Electronic signatures (e-signatures), the concept of using a signal or process to show signing intent, has been around for a long time. In fact, the New Hampshire Supreme Court ruled in 1869 (Howley v. Whipple 48 N.H. 487) that Morse code broadcast over telegraph lines could serve as an enforceable signature under state law.
Over the years, laws and technology have continued to evolve. But it was not until the new millennium that the U.S. government made physical and electronic signatures legally equivalent. On July 1, 2000, President Clinton e-signed the Electronic Signatures in Global and National Commerce Act (ESIGN) and established a legal framework for using electronic documents.
Strong growth for e-signature technology through 2020
Electronic signature technology has grown significantly since ESIGN went into effect, especially in the U.S., where the practice has been widely adopted by the e-commerce, financial services, and insurance sectors. P&S Market Research expects the demand for the technology that enables e-signatures to sustain a compounded annual growth rate of 39.2% through 2020.
Three factors are encouraging companies to invest in this aspect of digital transformation: efficiency, compliance, and traceability.
Electronic signatures promote efficiency
Paper-based workflows and signature-management processes are time-consuming and unreliable. Workers often need to transport or print physical documents, capture a legible signature, and then scan, fax, or mail the completed document to another location for further processing.
With e-signature solutions, documents can be signed and returned online in minutes. For example, businesses can integrate e-signature management with procurement processes to simplify digital transactions and more quickly execute agreements. Other signature-dependent activities, such as human resource onboarding, can be similarly streamlined to reduce paper, increase productivity, and accelerate decision-making.
Electronic signatures ensure compliance
Traditional workflows create exposures by making potentially sensitive information easier to access. It is not unusual for business documents to include personal information, pricing details, proprietary business terms, intellectual property, and other highly sensitive data. If this information is subject to local and regional security and privacy regulations – such as ISO 27001, SSAE 16 SOC 2, PCI DSS, or HIPAA, for example – any compliance failure can lead to expensive penalties and legal entanglements.
Solutions for e-signatures are designed for compliance. Encryption and tamper-conspicuous measures ensure that sensitive information is kept secure at each step in the signing process. Rules built into the software can quickly check deliveries and verify that all required paperwork is complete and signed.
Electronic signatures improve traceability
Lost or misplaced documents drive down efficiency while increasing costs. Many companies implement paper-based audit trails to verify document processes, deter fraud, and correct input errors. While paper auditing is well entrenched in the business world, cloud-based document management and signature solutions are becoming more attractive to a range of companies, from large multinationals to small- to medium-sized enterprises (SMEs).
On-premise and cloud-based solutions are increasingly affordable and easy-to-implement. Documents that live in an electronic environment are easier to track during signing since the underlying software can automatically create clear audit trails, certificates of completion, and tamper-evident seals. E-signatures can be marked with time, geo-location, and unique identifier tags to create a level of visibility not possible with physical signatures.
As businesses further embrace digital transformation, they will continue to look for affordable enabling technologies. And the demand for e-signature solutions and related digital transaction management systems will continue to grow and improve the user experience while taking time and cost out of essential processes.
Want to learn more? Listen to the SAPRadio show Digital Transformation with eSignatures: Beyond the Obvious, featuring panelists from DocuSign, EY, and SAP. And follow @SAPPartnerBuild on Twitter.