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Fact: The former CFO of a defunct Internet company is indicted on charges of falsifying records to overstate revenue by $9 million.

Fact: The SEC (Securities and Exchange Commission) fines five brokers a total of $8.25 million for failure to preserve e-mail communications.

Fact: The CEO of a public pharmaceutical company is sentenced to seven years in jail and ordered to pay a $3 million fine for ordering the destruction of computer files and documents requested for an SEC insider trading investigation.

Stories like these, taken from the book Information Nation by Randolph Kahn and Barclay Blair, are becoming an all-too-familiar fixture of our newspapers, magazines, and news broadcasts. They are evidence that the laws and regulations the government recently put in place to protect against the corporate corruption so clearly demonstrated by companies like Enron and Arthur Andersen are now being enforced.

Whether it's Sarbanes-Oxley, HIPAA (Health Insurance Portability and Accountability Act), or the Patriot Act, most businesses face outside regulatory pressures of some kind. Now that it's clear that severe penalties are being levied, organizations are rushing to ensure they comply with the regulations that affect them. Nobody wants to be the next poster business for noncompliance. If convicted of an offense today, corporate executives can face up to 20 years in prison and a $5 million fine.

While this climate of compliance is nerve-racking for many organizations, it bodes well for today's technology providers. A recent study by AMR Research estimates that the total market opportunity created by compliance will reach $80 billion over the next five years. One company determined to grab its share of this market is ECS Imaging, Inc. This VAR is using records management expertise to show how its document imaging solutions can make the compliance process easier. This approach is driving a 26% increase in sales for the VAR in 2005.

Increase Sales By Showing How Imaging Reduces The Cost Of Compliance
Laws and regulations like Sarbanes-Oxley, HIPAA, and the Patriot Act each address different markets and have their own specific stipulations, but all center around the management, maintenance, and retention of records related to business operations. While a great deal of importance is placed on how these records are managed, none of the above regulations mandate the use of imaging technology in order to comply. An organization can maintain its paper processes and still be compliant, but doing so can be cumbersome and expensive.

Traditionally, businesses base their decisions to implement new technologies on an ROI or payback model that estimates the economic benefits of the technology and subtracts the costs. However, in the compliance world, illustrating the TCF (total cost of failure) can be more influential in closing a technology sale. In other words, what is the cost of not having an adequate base of technology to respond to requests for business records issued by the courts, regulators, and auditors?

"Many of our potential customers initially think of a file cabinet as an inexpensive way to store records," says Jim Pappas, CEO of ECS Imaging. "However, when you consider the labor necessary to file, search, retrieve, and refile records in this system, it actually costs $10,000 to $15,000 per year to maintain one four-drawer file cabinet."

These figures represent the daily maintenance costs of a paper records-keeping system. But, what if a business were required to provide specific records to an auditor in response to litigation? Employees would have to cease their day-to-day activities and manually search through several file cabinets to locate and pull only those records requested. This would result in lost employee time and possibly lost business. Also, the organization could face potential financial sanctions if this information is not presented in a timely manner. These hard and soft costs represent the TCF.

"Imaging technologies help protect against failure costs by providing an electronic platform where records can be quickly accessed, searched, separated, and retrieved while expending little human effort," says Pappas. "Also, more security can be applied to records in electronic form. You can control who has rights to specific records and what information certain employees are allowed to see."

Records Managers, Executive Leadership Key To Compliance-Driven Imaging Sales
Every employee in an organization shares responsibility for compliance, but many of the laws and regulations require that individuals with records management training and qualifications oversee compliance efforts. For this reason, records managers and compliance officers are becoming common positions in organizations across all industries. These individuals should be your primary contact when implementing an imaging solution to help with compliance.

"We didn't encounter a records manager until 1998, when one was employed with a city office client of ours," says Pappas. "Nowadays, we primarily work with records managers and compliance officers. They are appearing almost everywhere, including private industry, local government offices, and educational institutions."

A records manager or compliance officer may be delegated to set up the rules and determine the best practices to achieve compliance, but ultimate responsibility for the program lies with the CEO and other senior executives. These individuals will be the ones who face fines and imprisonment for noncompliance, so they should have a vested interest in the development of the compliance program and the technologies used to implement it.

"Our sales process starts with the records manager, but it is often also necessary to meet with the CEO to ensure the imaging solution being discussed is in line with his or her directives," says Debbi Richards, VP of ECS Imaging. "Also, during implementation, we provide training to all those affected by the solution -- from senior executives down to programmers -- to ensure consistency in the way the technology is applied to the compliance process."

Sell Compliance As A Process, Not A Product
The most important concept for an imaging VAR to communicate is the fact that technology alone will not make a customer compliant. "Compliance is a process, not a product," says Richards. "Imaging hardware and software can make the process easier, but compliance lies in the policies and procedures that are put in place before the imaging technology is implemented."

That being said, adjustments to the compliance process will be necessary when imaging technologies are introduced to an already compliant paper system. For example, many organizations discover that there is far more to scanning and imaging than meets the eye. The process consists of several stand-alone activities, from document preparation and the development of an indexing system, to a postscan review to ensure complete capture and usability of the image. Imaging VARs should help organizations develop policies and procedures based on industry best practices or standards for proper scanning, imaging, indexing, and storage of records. VARs can help companies write these procedures and present them to all employees, especially IT staff. This document will become the compliance criteria for making sure employees know what to do and get it right every time, at every step of the process.

VARs should also help their customers establish monitoring processes to ensure their employees follow these procedures. The process itself should also be audited regularly to allow for changes due to technology improvements. VARs can earn ongoing revenue in this capacity through client consultation and retraining of employees on use of the imaging system and scanning procedures.

Distributed Scanning Is A Model For Compliance

In a compliance environment, the earlier a document is scanned into the imaging system, the better. Sending documents en masse to a centralized scanning facility raises privacy and security issues and can lead to lost records. For this reason, distributed scanning is the model of choice for many compliance-related imaging applications.

Distributed scanning allows documents to be scanned where they are created or initially received, but it also takes the scanning process away from trained scanner operators and places it in the hands of administrators, accountants, and knowledge workers. This contingent is largely unfamiliar with how to operate a document scanner, and therefore ease of use is becoming the primary selling point for workgroup and departmental scanning hardware.

ECS Imaging, Inc. has success selling Xerox DocuMate 262 desktop scanners in distributed environments where ease of use is a primary concern. The DocuMate 262 incorporates One Touch technology that eliminates the multiple steps often involved in sending scanned documents to other applications or devices. "With the DocuMate 262, we can help a customer preprogram scanner settings so that images can be launched to other applications with the touch of a button," says Jim Pappas, CEO of ECS Imaging. "For example, users can choose to scan documents to searchable PDF, scan to print, scan to archive, scan to network, scan to OCR [optical character recognition], or scan to e-mail."

The scanner becomes even more suitable in a compliance environment when combined with a Xerox UDO (ultra density optical) drive. These two products can be used together to automatically generate and store searchable PDF files, helping clients improve their data retrieval processes.

DoD 5015.2-Certified Imaging Software Is A Plus For Compliance

The vendors and products you represent can have a significant impact on influencing a sale. In the compliance market, many customers will place a great deal of emphasis on whether or not the imaging software you use is DoD (Department of Defense) 5015.2 certified.

DoD 5015.2 establishes rules for retention and destruction of documents. "ARMA and AIIM are accepting DoD 5015.2 as the de facto standard for records retention today," says Jim Pappas, CEO of ECS Imaging, Inc. "These organizations are currently using it as the model, and from what I've read and seen I don't think that is going to change because the requirements are very stringent. I feel being certified on a DoD 5015.2 imaging product has helped us get sales in the compliance market."

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