Still hesitant to go paperless? Digitising may seem to be an expensive alternative to paper-based processes, but after crunching the numbers, many businesses are surprised to find that quite the opposite is true — paper is a real drain on costs.
Many industries, particularly manual sectors such as construction and rail, are embedded in paper-based processes. Even in the modern day with all of our innovation and technological advancements, there are those who are reluctant to change from what they know.
If these long-serving employees were asked why they still use paper forms, they’d tell you that their existing paper processes have got them where they are today. Those A4 pro-formas have worked perfectly fine for the last thirty years and will continue to work until they’re fit to retire.
This attitude stagnates a business and stops it from achieving its full potential in terms of productivity, communication flow, and crucially, its bottom line.
There’s a common misconception that digitising comes with a big price tag; sticking with existing paper processes is the cheaper option. However, when you analyse the different factors that come into play when using paper, the figures speak for themselves. This notion is also negated by the lower-cost digitisation options that are out there, such as no-code development.
In this article we dissect and discuss the true cost of paper processes, bringing to light the expenses you may not have considered before, and why so many businesses are shifting into the world of digital. Or you may prefer to download our special report in full to learn how you can start mitigating these costs today.
The 3 main challenges of paper processes
There are several recurring challenges that crop up for businesses still using paper-based processes, which may seem like minor annoyances but can have dire consequences. We’ve compiled the top three most common pitfalls that resonate with the manual construction and rail industries in particular:
1. Reports not being completed
As terrifying as it is, accident-prevention reports like close-calls, near-misses and NCRs often don’t get submitted. Sometimes this is down to simple oversights, such as the printer being out of ink or someone having forgotten to replenish the photocopier, but often it’s because the original form was lost or spoiled on site.
If these reports are never made, then lessons are not being learned. More crucially, opportunities to make the working environment safer for employees are not being discovered, let alone actioned. This puts lives at risk on-site, and in turn puts the business at risk of litigation and, in the very worst cases, potentially being expelled from supplier frameworks.
Ensure prompt, accurate, and compliant health and safety reports with Nutshell’s Close Call and Near Miss apps.
2. Incomplete or incorrect data
At first, a few missing fields here and there doesn’t sound too serious, but the broader implications could be catastrophic. This is so widespread, many of the businesses we talk to just accept it as granted. But let’s consider a few specific examples.
If an audit trail is incomplete or incorrect, it’s effectively impossible to prove that RAMS/SSoW were issued, understood and followed to the letter by staff on-site, leaving the business open to litigation should an accident occur. Likewise, site or shift reports that are incomplete or incorrect could be missing key information that the incoming shift workers need in order to work safely.
3. Reports arriving or being authorised too late
Speed is one of the biggest issues with paper-based procedures, often taking a great deal of time to fill in multiple forms and travel between sites to collect wet signatures from responsible persons. In some instances, this can have a major impact on project timescales, affecting line blocks and other time-sensitive planning processes that eat into company profits.
In most instances, the effects are far more subtle, yet no less damaging. For example, timesheets that are not submitted, validated and authorised quickly enough can often result in late (or no) payment, leading to pay disputes and in the worst instances, tools-down action and refusal to work.
According to McKinsey, employees spend 1.8 hours every day (that’s 9.3 hours per week on average) searching for and gathering information. Following our own research, one facilities management company with a fleet of 150 gas engineers reported they wasted 80 hours per month chasing up missing paperwork, at a cost of approx. £9,200 per year in time alone. This is a huge added cost that could be avoided by going paperless.
9 ways paper processes are costing you
The damage that remaining analogue does to a business is brought about slowly and gradually. To estimate the true cost of not going digital, you must take a lot of other factors into account.
1. The time and effort involved in chasing missing or incomplete data
Consider who is involved in this process and their hourly rate. Is it your Health & Safety Director, your Compliance Manager or an office admin calling around? It’s most likely a combination of all three.
Who is doing the chasing will have a massive impact on the financial cost. Figure out how many hours each person wastes per week, either day-to-day, or during an audit, and use their hourly rate to calculate the cost.
2. The time and effort involved in manually validating illegible or partial form submissions
You’d be shocked at how many hours administrative staff can spend on the phone each week asking on-site workers to translate their handwriting before reports can be properly filed, if it’s followed-up at the time at all. Add up how many hours are wasted like this, each week and calculate the cost.
3. The time and effort involved in hand-typing information from paper forms into a central Information Management System
Most businesses that still operate on paper do at least collate their data into a digital Information Management System. These can range from just a simple spreadsheet or a Microsoft Sharepoint site to a full ERP system. Documents are often scanned and uploaded, or worse still received via personal messaging and captured in a screenshot, where their content can’t be searched or reported on.
This means that someone has to hand-type this data into a database. But all this double-entry doesn’t come free. Work out how many hours your admin staff spend scanning, uploading and hand-typing information into your IMS, then apply their hourly rate to find out how much it’s costing you.
Download our case study to discover how Nutshell Apps saved Systra more than 300 man hours in submission processing time.
4. The time, project delays and fuel costs involved in traveling between sites
This is a big one, and often flies below the radar because people think of it as just part of the job. It’s still commonplace for site and construction managers to travel between sites to drop off paper forms or collect wet signatures before work can continue. These sites can often be several miles apart, which takes a lot of time, costs a lot of money in fuel and vehicle wear and tear, and causes knock-on delays to projects; waiting for things to get signed-off.
Without the correct paperwork being present on-site each day, a project cannot even start, which leads to wasted money on expensive contractors who are unable to begin work.
5. Overpaying staff due to incorrect or unvalidated timesheets
You’d be surprised how many timesheets aren’t properly validated by a line manager before making it to payroll. Imagine how many unworked hours have been paid for, because nobody checked them first. Every hour paid eats into your organisation’s profitability.
6. Tools-down action taken by staff who have been paid late, not paid enough, or not paid at all
The opposite problem, and potentially far more damaging to a business; nothing creates unrest amongst a workforce faster than a payslip with the wrong number on it. This is a potentially devastating side-effect of timesheets not being processed quickly enough, especially toward the end of the month, which could result in severe project delays and considerable reputational damage.
7. The time and effort of key staff members trying to scrape together incomplete records during an audit
Everyone has been through this at least once. Whatever time you saved not verifying that piece of vital information when it was first scrawled on a bit of wet paper, you’ll now spend three-fold, trying to help its original author remember what on earth it was supposed to say. Last-minute scrambles at audit time are stressful enough, without the hourly cost of key individuals who must drop their day jobs to rescue the situation.
8. Fines and other penalties as a result of failing an audit
Whether it’s fines for non-compliance or litigation after an incident, the penalties for getting it wrong (or indeed failing to track and gather evidence when getting it right) can be potentially catastrophic for a business.
9. Plant, equipment and vehicle downtime
Although arguably the result of several of the other points above, rather than a cause in its own right, downtime of equipment, plant and vehicles is an easily measurable cost, and should factor into any ROI calculation. Failure to monitor, predict or action maintenance work on vehicles and equipment can result in a fleet of depreciating assets sitting in a yard earning nothing.
The detrimental impact of not digitising
While each of the examples above comes with its own discrete cash value, there are wider-reaching costs that are more difficult to quantify. For example, the loss of productivity due to all the above can cause projects to run longer than necessary, increasing overheads, inflating budgets and ultimately eating into company profits.
An almost invisible side-product of this can be damage to a company’s reputation, both with clients and with future employees. Who wants to work with or for a company known for being slow, inefficient and old-fashioned?
The recruitment costs alone for replacing young talent who choose to move to more forward-thinking employers is enough to make anyone consider upping their game.
Most companies, when they add up all of the individual costs involved in compensating for their inefficient paper-based processes, realise quickly that, in this day and age, they can’t afford to not go digital.
Starting your digital journey
Once you’ve identified the areas most affected by old-fashioned paper processes and understand the true cost of not doing anything at all, it’s time to look at potential solutions.
This involves identifying all the options available to you and their potential cost implications, then building a compelling business case to ensure the backing of senior management to invest in digitisation.
Done the right way, digitising your business can be far quicker and easier than you ever thought possible. Better than that, it can be done effectively for free, simply by understanding the true cost of not digitising.
Conclusion
Although the true costs of paper processes are a jarring realisation, this can be a turning point for your business and a catalyst for change. Going paperless through digitising your processes is the best way to safeguard your business for the future, retain staff, and improve your bottom line.
It doesn’t have to be an arduous or expensive task either thanks to no-code options including our own selection of off-the-shelf and bespoke apps. Now is the time to be analysing your existing processes and assessing the endless benefits of digital transformation.
Looking for more advice on how to cut down business costs through digitising? Download our e-book ‘The Hidden Cost of Analogue’ here.