--- title: "What is a document management system (DMS)?" url: "https://solutionmanagement.eu/resources/what-is-a-dms/" language: "en" description: "What a document management system (DMS) does that a shared drive cannot, five things every DMS does, what it costs and seven questions to ask before you buy." dateModified: "2026-10-22" --- Guide # What is a document management system? Three people hold three versions of the same procedure, and nobody can find the signed contract. A document management system (DMS) is the software that sorts that out. Here is how it works, what it costs and what to ask before you buy. On this page 1. [Software that knows what each file is](#software-that-knows-what-each-file-is) 2. [Why the shared drive ends up in a mess](#why-the-shared-drive-ends-up-in-a-mess) 3. [Five things every DMS does](#five-things-every-dms-does) 4. [Paper needs a way in too](#paper-needs-a-way-in-too) 5. [It works where documents are made](#it-works-where-documents-are-made) 6. [DMS, ECM and records management](#dms-ecm-and-records-management) 7. [Cloud or your own servers](#cloud-or-your-own-servers) 8. [What it costs in practice](#what-it-costs-in-practice) 9. [Seven questions to ask before you buy](#seven-questions-to-ask-before-you-buy) 10. [The system we implement is M‑Files](#the-system-we-implement-is-m-files) 11. [Questions people ask about a DMS](#questions-people-ask-about-a-dms) ## Software that knows what each file is[#](#software-that-knows-what-each-file-is) A [document management](/solutions/document-management/ "Document management with M-Files") system stores documents together with information about them, controls who may see and change them, keeps every version, and moves them through approvals. A shared drive stores files. A DMS stores files _and knows what they are_. That second half is the part that earns its keep. Once the system knows a file is a contract, that it belongs to this customer and this project, and that it expires this year, it can find it, guard it and chase it. That is why a DMS settles the things that never stay settled on a shared drive: three versions of the same procedure, a contract nobody can find, an approval that lives in an email thread, and personal data that should have been deleted two years ago. ## Why the shared drive ends up in a mess[#](#why-the-shared-drive-ends-up-in-a-mess) On a shared drive, the folder is what causes the mess, however careful people are. A folder can hold a document in exactly one place, so the supplier agreement goes under the supplier _or_ under the project, and someone makes a copy for the other. Search will not rescue you: it works on the file name and on whatever the person who saved it happened to be thinking. Permissions were set per folder, years ago, by someone who has since left. Which version is current, and who approved it, is anyone's guess. The fair objection is that you already have [SharePoint](/resources/m-files-vs-sharepoint/ "M-Files vs SharePoint"). SharePoint improves on this with libraries, versions and [metadata](/m-files/metadata/ "Metadata-driven document management") columns, and for many teams that is enough. The difference that remains is where the rules come from: in SharePoint, people set access and other rules on sites, libraries, folders or items, rather than the rules following from the information stored with the document. The [M‑Files vs SharePoint](https://solutionmanagement.eu/resources/m-files-vs-sharepoint/) guide goes into the differences. Whatever you end up comparing, the same five things are doing the work underneath. In every system ## Five things every DMS does ### 1\. It knows what each document is Each document carries a few facts as fields: its type, customer, project, owner and expiry date. This is its metadata. Everything else in the system reads those fields, so filling them in has to be quick. ### 2\. You find it by what you remember Search the full text, or filter on the fields. A view is a saved search, such as active contracts for my customers expiring this year. Different teams look at the same documents through different views, and the documents stay where they are. ### 3\. There is one current version Every save becomes a version, and the history shows who changed what. Checking a document out stops two people overwriting each other. Where several people need to write at once, the system supports co-authoring. ### 4\. Approvals leave a record Review, approval, publishing and deletion run as a workflow: a fixed sequence of steps, with a notification and a task for the right person at each one. The approval that lived in an email thread belongs here, and the record of each step is your audit trail. ### 5\. The right people see it Rules decide who may see, edit or delete a document. Ideally they follow the fields, so a confidential document stays confidential wherever it appears. A log records what happened to each document, for GDPR, ISO audits and your own auditors. ## Try all five in M‑Files, free for 30 days [Ask for a free trial](https://solutionmanagement.eu/contact/) ## Paper needs a way in too[#](#paper-needs-a-way-in-too) Not every document arrives as a file. Signed agreements, delivery notes, certificates and old personnel files turn up on paper, and a DMS needs a way to capture them. A scanner gives you a picture of the page; optical character recognition (OCR) reads the words on it, so a scan can be searched like any other document and filed by what it is. In M‑Files, M‑Files OCR turns scanned pages into searchable PDFs. ## It works where documents are made[#](#it-works-where-documents-are-made) Most documents start in Word or in an email, so a DMS that lives in a separate window gets skipped on a busy day. M‑Files works with Outlook, Teams, Word, Excel and PowerPoint. You file an email from Outlook with its [metadata](/m-files/metadata/ "Metadata-driven document management"), and M‑Files can pick up the customer or contact from the email. You open, edit and save documents from inside those Office apps, filling in the metadata as you save, and you can search M‑Files from Teams. Several people can write in the same document at once, in M‑Files Cloud with [Microsoft 365](/m-files/microsoft-365/ "M-Files in Microsoft 365") or with the CtrlShare add-on on every M‑Files edition. What you already have need not move first: the [SharePoint](/resources/m-files-vs-sharepoint/ "M-Files vs SharePoint") Online connector lets you find and manage SharePoint Online content from M‑Files, and other connectors show network folders and other repositories alongside the vault. Microsoft 365 Copilot can work with M‑Files documents and respects M‑Files permissions, through Microsoft 365 storage or the M‑Files Copilot connector, for people with a Copilot licence. The [Microsoft 365 page](https://solutionmanagement.eu/m-files/microsoft-365/) goes through each of these. ## DMS, ECM and records management[#](#dms-ecm-and-records-management) Three labels get used for overlapping things. A [document management](/solutions/document-management/ "Document management with M-Files") system manages documents: files with a life of drafts, approvals, versions and, in the end, deletion. Enterprise content management (ECM) is the wider term for all of an organisation's content, documents included, and the processes around it. Records management is the keeping and disposing part: which documents must be retained, for how long, and how they are destroyed when the period is up. Vendors use the three labels loosely, so ask what a product does rather than what it is called. ## Cloud or your own servers[#](#cloud-or-your-own-servers) Where a DMS runs is one of the practical matters that separate one system from another, since the core functions are much the same wherever you look. Most are offered both in the cloud and on your own servers. Cloud means the vendor runs the servers, the updates and the backups. On your own servers (on-premises), your IT department does. Some regulated organisations need the latter. For everyone else, cloud usually means less to run yourselves. ## What it costs in practice[#](#what-it-costs-in-practice) The licence price on its own says very little about what a DMS will cost you. A DMS costs in three parts: the licences, the implementation (setting the system up for your document types, moving existing files in, training) and support after go-live. Only the licences come from a price list. Implementation and support depend on your documents and your processes, so be wary of a total price given before anyone has looked at them. ## Seven questions to ask before you buy[#](#seven-questions-to-ask-before-you-buy) A demo shows what a system can do. These questions get at how it does it, which is the part you live with afterwards. The first two matter most. - Can a document appear under the customer _and_ the project without a copy? - How is access set: folder by folder, or from the document's own fields? - Does it work inside Outlook, Teams and Word, or is it a separate program people have to open? - What does the log record, and can we export it? - How are retention and deletion handled for personal data? - What happens to our existing file share: is migration part of the quote? - Can we try it before we sign? Put them to every system you look at, ours included. Where M‑Files fits ## The system we implement is M‑Files We are an authorised M‑Files reseller and an Elements.cloud reseller. M‑Files files every document by what it is, with no folder tree underneath, which is how it answers the first two of the seven questions. The Why M‑Files guide shows what that changes, and the free 30-day trial answers the last one. [Read Why M‑Files](https://solutionmanagement.eu/resources/why-m-files/) [Ask for a free trial](https://solutionmanagement.eu/contact/) ![The M-Files web client with search results filtered by metadata and a document preview, beside the M-Files mobile app](https://solutionmanagement.eu/img/5UeWO7cNZ0-200.png) A search narrowed to documents, a signed agreement previewed beside the results, and the same vault on a phone. Questions ## Questions people ask about a DMS How much does a document management system cost? Count three parts: the licences, the implementation (setting the system up for your document types, moving existing files in and training) and support after go-live. Only the licences come from a price list. The other two depend on your documents and your processes, which is why a total price given before anyone has looked at them is worth little. M‑Files is sold in two editions: Essentials has a published per-user price on m-files.com, and Enterprise is quoted. [Pricing and editions](https://solutionmanagement.eu/pricing/) sets out what goes into a quote. Document management system or shared drive? A shared drive stores files. A DMS stores files and knows what they are. On a drive, a document can sit in one folder only, search works on the file name, permissions were set per folder years ago and nobody knows which version is current. A DMS files each document by what it is, so it appears under the customer and the project without a copy, keeps one current version with the history behind it, runs approvals as workflows and sets access from the document's own fields. If your documents have to obey a rule, you have outgrown the drive. [Document management on M‑Files](https://solutionmanagement.eu/solutions/document-management/) shows how we set that up. What questions should we ask before buying? Seven, and the first two matter most. Can a document appear under the customer and the project without a copy? Is access set folder by folder, or from the document's own fields? Does it work inside Outlook, Teams and Word? What does the log record, and can you export it? How are retention and deletion handled for personal data? Is migration of the existing file share part of the quote? And can you try it before you sign? Put them to every system you look at, ours included. Cloud or on our own servers? Most systems offer both. In the cloud, the vendor runs the servers and looks after updates and backups. On your own servers (on-premises) your IT department does, which some regulated organisations need. M‑Files can run in the cloud, on your own servers, or as a hybrid of the two. M‑Files Cloud runs on Microsoft Azure, with data encrypted both in storage and on its way over the internet, and M‑Files holds an ISO/IEC 27001 certification that covers M‑Files Cloud, Hubshare and Aino. Can we keep our existing documents where they are? Largely, yes. With connectors, M‑Files can show content from network folders and other repositories alongside the documents in the vault, and the SharePoint Online connector lets you find and manage SharePoint Online content from M‑Files without moving it. Which documents move in and which stay is a decision for the implementation, and it belongs in the quote. What is the difference between a DMS and SharePoint? SharePoint does much of what a DMS does: it keeps versions and works with Office, and it can describe a document with metadata columns alongside folders. Its permissions are inherited from the site, library or folder unless they are changed for an item, so a rule belongs to a place. In M‑Files a document is filed by its metadata, appears under every customer and project it belongs to, and its access follows what it is. Many companies run both. [M‑Files vs SharePoint](https://solutionmanagement.eu/resources/m-files-vs-sharepoint/) goes through the differences and when to keep both. On this page 1. [Software that knows what each file is](#software-that-knows-what-each-file-is) 2. [Why the shared drive ends up in a mess](#why-the-shared-drive-ends-up-in-a-mess) 3. [Five things every DMS does](#five-things-every-dms-does) 4. [Paper needs a way in too](#paper-needs-a-way-in-too) 5. [It works where documents are made](#it-works-where-documents-are-made) 6. [DMS, ECM and records management](#dms-ecm-and-records-management) 7. [Cloud or your own servers](#cloud-or-your-own-servers) 8. [What it costs in practice](#what-it-costs-in-practice) 9. [Seven questions to ask before you buy](#seven-questions-to-ask-before-you-buy) 10. [The system we implement is M‑Files](#the-system-we-implement-is-m-files) 11. [Questions people ask about a DMS](#questions-people-ask-about-a-dms) [Book a demo](https://solutionmanagement.eu/book-a-demo/) Next step ## Put the seven questions to M‑Files in a demo Bring all seven. The people who answer them are the ones who implement M‑Files. [Book a demo](https://solutionmanagement.eu/book-a-demo/)