Given its history, it is no surprise that paper still plays a major role in most corporations. But as businesses redouble their efforts to increase productivity by automating and rethinking paper-centric business processes, IT is finally gaining the upper hand.

There's little choice, says Alan Goldstein, managing director at The Bank of New York Co. "As volumes increase, the only way firms can adjust is by going to greater automation," he says.

The effects of such efforts are being felt in the paper markets. "Paper consumption levels are essentially flat," says Merilyn Dunn, an analyst at InfoTrends/Cap Ventures in Weymouth, Mass. Sales of cut-sheet paper are expected to grow at less than 2 percent over the next few years, a sharp drop from the double-digit growth rates of 10 years ago. The slowdown is a direct result of the replacement of paper-based systems with electronic ones, Dunn says.

Businesses have made strides in reducing paper flows. Thanks to technologies such as Electronic Data Interchange and Web services, imaging and electronic documents, and document management systems, many workflows have been redesigned to reduce or eliminate paper-centric processes and replace them with more efficient ones.

Re-engineering workflows is the key to cutting costs, says Steven Thum, vice president of the business process engineering division at Bank of New York. "You really need to understand technology, how you can take advantage of it and re-engineer the underlying processes," he says.