Electronic data produce paper cuts

Paper has been around in one form or another for 5,000 years. Paper money has been the preferred medium of exchange for business transactions for about 1,000 years. For the past 30 years, organizations have been trying -- with limited success -- to eliminate paper from business processes.

Given its history, it is no surprise that paper still plays a major role in most corporations. But as businesses redouble their efforts to increase productivity by automating and rethinking paper-centric business processes, IT is finally gaining the upper hand.

There's little choice, says Alan Goldstein, managing director at The Bank of New York. "As volumes increase, the only way firms can adjust is by going to greater automation," he says.

The effects of such efforts are being felt in the paper markets. "Paper consumption levels are essentially flat," says Merilyn Dunn, an analyst at InfoTrends/Cap Ventures. Sales of cut-sheet paper are expected to grow at less than 2 percent over the next few years, a sharp drop from the double-digit growth rates of 10 years ago. The slowdown is a direct result of the replacement of paper-based systems with electronic ones, Dunn says.

Businesses have made strides in reducing paper flows. Thanks to technologies such as Electronic Data Interchange and Web services, imaging and electronic documents, and document management systems, many workflows have been redesigned to reduce or eliminate paper-centric processes and replace them with more efficient ones.

Re-engineering workflows is the key to cutting costs, says Steven Thum, vice president of the business process engineering division at Bank of New York. "You really need to understand technology, how you can take advantage of it and re-engineer the underlying processes," he says.

Sticking to paper

In some areas, however, the use of paper is likely to continue for the foreseeable future. Many people still have a cultural preference for paper-based output. For example, Sonora Quest Laboratories is automating its medical test lab processes, but at the end of the day, health care providers still want a printout.

"A lot of doctors still want a hard copy. [They] like to show it to the patient," says CIO Bob Dowd.

People like to have paper copies of documents that represent the final outputs of transactions, says Richard Harper, senior researcher, socio-digital systems at Microsoft Research. "Paper can act as the physical embodiment of a transaction," such as an insurance policy, he explains.

Even that could eventually change. More than 40 percent of the workforce was born after 1975 and has always used computers, says Dunn. "They've learned to absorb and retain information from screen displays ... and they look at paper as redundant," she says.

That has been the case at Bank of New York, where users have adapted to viewing document images and PDF files on screen instead of printing them. "I've seen how readily some folks who have more than a few years in this industry have embraced the ability to pull up a record on their desktop. People printing it is truly the exception," says Thum. Nonetheless, there's a difference between viewing transactional documents on screen and reading large reports and other knowledge-intensive documents in that way, says Harper.

At appliance maker Whirlpool, product manuals are an area where paper remains the superior technology, despite the potential cost savings of digital documents. A paper manual can be attached to an appliance, where it is more immediately available to the customer than electronic documents on a CD-ROM or Web site. Paper also has certain tangible qualities that are attractive for marketing purposes.

"[Marketing] may want to use a certain type of paper that conveys our brand image," says Thomas Ehrman, director of global enablement services at Whirlpool.

At a software company like Microsoft, however, printed manuals aren't very useful. "There's no way you could print a manual for Windows, because it changes every six weeks," says Harper.

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