IDC VENDOR SPOTLIGHT

IDC #EUR146722220

HOW A DIGITAL OR HYBRID MAILROOM

STRATEGY CAN TRANSFORM YOUR

ORGANIZATION Author:

Sharon McNee

August 2020

Sponsored by

How a Digital or Hybrid Mailroom Strategy Can Transform Your Organization Introduction

This IDC Vendor Spotlight provides an overview of the trends, benefits, and challenges linked to the digitization of the mailroom.

Market disruption is dramatically underscoring the crucial requirement for enterprises to implement measures to guarantee business continuity and remain resilient in any prevailing market condition or circumstance. Digital transformation and the confluence of economic, environmental, security, and corporate compliance imperatives are giving rise to global demand for outsourcing of non-core business activities. Recent market disruption has created fear, uncertainty, and doubt, and the requirement for enterprises to focus on continuity and resilience as well as disaster recovery has never been so critical.

In the current "do more with less" culture, most enterprises are overwhelmed as they have neither the resource expertise nor the bandwidth to manage the increasing workload while all the time upholding good corporate governance. Therefore, more organizations are seeking the assistance of external business partners to lift some of the heavy burden. According to IDC, worldwide business process outsourcing services spending is forecast to show a CAGR of 2.6% between 2019 and 2024 (source: IDC #US45108920).

Strategic outsourcing delivers on several key fronts: cost reduction, efficiency gains, risk sharing, flexibility to scale, and access to technology and expertise. Buying power and economies of scale enable outsourcers to price very competitively and to pass on these benefits to their customers. However, cost is not the overriding criterion. Organizations must prioritize the expertise and suitability of the outsourcer and any subcontractors if applicable. Strategic outsourcing affords enterprises the luxury of focusing on their core business. When strategic outsourcing meets digitization of traditional analog or paper processes, the outcomes can be truly transformational.

The mailroom is an area ripe for digitization and optimization. Although familiar with the concept of the digital mailroom, most enterprises still have a predominantly physical operation. IDC's hardcopy survey data shows that only 37% of 500 + companies in Western Europe operate in an overall hybrid environment (where 50% of processes are digital), though that is expected to rise

WHAT'S IMPORTANT 

Though familiar with the concept of the digital mailroom, most enterprises still operate a predominantly physical and onsite operation. The mailroom is an area ripe for digitization and optimization. 

Market disruption is further fueling the need for digital transformation in the enterprise. Business continuity, disaster recovery, and organizational resilience are now top‐of‐mind priorities. 

By partnering with a specialist outsourcer that can digitize your mailroom and migrate you to a digital or hybrid operation, you will achieve far‐reaching process efficiency and productivity gains as well as significant cost savings.  

The mailroom is the portal into and out of the organization, so it must be protected from any external physical or digital security threats. 

New ways of flexible working and collaborating afforded by hybrid or digital mailroom process increase your attractiveness as an employer.  

AT A GLANCE 

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How a Digital or Hybrid Mailroom Strategy Can Transform Your Organization

to 63% in 12 months' time (source: IDC #EUR146482820). Transitioning to a digital mailroom or a hybrid physical and digital setup will facilitate alignment with companywide digital transformation projects and adherence to security, corporate compliance, and CSR policy.

Trends

Less Paper, Not Paperless

Worldwide revenue from physical mailroom services was on a downward trajectory in 2019, dropping 3.1% to $4.9 billion, compared with $5.1 billion in 2018. IDC forecasts the market to further decrease from $4.9 billion in 2019 to $3.9 billion in 2024, at a CAGR of -4.7% (source: IDC #US45238120). Paper-based communication is being superseded by digital communication, and this transition has accelerated from gradual erosion to rapid replacement. IDC estimates that in almost 40% of organizations, the percentage of digital processes is currently around 50%. It could be argued that the emergence of the universal remote worker will further accelerate the migration away from paper. But not all communication arrives in paper format. It can be a physical object — a packet or parcel, for example. The world, while not on track to become paperless, will certainly consume less paper. With the shift to ecommerce, however, we will also almost certainly send and receive more packets and parcels. Many of these items might be personal items that employees have ordered online and have delivered to work, but enterprises are still obliged to safely handle all incoming objects, data, information, and content whatever the format. Paper is also still very relevant in outbound mailing, transactional, and transpromotional printing. Many customers still prefer paper via post communication, and the pandemic brought this into sharp focus. Mailroom services must retain a physical element, but also embrace digital.

Capture Technology Transforming the Mailroom and Driving Change

Advancements in capture software have been a catalyst for change. Intelligent capture technology must sit at the heart of any digital mailroom operation. The ability to capture and convert, via automated character recognition (OCR) tools and robotics, incoming paper to digital information and then classify and enhance metadata, extract and validate it before routing it into the correct workflow or to the correct destination is peaking customer interest and driving capture application growth.

Accurate and expeditious routing of data and information integrating into to the correct lines of business, department is invaluable. Time- and error-saving features — such as image preprocessing to improve downstream OCR (e.g., de-skewing, de-speckling, image rotation, cropping, and other capabilities) and workflow capabilities such as notifications and approvals — are very appealing propositions. Exception handling and specialized recognition engines for handwriting recognition and check processing, for example, are strong use case examples. IDC believes the worldwide capture applications market will grow at a CAGR of 2.1% from just over $1 billion in 2019 to $1.2 billion in 2024 (source: IDC #US45393320).

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Security and Regulation Compliance

Recent market disruption has propelled business survival and employee and customer health and safety to the front and center of the priority queue, but security and regulation compliance still rank very high in organizational priorities. IDC's hardcopy survey data recently showed that security was of concern particularly to the financial and healthcare sectors. Data privacy regulations such as the General Data Protection Regulation (GDPR) have forced organizations to review how they capture, store, and maintain personally identifiable information (PII), resulting in the need to convert documents to structured data to enable automatic detection of the PII. Security compliance must be met throughout the whole document applicable from creation, through audit trail, archiving, retrieval and eventual safe disposal of the data, document, or information. As some content will be handled onsite and some offsite, then the system must be robust enough to guarantee security in both locations. On a more sinister note, if the mailroom is not only a physical but also a digital portal into and out of your organization, then it is also a target and potential entry point for unscrupulous hackers and cyberattack. Therefore, it is critical that the mailroom is included in your overall security policy and management.

Benefits

Replacing technology, eliminating paper, reducing head count, improving archiving, providing an audit trail, and making postage savings are the initial benefits that can be achieved. Deeper digitization of the mailroom will elevate its position in the organization and will facilitate significant cost savings that will be positively received companywide. The opportunity to review and reinvent processes to get the right document or information to the right people at the right time regardless of their location must be exploited, particularly as the workforce becomes increasingly dispersed and remote. An offsite mailroom offers scale efficiencies and process maturity benefits. Additionally, it speaks to disaster recovery requirements and acts as a protective barrier from physical threat. It also frees up space in premium cost buildings and real estate.

Artificial intelligence (AI) and robotic process automation (RPA) offer significant operational and process benefits. Automation of tasks will eliminate human error and cut down on labor costs. Automated activities also offer new ways of working, including remote and flexible home/office working, and will also respond to the current calls for increased hygiene and employee health and safety by reducing physical handling by people.

Organizations must act now to add value to documents and the document life cycle. The sooner an error is spotted in a document, the shorter and less expensive the whole process becomes. Speedier processing of high-value mail directly benefits the bottom line. Rapid turnaround of invoice generation and subsequent faster payment, for example, can result in a more financially healthy company. Such improved response rates and other gains such as improved complaint management will increase internal and external customer satisfaction levels. Physical and digital mailroom management must not be a one-off exercise — it must be optimized and monitored over time. Internal and external circumstances will change, and organizations need to be agile enough to pivot very quickly. By going hybrid, organizations can continue to meet the needs of

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existing internal and external customers. The new capabilities will also facilitate the approach to new potential clients.

Vendor Profile

Swiss Post Solutions (SPS) is part of the Swiss Post Group, headquartered in Bern, Switzerland. The company's activities span all industry verticals with a focus on banking, insurance, telecommunications, and healthcare. SPS is a global full-service provider of physical and digital document management and information processing and provides a comprehensive suite of document processing and business process services, including mailroom and office services. One of the few hybrid providers, it can manage both physical media, such as letters and forms, and digital media for inbound capture and output management. SPS is present in all the major economic regions, operates over 500 mailrooms worldwide, and handles around 120 million items of mail for clients each year.

The SPS Digital Mailroom Services Solution begins with the preparation and scanning of mail, including the extraction and management of unsolicited mail. The next step is the automated capturing of physical mail and email, enabling remote and mobile access. From there, classification and indexing takes place before digital delivery via the SPS secure platform. The proceeding stages cover archive scanning, secure data destruction and archiving finally culminating in workflow integration.

SPS Digital Mailroom Services include:

On-Site Management (a fully managed service covering inbound and outbound traffic as well as third-party management)

Off-Site Mail Management (a shared service to reduce risks and facilitate disaster recovery as well as transactional pricing)

Postal Tariff Management (postal cost management and best practices) Courier Management (courier cost and best practice advice) Secure Mail Screening (specialist security screening) Personal Delivery Management (identification and reporting of cost and productivity

activity and impacts with related advice)

SPS also provides office and information processing services.

Challenges

Implementing a physical and digital mailroom strategy is not without its challenges. The current low adoption rate of the digital mailroom in the enterprise can be attributed to many major contributing factors. Historically the physical mailroom has typically been the remit of the facilities or estates manager within an organization. Physical mailroom personnel need not be highly skilled in many aspects of digital technology to manage the operation. This can mean that the function has little or no internal corporate visibility and is perceived as low priority, seldom included in discussions around IT infrastructure, security, corporate compliance, and digital transformation. The mailroom may not then be top of mind for executives and line-of-business heads charged with streamlining and optimizing processes. Without a champion or a key

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stakeholder, it is very difficult to obtain senior management buy-in and commitment to digitize the mailroom.

Organizations overlook the mailroom at their peril as it is a critical enabler in times of crisis. It can offer new ways of working, guaranteeing compliance and protection against risk, particularly considering the increasing volume of incoming physical parcels. The onus is on the outsourcers to raise awareness within the organization, elevate the importance of the mailroom by stressing the critical function it provides and how by digitizing it significant improvements and savings can be made. As mailroom activities touch each function within the enterprise, every effort must be made to demonstrate the features and benefits of operating a physical and digital mailroom to all parties. Integration into business processes across all departments will result in a rapid ROI companywide and this proof of connect must be shown to the corporate, line-of-business, and operations managers. The finance and accounting functions, as well as other paper-intensive and application-form-heavy practices, might be most ready and amenable to integrate digital mailroom and should be approached in the first instance.

Challenges for SPS

The SPS brand has very strong equity in the mailroom and information processing sphere and in document management and processing services. However, it may not be as well known as IT outsourcers or total facilities management (TCM) providers in other departments of the enterprise and can sometimes be overlooked for more involved digital transformation projects. SPS should therefore focus on highlighting the length and breadth of its solutions and services portfolio and its comprehensive capabilities.

Conclusions

IDC Guidance for Businesses

Wherever organizations currently are on their digital transformation journey they must not only incorporate but prioritize a hybrid physical and digital mailroom strategy. If executed well, a strategy will result in recurring productivity, efficiency, and cost gains. The mailroom is ripe for digitization and optimization. Consider it as a portal into and out of the organization. The capability to digitally ingest data or information in any format at the source entry point, classify, and then route it to the correct destination will save significant human resources, time, and money. To achieve these goals, organizations must seek expertise from partners with critical capabilities and credentials in the hybrid and physical and digital mailroom as they will help build a best-of-breed solution that acts as a bidirectional bridge between the analog and digital worlds.

Once the mailroom has been digitized and integrated, organizations should appoint an individual or team to work closely with the outsourcer on an ongoing basis to ensure that the mailroom remains optimized, efficient, and cost effective regardless of any internal company changes and external market conditions. Regular operational and commercial meetings with the outsourcer are advised to maintain a symbiotic working relationship.

The ongoing relationship with the outsourcer will need to be nurtured as part of an ecosystem that includes technology and people expertise. Since any partnership is based on trust and

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expertise, selection criteria must include expertise in hybrid services and physical and digital mailroom heritage, without a vested interest in hardware or software solutions used. A partner that offers the best-in-class solution regardless of the brands on the box is indispensable. Additionally, if business sites are spread across many geographies or are global, a partner with international experience is advised to ensure uniformity and consistency across the required regions. Some outsourcers may also offer personnel manned onsite management services and this is something that could be explored providing the personnel deployed has the latitude to suggest and offer solutions that might improve your business. Outsourcing the physical and digital mailroom will enable organizations to focus entirely on their core business, increasing their chances of surviving and thriving in the future.

IDC believes that SPS has the right blend of physical and digital mailroom heritage and expertise to successfully navigate customers through the digitization of the mailroom. It can provide high-quality scalable solutions that enable customers to fully benefit from an enterprisewide digital transformation strategy.

Definitions

Capture Software

Capture software converts unstructured and semistructured data, from paper and digital documents, email and social streams, to structured information that can be passed to another enterprise application and/or consumed by a downstream task or process. It can also handle various formats such as text, images, audio, and video. Traditionally, capture software implementation was associated with back-office processing of high volumes of semistructured documents, for which there are usually dedicated employees. Examples include backfile conversion, invoice processing, loan servicing, claims processing, and handling of other financial documents.

Mailroom Services

Physical and digital or hybrid mailroom services incorporate third-party management of in-house mailroom operations and include people, services, facilities, and/or equipment, depending on the structure of the contract. They can be onsite with the customer, offsite at the outsourcers, or a combination of both depending on the type and nature of communication or information type.

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About the Analyst

MESSAGE FROM THE SPONSOR 

To find out more about our services, please visit: www.swisspostsolutions.com  

 

Sharon McNee, Research Manager, European Imaging, Printing, and Document Solutions, IDC EMEA

Sharon McNee has 27 years' IT industry experience focusing primarily on the imaging and print hardware, software, solutions, and services markets. Her current research areas include office and production print with a specific focus on the growing industrial print space. She also works on custom research projects to support vendors and channel partners in their product and marketing strategies, business plans, and R&D.

 

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

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