The Total Cost of Scanning: A Framework for Analysis and Improvement

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1 The Total Cost of Scanning: A Framework for Analysis and Improvement By Anthony Barbeau Worldwide Marketing Manager, Mid-Volume Scanners Eastman Kodak Co., Business Imaging Systems Division Presented at The Association for Work Process Improvement (TAWPI) 1998 Annual Forum & Exposition, Chicago, July 15, 1998 As any good records manager knows, document capture involves more than simply feeding documents into a scanner at one end and getting digital images on a computer screen at the other end. Likewise, controlling the costs of document capture goes far beyond simply buying the least expensive scanner with a high enough transport speed to handle an organization s workload. But how many managers take a sufficiently broad systems view of the document capture process? And how many recognize that decisions made at every step especially in the purchase of the scanner itself will affect costs throughout the system? In fact, the failure to view document capture as an interrelated system, and to purchase equipment and software with the system in mind, is the most likely cause of higher-than-expected scanning costs. These costs include the cost of poor quality, which an organization might incur months or even years after a document has been scanned, when the document is found to be unreadable and unusable. From the input of paper documents to the output of digital images, there are eight major steps in the document capture value chain. Every step offers opportunities for cost reduction and efficiency improvement. The steps, shown in Figure 1, are: Preparation, including staple and paperclip removal, repair of damaged documents, and sorting and batching documents for efficient scanning. Document input, including feeding the scanner, clearing jams, and cleaning and maintenance. Image capture, which involves the conversion of documents to digital form, and also includes document output and disposition, in which the documents are removed from the capturing process and are either filed away, disposed of, or held for rescanning. Image formation, in which adjustments and corrections are made to the scan, including compensating, filtering, and noise removal, as well as binarization. Image enhancement, where images are deskewed, cropped, and rotated, and borders are removed. Quality assurance, in which image quality is verified and, if necessary, documents are sent back to the document input stage for rescanning. Indexing and extraction, a large step in which document capture software does most of its work, including forms recognition, data capture and optical character recognition. At this stage, information is used for indexing and input into databases, and might be combined with other information for further use by the organization. Also, images are put into proper file formats and organized into directory structures. Export and delivery, where images are routed and presented to the system as part of the workflow and database management process. This also includes the storage of the image for later access. Note that only three of these steps, document input, image capture, and image formation, are generally part of the actual scanning procedure. Preparation occurs before scanning, while all of the steps after image enhancement quality assurance, indexing and extraction, and export and delivery - can be grouped in the category of post-scan processing. We will now examine the costs associated with each of these three categories, preparation, scanning and post-scan processing, over a three-year period in a mid-volume scanning environment (see Figure 2).

2 Surprisingly, the costs associated with scanning, including the purchase and maintenance of the scanner itself which, at about $25,000, is likely the most expensive piece of equipment in the value chain - will represent only about 24 percent of total document capture costs. (In a high-volume document capture environment the costs drop to only percent of the total.) The preparation stage, however, represents about 37 percent of total document capture costs. Even though capital outlays are small, involving only the purchase of tables and, at most, a document jogger, the combination of labor costs and charges for expensive office space dwarf the costs of scanning. The post-scan processing stages incur the highest costs of all, at 39 percent. Capital and maintenance expenditures, which include the one-time cost of personal computers, printers, and software, are actually lower than those for scanning. But post-scan processing is much more labor-intensive than scanning, and the space requirements are more than double. The Costs of Quality A complete examination of document capture costs should also consider the thorny issues related to the cost of poor quality. These problems tend to appear during or after post-scan processing and are often harder to quantify because they are scattered over a variety of functions. The costs of quality can be categorized into three groups: Failure costs, both internal and external. Appraisal costs. And prevention costs. Internal failure costs are those associated with defects (errors, nonconformance, etc.) that are found in the process and include such items as rescans. External failure costs are associated with defects found after the process has been completed. An example of this would be an unreadable image found by a customer service representative while performing his or her job. In this case, special action must be taken after the defect is found, such as requesting an original copy of the document, in order to provide the required level of customer service. Appraisal costs are incurred in determining the degree to which a scanned document conforms to quality requirements. In the world of manufacturing, this generally involves inspection and audits. In document capture, it means image quality assurance, prior to release. Finally, prevention costs are related to the activities that keep failure and appraisal costs to a minimum, such as time spent cleaning a scanner to prevent jams and maintain high image quality. The costs of quality always revolve around defects in the process and the final output, and an assessment of these costs is important for defining key opportunities for improvement and cost reduction, and for analyzing an organization s total cost of scanning. Consider: What is the cost associated with an image that has been incorrectly indexed or is not readable? The cost could show up in litigation problems, if a scanned image is later discovered to be unreadable and the original document cannot be found. Even if the document can be eventually found, what is the cost of searching for it? In other scenarios, the organization might incur costs in the form of additional work to follow up on a customer inquiry, or in manually entering data, or it might face delays in processing work, which slows down work elsewhere in the company and ultimately leads to cash-flow problems. Measuring defects, or defect ratios, and assigning cost value to them based on their impact is the most straightforward approach to measuring the cost of quality. A defect in image quality for example, an image that is cutoff and unreadable that is caught during the QA process will result in a rescan. Each rescan requires that the original document be located, scanned and verified. This process generally results in a cost that is three times the cost to scan the original document. Just finding the document can take a significant amount of time. Assume that it takes five minutes to locate, rescan and index a document, and the percentage of rescans to total documents is 1 percent. If you are scanning 10,000 documents a day, the cost of quality associated with rescans is 100 rescans times five minutes, or 500 minutes. That costs $20,800 annually at a $10 labor rate. The best way to avoid these kinds of costs is to invest in scanners and image processing software that will provide high-quality images in the first place. Scanners that employ adaptive threshold processing technology, automatic deskewing, border removal, and other features that ensure clean, crisp usable 2

3 images, will pay off in the long run. The up-front investment in quality will reduce the need for rescans, speed up the quality assurance step in the value chain, and minimize the chance that a poor quality image will slip through undetected, and create problems down the road. Investing in quality can also impact the costs associated with document preparation. Scanners that are capable of reading barcodes can reduce the need for batching and separating documents. When the scanner reads the barcode, the digital image is automatically batched, so the separating process is largely automated. The Scanner is the Key In many other ways, the scanner itself is the key to cost reductions throughout the document capture process. For example, one way to reduce labor costs would be to replace two low-volume scanners with one high-speed, high-volume machine, eliminating the need for one operator. Other opportunities for cost reduction are less obvious. A scanner might have a low price and a high rated transport speed. But buyers must also consider the time-intensive work involved in clearing paper jams, photocopying torn pages, removing sheets from oversized plastic protectors, and other laborious chores like removing and cleaning feed rollers. These hidden factors are as important to the bottom line as the more obvious retail price and pages per minute rating. A recent white paper from Kofax Image Products provides some perspective on how much companies can save when scanners are easy to use, provide better image quality, and require fewer rescans, resulting in greater labor productivity. The Kofax model assumes that a clerical worker charged with document scanning is paid $10 an hour, or.28 cents (28/100ths of a cent) per second. By shaving one second off the time it takes to process every document, and assuming that 10,000 documents are scanned each day, an office can save $28 per day. Over the course of a year five days a week, 52 weeks per year the savings total $7,280. Obviously, the seconds, and thus the costs, add up when operators must frequently stop a scanner and clear a paper jam, especially if it takes significant time to clear a jam. Seconds and costs multiply when documents must be rescanned, or photocopied and then rescanned, because the scanner would not accept a type or size of paper, or the document was in such poor condition it would not go through the scanner. Or, consider the time and money that is lost when the scanner goes down altogether and must sit idle while the office waits for a service technician. Clearly, a scanner will be less costly to operate over time, if: It is well designed and simple to operate. Good ergonomic design can enhance operator productivity. Scanners should allow operators to perform as many tasks as possible from a sitting position. Controls should be easily accessible and operators should be able to view the documents being scanned, and retrieve them after scanning, from a seated position. When operators can work comfortably, they require fewer breaks and are less likely to develop health problems from needless reaching and stretching over months or years. It is difficult to jam, and easy to clear if it does jam. It is easy to maintain. Every scanner requires routine maintenance. Paper dust must be removed and rollers cleaned at regular intervals to achieve maximum performance and image quality. But how easy is it to perform such maintenance? If primary parts are difficult to access, operators will tend to clean the machine less frequently, leading to poor image quality and, eventually, a service call, which might incur a charge and will certainly result in costly downtime for your scanning operation. Actual Throughput vs. Raw Transport Speed Several other factors also contribute to the overall cost of scanning, though these factors are often not considered when a purchasing decision is made. Managers sometimes overlook the question of throughput. Most vendors determine their throughput rate by measuring the raw transport speed, a theoretical maximum speed with everything operating perfectly including the person feeding documents into the scanner. But transport speed does not 3

4 account for gaps between documents, slowdowns that result when different types of documents are scanned, or when batches are different sizes, whether documents are in landscape or portrait mode, or operator productivity. Some operators, and some scanners, are significantly more productive than others. In addition, some scanners can scan documents faster than the scanner interface can process them, which results in delays. The bottom line is that transport speed is not a meaningful criterion for evaluating differences between scanners. A far better comparison than raw transport speed is a measure of productivity: How long does it take to scan a standard batches of mixed documents? This measure takes into consideration limitations in the feeder, delays due to jam clearance and re-scans, and restrictions in the scanners electronics to process and deliver images to the host. With the help of independent testing organizations, Kodak engineers evaluated scanner productivity by timing the results to scan 1,500 documents in batches of 100 each. As would occur in real customer operation, these batches included documents in varying sizes, thicknesses and paper conditions. Jam clearance was included in the timing, and conservative penalties were assessed for rescans. The penalty for a rescan was the total of the time necessary to find the original document in the batch, copy the original document onto paper that could be properly scanned, and then rescan the document. Using this method, the productivity of different scanners can be compared by totaling the number of seconds required to scan the 1,500-document set. For example, if Scanner A requires 1,000 seconds, and Scanner B requires 1,800 seconds, then Scanner B is only 55.5% as productive as Scanner A even though Scanner B might claim a higher raw transport speed. Speed can also be affected by output resolution. As a rule of thumb, higher resolution is better. However, the basic laws of physics suggest that higher output resolution for a given machine means proportionally slower speed. Also, as mentioned earlier, better scanners employ sophisticated imaging algorithms to clean-up an image and remove spurious data, but this can also result in slower operating speeds. But the better the image, the less likely it is that a document will need to be rescanned. Scanners with adaptive threshold processors eliminate rescanning of documents by up to 50 percent. This technology automatically adjusts parameters to accommodate colored paper stock, low-contrast documents, and poor-quality originals. This improves the legibility of documents, as well as dramatically decreasing the rescan rate. Other cost factors Reliability is another important factor in calculating costs. If you run a scanner under conditions that are more strenuous than the scanner is designed for, you risk a service call during a peak processing period. Reliability also affects throughput. Records managers should ask vendors to provide mean time between failure figures, and to define what they consider a failure to be. Also, ask other customers about performance characteristics. Their input may have a significant impact on your final selection. Managers should also determine whether a manufacturer or a distributor provides service, what kinds of service programs are offered, and what level of service is required. A two- or three-shift scanning operation may require round-the-clock service and faster response times. Records managers who do not work through an integrator should find a service provider that is equipped to address software and hardware problems. Meanwhile, you have to clearly consider what you get for your money. Will the scanner require some additional accessories before it is a fully functional scanner? These accessories can include automatic document feeders which can have a big impact on worker productivity as well as interface boards. A video board, which is required for many scanner interfaces, can cost up to $6,000, and duplex scanners that simultaneously scan both sides of a document, require two boards. On the other hand, a scanner that uses a SCSI interface requires only a SCSI card, costing about $150, if it s not already built in to the computer. Also, when considering volume, managers should determine the office s peak volume, rather than its average volume. If 60 percent of scanning work is done on Mondays, the scanning system must be designed to accommodate that volume. It s like choosing a car: Even though the entire family only 4

5 occasionally rides together say, on weekend outings and summer vacations you might still choose a minivan over a compact car, to accommodate those peak passenger loads. Finally, scanner buyers should consider how well the scanner will hold up over the months and years. Few manufacturers assign or, more importantly, publish an estimated life for a piece of equipment. This useful life is not the time between belt changes or cleanings, but the life before repair is no longer economically feasible. A more expensive scanner might offer considerably more value if it lasts three times as long as a low-end model, which might also require more frequent service calls. Conclusion Determining the total cost of scanning involves more than a simple equation. But, as a rule of thumb, managers seeking to reduce overall document capture costs would do well to invest in high-quality scanning equipment, as long as that equipment helps them reduce preparation and post-scan processing costs. Robust document feeders, high image quality, and productivity features, such as barcode readers, can help reduce those costs and thus alter the value equation. In the long run, better scanners save significant money, often more than covering their price premiums through lower labor costs alone. 5

6 Figure 1: Steps in the Document Capture Process Preparation Staple and paper clip removal, damage repair, sorting, batching. Scanning Document Input Feeding scanner, clearing jams, cleaning and maintenance. Image Capture Convert documents to digital form. Document output and disposition (documents filed away, disposed of, or held for rescanning). Image Formation Adjustments and corrections made to the scan (compensating, filtering, noise removal, binarization). Post-scan Processing Image Enhancement Images deskewed, cropped and rotated; borders removed. Quality Assurance Image quality verified. If necessary, documents sent back to the document input stage for rescanning. Indexing and Extraction Document capture software does its work: forms recognition, data capture, optical character recognition, indexing, input into databases, information extraction. Digital document might be combined with other information. Images put into proper file formats and organized into directory structures. Export and delivery Images routed and presented to the system for workflow and database management. Storage for later access. 6

7 Figure 2 Document Capture Costs: An Example Capital Preparation Scanning Post-scan Processing Tables, jogger, $1,500 Mid-volume scanner plus PC, $25,000 Two PCs, printer, software, $12,000 Total (3 years) $47,500 (11%) Maintenance Labor None Two people $40,000 per year 8% per year $2,000 per year One person $20,000 per year 8% per year $1,000 per year Two people $40,000 per year $300,000 (71%) Space 120 square feet $12,000 per year Total (3 years) $157,500 (37%) 40 square feet $4,000 per year $103,000 (24%) 100 square feet $10,000 per year $165,000 (39%) $78,000 (18%) $425,500 (100%) Calculations are based on the following: Three-year time period. Labor with $10/hour x 8 hours x 250 days = $20,000/year. Space (roughly 6 foot by 6 foot area) of 40 square feet per scanner at a cost of $100/square foot/year. Capacity (based on scanning and assuming other operations can sustain) is roughly 1,000 documents per hour x 6.5 hours x 250 days x 3 years = 4,875,000. Cost per document is $425,500 / 4,875,000 = $0.09 (8.7 cents) 7

8 Figure 3: Costs associated with purchase of scanner. Costs associated with purchase of a scanner: Purchase of scanner and scanning software. Purchase of tables for preparation work. Purchase of document jogger. Purchase of personal computer, printer and software for post-scan processing. Purchase of video boards (approx. $6,000, two required for duplex) or SCSI boards (approx. $150), if not included with PC. Cost of automatic document feeder, if not included with scanner. Costs associated with scanner operation: Labor for preparation, scanning and post-scan processing. Includes time and labor to organize documents into like batches if scanner lacks robust feeder, barcode reader, and other productivity features Space for preparation, scanning and post-scan processing. Time and labor to clear paper jams. Time and labor to photocopy and rescan oversized or poor-quality documents, or documents on unacceptable paper stock. Time and labor to deskew and clean up images, if scanning and processing software does not do so automatically. Downtime for repairs and, ultimately, replacement. Costs are lower for highly reliable scanners with longer lifetimes. Cost of quality factors: Internal failure costs - errors and nonconformance, resulting in rescans. External failure costs - errors found after post-scan processing (often months or years afterward), resulting in efforts to relocate original document. These costs could include litigation or downstream workflow penalties. Appraisal costs - quality assurance prior to image release. Prevention costs - cleaning and maintenance to ensure image quality and prevent jams. These costs are higher if the scanner is difficult to clean and maintain. 8

9 Bibliography: Kofax Image Products. The Dynamics of Cost in Document Capture. Company White Paper. September n.p. Online: Internet. 5 May Available: 9

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