From: Bob Fischer

Date: November 1, 2003


******** Document Scanning, Storage and Retrieval System

System Management Summary

Executive Summary:

After 2 1/2 years of operation the ******** Document Imaging System had eliminated the paper storage needs for all of our clerical operations and many of the engineering functions. Day-to-day historical project research is now performed on-line. The scanning work has been accomplished through a mix of in-house and subcontracted services. The total cost of the first year ($157,260) was nearly offset by estimated savings ($137,500) resulting from a reduction in required storage space and increased office efficiency. To date the total cost has been $238,000 and the total savings are $344,000. Most of the cost ($204,000) is the back-file conversion expense. Going forward, the five-year net savings are estimated at $1.6 million. ______________________________________________________________________________________


The ******** Document Imaging System stores many of the internal papers generated by ******** as digital images, available at all times on the network. They are scanned, named and stored on the network, and categorized by their type and department of origin. Besides the on-line format, the files are backed-up on CD-ROM and stored in multiple locations for safety.

The bulk of the ******** documents have been scanned by outside service provider Digital Storage Solutions of Hauppauge. ********'s lower volume scanning requirements are being met by four in-house systems: one located in the X Order Processing Department, one in the Y Order Processing Department , one at each of the two QC Administration offices.

All of the first floor file cabinets for Order Processing had been scanned by October 1, 2001. This emptied about 100 file cabinets. The in-house scan stations are capable of keeping up with the day-to-day work completed by Order Processing.

Older engineering files from Department 10, 31, 45, 75 and the current files from the Department 25 Model Shop have also been scanned. The former have been returned to the respective departments in CD format. The physical papers have been shredded.

Department 25 mechanical files have been placed on the network and the papers returned to the Shop.

All of the Department 25 project files in the basement of X have been scanned and either put on-line or are available for viewing on CD

Purchasing Department files since 1998 have been scanned and put on-line. All Department 25 Quotations since 1987 (except for 2000 and 2001) have been scanned and put on-line. The QC department is also scanning their Serial Number index cards, which number about 500,000, and their CRR's and SFR's. As these are scanned the originals are discarded. Digital annotations are added to the Serial Card image files when additional QC information is generated.

Pictures used in manuals have been scanned and stored under the project name and model name. The original prints and photographs have been discarded. These items were previously stored in the basement, using about 225 boxes holding 100 copies of 4300 different pictures: 430,000 pages. Each picture also had an original photograph stored in a file nearby. This is the equivalent of about 30 filing cabinets volume.

Order processing now creates PDF images of orders at the time of entry, and the entire project folder including quotations and customer PO's are scanned at that time, as well as when the order is closed. Automated notifications are sent to the manufacturing department and to the customer by email and /or fax.


Storage Space Used:

The network is currently storing 349 folders containing 370,000 image files. This occupies 102 gigabytes of hard drive (RAID) memory. There are also CDs containing older corporate and departmental images that have not been loaded on the network. Order Processing files account for the majority of the files. Each building scans about 600 MB of data per month at the current rate.

Digital Storage Solution cost summary:

As of Nov. 13, 2003 DSS has scanned 169,984 project files containing a total of 3,097,000 pages at a total cost of $242,089. This is an average cost of 7.8 cents per page. Some of this work was departmental-only files, which will be a recurring cost. The bulk of the DSS costs to date have been corporate work (basement files) and that was a one time expense. The cost of scanning the basement files was about $204,000.


Internal Scanning cost summary:

As of Nov. 13, 2003 ******** has scanned 56,887 files containing 946,226 pages at an average cost of 3 cents per page.

In-House System Usage

The TIFVIEW program is used to find and display a stored item, and is loaded on about 160 desktops at the present time. The program is used for a successful search about 85 times each day, on average. Peak usage (about 30%) is on project files less than one year old, and there is high usage (60%) of files between 1 and 3 years old. Files older than 3 years comprise about 10% of the searches.

Order Processing Communications

Email messages are now sent to the production department, and email and FAX messages are used to acknowledge receipt and acceptance of the order to our customers. This has saved about one hour per day at each of our two Order Processing offices, for a savings of $20,000 per year.



Return on Investment To-Date

Based on $20 per square foot storage costs, the document imaging system saves about $37,500 per year of production area filing cabinet space. The system averages 85 successful searches per day. At $40 per hour burdened labor costs, this saves about $200,000 per year. Internal scanning has cost $30,000, and it has cost about $4000 to shred the old paper. The total savings ($344,000) and the total cost ($238,000) indicate an ROI of less than one year. This is an excellent return by industry standards for a project of this size. These savings will continue to accrue as the system is used in future years.



Five-Year Return on Investment

Going forward, we can calculate the savings from this project over the next five years as follows:


DSS finished scanning the Department 25 basement files in February of 2003 at a cost about $203,000. After that time the scanning costs will be due to our internal scanning stations, which are less than $15,000 per year. The five year internal scanning cost will come to about $75,000.

Other costs are incurred due to project management time, network storage hardware costs, and user desktop maintenance. From our experience over the past year the project management time is almost negligible. For the coming year the DSS work will occupy one or two hours per month for a cost of about $1000 per year. Network storage cost is a soft cost since we piggyback on existing servers. User maintenance may involve 1 or 2 hours per month or more when there are network issues, but this comes at a lower hourly rate and so may also be in the range of $1000 or so.

The total scanning system cost over five years is estimated at $290,000.



The money saved this year was due to recovered space used for filing cabinets, and reduced manpower costs to research older projects. Both of these factors will continue in the future. We do not anticipate significant reductions in filing cabinet usage in the future, so we will assume the same $37,500 savings per year over the next five years. We will not include the cost of the additional storage space which would have been required had we not embarked on the document storage system. We have also eliminated about 100 filing cabinets from the basement, saving $10,000 per year.

We anticipate more extensive usage of the stored image files in the future, as more people become aware of its practicality. During the first year of operation we had an average of 10 to 20 people using TIFVIEW. There are 185 in November, 2003. Our savings estimate above using $40 per hour was based on fully loaded clerical staff research time using the floor space filing cabinets. In fact some of that time is spent by engineering and senior staff, and some of the time is spent looking through the basement, which is much more time consuming than using the floor area. We can estimate the research time cost somewhere between $40 and $100 per hour. For this we will use $60 per hour and assume that the number of successful searches increases to 100 per day. We will assume that the average time for a mechanical file cabinet search (including the basement in the average) is 15 minutes. This brings the savings to $375,000 per year, or $1,875,250 in five years.

The total estimated five year savings due to the system is $2,375,000

Net five-year savings from the document imaging system are estimated at $1,635,000.