How to Calculate the Return on Investment (ROI) on a Digital Signature Solution

Transcription

1 How to Calculate the Return on Investment (ROI) on a Digital Signature Solution

2 Introduction Large and small organizations alike have found that the investments they have made in document and workflow automation do not enable them to remain paperless due to signature-dependent processes. In order to collect signatures they must revert back to printing out paper documents that must be physically signed, scanned, archived, routed, and then are sometimes lost. This brings efficient business processes to a grinding halt and at the same time increases operating costs. To address this issue, more and more companies are implementing a digital signature solution, which allow the organization to maintain a completely electronic workflow from the point the document is created through to its signing, archiving, and auditing. These solutions mean that the company no longer has to interrupt its streamlined electronic processes by reintroducing paper into the workflow. The purpose of this white paper is to help you establish the Return on Investment (ROI) that your organization can expect to achieve by deploying a digital signature solution. We use a sample company with 200 employees who sign documents as a part of the organization s operating policies and procedures in order to quantify the costs of using paper-based signatures. The ROI and payback period can be calculated by adding on the costs of implementing a digital signature solution. This paper concludes with a chart summarizing the figures you need in order to calculate your own ROI.

3 The Costs of Paper-Based Signatures As mentioned above, we will examine DS R US, a company with 200 employees who each sign 250 documents per year (an average of 1 document per working day) as part of their operating procedures. This number is based on the average usage we see in the log data of actual CoSign customers (companies with more employees or in paper-intensive industries may see lower or higher numbers.) This brings us to a total of 50,000 signed documents a year across DS R US or, if we estimate that the average document consists of 2 pages, 100,000 pages per year. As these documents are currently printed and signed manually, their associated costs include: Printing - The average cost of toner, ink, and paper amounts to 3 cents per page. Printing 100,000 sheets of paper for signing purposes costs the company $3,000 per year. Routing - For the purpose of remaining conservative, we will only address DS R US s external routing costs (not including those inside the organization). If we estimate that 35% of signed documents require some form of external routing, the company would spend $174,325 per year, with the breakdown as follows: Standard mail - 5% (1/signer/month) of the documents are routed by US mail at a cost of $0.83 per envelope (2,500 x $.83 = $2,075). Based on USPS price for sending a large envelope-sized letter weighing 1 ounce across the US for three day delivery. Overnight couriering - 5% (1/signer/month) of the signed documents are couriered at a cost of $42.55 per package for overnight couriering (2,500 x $42.55 = $106,375). Based on the FedEx Standard Overnight fee for a package weighing 0.10 pounds. 2nd day shipping - 5% (1/signer/month) of the signed documents are shipped at a cost of $26.11 per package for 2nd day shipping (2,500 x $26.11 = $65,275). Based on overnight USPS Express Mail flat rate fee. Faxing - 20% (1/signer/week) of the signed documents are faxed at a cost of $.03 per faxed page (10,000 x 2 pages X.03 = $600). Scanning - Since signed documents need to be archived either digitally or in paper form, we ll assume that 50% of them are archived digitally and require scanning. If the hourly wage for the employee responsible for handling the scanning is $10 an hour, and it takes him or her 3 minutes to scan and save each document (or 20 documents per hour), DS R US pays $0.50 per scanned document in hourly wages for a total of $12,500 per year. Paper Archiving - In the previous section we assumed that 50% of the signed documents in the company need to be archived digitally, while the other 25,000 documents are archived in paper form. If we use the same hourly wage as before ($10) and an average of 5 minutes to

4 file each document (or 12 documents per hour), DS R US pays $0.83 per archived document in hourly wages for a total of $20,750 per year. Document Loss and Reproduction - According to PWC, 7.5% of all documents in an organization end up being lost, with 20% of those never being found and needing reproduction. PWC estimated the average costs in labor to find a misfiled document at $120 and the average cost in labor to reproduce a lost document at $220. Being more conservative, we will use 5% as the percentage of documents lost, $20 as the cost of finding a misplaced document, and $40 as the cost of replacing the documents that are not found. These numbers mean that DS R US loses 2,500 documents every year, costing $40,000 per year for finding them and $20,000 per year for reproducing those that are never found. The costs listed above don t include additional indirect costs such as the failure to realize the full potential of an organization s investment in its automation systems, as well as: Costs incurred by workflow delays, such as lost business due to delays in signing agreements Damage to the organization s reputation due to lost documentation or documentation that cannot be authenticated Environmental costs of using paper which amount to ¼ of a tree, 3/8 of a barrel of oil, and 75 pounds of carbon emissions per signer, per year The summary of quantifiable costs for DS R US (200 signers and 50,000 signed documents per year) is below. By dividing the total annual cost by the number of documents, we come to an average cost of $5.41 per paper-based signature, with an annual paper signing cost per signer of $1,352. Again, this is a conservative estimate as Pfizer has previously estimated the cost at $30 per paper-based signature. Printing $3,000 Routing $174,325 Scanning $12,500 Archiving $20,750 Finding and reproducing lost documents $60,000 Total annual cost of paper-based signatures $270,575

5 Calculating Your Organization s Paper-Based Signature Costs To help you calculate your organization s paper-based signature costs, we put together an Excel spreadsheet where you can enter the numbers that are relevant to your organization in order to calculate your total annual cost of paper-based signatures. The table below details the assumptions and calculations used in the spreadsheet, which also includes an ROI calculator as explained in the section below. Metric base scenario Your Costs # of signers Use your actual figure # of documents per signer per year # of pages per typical signed document Use your actual figure (if you don t know your organization s actual figures, use 250 documents per signer) Use your actual figure (if you don t know your organization s actual figures, use 2 pages as the default) Printing Costs $.03 per page $.03 x (pages /year) Pages Mailed Pages Couriered Pages Shipped 2 nd Day Pages Faxed Scanning Costs $.59 per mail (or use your actual costs) $42.55 per courier (or use your actual costs) $26.11 per shipment (or use your actual costs) $0.05 per fax $0.50 per document $.0.83 x (your percentage mailed-typically 5%) $42.55 x (your percentage couriered-typically 5%) $26.11 x (your percentage shipped-typically 5%) $.05 x (your percentage faxedtypically 20%) $0.50*50%*(docs/year) Archiving Costs $0.83 per document $0.83 x (your number of archived documents-typically 50% of total signed docs) Lost Documents 5% lost; $20 to find (80%); $40 to replace (20%) 5% x total signed docs x (80% x $20+20%*$40)

6 The TCO and ROI of a Digital Signature Solution The next step in calculating the ROI of a digital signature solution is to arrive at the Total Cost of Ownership (TCO) required to employ and maintain the solution. TCO is determined according to a number of factors including the cost of the initial system, the cost of the internal IT resources (or external professional services) for deployment, the annual vendor maintenance and support fees, and the annual internal IT maintenance cost, as well as any additional costs that are directly related to the digital signature solution. For the CoSign Digital Signature solution, these costs would include: $9,000 for the server (including hardware and software) and $3,500 for the first 25 signer licenses (price per user falls sharply after the first 200 users) for a total cost $37,000 for a CoSign Enterprise server with 200 licenses. Support and maintenance are set at 20% per year. Since one of CoSign s main advantages is its quick deployment and minimal ongoing management requirements, both the installation time and the annual maintenance time are estimated at 10 hours or less, with electricity costs of less than $100 a year and negligible server storage costs. To calculate the TCO and ROI for CoSign over a 4 year period: CoSign Enterprise pack TCO (for 200 signers) Cost of CoSign package + (No. of years X maintenance costs) $37,000 + (4 X 20%) x 37,000 $66,600 Total IT time (installation and maintenance) Total IT labor costs (at $50 per hour for IT personnel) Total electricity costs No. of hours for installation + (No. of years x annual maintenance hours) No. of hours X Hourly IT personnel wage No. of years X Annual electricity costs x hours 50 x $50 $2,500 4 x $100 $400 CoSign TCO over 4 years CoSign TCO + Total IT labor costs + Total electricity costs $66,600 + $2,500 + $400 $69,500 ROI as percentage return on investment (Total paper-based costs - TCO) TCO X 100% (4 X $270,575) $69,500 $69,500 X 100% 1,457% Payback period in months (Annual TCO / Annual paperbased costs) X12 ($69,500/4) / $270,575) X months (*)

7 As mentioned above, we created an Excel spreadsheet where you can enter the numbers that are relevant to your organization in order to calculate your costs, TCO and ROI. (*) This figure assumes complete rollout from day one. This is not usually the case, as end users normally take time to change their working habits. Customers typically report 3-6 months to return their investment of purchasing and implementing CoSign.

8 Conclusion In the current fiscal economy, organizations find themselves evaluating all conceivable means of reducing operational costs and gaining competitive advantages. Transforming their processes from paper-intensive to paper-free, including all of their signature-dependent workflows, is one of the key ways to accomplish these goals. Each paper based signature that an organization produces amounts to $5.41 in printing, routing, scanning, archiving and document loss recovery costs. A typical signer signing around 250 documents a year (or an average of one per workday) costs the organization $1,350 a year in paper-related costs. This means that an organization with 200 signing employees will spend around $270,000 a year on the costs associated with paper-based signatures. Implementing the CoSign digital signature solution enables that same organization to cut more than $250,000 from their annual operational costs, see a return on their investment in less than a month, and realize a four year ROI of over 1,000%. In order to calculate the precise paper costs, TCO and ROI for your organization, you can download the Excel spreadsheet available on our web site. About CoSign by ARX CoSign by ARX is the most widely-used digital signature solution with millions of signers at securityminded businesses, governments and cloud services around the world using it to create efficient signature processes. CoSign was recognized by Forrester Research as the strongest digital signature solution in the Forrester Wave: E-Signatures, Q report. CoSign, which is available both on-premises and in the cloud, can be used on any device to easily and securely sign documents in Word, Excel, PDF, and many other file types. The flexible CoSign digital signature engine can also be seamlessly integrated into any document-related workflow, application or service. Contact us via at sales@arx.com or by phone at (415) for a personalized demo and a tailored quote that you can use for your actual TCO and ROI calculation.