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Physical Paper Document Management Systems
Typical systems have the user scan in the original paper document, and store the image of the document in a database of some sort. The image is often given a name containing the date, and the user is often asked to type in additional "tags" in order to make finding the image easier. For instance, a user scanning in an invoice might want to tag it with "water, invoice, 1/1/2002".
Slightly more advanced versions also perform an OCR on the image, storing the text along with the image. Although most OCR systems are notoriously inaccurate, even a few correct words scanned off the page can eliminate the need for the user to type in their own tags.
Once the document is stored, it is typically retreived using an application that is aware of the way the tags (or scanned text) and image is related. That way when you search for "invoice", opening the document will in fact open the original image.
Document management systems can save a tremendous amount of time, even in cases with small numbers of documents, like home bill payment or personal tax preparation. It is somewhat odd that they aren't more widely used, but some of this is likely the fault of the scanning step. Many systems include their own high-speed black and white scanner to make this step as easy as possible.
Electronic Document Management Systems
Storing electronic documents are somewhat different but follow the same principle. Here, all kinds of internal documentation of some body (typically a company or corporation) is both written and stored electronically. Printed copies of documents need not even be produced, and documents may be electronically signed.
Electronic document management systems typically include a workflow model for certifying and electronically sign documents.
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