Document management activities – like capturing, filing, and retrieving files – are time-consuming processes that any company performs on a daily basis. Although such operations are crucial for a business, they are often disregarded to such an extent that they end up being done in an irregular, insecure, and inefficient way.

This article highlights how the adoption of a Document Management System (DMS) would simplify and secure your records management tasks.

What is document management?
What is an EDMS?
Why do you need a document management system?
What are the benefits of a document management system?
How does a document management system work?
How to choose the best document management software


What is document management?

Document management is the control and coordination of document processes, either in paper or electronic format – including document capture, routing, storage, indexing, and retrieval. More simply, it refers to the way a company organizes, handles, and stores its documents.


What is an EDMS?

The expression document management is often used in reference to electronic document management systems (EDMS) – computer programs or cloud software used to handle all activities involved in the document flow with greater efficiency and safety. A document management system is essentially a digital filing cabinet that provides the means to carry out electronically the traditional paper management practices.

Electronic document management system


Why do you need a document management system?

Organizations today hold an immense amount of content and data – that can easily get misplaced. Between 2% and 5% of a company’s files are lost or misfiled on any given day. When multiple storage locations are being used, a simple task involving a document becomes challenging and time-demanding.

Document management systems help to prevent everyday pitfalls by paying business documents the attention they deserve.

After all, 90% of a business’s information is in documents. Neglecting their care because it requires too much time only leads to subsequently wasting further time when these documents are needed and cannot be found.

Who has never been delayed in their schedule because they could not find a document? If the searched record is not vitally important, it can be a bearable inconvenience – though annoying and time-consuming. But what if it’s a business-critical agreement? What if it’s a report to be necessarily submitted during a security audit? Maybe it’s something that can save the company from struggling over costly litigation. Or it could be that one document a team needs to get started on a stringently time-sensitive project.

In all these cases, there is no time to manually search in dusty filing cabinets or countless other places. Similarly, there are no resources to locate files in multiple repositories and different databases to update information, make it available when needed, and delete it when requested.

All these problems are solved by document management solutions thanks to a wide range of built-in capabilities that make our daily job easier and have a significant impact on your business’s long-term goals.


What are the benefits of a document management system?


1. Optimizing time-cost efficiency

Improper filing habits lead to high expenses for an organization. About 10-12% of documents are not found on the first attempt (despite the average record being copied 11 times).

The time wasted trying to locate files is one of the largest costs associated with in-house document storage. Having an electronic document management system can help you instantly locate files and therefore optimize productivity and lower your cost of doing business.

The potential for profitability when investing in a DMS is massive. No more headaches from searching for information. Gone are the days of manual processing, human errors, and re-filing. Record management systems improve data handling and accessibility and raise overall productivity – making all the difference in how smoothly your business runs.


2. Strengthening security

Documents stored on corporate devices are not safer than papers locked in the office space. Personal computers and networks are susceptible to cyber threats and data theft. Therefore, your digital documents are just as vulnerable as they are exposed to the risks of being corrupted, damaged, or stolen.

Information and records are irreplaceable for a company to deliver its services to customers and ensure business continuity. Thankfully, cybersecurity risks can be mitigated by using a DMS.

The use of a file management system guarantees that no company information can be lost, and your business and customers’ data is protected against hackers’ attempts and security breaches.

If one of the company’s devices or even the office network is infiltrated, all the documents in the DMS are safely stored offsite in the cloud. Therefore, in case of emergency or inability to use the corporate computer, you can still rely on safe access methods online. You’ll be able to access your files from a different device or location, and it will always be just as secure. Recovery of the data and documents will be automated, so even in the worst-case scenario, the business can still run, and the best safeguards are in place.


3. Ensuring compliance

Championing cybersecurity and data protection is no longer a nice-to-have. Implementing a proper DMS is today a legal imperative. Especially for companies operating in highly regulated sectors, improving document management security greatly helps meeting compliance requirements.

Many data management software can automatically help you ensure compliance with relevant regulations. DMS include automated data management features to establish rules for retention, disposal, and erasure of customers and business data.

For example, you might be obliged to:

  • keep a record for five years to have it available in the case of authorities’ inquiries or need in a legal proceeding;
  • delete former employees or customers’ data after the business relationship has ended;
  • erase individuals’ data when they don’t renew their consent to data processing or explicitly exercise their “right to be forgotten”.

On all these occasions, a DMS provides reassurance that you’re properly handling documents and data and addressing your legal obligations.


DMS benefits


How does a document management system work?

To better understand how a DMS works, let’s take a look at its key components:


Cloud storage

As the world is striving to go paperless, many companies are still lagging behind in the transition. Some initiate the migration from physical to electronic documents by relying on simple storage solutions without realizing what they’re missing out on. While basic cloud storage merely serves as a place to house documents online, a cloud-based document management system is a much more robust filing management solution to handle and control all company files in one centralized and standardized archive.


Archive management

It’s not just about putting all documents in a single space. Secure archiving also involves where each document is located, how long it is kept, how it migrates from or to other platforms, and the eventual erasure of its data. DMS include automated record management functionalities to set up retention schedules and documents’ lifespan to ensure compliance with legal obligations, both to keep the data for the required period and to delete it when requested.


Document capture

A document management system can capture, import, and organize documents of any type from any source – be they on paper or electronic format, email, CRM or ERP software, etc.

• Paper documents can be captured through high-speed scanners and indexed manually – or using ERP integrations, optical character recognition (OCR), or barcoding. After being converted into easy-to-find electronic documents, they can be tied together with the other digital files and placed into a single hub.

• Email messages or attachments still amount to a significant volume of corporate documentation. Most DMS include settings to automatically import emails and sort out what they enclose into the chosen folder on the DMS.

• For electronic records held by other software and applications used in the company – like CRM, ERP, and so on – a DMS allows having them automatically routed and stored in one central repository.


Indexing, searching, and retrieval

Each document stored in a DMS is indexed, meaning that it is classified through metadata, indicating what the document is about and increasing its findability. A DMS can automatically apply document identifiers in the form of tags and categories to mark files or request the user to provide the metadata of interest. The most basic can be the date of creation or storage, the title and author of the document, and the file size. More powerful DM systems allow adding a wider range of metadata, including function, due dates, order number, customer information, notes, and even customized data fields or words from the content of each document.

The better the indexing, the easier it is to quickly track and locate the document needed. Searching and retrieval are indeed critical elements of every document management system. The DMS acts like a search engine where users can specify keywords, be assisted in navigating the library, and draw results in a matter of seconds.


Safe sharing & access control

Documents often need to be distributed internally and/or externally. With document management software, you can configure permission settings and role-based access.

Administrators can grant viewing or editing rights, as well as restrict who can see specific folders and files, change files’ ownership, regulate clearance for employees or teams.

By providing access for work-based needs, every user will have only those privileges essential for its legitimate purpose. Two or multi-factor authentication can be required to perform more critical operations on documents and data or access backups. An individual account for each employee-user can be set up, restricted to the job role, limiting access to data. In this way, if an employee leaves the company or changes department, their access to certain or all business information can be easily and safely removed.



To streamline cooperation, communication, and reporting, the following features enable total control on the documents, including:

• Check-in/check-out and locking options to coordinate multi-editing and prevent changes overlap. Along with file synchronization, this feature helps make sure your team has access to the last updated version of the document needed.

• Annotation and stamps for effective multi-handed editing coordination so that the resulting file shows the various markups added by each user.

• Version control is especially useful for documents that require to be updated over time; versioning lets you see all previous revisions of the document.

• Roll-back functionalities are strictly linked to version control. They allow users to restore old versions and ignore any subsequent changes on the document, thus preventing re-work or error-fixing activities.

• Audit trails provide history monitoring and maintain logs to track edits, clearly identify their authors, and have a full overview of the document lifecycle. You can also pull out reports detailing the document journey – including who accessed it, when, and what they did.


Backup & encryption

If you uniquely rely on inefficient backup procedures on USBs or hard drives, you are missing a major portion of a proper crisis management plan. Offsite document storage combined with proper online backup is a lifesaver solution.

You can set regular backups to happen automatically, And the best DMS even store data in multiple geographic locations to ensure that documents remain legible and available in time of need. Backups can also be encrypted to protect the data with an additional layer of security.



Just as multiple people are often involved in operations on the same document, so are multiple software. Most companies use several tools in their daily business. A DMS acts as the missing link that connects and bonds all the other platforms you use to create and process information and documents. This liaison is based on integrations and partnerships, browser compatibility, and application programming interfaces (API). DMS Integrations eliminate redundant data input and enable seamless information flows between different platforms. You can set up other programs to automatically feed information to the DMS so that you’ll find all new documents in centralized storage.


Going paperless


How to choose the best document management software

There are additional functionalities to watch out for while selecting the best document management software for your company. We recommend picking a DMS that includes the following:

• Customer-built: Easy-to-use file structure to facilitate day-to-day operations, such as a “cabinet-drawer-folder” approach.

• Mobile access: Accessible from anywhere, across devices

• Customization & branding: Relying on a third-party solution shouldn’t make your daily document operations impersonal. A DMS should enable digital communication with a personalized and recognizable approach.

• Security & encryption: Data and documents should be handled in the safest possible way (under local, EU, and international standards) and encryptable.

• Compliance: Some information security standards are globally recognized best practices for securing IT processes. The ISO/IEC 27001, for instance, ensures that a DMS has state-of-the-art protection measures in place to safeguard information entrusted by third parties.

Penneo can help you manage your documents for maximum safety and data protection. But that’s not all!

Our comprehensive solution brings document management to the next level, encompassing document transactions and workflow automation. Penneo goes beyond secure record filing by including built-in e-signature and authentication capabilities to cover all the core elements of a document lifecycle. With routing scenarios and rule-based flows, everyday operations like contract approvals, invoicing, employee or client onboarding can be completed in a faster, easier, and safer way.



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