How Does a Document Management System Work?

What is a document management system?

An electronic document management system (DMS) is a system for storing and tracking documents. It originated as a way to convert paper documents to digital documents. As a result, an DMS is sometimes called an electronic filing cabinet. But it’s so much more than that today.

An document management system is a way to automate manual processes. And that makes it a key part of a digital transformation for any organization.

How does a document management system work?

It captures documents. It stores documents. And it distributes documents.

Here’s how.

1. Document Capture—from Any Source

Document management systems need to do document capture from any source.

Document capture is the ability to save documents so you can find them later. This usually means indexing. Indexing is essentially a way to classify a document. You add terms to the document’s metadata, like order number or customer number. These indexes make it easier to find documents later on.

Done well, document capture ensures you can find any document tomorrow or ten years down the road.  There are several ways you can capture documents.

Capture for Paper Documents

High-speed scanners have long been used to capture paper documents. But scanning documents on its own isn’t enough, and paper-based document management is far from efficient.

A document management system should take documents from the scanner. It can then add indexing by order number, for instance.

Indexing can be done by hand (by you or anyone else). Or indexing can be done through enterprise resource planning (ERP) screen integration, zone optical character recognition (OCR), or barcoding. Or you could even capture indexes using smart processing software.

Capture for Email

Email messages—and their attachments—are a key part of conducting business today. Receiving important documents—like invoices—by email is commonplace.

A document management system gives you a way to capture these messages—and invoices—instantly.

Capture for System Generated Reports

Business systems generate reports. These reports could be on everything from inventory levels in a warehouse to sales trends.

A document management system gives you the ability to capture these system generated reports automatically. And that helps you make them available to your warehouse managers and sales teams faster.

Capture for Any Application

In addition to system generated reports, you might have other applications producing documents. Applications for customer relationship management (CRM) and enterprise resource planning (ERP) are usually among these.

A document management system gives you the ability to import these documents instantly. And that makes it easier to route them (if they need approval) or share them.

2. Central Document Storage

Document management systems need to have central document storage. This is crucial for managing and retaining documents that come from all over the place.  

This is important for several reasons.

Central Access

Today, employees need immediate access to documents from anywhere at any time. After all, business documents and reports are used to make decisions every day.

A document management system gives employees the ability to access documents wherever they are. This can be done on-premises. Or it can be done by utilizing cloud-based document storage.

Central document storage should be used for both static content and dynamic content. Static content means the documents your organization typically creates every day—like invoices and purchase orders. Dynamic content means documents like forms, webpages, and emails.

Document Security

Document security is just as important as central access. And a document management system gives you security in two main forms.

First, it incorporates version control. For some documents, you’ll need the ability to make revisions by checking a document out. But you’ll also need the ability to revert those revisions if they’re made in error. And that means tracking what changes were made when.

Second, document management systems include permissions so you can control access. This means you determine who can access what documents. You can define user rights to author, revise, view, route, or delete documents.

3. Document Retrieval and Distribution

Document management systems need to include document retrieval and distribution. This is important to make sure you’re able to utilize and share your documents.

Document Retrieval

Document retrieval needs to be quick and easy—or else it’s useless. When a customer calls in with a question on an invoice for a customer service rep, that rep needs to be able to retrieve the invoice in a snap.

Document management systems give you the search features to be able to retrieve a document on any keyword search. That’s because of indexing. Using the right index keys ensures you’ll be able to retrieve a document.

So, with a document management system, customer service reps can answer questions in seconds and make customers happy.

Document Distribution

Document distribution is a key component of any document management system. It’s the way you’re able to send documents to customers, vendors, and even employees.

Document management systems give you the ability to distribute documents any way you need to, like email and FTP. 

Process and Workflow Automation

Distributing documents is just the beginning. Today’s document management systems need to be able to process digital business content, including workflows (according to Gartner’s Magic Quadrant).

A document management system gives you the ability to automate manual processes and workflows.

Automating manual processes is simple. You just need to set the system up the right way. For instance, if you receive an invoice, it can be automatically routed to an accounts payable system. There it will be matched and paid. If the system detects a problem, it can send a notification. Otherwise, the invoice will be paid instantly. And that means you don’t need to chase an invoice through an approval process anymore.

Integrating your document management system with your ERP is another great way to automate workflows. When an order originates in your ERP, it can trigger a workflow in your document management system. This workflow will take the order through an approval process and on to fulfillment automatically.

What Key Features Should a Document Management System Have?

A document management system should have the following features:

Powerful Workflows

Streamline your document processes from start to finish with the ability to automatically route electronic documents and files through your approval, payment, order-to-ship, and other processes.

Data Integration

A proper DMS makes your existing applications and systems more valuable by connecting your ERP, POS, LOBS, and others to keep data consistent across your enterprise.

Report Management

Spend more time analyzing data than collecting it when your DMS can automatically create and deliver reports in the right format and eliminate the need to print spool files.

Advanced Security Features

Protect your documents from threats with security features that make it easy to maintain oversight on your document processes.

What are the Benefits of a Document Management System?

Document management systems should improve the way things run at your organization. They should give you:

More Time to Do the Work That Matters

No one wants to do mundane tasks day in and day out. A document management system can take care of those tasks for your employees.

That means you’ll save time across the entire lifecycle of capturing, storing, and distributing documents. And it will give you (and your employees) more time to focus on the work that matters, like manufacturing a great new product or admitting new students.

Convenience for an Increasingly Mobile Workforce

Today’s workforce is increasingly mobile. So, your employees need to be able to work with documents anytime, anywhere.

A document management system will help you accommodate your mobile workforce with access to documents from anywhere. And that means when a customer has a question about an order, you can find the information in an instant.

Peace of Mind

Security is a top concern for organizations everywhere. Worrying about the security of your business documents could easily keep you up at night.

A document management system can give you peace of mind. With security controls, you don’t need to worry about your documents going missing.

Room to Grow

Your business is growing and so are your documents. Shouldn’t you be growing along with it?

A document management system can take the burden of mundane tasks off your plate. That means more meaningful work—and more opportunities to grow your career alongside your organization.