Document Management Systems: All information about DMS

Basically, there are four different types of DMS. To some extent, the short history of document management becomes apparent through this differentiation. At the same time, the advantages and disadvantages of the four document management software procedures become clear

The storage of documents in tree structured storage locations, e.g. on file servers, network drives, inboxes and similar, replaces one problem with another: A paper one for a digital one. This means that documents disappear into unclear index structures. And document storage alone requires discipline – from an agreed naming structure for files to the right storage location to tagging, if the latter is possible. As a rule, this type of document management system proves to be inadequate for daily document management.

Using such systems as a replacement for a document management system is counterproductive. The contents of the documents are often not searchable, Metadata is missing, to say nothing of workflows, versions etc. Only file names and directory paths serve as information carriers.

Current document management systems work according to the following pattern: A document is compiled, certain document information is selected, a document ID is assigned. The document and the Metadata are stored in a database. The big advantage: Via the document ID, the document remains clearly identifiable, and is not lost in the document management system. The disadvantage: To access the document management tool, you need DMS software installed on the local computer.

However, the exception confirms the rule. This means that document management systems exist, that provide the user with a browser based DMS webclient for day to day work. Therefore, installation of software on the local computer is superfluous.

This also applies to a DMS in the Cloud. Therefore, the document management system can be accessed via the browser of your choice: Anytime, anywhere, even via Smartphone/tablet. However, a Cloud document management software also brings many other advantages: As with so many other software as a service offers (SaaS), the service provider also takes on the maintenance of the Cloud-DMS, and ideally ensures the flawless operation of the document management system; so, e.g. the provider carries out regular, automated backups. Thus, a Cloud document management system also has lower associated IT costs. However, at this point, everything lives and dies by the content-related design of the service agreements. Service lives, number of users, data volume used etc. are amongst the most important factors, that determine the costs for the Cloud-DMS.

Picture: Gone are the days of endless searching in a chaotic order structure. In the digital document management system, your documents are neatly stored and can be found at any time.

According to the DMS system used, electronic document management has various other functions. Important, frequently used document management tool functions are: Revision security, versioning, archiving, requirements for privacy protection compliance, workflows, group based authorisations and many more. Especially for distributed organisations, i.e. companies with several locations, a document management system simplifies and accelerates the day to day work tremendously.

Ultimately, a document stored in a DMS system, contains more information than purely the document content.

Additional information accompanying the document is described as Metadata. These are also assigned to the document, e.g.

• Project number and name
• Creation date
• Version
• Status
• Cost center
• Checker etc.

These Metadata can either be automatically obtained from the document, or added to the document management software via manual tagging. When carried out consistently and uniformly, this helps make searching for documents quicker. Furthermore, documents of a process can be summarised in so called folders, also called electronic files, without further ado. At this point, it becomes very clear, that a document management system very quickly takes on the status of the Holy Grail of information.

Contemporary document management systems help to significantly shorten both process run times and the time for the preparation of documents in the company. Therefore, a document management system supports business processes of all kinds. Of course, this requires a database supported DMS (see diagram “…..”). Certain user groups have access to the documents relevant to them in the DMS, regardless of the location (see diagram “Cloud-DMS”).

Furthermore, a document management system should also flank, improve and simplify other business processes. For example HR processes, incoming invoice processing, P2P-processes etc. The keyword here is “DMS Workflow”. Essentially, workflow means the fact that the document management combines and automates further tasks, for example deadline monitoring, escalation management, holiday cover etc.

Documents or generally speaking: Information is available in two different forms in companies: Already electronic or still in paper form. This information must first be entered into the document management system – yet how does that work and what happens in the document management software as a result?

According to the media type, recording documents can take on different forms in the DMS. If the information is already available in electronic form, contemporary document management systems are able to transfer this information to the document management system largely automatically. To record paper based documents, as a rule, a DMS uses a scanner with optical character recognition (OCR) for digital document capture.

According to the document type – or more generally: Information type – certain formats exist. For example information which has been transferred with one of the many formats of Electronic Data Interchance (EDI). For example: Sales invoices, bills of lading, orders, shipping notifications, account statements, design specifications, insurance claims etc. Two other examples: the XRechnung or ZUGFeRD-2.0 format. Both fall into the domain of digital invoice formats – and they are structured data, just like the EDI formats.

The advantage of such structured data for a document management system is obvious – because the data are stored in a fixed location, forever. Here is an illustration for the example of an XRechnung, an elecronic invoice format:

As long as the creator of the invoice complies with the agreed specification, it is easy to process the structured information of the incoming invoice automatically in the document management system. It is also clear, that a workflow started via such media, is the be all and end all for flawless business processes.

It looks very different for documents and information in paper form. The common way in the document management system is via so called scanning. I.e. The documents must first be digitised via a scanner. What is important at this point: The scanning software of the scanner or a downstream software must have optical character recognition (OCR). In this way, the textual elements of the document are entered, and ideally allocated accordingly – and that is the most important source of information for a DMS using this medium. As a rule, these processes for the entry of content are developed and improved over the years, and consequently very precise – always with the requirement and assumption that the data featured in the document remains consistent. Unfortunately, this is not always the case, and therefore a stumbling block for the subsequent workflow of the relevant business processes.

From now on, everything will remain digital, and media disruptions will no longer happen. A great advantage of a document management tool is that all documents and information is automatically directed to the relevant company departments.

Where the documents and/or information are ultimately transported, is primarily dealt with by the DMS using the categorisation made. Via recognised and selected information, the document management system can determine for example: A document is a bill of lading, an incoming invoice or a contract etc.

It is at this point that a document management software has an important advantage: Because now, a contemporary document management system can engage with so-called workflows.

Document transport and the processing of documents in the individual departments, can be carried out completely electronically with a modern DMS. In the course of a workflow, a document management system automatically sends documents to the relevant processors or groups within or outside of the company, using defined parameters (category, project, customer number etc.). What is important at this point: Thereby, it is not the document itself that is sent, but rather the link to the relevant document in the document management system. Notification occurs either in the document management system itself or by e-mail. This has the advantage that the document remains accessible to all other authorised employees during the whole workflow. This means that copies of documents are as much a thing of the past, as the complexity that arises from it.

A good document management system stands out, by allowing the option of two types of workflows: Ad-hoc workflows for tasks that occur rarely, and more comprehensive, fixed workflows for recurring tasks. The difference between the two: Ad-hoc-workflows can be created and set up quickly if needed, but have no previous fixed process model. Therefore, they are the right tool to solve simple tasks, that only arise in the course of a working day: E.g. You notice for the second time, that invoices from the customer XY are raised during processing. As you use discount revenues and want to avoid reminder fees, you and your work colleagues can easily be informed when the case occurs, via the document management. Read more about more comprehensive workflows under complex workflows in the DMS.

The most important document management system feature is the classification and appropriate storage of documents. As illustrated, workflows can also be established in the document management system. This applies to all documents. And especially when combining DMS workflows with ECM or ERP systems, time saving simplifications can be carried out.

An easy and very basic workflow, which can be implemented with a document management system, is task and deadline monitoring. This is very easy to do. On arrival in the DMS, a document is sent to a group of processors – and the document has a fixed time “attached”, a “deadline”, by which the task relating to the document must be completed. If no-one takes care of the task by this time, the escalation management will get involved. That means: There will be a reminder about the unresolved situation. If none of the affected employees react to the reference to the DMS workflow, automated notifications could for example be escalated to the team leader.

Of course, more comprehensive workflows can also be implemented with a document management system: for example the incoming invoice workflow. It is easy to recognise that this workflow consists of several factual and technical tests – with subsequent transfer to a ERP system to post the invoice and ultimately archiving.

The topic of versioning and version control is becoming increasingly important in the area of document management. Keyword “traceability”. Originally, the problem of versioning and version control comes from software development (the tools there to solve it: RCS, CVS, Subversion, Git etc.).

The problem in the context of document management can be illustrated as follows: By processing a document, various versions of the document are created within the document management system over the course of time. If several people are working on document, this will result in several versions of the document. Sooner or later, all processors will wonder which version of the document is the most current. Document management systems solve this problem, by ideally creating a time stamp with ID of the processor for each version, and presenting it to the observer. Of course, you can also travel into the version history of a document via a DMS – this means that all changes to the document remain traceable in the document management system.

The described versioning of documents within the document management system is surely one of the most helpful functions. A question that continually arises in this context, is about the revision security of documents. What does revision security mean? Short answer: You want to ensure that a document is not changed or manipulated, during the lifetime in the document management system – without it being noticeable.

However, how can a document management system ensure the revision security of a document? An example for illustration: Who would feel able to take a document out of a pool of 1000 documents, and say: That is an unchanged document?

To ensure this, a modern DMS has checksums. Such checksums, also called hash values, are calculated from the document content. These hash values are clear. This means: the same document content, the same checksum. And a changed document then inevitably means a different checksum. The document management tool takes on this task in the background and shows the calculated status.

In most cases, a document management system also has an archive and/or an interface between the document management system and the archive system. You must ensure this option. The reason is clear. On the one hand, you want to relieve the document management system. On the other hand, you are faced with the task of having to archive certain types of documents for six and/or ten years. Keyword “Tax office (GoBD [The principles for duly maintaining, keeping and storing books], sect. 147 Tax Code etc.).” For both cases, an archive will help you.

As a rule of thumb, anything that is no longer required for day to day work, is moved from the DMS system to the archive. This means that you relieve the productive system. All other documents with a mandatory archiving requirement, also belong in the archive of the document management system. Documents of this type would be for example wage payments, personnel files, annual financial statements, invoices and much more.

Modern systems for document management have this archiving function, and/or a link to an archive. This makes archiving child’s play. It is also quite easy to deal with the archive on a day to day basis: Because you can start searching (also called information retrieval) for archived content directly in the document management software application. Instead of taking the laborious path into the archive, use the convenient search function of a modern DMS. Thanks to good tagging and existing Metadata, and the information gained from the full text search (OCR) you can find the exact search result in the document management system much quicker. Whatever the source of the document was – from paper document to e-mails to media already appearing in a structured data format. In short: A modern data management system frees you from laborious, time intensive and literal search processes.

Of course a document management system can only be used to full effect when it is linked to an ERP system. Therefore, when choosing a document management system, it must be ensured that the DMS has the right interfaces and/or APIs for the ERP systems used. Because: Both systems – DMS- and ERP system – mutually complement each other at this point. How does that work and what are the advantages?

For clarification: Whilst the Enterprise Resource Planning-System (ERP) has the master data of suppliers, an incoming invoice arrives with the company via the document management system. Now, under some circumstances, it is possible that certain data is missing from the incoming invoice document. Consequence: The incoming invoice workflow could not start for precisely this reason, and/or got stuck at a very early point.

Through recourse to the ERP system, the missing data is completed and the workflow can continue in the document management software. The whole thing can be illustrated in a fully automated way: A fully automated workflow can result from the incoming invoice in the document management system and the content comparison with the master data of the ERP system, together with a calculated verification of the sums and checking whether an order belonging to an invoice is present. At the end, the data is forwarded for posting in the ERP.

Furthermore, all the documents created in the ERP system, can ultimately also be archived in the DMS system, revision secure, and bundled into a process together with other documents within the document management tool, and merged. The combination of document management system and ERP system therefore creates enormous synergy effects in terms of automation of workflows.

A seamless connection to widespread Microsoft products (Word, Excel, Outlook etc.) is essential for a modern document management system. From a user point of view alone, because who wants to continually switch between applications these days? Noone, exactly.
Ideally, the DMS system links the aforementioned applications so well, that for example a Word document can be opened, changed and saved directly in the document management application.

Of course, even and especially the document management system must have the prerequisites to comply with specific legal requirements. In Germany, several important legal texts and other details should be mentioned at this point. It is all about mandatory archiving requirements and privacy.

Disclaimer: In all this it is clear that no legal advice will be given here; only the extensive situation will be sensitised.

First of all: Who do the mandatory archiving requirements apply to? Anyone who is obliged to keep accounts in accordance with commercial law or tax, is also obliged to archive the same. The sect. 147 of the Tax Code, sect. 257 of the German Commercial Code, and sect. 14 b of the VAT Act provide further clarification. This immediately poses the next question, what type of documents must be stored in the document management system, and for how long? As a rule of thumb:

A ten year archiving obligation applies to the following type of documents:• Inventories and warehouse reports

• Records and books
• Annual financial statements and opening balance (alongside the understanding of the necessary wok instructions and other organisational documents)
• Invoices and posting documents
• Documents to be attached to a customs declaration submitted with means of data processing (ATLAS), if the customs authorities dispensed with your template.

A six year archiving obligation applies to the following type of documents:

• Commercial letters or business letters received,
• Reproductions of the commercial letters or business letters sent,
• other documents, if they are important for taxation

To comply with these requirements, an appropriate certification must be ensured, on selection of the archive system. The standard IDW PS 880.

Disclaimer: In all of this, it is clear that this is not legal advice; you should just be aware of it for the complex situation.

If you maintain business relations with European companies or work together with customers who come from Europe, you must observe the legal regulations of the GDPR. It is now necessary to combine two legal requirements: the aforementioned archiving obligations and the requirements of GDPR, here in particular article 17 right to erasure (“right to be forgotten”).

What at first glance looks like a contradiction, is easy to resolve. After expiry of the purpose limitation (here: Archiving obligations), GDPR rules – with the consequence that a document management system must be in a position to erase special documents and personal data. A modern DMS must have this erasure function. Furthermore, GDPR also requires document management systems to have the ability for a customer to make a request for information at any time: Therefore, it is about clarifying whether and for what purpose personal data is stored – and if yes, which data they are. In short: The document management system must have the option to send these data to those requesting information.

Disclaimer: In all of this, it is clear that this is not legal advice; you should just be aware of it for the complex situation.