How does a document management system (DMS) work?

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 from 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.

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.

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. 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 fulfilment automatically.

Document management can help

What are the typical features of a Document Management System?

Document management systems tend to have features that streamline the process of creating, collaborating on, and managing your documents. Systems typically consist of several components, including:

  1. Document metadata

Your company’s content contains metadata — that is, basic information about a document. It’s not always visible when you open a document, but the metadata is always there. Metadata typically includes:

    • Date of creation
    • Name of the user who created the document
    • File size
    • Last user to edit the document
    • Last save date and time
    • Details about changes made to the document
    • Custom metadata such as invoice number etc. Creating your own metadata gives you the ability to fully control your documents.
  1. Document capture

A document management system is nothing without documents. “Document capture” is the process of creating and uploading documents into the system. It can take several forms.

If you’re adding physical documents to a document management system, you can capture them by scanning. The scanner might use optical character recognition (OCR) to transform text images into text you can edit in the document.

Another way to capture documents is to upload electronic documents from another app into the document management software. For example, you can integrate Microsoft 365 files or Google Docs into your system.

Finally, “document capture” can refer to creating documents, such as text files or images, directly in the system itself.

  1. Indexing

It’s not enough for a document management system to store your documents. You and your team need to be able to retrieve those documents quickly. For this reason, indexing is a crucial component of a document management system. It allows you to keep track of the content you upload or create in the system. The system can index documents based on the original creator, the team that uses them, or custom rules.

  1. Storage

A document management system allows you to store content and set specific rules for that storage. For example, you might create individual drives for documents based on the teams that have access to them.

Document storage can also involve archiving older materials, ensuring they are kept secure, and managing the eventual disposal of documents. How documents get destroyed or disposed of depends largely on the industry you are in and the type of documents you work with. 

You may be able to set rules for the retention of documents. For example, employee contracts might be retained in one section of your document management system for as long as a person works for your company. Once they leave, the contract might move to another area of the content management system, where it’s held for one year. After that, the contract can be permanently archived or deleted, depending on your company’s rules or any governing regulations.

  1. Document retrieval

When you create and store documents, you want to be able to retrieve them when necessary. Retrieval is an essential part of a document management system. How you retrieve documents depends on a few factors. 

You might set permissions on a piece of content so only people on a certain team or people in certain roles, such as managers or executives, can access and retrieve it. You can also limit how the document is retrieved. For example, a user might need to be logged into your organization’s network or using a company-owned device before they can access or download a piece of content.

  1. Document versioning

Documents tend to be living things. They evolve and change as team members edit them. In some cases, you might need to revert to an earlier form of a document or double-check an earlier version to see what changes a person has made. A document management system will create and store multiple versions of your team’s content, so you can keep tabs on it as it moves through its lifecycle.

  1. Searching

The documents stored in your organization’s document management system should be easy to track down. A search feature allows users to look up documents based on name, date or keywords or a combination of fields.

  1. Integration across platforms and systems

Your organization might use a variety of other software platforms for creating or organizing its content. Your document management system must integrate with any apps or systems you already use to keep your documents organized and ease the content creation process. 

  1. Document security

A document management system should have security features that control who has access to particular documents and the type of changes a person can make to the content. The system might use security features such as permissions to manage who gets access to what.

  1. Annotations

Sometimes, a user might want to make notes or leave comments for other users without altering the document itself. An annotation feature enables this. Depending on the security settings, a user might have permission to annotate a document without changing it.

  1. Workflow

Document management systems also include a workflow component that automates certain processes. For example, after the creator of a document finishes writing it, the document might automatically get sent to an editor. Once the editor signs off on the document, it might go to a reviewer, who checks it. Workflow automation ensures content flows smoothly and that there aren’t any lags or pauses in the midst of an important project.