2007 Review of Document Management Systems

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If you’re young enough, think back to the period starting in the early 1980s. In the accounting technology world, we were making the gargantuan leap from the VisiCalc spreadsheet and WordStar word processing software to Lotus 1-2-3 and WordPerfect. “Back in the day,” those were considered premier applications. It would be fun to show those applications to a group of young professionals today to get their reaction. The other big technology issue of the day, back then, was the initial movement towards PC-based accounting systems, such as Open Systems, State Of The Art, Great Plains and many more, which, by the way, have evolved and survived more than 25 years later. In retrospect, it has been an interesting stretch of time for technology in the tax and accounting profession.

What does this have to do with document management software? Well, the point is that spreadsheets, word processors and accounting systems were the new frontier of the early ’80s. The same can be said of document management software relative to the start of the new millennium. It is only within the past few years that this type of application has started to gain significant momentum. We can draw a number of parallels between the evolution of document management software (DMS) and general accounting software to help us gain some insight into where the DMS market is likely to head.

In the early days of accounting software, life was pretty simple. Essentially, the objective was to provide an automated system to replace the pegboard system. Typically, the first generation accounting packages had a very simple design: Enter transactions, print source documents, post transactions and print reports. This model was replicated for all of the classical systems: general ledger, accounts payable, accounts receivable, payroll, inventory, job cost, etc. Look at where this market is today. The systems are still built upon that same foundation, but they have a much more extensive feature and function set, including cross-application integration, user-designed data-entry screens, custom reports, and much more. But at the end of the day, what has been the best-selling accounting application for the past decade or so? QuickBooks. Why? Because it is based on the KISS (keep it simple, stupid) philosophy, compared to the enterprise systems that were just too complicated for many small businesses. This is a resounding affirmation that more isn’t always better when it comes to features and functions. That brings us to an explanation of how this review is structured.

A wide variety of DMS solutions are available for accounting and tax practitioners. They range from the basic document storage systems to comprehensive document management systems. As with accounting software, one is not necessarily better than the other. What’s best for your firm depends upon the nature of your practice in terms of size, services offered, personnel, culture and more.

Let’s try to simplify the distinction. On one hand, the document storage systems are fundamentally designed for the purpose of creating an electronic document filing system. The primary difference between these systems and what you can already do with the Windows file storage system is the ability to use an indexing based file organization model, similar to the card catalogue system at the public library. Document storage systems are intended to be limited in their scope and functionality to help keep them simple and affordable. On the other hand, document management systems are evolving to be a comprehensive collection of document filing, automated scanning, electronic annotation and paperless workflow tools. And the feature list continues to grow.

This review focuses on the full-featured document management systems, and the August 2007 issue will focus on the more basic document storage systems. Beware that the line that separates the two categories is easily blurred. If you’re seriously considering an electronic document system for your practice, it would be wise to investigate all of the solutions presented to help you gain a better understanding of the opportunities to improve the efficiency of your operations.