 13). Asian respondents, led by China, were more likely overall to have experienced a Inefficiencies and ineffectiveness in document-driven serious risk/compliance incident due to failures in document business processes are felt across all geographic regions, processes, and they were much more likely to have lost a industries, and company sizes. Analyzing the survey data by major customer or suffered an IT security breach. They geography, we noted that serious business risk and compli- were also somewhat more likely to have paid a financial ance incidents occurred at roughly equal rates in organiza- settlement. North American respondents were more likely tions in North America, Europe, and Asia, with the highest to have failed to meet regulatory requirements, and Euro- rates found in Asia (see Figure 12). peans were more likely to have been drawn into an audit. Busted Myth: The risk introduced by broken FIGURE 13: Specific Risk/Compliance Incidents by Geography (Select Responses) document-driven business processes will vary by geography or industry. Failed to meet compliance or regulatory requirements IDC Finding: There is a remarkable degree of consistency in the (high) degree of risk Lost one or more major brought about by broken document-driven customers processes across geographies and industries. Suffered a major IT security breach FIGURE 12: Document-Driven Risk/Compliance Got pulled into a major Incidents Rate High Across Geographies audit North America Europe Paid a financial settle- Asia100% ment of $50,000 or more 26.2% 25.7% 21.2% 0% 5% 10% 15% 20% 25% 30% 35% 40%80% 73.8% 74.3% 78.8% Q37. In your opinion, which, if any, of the following incidents has your organization experienced in the past five years as a direct result60% of inefficiencies or ineffectiveness in one or more of your document- driven business processes? Base = respondents who have oversight of or visibility into business processes governing organizational compliance and risk mitigation40% or management, n = 396 Source: IDC’s Document Management Thought Leadership Survey, February 201220% Chinese respondents were also more likely to take document No incidents Experienced process issues seriously, probably as a consequence of having 0% risk/compliance been negatively impacted by issues in the past. 71.6% of North Europe Asia incident America Chinese respondents gave it greater importance than other IT investments, compared with 42.4% for the total. They Q37. In your opinion, which, if any, of the following incidents has also are spending more to fix processes in key areas: 84.9% your organization experienced in the past five years as a direct result of inefficiencies or ineffectiveness in one or more of your document- of Chinese respondents have projects budgeted to improve driven business processes? Base = respondents who have oversight of or visibility into business risk mitigation, compared with 58.2% for the total, and processes governing organizational compliance and risk mitigation 87.5% have budgeted projects to improve new product or management, n = 396 Source: IDC’s Document Management Thought Leadership Survey, development processes, compared with 58.4% for the total. February 2012 12
  13. 13. Companies that depend on Chinese suppliers and business than-average reported rates of key employees leaving thepartners would do well to make sure that these partners organization and suffering from PR crises. Manufacturingare focusing on ensuring best practices in their document industries had high reported rates of lost customers, lostprocesses. As many organizations in China have grown employees, and IT security breaches, while services firmsquickly, it is understandable that they have struggled with were more likely than manufacturing firms to have beenevolving their business processes to keep pace. The good brought into a lawsuit or suffered a PR crisis.news is that more of these organizations are now taking theissue seriously. FIGURE 15: Specific Risk/Compliance Incidents by Industry Vertical (Select Responses)Serious risk and compliance incidents were also blamed onineffective document processes in all industries studied (see Key employee(s) left theFigure 14). 71.6% of government and educational institu- organizationtions, 74.0% of manufacturing firms, and 77.0% of services Suffered a major ITcompanies have experienced significant incidents. security breachFIGURE 14: Risk/Compliance Incidents Affect Suffered a major PR crisisOrganizations Across All Vertical Industries Lost one or more major customers100% 26.0% 28.4% 23.0% Manufacturing Lawsuit levied against us Gov/Education Services80% Paid a financial settlement of $50,000 or more 74.0% 71.6% 77.0%60% 0% 10% 20% 30% 40% 50% Q37. In your opinion, which, if any, of the following incidents has40% your organization experienced in the past five years as a direct result of inefficiencies or ineffectiveness in one or more of your document- driven business processes? Base = respondents who have oversight of or visibility into business20% processes governing organizational compliance and risk mitigation or management, n = 396 No incidents Source: IDC’s Document Management Thought Leadership Survey, Experienced February 2012 0% risk/compliance Manu- Gov/Ed Services incident facturing Organizations of all sizes were also highly likely to have experienced significant risk/compliance incidents (seeQ37. In your opinion, which, if any, of the following incidents has Figure 16), although there was a somewhat higher rateyour organization experienced in the past five years as a direct resultof inefficiencies or ineffectiveness in one or more of your document- reported among companies with between 5,000 employees driven business processes? and 9,999 employees. There were no significant differencesBase = respondents who have oversight of or visibility into businessprocesses governing organizational compliance and risk mitigation observed in the types of incidents by organization size.or management, n = 396Source: IDC’s Document Management Thought Leadership Survey,February 2012Examining the types of incidents reported, we noticedsome significant differences between industries (seeFigure 15). Not surprisingly, respondents in government/education had very low reported rates of lost customers,lawsuits, and financial settlements, but they had higher- 13
  14. 14. FIGURE 16: Organizations of All Sizes Are at Risk FIGURE 17: Improving Document Processes of Document-Driven Risk/Compliance Incidents Would Have Broad Risk Mitigation/Management Benefits100% 24.5% 15.7% 25.4% 27.6% Would improve business oversight and control . . . 71.3%80% Would reduce regulatory compliance risk . . . . . 67.0% 75.5% 84.3% 74.6% 72.4% Would reduce60% information security risk . . . . . . 64.9% Would increase business agility . . . . . . . 63.3%40% Would reduce business continuity risk . . . . . . . 61.9%20% No incidents Other . . . . . . . . . . . . . 48.4% Experienced risk/compliance 0% 10% 20% 30% 40% 50% 60% 70% 80% 0% incident 1,000- 5,000- 10,000- 50,000 (Number of Q39. If you could wave a magic wand and fix all the issues in 4,999 9,999 49,999 or more Employees) effectiveness and efficiency in your document-driven business processes governing organizational compliance and risk mitigation/ management, what would be the effect on your organization’s business risk? Base = respondents who have oversight of or visibility into Q37. In your opinion, which, if any, of the following incidents has business processes governing organizational compliance and risk your organization experienced in the past five years as a direct result mitigation or management, n = 406 of inefficiencies or ineffectiveness in one or more of your document- Source: IDC’s Document Management Thought Leadership Survey, driven business processes? February 2012 Base = respondents who have oversight of or visibility into business processes governing organizational compliance and risk mitigation or management, n = 396 Source: IDC’s Document Management Thought Leadership Survey, February 2012 Addressing Issues in Document Processes Can Significantly Reduce Risk The good news is that there is significant upside to reducing risk by fixing issues in document processes. 71.3% of respondents said improving their processes would improve business oversight and control, while 67.0% said it would reduce regulatory compliance risk. In fact, well over half of all survey respondents said improving processes would have an impact across a broad range of risk mitiga- tion and management areas (see Figure 17). 14

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