Friday, October 26, 2012

Percetive Growth Still Not Fast Enough for Lexmark

This week's issue of the DIR newsletter features a cover story on the re-branding that is underway at Perceptive Software. Perceptive was an ECM vendor that was acquired by Lexmark in 2010 and is now operates as the Enterprise Software Group within Lexmark. Its ECM suite has been fleshed out by a series of software acquisitions that Lexmark completed in 2011-2012. These include capture, search, and BPM technology, as well as vertical market specialist ISV. The details of how these products are being integrated, as well as still taken to market separately, are in the DIR article.

This week Lexmark reported its third-quarter results, and Perceptive's quarterly revenue came in at $41 million, which represented 88% growth from the previous year's third quarter. A good bit of that was due to the aforementioned acquisitions, but organic growth was still 22%. This is no doubt above market growth rates, but, it is apparently significantly below what Lexmark had budgeted.

According to Rooke (as quoted in a transcript of Lexmark's recent conference call to discuss quarterly results, "While Perceptive Software's revenue was up strongly year-to-year, it was less than we expected, driving a larger-than-expected operating income loss as we continue to invest for growth. Now for the next several quarters, we plan to limit Perceptive Software's expense levels to allow expected revenue growth to catch up and deliver positive operating margins in 2013."

Unfortunately, despite Perceptive's growth, Lexmark reported that its segment operating income was negative $8 million. This begs the question: What kind of growth is Lexmark expecting?

Lexmark certainly paid a good premium for Perceptive and some of the complementary ECM technology it bought, so it obviously was expecting some significant returns. But, to tell the truth, a lot of people I talked with thought an MFP hardware vendor like Lexmark could not successfully run an ECM software operation like Perceptive. But, to date, it seems that Lexmark has done everything it can to nurture Perceptive's business, buy acquiring complementary technology, while also allowing it to operate fairly autonomously. And this has worked to the tune of 22% organic growth - which certainly seems like a far cry from failure. Let's hope that unrealistic expectations don't spoil this success and that limiting expenses doesn't end up limiting Perceptive's success.

Rooke added that Perceptive's growth reflects, "slower growth in EMEA than expected and the delay in the closure of a number of large transactions in North America. With regards to EMEA, we continued to make progress, although slower than expected, and are making changes in sales leadership that we believe will accelerate growth. In North America, although we are disappointed that several large transactions did not close in the quarter, the majority of them, we believe, were deferred and not lost, and we expect them to close over the next several quarters."

Tuesday, October 23, 2012

PPO Using Perceptive Cloud Apps

PPO (Preferred Provider Organization) Preferred Health Professionals (PHP), based in the Kansas City-Topeka (Kansas-Missouri border area) has selected Perceptive's hosted ECM platform. This includes utilizing Perceptive Intelligent Capture (powered by Brainware) for the classification and processing of medical claims.

This is cool for two reasons:
1. We haven't seen a lot of adoption of hosted data capture systems. Brainware announced a version of its software hosted on Azure more than a year ago, but we haven't heard of many (if any) wins to date.
2. The Brainware software (which was recently re-branded as Perceptive Capture) has primarily been used for invoice capture historically. Part of the charter following Brainware's acquisition by Lexmark earlier this year, and it's integration into the Perceptive Software business, was to expand the uses of its automated data capture technology. Getting into medical claims forms is an example of this expansion.

For those not familiar with the U.S. healthcare model, a PPO is basically an insurance plan that has agreements with a network of physicians. PHP is based near Perceptive's headquarters, so it's somewhat of a local deal, but still, it's a good place for Perceptive to start with its hosted capture and ECM solution.

Crowley Contracts Imaging 411 for Service

Crowley Company has signed on Imaging 411 to provide service to its image capture hardware customers. Crowley, which is based in Frederick, MD, sells a variety of microfilm- and document-capture scanners. Vendors that Crowley represents include Mekel Technology, Wicks and Wilson, InoTec, Zeutschel, Qidenus, Extek Microsystems and HF Processors. 

Historically, Crowley has serviced its own products, but has expanded to the point where it was beneficial to bring in a third-party provider. "With the addition of the Wicks and Wilson UScan and the Zeutschel zeta to our scanner line this year, our equipment sales have considerably increased, affecting our ability to service maintenance and technical support customers to the degree they deserve," said Chris Crowley, co-owner and president of Crowley.  "From the customer standpoint. The Crowley Company remains the point of contact and the contracting agent. The only difference noticed will be faster turnaround.”

Based in Long Island, NY, Imaging 411 offers third-party service on a wide variety of scanning equipment from almost all leading vendors. Imaging 411 has some federal large government customers and also has a contract for scanner service with national service bureau Databank IMX. Imaging 411 also makes its service available to resellers who are looking for an alternative to vendor-provided service.

"Imaging 411 techs will receive intensive training on all Crowley brands and will be well-qualified to support the units in the field," said Chris Crowley.

Imaging 411 will also act as a distributor of Crowley’s Wicks and Wilson, InoTec and Zeutschel products. Imaging 411 also offer Sunrise microfilm scanners as well as pre-owned scanners and equipment.

Monday, October 22, 2012

Kofax Debuts Mobile App for Mortages

At the Mortgage Bankers Association's annual convention being held in Chicago, Kofax announced a new mobile document capture app. The Kofax Mobile Capture for Mortgage app is based on the technology Kofax announced in January, which involves capturing and processing document images on a phone and then passing them onto a cloud server, which connects with Kofax Capture. Kofax Capture can be used to perform data extraction, document classification, and other process, as well as to connect line of business and BPM systems.

The Mortgage app is designed "to enable lenders, brokers and borrowers to use cameras in smartphones and tablet computers to capture, perfect and extract relevant information from supporting documents and deliver it directly into the appropriate loan processes."

“We’ve seen ready adoption of electronic document management and mobile banking, making the integration of mobile capture into mortgage loan processing the natural next step," said Mark Swift, VP of Opus product management at ISV Mortgage Cadence, in a press release. Mortgage Cadence develops software for the mortgage banking industry and Opus is its document management offering. It is already a Kofax Capture customer.

 Kofax CEO Reynolds Bish expects the flood of refinancing to drive adoption of mobile capture apps.

Harvey Spencer Associates has projected the market for mobile document capture technology to reach $1.5 billion by 2015 and this is clearly the type of repeatable and useful app that can help drive strong growth in a space that is just now emerging. A couple months ago, Kofax announced four Mobile Capture wins in four different markets. So, it appears as if mobile capture is at developing a wide footprint. It will be interesting to see if a killer app emerges out of these early wins and product announcements.

Monday, October 15, 2012

Toshiba's Forward Thinking

In my last newsletter, there's a story on Toshiba America Business Solutions (TABS) launching a new business unit - Toshiba Managed Business Services (TMBS). No surprise here that an MFP vendor is trying to expand further into services. After all, we've written about Ricoh, Canon, Xerox, and HP all trying to do the same thing. With paper volumes declining, hardware just isn't enough to pay the bills anymore.

What's interesting about TMBS, however, is the range of its focus. It is targeting four main areas within the enterprise market:
  • Managed Print Services
  • Document security, workflow/capture
  • Barcode systems
  • Digital signage and kiosks 
Now we all know what MPS is, but here's what Chris Applegate, Director, Enterprise Services, TMBS, had to say about his organization's focus on MPS. “The MPS space has become overcrowded. You’ve got MFP vendors, big box office equipment providers, VARs, and even large technology distributors playing there. And their value propositions all sound alike.

“Basically, they tell the same story. They provide a baseline assessment and an analysis. They then help customers right size their fleets by doing things like replacing inefficient desktop printers with workgroup models. And they provide software to manage that new fleet of printers.

“We believe that creating a lower cost per printed page is only a foundation for managed services. The true value is in reducing print. The paperless office is a myth, but running an office with less paper can be a reality today. We help customers choose when paper is the best solution."

The focus on digital signage and kiosks is designed to offer an alternative solution to printing. In a world where more and more formerly printed materials is now being read on tablets, this makes a lot of sense. I always tell people that a number of years back at a Xerox Tech Expo I saw a lot of "digital paper" solutions previewed that I think foreshadowed today's tablets. I think even better "viewing" technology is on the way.

Healthy Coopetition
The other forward thinking strategy employed by TMBS is its vendor-agnostic approach. Included in TMBS software portfolio is Lexmark's Perceptive software suite, as well as some HP security software. Yes, both HP and Lexmark make MFPs that conceivably compete with Toshiba. This is the second time I have heard TABS commit to this vendor-neutral approach. The first was two years ago, when they launched a professional services group - and they said that it was not about the hardware anymore. I can't say for sure whether this is lip service or reality, but it certainly makes sense. Integrators selling scan-focused document imaging solutions realized it was not about the hardware brand several years ago.

Monday, October 08, 2012

E-Puzzler - Reverse Shredding

Not to sound snooty, but I caught a brief report on NPR this morning on some technology currently being used to piece together documents that were ripped up by the former East German secret police- the Stasi. Developed with help from the Fraunhofer Society, German research organization, the technology is known as the e-Puzzler. According to the NPR report, "The E-puzzler is basically a shredding machine in reverse. You scan torn-up documents into it. It matches up the pieces using color, paper texture, fonts, tear lines and other details."

A conveyer-belt is apparently used in the scanning device, which I can only imagine looks like the open track devices developed by IBML and BancTec. According to an article that appeared in The Guardian a few years back, "The machine works by scanning the document fragments into a computer image file. It treats each scrap as if it is part of a huge jigsaw puzzle. The shape, colour, font, texture and thickness of the paper is then analysed so that eventually it is possible to rebuild an electronic image of the original document."

More from the NPR article: "For the past few years, the E-puzzler has been used under a pilot program funded by the German government. But it has processed only a few hundred sacks. There are more than 15,000 to go. Joachim Haeussler, the archivist in charge of digital reconstruction, now wants to greatly step up the use of E-puzzler technology. "It will help us enormously," he said. "We couldn't even employ the amount of people that would be needed to put together the tiny, tiny pieces of files, because some files are only half a fingernail's worth in size." Ahh, the beauty of document capture.

Tuesday, October 02, 2012

Canon's I.R.I.S. Strategy

A couple weeks ago, Canon, through its European subsidiary, announced it was planning to acquire document capture ISV and systems integrator I.R.I.S., which is based in Belgium, outside of Brussels. Following is a Q & A put together through a correspondence with the Canon PR department about how the two companies will work together going forward. Basically, it sounds like Canon will enable I.R.I.S. to operate primarily independently, but that the companies will now be able to share more intellectual property. (As far as I know, the only current jointly developed product between the two organizations is the Advanced Scanning module in Canon's UniFlow platform.)

1. How will the acquisition change the way that Canon is currently working with I.R.I.S.?        

Canon anticipates leaving I.R.I.S. Group as a stand-alone company within the Canon group (in line with the acquisition of other software companies in the group). This should allow I.R.I.S. Group to keep its focus on high-quality product development.

Canon has no intention to change any of the strategic relationships in place between I.R.I.S. Group and third parties.

2. What will change at I.R.I.S. as a result of the acquisition?

See answer to question 1.

3. Does Canon have plans to market the I.R.I.S. products through its channels worldwide, or still primarily in Europe?

Canon anticipates leaving I.R.I.S. Group as a stand-alone company within the Canon group (in line with the acquisition of other software companies in the group [Therefore and NT-Ware]). This should allow I.R.I.S. Group to keep its focus on high-quality product development.

4. How will the operation of I.R.I.S. Professional Service group change under Canon?

See answer to question 1.

5. Can you tell me anything about the timing of the acquisition? e.g. why the decision was made to buy the whole company after spending three years as an equity partner?

The relationship between Canon and I.R.I.S. Group has developed very well since 2009 with Canon contributing well to the sales of I.R.I.S. Group’s products and both companies working together to develop new solutions.

However, the relationship is limited in its nature to that of a strategic commercial relationship due to the mutually agreed rules between Canon and I.R.I.S. Group that govern sharing of information.

Canon has a long standing strategy to develop end-to-end solutions in the business environment for its customers. This is better achieved when the relationship between Canon and I.R.I.S. Group is stronger and not subject to the current restrictions.