What Is A Document Management System? Analysis of Features, Benefits & Types

The unprecedented growth of Zoom in the last two years puts into focus the speed by which companies have set up their tech stacks for communication and collaboration. During this period, the novelty of meeting virtually for many businesses took the limelight and sort of away from another earth-shaking shift in the way business is conducted: remote document handling.

As soon as companies have realized that talking and sharing emojis during online meetings is just half of the picture, where sharing and collaborating on documents is the other half, document management system (DMS) vendors have never been happier.

In today’s remote work landscape, you cannot not have a DMS. Sure, you can rely on freebies like Google Drive, but that’s like paddling a speed boat to get to your destination.

To help you get started with DMS, you’ll find below important details as a rejoinder to the question, what is document management system? We’ve spelled out its benefits, core features, potential issues, trends and even a few examples of the top DMS on the market today.

The remote work shift in the last two years has forced employees and companies alike to adopt technologies that allow one to work from anywhere except in the office. It’s no surprise that today, nearly 80% of business owners want remote access to files. They’re talking about DMS even as some of them have yet to understand this software category.

Arguably only overshadowed by communication software, DMS takes a leading role in today’s pandemic-induced work setup, helping employees, not just access files, but collaborate on them wherever, whenever. Spurred by demand, the DMS global market is predicted to hit $6.78 B by 2023.

The silver lining here is that, by adopting DMS, companies are also solving the fact that document issues result in 21% of daily productivity loss. That’s way back then when a document search means a trip to the filing cabinets.

Today’s DMS offers more than a quick search though, as you’ll find out below. But first, some of the fundamentals are in order.

What Is Document Management System?

The simple definition of a document management system is that it’s a software category that helps you to create, store, manage and track digital documents. While DMS solutions vary depending on core function and scale, they share similar standard features such as real-time collaboration, a centralized document location for a single source of truth and version control that lets you revert to previous edits or the original file.

Most DMS solutions also provide digitization of printed files, an audit trail that helps you spot the users accountable for changes in the document and an e-signature tool that allows you to sign documents digitally from any device through the internet. Digital signatures are now legally accepted and compliant with regulations.

Some DMS solutions only provide a core feature supported by limited DMS features, while others offer an end-to-end solution. Some software cater to small and medium businesses, while others scale to enterprise level.

Not to be confused with a content management system, which manages content for web publishing, a DMS is used for internal and sensitive documents such as contracts, memos, guidelines and other office files.

Types of Document Management System

We can classify document management systems in three ways.

By Deployment

This refers to how a system is hosted and accessed by users. There are two ways DMS is deployed:

• On-premise – The system is hosted on your local server. Typically, you own the system and the server. You’re also in charge of maintaining the system, troubleshooting it and upgrading it. Because of the technical complexity of an on-premise system, only large enterprises with an in-house IT team go for this setup.
• Cloud-hosted – Most modern DMSs are deployed this way. A vendor owns the system and rents it out on a monthly basis to businesses like yours. In exchange, the vendor takes care of its maintenance, troubleshooting and upgrading, as well as the hardware requirements. The setup is more cash flow-friendly and ideally suited to small and medium-sized businesses that cannot afford a resident technical team.

By Scale

This refers to the DMS’s target users. In general, vendors cater to two major segments:

• Small and medium business DMS – It caters to companies with standard DMS needs that can be managed by out-of-the-box plans. Features such as templates, rich media, tables, custom branding, content library, document analytics and integrations are more than enough for these companies to manage their files.
• Enterprise DMS – It caters to large corporations, which often have unique requirements that cannot be addressed by off-the-shelf plans. They need custom features and unlimited storage and bandwidth. As such, they need an enterprise DMS priced by quotation to tailor-fit a solution.

By Core Function

We can also categorize DMS by its core function, although most modern DMS today are end-to-end solutions. But a few remain that only perform a specific function, namely:

• Records management system – It only indexes and organizes your files for storage and retrieval. You still need to create the documents elsewhere.
• Document imaging system – It converts your physical files into electronic formats and stores them in the system. It may not have a document creation feature.
• End-to-end system – Typical of modern DMS today, it has all the features to help you create, store, index and retrieve documents within the system.

Features of Document Management System

So, what does document management system do? DMS solutions are wide and varied, but they do share standard features as discussed below.

Document Indexing

The use of tags, labels and metadata enables you to lay down a path to your files. Similarly, most DMS solutions use standard keyword-based indexing that scrapes relevant content to help you find the right document.

Other ways to index a file include by file type, creation or revision date and author.

Smart Search

Working hand in hand with indexing is a DMS’ smart search. Through a search filter, the DMS allows you to narrow down the search to the matching tags, labels, metadata or any other index identifier.

Further, the more advanced solutions feature smart filtering that utilizes historical searches and a predictive algorithm to suggest keywords and search terms. They also support a range of file formats to help you find the right document.

Document Processing

This is the feature that converts hard copies and images into electronic files by scanning. It uses Intelligent Character Recognition (ICR) and Optical Character Recognition (OCR) technologies to digitally convert text and images.

Processing also involves linking documents with other files in the DMS or, through integration, with files in your other business systems like ERP and CRM. You gain more context when relevant documents are associated with each other.

Document Viewer and Editor

A DMS with this feature allows you to open or edit a document inside the system without needing to open another app. This is convenient and allows for a quicker way to modify content where necessary. Generally, a viewer/editor tool supports PDF, TXT, CSV, XLSX, DOC, PNG, JPG and other standard file formats.

Workflow Automation

Using rules-based triggers, modern DMS helps you automate workflow that concerns your documents. For instance, you can set automation to:

• move documents through multiple approval levels
• move documents to the next stage or action
• route documents to their destination
• create, update documents

Ironically, a good automation feature should allow for manual intervention in or unique cases that don’t fit into your standard workflow.

Files and Folders Rights

Most DMS have permission rules that allow you to set access control at different levels. Typical rules are editing, view-only or comment-only rights. Some DMS also lets you authorize who can create, download or upload documents.

A DMS may also allow rights at individual or group levels. For instance, all managers get editing rights over critical documents while the rank and file get view-only access.

Files and folder rights are important to keep the integrity of your documents safe and consistent.

Alerts and Notifications

Some DMS sends out an alert when a document is viewed, edited, accessed or downloaded. This tool is critical to protecting sensitive files, helping you address a potential breach before it escalates. The notification can be sent from inside the DMS or via email, depending on the software.

Security

DMS solutions employ a range of security tools to guard your files against unauthorized access or changes and other breaches. Most solutions provide version control and audit trails to help you backtrack the sequence of changes and pinpoint the unauthorized party.

Many DMS also support SSL, a protocol that secures links between connected devices. Other security features include permission rules, IP restriction and server timeout (in case the system is left open on a public computer).

Document Storage Integration

Many DMS solutions do not provide built-in file storage, but they allow integration with document storage apps, such as Google Workspace, Microsoft OneDrive, Box and Dropbox, and access files without leaving the DMS.

This setup lets you centralize a location to upload/download, access and share your documents.

Standard Features

These are standard features of document management systems that you’ll find in other SaaS solutions, too.

• Dashboard – the user interface (UI) that gives you a quick lookup of your key data such as alerts, messages and a calendar.
• Customizations – allows you to configure the UI based on personal preferences
• Integrations – connects the DMS to other key business apps
• White labeling – enables you to brand the DMS using your logos and colors
• Mobile apps – lets you access the DMS and your documents from a smartphone

Benefits of Document Management System

Why use a document management system? Well, you get to gain a lot from the advantages of document management systems, as spelled out below.

Save on Office Space

The average per-square foot prime office space in New York City costs nearly $130. It will be a pity if a huge portion of that space is taken up by filing cabinets, servers and storage rooms for documents alone.

With a document management system, you can free up that precious space for a more productive purpose, say, more workstations.

Many document management system vendors provide free storage. For one, Google Drive offers 15 GB for free. With 1GB able to hold about 10,000 documents, imagine the physical space you could save.

Further, documents that don’t require hard copy versions can be stored electronically on the cloud. With fewer hard copies on hand, you can simply rent an offsite storage space.

More Secure Place

DMS vendors typically use data centers owned by the biggest tech companies, such as AWS by Amazon, Azure by Microsoft and Google Cloud. These data centers are fortresses utilizing the latest technologies and infrastructure to guard against cyber attacks. Now compare their security with a local server sitting at the corner of your office.

Some of the security protocols employed by vendors include user permissions for granular access, 2-step verification and bank-grade security protocols like SOC II Type II, TLS and SCA.

Moreover, an audit trail can pinpoint who accessed, modified or downloaded a file, lending to users more accountability. In a similar vein, you can set automated alerts for an unauthorized access attempt.

A Single Source of Truth

With a cloud document management system, people in your business access the same file wherever they are. This setup forces them to use only a single document, thus ensuring they are looking at the most updated version. Conversely, a DMS helps you avoid duplicating files that can lead to document silos.

Likewise, with versioning or document history, you can revert to older versions if the need arises. Standard DMS features like edit tracking and audit trail also help you monitor changes made in the document.

Improve Compliance

Whatever industry you’re in, there is one or a dozen document regulations that require your compliance. To violate one can result in legal issues, costly penalties, a revoked permit or, worse, a criminal case.

Some of the general regulations governing documents include tax laws, HIPAA, OSHA document creation and retention requirements, and Sarbanes Oxley, which oversees audit compliance of public companies. Then you have other industry-specific federal and state regulations. Handling files manually, it’s easy to overlook any of these regulations.

With DMS, you can set an alert for records submission schedules. You can also put in place privacy protection and security against leaking classified files.

Retrieve Documents Easily

Did you know that, in general, an employee spends up to 40% of the day just looking for a printed document. That’s a waste of resources you can avoid with DMS.

With DMS, you can cut the time searching for files. The system can make documents discoverable by enabling you to search at the keyword or phrase level. An intelligent search algorithm can even predict what you’re looking for and suggest relevant results.

Likewise, you can access files remotely from multiple devices like smartphones, tablets and laptops. This feature is especially critical for executives, salespeople or anyone on a business trip or on location for a meeting.

Collaborate on the Cloud

DMS helps individuals collaborate from multiple locations, thus improving their productivity. Further, most document management systems allow for third-party access.

Collaboration can happen between team members, office and remote teams, your team and the client and practically between any stakeholders.

With DMS, collaboration-intensive activities like product development, creative brainstorming and client liaising are possible wherever there is an internet connection. Teams can exchange files, annotate images, edit content… the list is endless.

Have a Backup

Having a document management system also gives you a backup strategy in case of floods, fires, theft, misplaced documents and unforeseen events that could compromise your files. In many ways, a DMS addresses the critical factors in developing a backup system, namely:

• backup location – your documents are tucked away in a safe place.
• backup method – this is care of the DMS vendor, freeing you from this stressful technical requirement.
• backup schedule – all documents are automatically backed up once they’re uploaded or created in the DMS.
• scalable – most DMS plans allow you to expand storage and bandwidth on demand.
• backup security – again care of the DMS vendor, most of which employ bank-grade security protocols.

A DMS with analytics is valuable for getting insights into your critical files.

Examples of Document Management System

How does a document management system work? To answer that, let’s take a look at some of the leading examples of document management systems.

PandaDocVISIT WEBSITE

PandaDoc is a DMS with a strong focus on e-signature that allows you to sign business documents from any device and anywhere you’re internet-connected. It also offers DMS features, including custom fields, approval workflows, and templates. Through drag-and-drop, preparing stylish documents is done in minutes. Other key features include real-time alerts, tracking, CRM integration, and tables. A free plan is available for limited features, while paid plans start at $19.

Juro

Juro Contract Automation is a contract automation software helping legal and business teams manage contracts online and in one place. It frees you up from using disparate apps and, instead, relying on one tool only across the contract management process, from negotiation to signing to storing. It has DMS features such as a template editor, approval workflows and e-signature. Pricing is by-quote with three plans to choose from.

Oneflow

Oneflow is an e-signature and contract management software that helps you digitize and automate the contract process from creation to contract management. With live edit and interactive fields, it lets you collaborate in the cloud, thus speeding up contract delivery. Its e-signature is compliant and legally binding, which you can use on any device. Other core features include real-time insights, integrations with key business systems, and templates. Plans start from $29.49. A freemium is available for basic features.

PaperSave

PaperSave is a DMS specifically created to work with Blackbaud, Intacct and Microsoft Dynamics. With a single click, you can access files within the software from its integration with these key business systems. It features screen capture for faster documentation. Combined with digital transaction processing, PaperSave helps you eliminate the need for printed files. Aside from its DMS features, the software also has electronic workflow and invoice automation capabilities.

Qoppa

Qoppa PDF Studio is a PDF editor you can utilize as a DMS. It’s compatible with Mac, Widows and Linux. A viable Adobe Acrobat alternative, Qoppa provides all PDF features such as scan-to-PDF, OCR, annotations and markups and document storage integrations. Pricing is by one-time licensing fee and as low as $25.16 (volume price).

One of the leading DMS solutions, PandaDoc is also one of the easiest to use and roll out.

Cost of Document Management System

The cost of document management system varies not just by vendor but by the type of DMS. Here are the common pricing models employed by vendors:

Subscription model

The most common plans today are subscription-based, that is, you pay a monthly fee for as long as you use the software. This scheme is popular among businesses today because it frees up the company from managing the system, which is care of the vendor.

Several vendors follow a structured subscription model. They may offer a free plan commonly used for individuals or businesses that want to try the product first before moving up to a paid plan.

As for the paid plans, the typical pricing scheme is by the number of users and feature set packaged by business size. A small business plan usually only has the standard features, while a premium plan offers more advanced features such as data fields, a template builder, user roles, higher security grade, and screen recording. By and large, subscription plans range from around $20 to $30 at the baseline.

Some vendors may provide by-quote pricing only to help them tailor-fit a solution for you. Typically, a quoted plan is more expensive than a published monthly fee given the extra effort that goes with customizing the feature set.

Perpetual licensing

This pricing type is commonly used for on-premise DMS. You only pay a one-time license fee but excludes the system’s technical maintenance and upgrading, which often are charged separately. The fee can be exorbitant for a small business, plus, the overheads that go with managing a system can be costly.

Open-source

An open-source system is free to use. You get the source code, which in itself isn’t functional yet. You need technical expertise or an IT team to develop the complete system based on the source code. This model doesn’t include technical maintenance and support, but a community of developers is usually available to ask for assistance.

Document Management System Buying Factors

Before getting a DMS, evaluate your specific needs so you can shortlist a solution that fits your requirements. In most cases, you won’t need a fully-featured DMS, just one with tools that address your purpose of document management system. Below are the things to remember to ensure you get the best-fitting DMS.

File Type Support

Double check if the DMS supports standard document formats like TXT, DOCX, XLSX, CVS and PDF. Likewise, you’d want a solution that can handle common image files such as JPG and PNG. In general, the more file types the DMS supports, the better. But if you only need standard file types, most DMS will suffice.

Just to be sure, too, also check if the DMS supports the older versions of the mentioned types. For example, DOC and XLS of older Word and Excel versions.

Integration

A DMS should integrate with other key business systems to optimize your organizational workflow. Some of the critical integrations should be with a CRM, ERP, productivity apps, accounting software and third-party connectors like Zapier.

Integrating the DMS with CRM helps you send documents to and from your customer database. With accounting software, you get to create and manage invoices and financial records from inside the DMS. In the same vein, connecting the DMS to your ERP allows you to manage documents across your organization’s processes.

Some DMS don’t have authoring and editing tools, so integrating them with productivity apps like Google Workspace and Microsoft Office allow you to create and store files in the cloud and manage them via the DMS.

Security

Most DMS feature the following standard security tools to protect data and privacy.

• File transfer encryption – The web portal for sharing documents should be encrypted. It should employ data transit protocols like 256-bit AES and SSL/TLS for a secure file transfer line.
• Regulatory compliance – The DMS should also comply with regulations such as HIPAA, FINRA and SEC. These regulations protect the privacy of information, hence make sure your DMS is not leaking out sensitive data to your detriment.
• User permission – It lets you manage access to sensitive data like financial records, client data and personal information, while ensuring editing rights to the right persons.
• WORM – The DMS should comply with Write Once Ready Many (WORM), a feature that denies rewriting or erasing data in the document. This feature is important for critical data like contracts and records.
• Automated backup – The documents are always saved even as you type or edit them, protecting you from data loss during power or net outages.
• Automated file deletion – Some DMS have this feature that you can set for temporary files with sensitive data.

Scalability

DMS scalability mainly points to one critical feature: storage. Ideally, the DMS should have an unlimited storage capacity to meet huge data volumes down the road. At the least, it should integrate with scalable cloud storage services like Dropbox, Box and Google Drive. This ensures continuous productivity and profitability.

Also consider your backlog of printed documents that you plan to convert into digital files. Your DMS should take into account this backlog on top of your current data volume.

Ease of Use

Most modern DMS are user-friendly, so almost always ease of use is a given whatever solution you choose. Some of the characteristics of ease of use in DMS include:

• The key tools are easy to find.
• The functions are easy to understand.
• Navigation is easy to follow.
• The UI is clutter-free.
• The knowledge base is easy to access.
• A plug-and-play setup.
• The tutorials are intuitive.

Mobile Access

Cloud-hosted DMS can be accessed via a browser, but you’d still want a native mobile app for a smoother experience. DMS with Android and iOS apps are preferable for users who are always on the go. They can be sales reps, executives or any stakeholder whose main access to the internet is through a smartphone.

Having a mobile-supported DMS also benefits your clients, who may only have their phones to check your document.

Finding files easily is one of the factors to consider when getting a reliable DMS.

Document Management System Trends

Cloud solutions, smart automation, integration with ERP or CRM and enterprise-scale are marks of a modern DMS, but they are nothing new. What will drive the industry in the next few years are three external forces that are likewise impacting industries far and wide.

Artificial Intelligence

An AI-powered DMS can understand the search intent, not just rely on keywords and related concepts. Using historical patterns and context and aided by Natural Language Processing, AI can extract information at the data level, a far cry from the document-level search that we’ve come to know.

Further, AI lends deep-dive data analytics to DMS, allowing users to cluster disparate documents and data for insights. AI makes it possible also to improve and automate document processing more accurately.

Sustainability

The climate change-induced call for business sustainability leads companies to look for ways in cutting down their carbon footprints. This trend only moves businesses closer to adopting DMS as a way to go paperless. It is no surprise that the DMS market growth is expected to hit 13.05% through 2026. With a bigger market, we can expect more vendors to come up with better software and pricing as they try to outcompete each other.

Remote Work

The pandemic has shown companies the benefit of going remote. As they build their tech stacks, many businesses have DMS as one of their core apps alongside communication and task management software.

With 73% of managers believing that the shift to remote work during the pandemic was a success, we can only expect more companies to rely on cloud solutions like DMS to manage their day-to-day operations.

Potential Issues with Document Management System

A DMS is not without issues, either directly or indirectly caused by its use. In most cases, the problems are easy to address as long as you are aware of them before subscribing to a plan.

Network Latency Due to Poor Internet Connection

This isn’t really a DMS issue but an indirect consequence of having poor internet service. Latency creates delays in file transfers and data upload/download. Your connection can’t transmit data packets continuously between your device and the vendor server. This might come at a critical moment, say, during a presentation or a meeting.

A DMS with an offline mode comes in handy in these frustrating moments. An offline feature saves a file in your local computer for emergency access. The local file is automatically synced with the cloud file every time you’re internet-connected, ensuring you are using the latest version.

Limited Storage Space

No doubt, you’ll need more storage later, if not soon. With the amount of data being generated daily seen to reach 463 exabytes by 2025, there’s no escaping dealing with more documents and files down the road.

Many DMS plans scale to more storage, but if the DMS doesn’t warn you about exceeding your limit way ahead of the due date,  you can end up unable to save to your DMS account when you need it most. Make sure the DMS has this alert setting so you can enjoy an uninterrupted service.

It’s not without an option though should you exceed the cap. You can still access your saved files. Plus, of course, you can always save files on your local server temporarily.

Implementation

If the DMS is difficult to use, your employees won’t bother with it. That’s why ease of use should be a major factor to consider when getting a DMS. The easiest DMS to use are usually the best ones, too. They understand that the average DMS user is a non-techie, hence the need for an intuitive user interface and plenty of self-help tutorials.

Security Breach

Security will always be an issue not just with DMS but practically with all your online activities. A poorly secured DMS can leak your confidential documents and expose you to potential legal issues.

The solution is simple—go for a DMS that uses bank-grade security protocols as explained above. Forget about any software that goes below industry security standards.

A well-secured DMS, in fact, not just prevents online breaches, but it also puts in place a consistent method of managing documents by your employees. In this way, you are also solving the security issue that’s inherent with printed documents being lost, misplaced, or left in the open for prying eyes.

Integration

It’s bad for you if you end up with a DMS that can’t work with popular business apps like Google Workspace, Microsoft Office and Salesforce. This will limit your ability to consolidate your business processes.

This isn’t an issue though with the leading document management software where integration is a standard feature. Ideally, the DMS should integrate with your CRM, ERP, productivity apps and file storage platforms like Box and Dropbox.

A DMS with an open API is even better, allowing you to customize integration with your own apps, perhaps.

Common Use Cases for Document Management Systems

DMS offers efficient solutions for various industries by streamlining document storage, organization, and management. Here are some common use cases:

• Healthcare: DMS manages patient records, treatment plans, and medical histories. They ensure quick access to information, improving care quality while maintaining compliance with regulations like HIPAA.
• Legal Firms: Law firms use DMS to organize contracts, case files, and evidence. This system enhances document retrieval, ensures version control, and facilitates collaboration among legal professionals.
• Financial Services: Financial institutions rely on DMS to manage documents like account statements and compliance records. They help maintain accurate records, facilitate audits, and ensure regulatory compliance, speeding up processes like loan approvals.
• Education: Educational institutions utilize DMS to manage student records, course materials, and administrative documents. This centralization improves collaboration among faculty and staff while providing students with easy access to essential resources.
• Real Estate: In real estate, DMS assists in managing property listings, contracts, and client communications. They streamline workflows and enhance client service by allowing quick retrieval of transaction-related documents.

Getting the Right Document Management System

With the benefits of DMS as clear as day and the issues attached to it manageable, getting a DMS is the right step forward. Just mind the factors to consider we explained above to avoid subscribing to the wrong plan.

You should also be aware of your workplace scenario. For instance, if you’re a Mac-based company, then choosing from the top DMS specific to Mac makes sense.

By Jenny Chang

Jenny Chang is a senior writer specializing in SaaS and B2B software solutions. Her decision to focus on these two industries was spurred by their explosive growth in the last decade, much of it she attributes to the emergence of disruptive technologies and the quick adoption by businesses that were quick to recognize their values to their organizations. She has covered all the major developments in SaaS and B2B software solutions, from the introduction of massive ERPs to small business platforms to help startups on their way to success.