Investing in document management is a greater opportunity than even some of the savviest investors may realize.

American beliefs are predicated on capitalistic mentalities, goals, and objectives, and rightfully so. Insomuch, The American Dream is defined as the attainment of these goals and objectives: The nice home with the white picket fence, the two dogs, the happy children, and the job to make these boons a reality.

Although smart investing has been a surefire way to secure our financial futures as consumers, venture capital funders, entrepreneurs, small business owners, and ordinary people are beginning to learn that the success of their investments hinges largely upon the internal processes of the companies in which they invest.

That’s not to say that innovation, great products, and proper market positioning aren’t important – it’s just that these things are incomplete without an internal assessment of a company’s operating procedures.

It’s for this reason that investors should acquire a more holistic investment strategy, one which analyzes the internal workings of an organization, but in tandem with traditional metrics, too. A good place to begin in such an assessment is the way an organization handles its documentation, filing, and imaging processes. Here’s why investing in document management matters.

Why Document Management Use Should Matter to Investors

A company with greater efficiency than its competitors is always worth investing in, especially if it belongs to an industry teeming with innovation.

Document management systems produce measurable efficiency. Although stakeholder meetings usually entail questions about organizational leadership, strategy, competitor intelligence, and product positioning, they should also include questions about what the company is doing to streamline its information processes.

In today’s information age, information is an asset practically tantamount in importance to time and capital. Considering that every 2 days we create as much information as we did up until 2003, the offices of the companies we invest in are bound to become digital landfills unless the mediums containing our information are managed with precision, exactitude, and organization.

There is no business technology better equipped to accomplish this task than document management software.

After all, knowledge is power, and without effective information management, knowledge in today’s corporate world is difficult—if not impossible—to come by. Investing in document management makes this knowledge a reality.

An office could contain heaps and piles of valuable information, but if the information can’t be leveraged, retrieved, or studied with great efficiency, the information is virtually useless.

For those wishing to measure their information, enterprise content management (ECM) is a more valuable resource than document management, as the latter of these two technologies merely harnesses information for observation. To learn more about the differences between ECM and DMS, visit our blog on the subject.

Handling Industry-Related Volatility through Document Management

Moving from an investor’s perspective to a business owner’s perspective, there are things business owners and entrepreneurs can do to make their company more deserving of venture capital funding, and one of these strategies is to safeguard an organization against industry-related volatility through business process automation–a fundamental component of investing in document management.

For instance, the stock price of a company or entire sector may go down if information is breached or compromised within an organization or throughout its industry. Applying data redundancy in mass or to an isolated situation (as would be the case with a company), could safeguard an entire market or its biggest player from stock price plummets related to data compromise or breach.

Although some facets of market volatility are uncontrollable, hence the drawback of planned economies, protecting business information is a document management system feature with implications as scalable as they are positive.

However, there is usually a way to protect against industry volatility from the inside out—and it requires optimizing document and file operations within any given company or organization, whether large, small, or mid-sized.

A paradigm shift in the services industry is beginning, and it stresses that volatility should not just be handled through external analysis, but also from the internal perspective of the organization. Now more than ever, What the Kellogg School of Management first coined to be “internal branding” is becoming grounds for improved processes at the micro-data and micro-documentation level, for it frees up time to improve monetizable aspects of a business when investing in document management.

In other words, reducing operating expenses (OPEX) can help organizations handle volatility from the inside out, not just through complex assessments of the industry competition or other external factors.

Hedging Bets on Stock Options through Document Management

Now, let’s shift back to an investor’s perspective, but this time an internal investor’s perspective.

Stock options are traditionally viewed as some of the riskiest investments a person can make. Consequently, stock options are avoided by most investors unless they have a significant degree of experience managing complex portfolios, or they work within an organization with a high degree of transparency in its strategy and offer reduced costs for stock options.

However, a stock option is much more than an employee’s right to shareholding at a discounted rate in an organization that he or she works for. It also entails a complex gamble far more significant than one taken with a traditional stock, which we’ll get in to in a minute.

This is one of the many reasons stock options are only opted in for by employees who work for the organization they’re buying the stock from—they not only get “inside scoop” on how the company will do, they get to impact how the company will do by working on behalf of it. Investing in document management from this perspective makes one an “insider” in the truest sense of the word.

Stock options become more navigable territory when you can depend on operational processes within your organization to increase profits and efficiency while reducing operating expenses. With a document management system in place, ensuring accurate vetting of the following stock option barometers will become easier and likely more successful.

Timing Matters, and Document Management Isolates the Timing Variable in Stock Options

Unlike most investments, stock options are riskier because they require investors to guess the timing of specific impacts in the market, whether the impact be neutral, positive, or negative. If an organization deploys a document management system, it will be easier to guess the timing of when a stock price will go up.

Usually, within 3 months or 90 days, a significant amount of capital can be freed up by use of a document management system and allocated to profit-forming activities, which should improve the accuracy of and guide stock option investing decisions for employees.

Direction of the Company Must be Predicted

Stock options also require that an investor successfully predicts the direction of a company’s movement. Contrary to the commonly held misconception, you can make money on a stock option if you successfully predict an organization will struggle – all one must do is call the shot beforehand. However, with a document management system in place, there’s a much greater probability one will be able to predict the advancement of the company.

If one opts in for stock options in an organization, guessing the direction in which the company will go (profit or loss) is integral to making money on the stock option. Although it seems counter-intuitive to hedge bets against your own employer, it is something that happens on a regular basis, and it can be profited from.

Magnitude Is Important

When it comes to investing in document management, not only do stock options require the investor to guess the direction of a company on the exchange and the timing of the change, they also require the investor to predict the financial magnitude of the direction in which the stock price moves on the exchange.

The magnitude a document management system has on operating expenses (OPEX) will help investors gauge ROI by looking at other companies that have gone paperless, and with what type of results. Remember to analyze your case in comparison to a similar company in a similar industry.

The industries that will gain the most from going paperless are real estate, accounting, finance, insurance, construction, property management, and healthcare.

If done correctly, going paperless through a document management system can reduce OPEX enough to garner profits ranging anywhere from $20,000 to $75,000 over the course of 5 years.

For instance, Gloria Hill, a successful tax professional who’s used eFileCabinet for roughly a decade, notes she has saved over $75,000 since using eFileCabinet document management software.