Obamacare - My Experience and why SPA could have saved it!

Okay, so first off, hope everyone here stateside has/had/is having a great T-Giving holiday.

So, far my Holiday shopping has been focused on getting some new health insurance  - taking advantage of the Obamacare plan, which is technically named the Affordable Healthcare Act, or something to that effect. Full disclosure  - I am a Democrat (having switched parties when George W. Bush was first nominated as the Republican presidential candidate) and have voted twice for Mr. Obama as president. I also have a pre-existing medical condition that historically had made it impossible for me to switch insurance and shop for a better policy. As I own my own business and am self-insured, I really have had no leverage and my insurers keep raising my rates and there has been nothing I could do about it. So, I was looking forward to being able to do some comparative shopping through Obamacare.

Yes, I had heard all the nightmare stories about how hard it was to actually get the Affordable Healthcare Act Web site to work properly when signing up. But, I figured some of this had to be exaggerated, right? Media hype. I'm mean I'm fairly technologically savvy and the U.S. federal government invested at least $100 million in the Web site, so it couldn't be that bad, could it? I mean Web sites are somewhat mature technology.

Well, it turns out everything is as bad as advertised. Here's a list of the problems I've encountered so far:
1. Online form was not very intuitive: For example, whenever you change something, it takes you back to that part of the form and doesn't make it clear how you are supposed to skip refilling in the same information in the sections that follow the area that you've changed.
2. I am currently attempting to log-in the Web site right now and can't get in.
3. It took me literally two hours to fill out the unintuitive e-form
4. Received feedback that I would get a tax credit for my wife and I and that the state would have to check on eligibility for kids enrollment in a state-sponsored insurance program.
5. I then realized I needed to change some (I thought fairly minor) info about my current healthcare coverage.
6. Went back online but couldn't get back into my application form to make the change.
7. Went through chat service and phone call to try and make corrections- and while my questions were answered promptly, nothing was accomplished. I was told I'd have to wait for a call back within 2-6 business days before I could make any changes.
8. In the meantime, my application seems to be stuck somewhere in limbo, although it's not really clear where that is.
9. Waited three weeks and never got a call.
10. Got a bill from my current insurer which for reasons (perhaps related to Obamacare?) has increased its premiums 12% across the board.
11. Called the Affordable Healthcare Act customer support number this morning and the rep said they had no record my previous call and that, someone would call me in another 2-5 business days. If I miss that call, I am instructed to call back on the same number I called this morning and only then can they connect me to who I need to talk to.
12. Took me six tries to log onto the Obamacare Web site to double-check the status of my application, which appears to be in the same state I left it before, although for some reason (presumably because someone has to make changes to it, it is listed as "inactive," although it's not exactly clear what that means.
13. Now I guess I wait until next Thursday to hear from someone before calling back. And my deadline for applying for coverage effective Jan. 1 has been extended to Dec. 23. 

It has been my contention since I began this process of applying for healthcare coverage through Obamacare, that the on-ramp is clearly something that could have been better addressed by what Forrester, Kofax and others are calling Smart Process Applications (SPAs). From a Kofax press release on Forrester's definition of SPAs: "SPAs is a new category of application software designed to support industry specific business activities that are people intensive, highly variable, loosely structured, and subject to frequent change. SPAs automate both structured and unstructured work activities in support of collaborative processes."

SPAs combine technology like capture, BPM, collaboration, and analytics to help connect customer-facing systems of engagement - which is what the Obamacare Web site is supposed to be - with systems of record, which is presumably what sits on the back end of the Obamacare Web site and is supposed to come up with a selection of insurance plans I can choose from. There is obviously a breakdown in the current system for making this connection as I've been trying to get some quotes from several weeks now!

As I've said before, I think this whole Obamacare mess demonstrates the market potential for SPAs. Sure, some e-commerce sites, like Amazon, are great, but they have spend billions of dollars and multiple years ramping up to their current level of mostly automated customer service. For almost everyone else, most back end systems are based on some type of tradtional paper process and just gluing a Web site to the front end is not going to work. This is where SPA fits in. It can act as the glue between old processes and new e-commerce driven ones. And document imaging ISVs and SIs are the perfect people to sell and install SPAs because their businesses are rooted in taking traditional processes and making them more electronic through applications like capture and workflow.  Basically, they understand technology and they also understand processes - two key ingredients to making e-commerce systems work successfully in a real world full of legacy systems and old habits.

In conclusion, I hope I get this healthcare thing resolved and I hope all you capture, document imaging and SPA vendors and SIs can leverage the so-far disastrous results of the Obamacare service to convince organizations transitioning to more e-commerce that they really need your help. After all, they certainly don't want to make the same mistakes and be compared to Obamacare when trying to conduct business.

Best T-Giving wishes,

Ralph

Kofax Extends What's Covered in Mobile Capture Patent

Key quote from the press release: "the technology embodied in this patent allows us to expand our mobile capture capabilities to include using a postal database to correct addresses captured from driver licenses and using a biller database to correct data captured from consumer bills.”

Make Sure You Read the End of This - ARMA Notes & More

ARMA - the Records Management Association  - held its 58th annual conference and exhibition last week in Las Vegas. I didn't attend, but wanted to share with you a couple insights from people who where there:

1. ARMA produced this podcast, which is an interview with IBML EVP, Worldwide Sales and Business Development Robert Sbrissa. Sbrissa has been in our industry for a few years and has a good perspective on how things have evolved. Here's a quote by him from that podcast that I really liked:


"We are seeing this year customer looking for not only what’s new but what’s simplified and improved – as our technology is evolving and becoming more efficient and easier to deploy. Customers  now realize that the technology exists. The question is how to choose technology that is simpler, easier to implement and easier to maintain."

2. Also, Art Nichols, VP of sales at recognition ISV NovoDynamics shared this insight with us: "Document classification to the ARMA folks is as likely to mean dealing with existing text files (word, excel, email) as it is they way we use it in forms /image capture."

I thought this was interesting because it jives with the content/first tack that  that Content Analyst, an ISV with a specialty in semantic understanding, seems to be taking as it attempts to expand its market from the e-discovery space, where it has had its initial success. And that seems to be part of the issue with semantic understanding in general as we attempt to apply it to the ECM market - where does it fit best? In a capture or an RM process, i.e. in the front-or-the back-end of the application? Of course, this is kind of the same issue that Kofax is broaching as it introduces BPM into it capture/SPA frameworks. It's all a bit muddled, but will likely make sense in the end when capture is finally subsumed by ECM - or vice-versa, and it all ends up as some sort of real-time, on-demand indexing/retrieval workflow paradigm that gets the right info to the right person at the optimal time - isn't that all we're after anyhow.

Kofax: A Go-To Partner for MS in SPA

A couple weeks ago, Kofax announced it would make an insurance claims processing solution available for demonstration as part of an engagement at Microsoft Technology Centers (KTC) worldwide. Here's our blog post discussing that announcement. It mainly focuses on Kofax's moving its technology to a cloud environment.

We were also wondering how significant this was regarding Kofax's relationship with Microsoft. Here's the reply we received from Dermot McCauley, VP, solutions product marketing, for Kofax: "The Kofax Agile Claims demonstration supports the Microsoft partnership by providing innovative technologies that allow us to offer a more complete customer solution and meet their customer’s exact needs. These resources shorten the time required to develop a customer demonstration by removing traditional barriers and reduces the total cost of solution acquisition while providing compelling customer value. Drawing on the integrated innovation of Kofax Total Agility, the Microsoft Technology Center can be a powerful resource for customer organizations.  

"Additionally, the KTA offering potentially influences Microsoft licensing including Azure, Dynamics, SQL Server, SharePoint, O365, Exchange, Lync, and Bing. As we continue to roll-out this demonstration globally, Microsoft team members in the field will look to Kofax as a leading provider of smart process applications for the business critical First Mile of customer interactions."

It seems as if he is trying to position Kofax as a go-to partner for MS in the SP space. That's not a bad thing.

Partnerships Take Technology into new Geographies

This week both NovoDynamics and KnowledgeLake announced interesting partnerships that will help them expand into new geographical markets. In conjunction with the recent GITEX show, held in Dubai, Novo, a recognition technology specialist, announced that ForeFront Technologies, a VAD that focuses on the Middle East and Africa, will be carrying its OCR software. KnowledgeLake, which develops software for document image-enabling Microsoft SharePoint, announced that PFU will be introducing its technology into PFU's ECM practice in Japan.

Novo, which first came onto our radar screen because of its Arabic OCR technology (it currently supports Chinese, Korean, Russian, Spanish, and English languages as well), exhibited at GITEX. "This show covers all areas of IT and expects over 140,000 visitors before the week is over," reported Art Nichols, Novo's VP of Global Sales, who attended the event. "Forefront is a large Fujitsu and Kodak distributor that also sells Kofax and now NovoDynamics NovoVerus."

Georges Mehchi, CFO and Managing Partner for ForeFront sounded pretty excited about the partnership. As quoted in a press release,  “The intelligence that NovoDynamics has built into NovoVerus’ software truly raises the bar for language detection, recognition and data extraction, taking Arabic and multilingual OCR to an unparalleled level! Introducing this technology into Middle Eastern and African markets will be life changing, not only for Arab nations, but globally.”

 The KnowledgeLake-PFU partnership was a natural, seeing how the ISV is now a wholly owned subsidiary of PFU. Said Ron Cameron, president of KnowledgeLake in a press release, "“This natural progression of our partnership with PFU will extend their already successful ECM practice to include SharePoint ECM. As SharePoint continues to gain momentum in the Japanese marketplace, we hope this partnership promotes the profile and perception of Microsoft’s platform by providing value around its robust ECM capabilities. We are grateful for this opportunity and I couldn’t think of a more suiting partner in this effort than our parent company, PFU."

I don't think there is any question that we are truly working in a global economy today. Yes, there are certainly hurdles to be cleared to be successful doing business in multiple countries, but working with strong partners, like the ones that NovoDynamics and KnowledgeLake have chosen, represents a great way to clear these hurdles.

Business Imaging Expo Less than Five Weeks Out

The Business Imaging Expo, being put on by 1105 Media, is set for Dec. 10-12 at the Mandalay Bay Convention Center in Vegas. The event is aimed at Office Imaging vendors, dealers, and channel and is expected to draw around 1,500 total attendees, including 75-100 vendor exhibitors.

A pair of executive summits kick things off on Tuesday, Dec. 10: one on MPS, and the other on workflow, which has a focus on ECM and document imaging technologies. Featured speakers include Pam Doyle of Fujitsu, Bruce Orcutt of Kofax, and Ron Glaz of IDC.

“This is a brand new event that is a mix of everything we cover,” said Amy Weiss, editorial director for 1105 Media’s Office Technology Group. Weiss oversees three publications: Recharger Magazine, The Imaging Channel, and Workflow. “We see this event as really representing the future of the office imaging market. The tagline features ‘service, supplies, and solutions’ and we see opportunity where those three areas converge. We hope to provide some cutting edge content and information for attendees looking to address the future of the market."

Early-bird rates are in effect until Nov. 15. You can register online at businessimagingexpo.com/events/bix2013

MS Partnership Hightlights Kofax's Cloud Strategy

Not really sure how big a deal with this, but Kofax today announced it would make an insurance claims processing solution is available for demonstration as part of an engagement at Microsoft Technology Centers worldwide. The solution is built on Kofax's new Total Agility 7.0 platform, which is basically a combination of all its technology - capture, plus everything is has acquired over the past few years in areas like data analytics, BPM and Web interfaces - put together in one platform. The demo is set up an Azure, so this really represents Kofax's first full scale cloud-centric marketing.

The Microsoft Technology Centers are hosted in a number of brick-and-mortar locations around the world. They are designed to provide "collaborative environments that provide access to innovative technologies and world-class expertise, enabling you to envision, design, and deploy solutions to meet your exact needs." It sounds like Microsoft and Kofax plan on working more closely together in the future around KTA 7.0 and Azure. Said Kim Akers, general manager, Microsoft Corp, “Kofax continues to demonstrate its commitment to the Microsoft community with TotalAgility, the first BPM and case management platform hosted on Windows Azure."

It will be interesting to see how Kofax's revenue is going to break down between on-premise and cloud solutions in future years.

Kurzweil, the Wisdom of Harvey Spencer, & Kofax TA 7.0

A couple weeks ago at Kodak Alaris' excellent Global Directions 13 Conference, noted futurist and technology author Ray Kurzweil gave the keynote. As I noted earlier, he totally delivered on the hype, and gave an excellent talk discussing everything from his roots in the document imaging industry to how and why we are going to live much longer in the near future. The main theme of his talk was how information technology grows at an exponential, and not a linear, speed. This causes people to underestimate the improvements that will be made a few years down the road, and as a result, the effect these improvements will have on our lives.

Related to this, Kurzweil noted that people developing technology products need to be working on stuff that makes sense three to four years down the road. This made me reflect on the Harvey Spencer Associates' conference I had attended two weeks earlier. At the HSA conferences, Harvey likes to push the envelope of the capture industry. In fact, he will often have speakers that make you think, what the heck does this have to do with the market? This year, in fact, there were a couple speakers that focused on voice technology, which, aside from Nuance, wouldn't seem to affect anyone in the capture market. But, when you consider Kurzweil's sentiments, maybe it will.

For some perspective, I took a look at the agenda for the second HSA Capture conference, held in 2006. One of the sessions was "Check 21 and its Impact on the Convergence of Document and Transaction Processing." I remember telling Harvey at the time, I really didn't see the connection between payments and document processing. But, low and behold, some seven years later, at IOFM Payments Summit I attended recently, the convergence of documents and payments processing was one of the major themes.

Of course, Windows Vista was also a topic on the agenda at HSA Capture 2006, so you can't win them all, but, I think it's safe to say, in line with Kurzweil's strategy, looking ahead a few years when developing new technology is important, because it helps get you to market ahead of the competition, who can follow, but will have a tough time unseating an established leader. SharePoint 2007 was another topic discussed at HSA 2006, and by that time KnowledgeLake already had an established, if small, capture-to-SharePoint practice. As Spencer's vision of the influence of SharePoint proved correct, and it spread as a popular ECM repository, KnoweldgeLake blossomed from a start-up to a major player in our industry, while other vendors scrambled to catch up.

Which all brings us to Kofax's announcement today of Total Agility 7, a platform for implementing smart process applications (SPA). Kofax first unveiled its SPA strategy about a year ago. At the time I wondered what the heck they were talking about. Kofax's CMO Martyn Christian (who left the company about a month ago), however, did a pretty good job tying SPAs to the newly defined "first-mile" of business processes and the strategy started to make sense, but I was still wondering how Kofax planned to address it. Well, Total Agility 7, which has apparently (per Kurzweil's advice) been in the works for several years and some $125 million worth of acquisition and R&D investment, makes it all clear. Basically, it's a Web-based (eventually cloud-based) platform with all the tools needed to create SPAs.

I'll expound more on this in my next premium issue of DIR, as Kofax CTO Anthony Macciola gave me a great interview on the details of TA 7. In brief, it combines Kofax's existing capture technology, with its internally developed mobile tools, with the technology from the acquisitions Kofax has made over the past few years, and puts in all in a Webified, cloud-ready environment that appears ready to address what Kofax hopes is an emerging market for SPA solutions.

Live from Kodak (Alaris) DI Global Directions

About 400 people here at the event being held in the Gaylord National Resort & Convention Center at the National Harbor in Washington, DC. Mix of Kodak employees, resellers/channel, end users, ISV partners and media/analyst. The great Ray Kurzweil gave the opening keynote.

Kurzweil, a renowned futurist, discussed the exponential growth of the information technology market. He also said that companies competing in this market need to be looking 3-4 years out. This coincided nicely with the Big Data message that seems prevalent at the conference. Speakers from big-time software companies like Google, IBM, Microsoft, and Salesforce.com took the dais on Day 1 and there overwhelming message was that Big Data is coming.

So, what does this mean to the attendees? Two things as far as Kodak Alaris Document Imaging is concerned:

1. The emergence of a multi-channel/source capture model to deal with an increase in information being received by organizations through an increasing number of input sources.
2. The need to add some sort of intelligent processing to efficiently manage this increasing volume of incoming information - which is the point of the Info Insight software that Kodak first discussed last year and recently made available as a product.

Cloud-based Capture Benefits Food Service Provider

“When you are processing from multiple locations 2,500 - 3,000 invoices a week, with some being as many as 10 pages long, having a distributed, web-based capture system that works to expectations is a real benefit."

- Chris Beckman, IT and Customer Service Administrator for Food Authority -- a fine foods service and produce distributor, based in Oceanside, New York

Check out this case study, which includes technology from CAPSYS, Fujitsu, and KnowlegeTree.

Also, here's a short piece on how moving their IT infrastructure to the cloud helped Food Authority maintain its business in the wake of Hurricane Sandy.

 

Jury Rules in Favor of ABBYY, Lexmark, in OCR Patent Trial

(Some updates since first post)
The long-lasting OCR patent lawsuit filed by Nuance against ABBYY and Lexmark is finally over. Yesterday, a jury appointed by the U.S. District Court of San Francisco, ruled unanimously in favor of ABBYY and its partner Lexmark. It ruled that neither company owes Nuance anything in damages related to patent or trade dress infringement. 

The way I understand it, Lexmark, which manufactures printers and MFPs, was a partner of Nuance, but at some point, prior to 2008, when Nuance filed the suit (I guess the suit was originally filed in Wisconsin in 2002, but moved to California in 2008), Lexmark switched out its bundled Nuance OCR technology in favor of ABBYY's. Nuance accused both Lexmark and ABBYY of attempting to create packaging that resembled Nuance, and also accused ABBYY of violating five six patents that Nuance picked up in its 2000 acquisition of Caere. ABBYY promptly filed a countersuit, accusing Nuance of violating two of its patents, as well as violating anti-trust act. The whole thing was combined in one trial in the Court of Judge Jeffrey S. White.

In 2009, eCopy and it's OCR partner I.R.I.S. were dragged into the suit, but that was apparently resolved when Nuance acquired eCopy later that year and replaced the I.R.I.S. technology with its own.

Apparently before the case went before a jury, in a trial that started earlier this month, it was narrowed down to three patents.

I've read Nuance's OCR patents and they are pretty broad based - meaning that if ABBYY were found in violation of them, it could have affected everyone else developing (and licensing non-Nuance) OCR technology. So, this decision should have many people in the document imaging market breathing a collective sigh of relief. 

No word yet if Nuance plans to appeal, if they can, and/or if they will go after anyone else for patent infringement related to OCR . We expect to talk with ABBYY reps later today and I know Nuance is planning on issuing a statement. We'll keep you posted as more news on this develops.

Mobile, Cloud, on MFP Dealers', Users' Minds.

From this week's premium DIR:

 “Our new app fits the needs we have been hearing about from our dealers for some time. In addition, we like to bring in our VIP accounts to the TABS corporate office—and nine out of 10 of them have been asking what our plans are for mobile and cloud applications. It’s something that’s clearly on the mind of all Toshiba’s customers.” 

- Tony Venice, manager, strategic product management, Toshiba America Business Solutions, 

discussing TABS' new e-BRIDGE Print & Capture Mobile Software

EPM and Crowley Announce Partnership

Eastman Park Micrographics (EPM), the media and equipment business that was spun out of Kodak DI in 2011, this week announced a partnership with the Crowley Company, which will provide worldwide sales and marketing for EPM's equipment line, which currently includes the IMAGELINK Archive Writer, the IMAGELINK Archive Processor, as well as a pair of OEM'd film to image scanners.

Technically, Crowley's partnership is with EPM Equipment, which was spun off of EPM this week as well. EPM will continue to sell media/film through its agreement with Agfa. Apparently, the Rochester-based Kodak film production operations, where EPM historically got its film, are winding down.

We'll have more in depth coverage of these announcements in our next DIR premium issue, which is due out Aug. 23.

Kapow Helps Kofax Address SPA/First Mile

Okay, so here's my first stab at explaining Kofax's acquisition of Kapow Technologies which was announced earlier today. Based in Palo Alto, Kapow is a data integration ISV with some $16 million in annual revenue. Kofax agreed to pay a net of approximately $46 million. (We'll get into more of the financial details in our next premium issue of DIR.)

On a conference call today, Kofax CEO Reynolds Bish explained that Kapow has three primary lines of business:

• enterprise application integration
• content migration from one ECM-type system or database driven application to another
• competitive or marketing intelligence involving monitoring social networks and tracking trends occuring on them

He also noted that over the past four years, Kapow has transitioned from an on-premise software model to a subscription model and that, including maintenance, more than 70% of Kapow's revenue is currently generated through a recurring billing cycle. Kofax plans to continue to sell into all of Kapow's current markets.

But, the really exciting part from a Kofax standpoint is how Kapow's software will help Kofax better pursue its Smart Process Application (SPA)/First Mile of the customer interaction strategy. SPA is a market defined by Forrester sometime between late last year and early this year. Kofax embraced it because of its higher growth potential than document capture.

 Here's some of what Forrester principal analyst Craig LeClair had to say about SPA (excerpted from a previous DIR article.): “SPAs are packaged apps designed to address end-to-end process needs. They can be used to address processes that businesses have been struggling with like invoice and claims processing, and customer onboarding....SPAs combine capture, BPM, social tools, and analytics as enablers to build focused applications."

Kofax is then trying to combine an SPA focus with its aforementioned strategy of addressing the "First Mile" of customer interactions. Here's how Kofax CMO Martyn Christian described this "First Mile:" “The First Mile is really that bridge between systems of engagement and systems of record,” he said. “It involves processes like scanning paper, but it could also involve an app on a cell phone. Our goal is to capture customer information and start to look at building cases and collaboration around it, before the data ultimately ends up in an ERP system or whatever system of record it’s headed towards.”

Basically the First Mile is about most effectively connecting systems of engagement on the front end with the back-end systems of record. But, one of the catches to doing this is that it involves connecting multiple disparate systems - something which Kofax, as primarily a document capture ISV, didn't really have a legacy in.

So, the first step in addressing this shortcoming was acquiring BI and data analytics ISV Altosoft. Altosoft gave Kofax the ability to pull data from disparate system for analyzation and decision-making. The acquisition of Kapow builds on that by enabling Kofax to more easily connect to multiple applications.

During today's conference call, Bish did a fairly good job of explaining the advantages of simplifying application integration when you are competing in the SPA space. "When we talk about SPA, we talk about being able to bridge the gap between systems of engagement and systems of record," he said. "To do that means we have to integrate our technology with both of those types of systems. For example, as part of an SPA you might have to do look-ups into your systems of records to validate information coming from your system of engagement. You also have to export data to a system of record or some other repository.

"Historically, to make those connections, we've had to rely on API programming, which can be time consuming as well as expensive, as it can require extensive professional services. Kapow will enable us to do integrations better, faster, and cheaper, which will accelerate deployment of SPA solutions. Reducing our professional services will also enable us to remove some potential barriers to selling SPA solutions."

The bottom line is that the Kapow acquisition seems to be an important step toward Kofax's goal of transitioning from a document capture specialist to an SPA vendor with a broader market to address. It is another example of how Bish continues to push the company forward through investment in new technology of the profits earned primarily through Kofax's current capture business. Clearly Bish (and the Kofax board) see the capture market as evolving and are not satisfied and stand pat and let it pass them by. 

Imaging 411 Targets VARs, Offering Higher Margins on Service

Following is an excerpt from an article entitled, "Imaging 411 Pumps Life into Hardware Service Market" that appeared in our July 19, 2013 premium edition of DIR.

There are several components to a document imaging sale. We typically talk a lot about the hardware, software, and professional services associated with a deal, because those items typically produce the big upfront price tag. (Unless of course it’s a SaaS or MPS driven deal—but, while gaining momentum, those are still exceptions rather than the norms in our market.) But, there is also typically recurring revenue that can be earned through software maintenance and hardware service contracts.

One difference between these recurring revenue sales and the upfront sales, however, is that while any number of vendors may be competing for the upfront sales, the number of options for maintenance and service is typically limited. Software maintenance, for example, because of the nature of the beast, is usually offered only by the ISV who developed the software. As a result, the ISV typically gets to set the terms with no questions asked.

Hardware service has historically been somewhat more flexible, and at one time many resellers were actually certified to service scanners, which enabled them to control their own pricing. However, while some scanner vendors like Canon still certify VARs, other market leaders like Kodak and Fujitsu have increasingly encouraged resellers to offer only the manufacturer’s authorized service at a price dictated by the manufacturer. The result has been successful service programs for the manufacturers, which has helped them offset some of their falling margins on hardware sales, but it has also put the squeeze on resellers who also have to deal with falling hardware margins and now have to deal with more restrictive service margins as well.

Imaging 411 is attempting to reverse that dynamic and once again make scanner service an important profit center for VARs. The Long Island, NY-based organization is offering scanner service packages to VARs—advertising significantly higher margins than the VARs get reselling similar service packages from leading scanner manufacturers. Imaging 411 recently brought on board long-time scanner industry sales and marketing executive Don McMahan as its VP of sales to help it drive some aggressive channel growth.

McMahan was originally hired by Imaging 411 as a consultant in 2010 when he launched the service provider’s Maintenance VAR Program (MVP). “One of the big components of the MVP program is that we offer deal registration,” said McMahan. “This signifies that we are not competing with our resellers. In addition, we are offering VARs two to three times the margins they get on service contracts from leading scanner vendors.”

Imaging 411 was launched in 2004 as a VAR, with the value-add of being able provide its own service. Its co-founders, Gary Armstrong and Joe Paradiso, are former Lason executives who helped manage service for a large conversion services and imaging systems integration business. Over the years, Imaging 411 began to increase its focus on service on both microfilm and document scanner equipment.

“In each of the past five years, Imaging 411 has enjoyed at least double-digit growth in terms of revenue and new accounts,” said McMahan. “We’ve landed some major national accounts with more than 100 locations—including Databank, which we publicized last year. We also landed a contract to provide in-house scanner service for one of the biggest office integrators in the U.S.”

A lot of the Imaging 411’s early customers are former Kodak Service & Support customers. “We went after Kodak customers and partners first because the dollar values associated with some of their accounts are so high and Kodak’s programs aren’t very flexible,” said McMahan. “One of our differentiators is that we pride ourselves on being easier to do business with."

McMahan said that Imaging 411 currently has about 20 reseller partners. “We are definitely growing our channel,” he said. “That said, I think 30 partners, that really want to do a good job, would be plenty."

Imaging 411 offers coverage throughout the United States through a combination of its own field engineers and contractors. It also provides Level II support to supplement its field personnel. “Our price book is basically the same as the manufacturers’,” said McMahan. “We match all the service SKUs sold by Kodak, Fujitsu, Canon, etc., and we offer more flexible pricing.”

“The bottom line," McMahan added, "is that even if the service market is shrinking, for a smaller company like Imaging 411, the opportunity is too great to pass up. We think the market is plenty big enough to support another major player.”

Kodak Event to Focus on Leading Edge Information Management

Here's an excerpt from an article that appeared in last week's premium edition of DIR:

From Sept. 22-25, Kodak DI will be hosting its second annual Global Directions Conference at the Gaylord National Resort and Convention Center in Washington D.C. The event features a keynote by Ray Kurzweil, the noted technology inventor, author, and visionary who is currently employed as the director of engineering at Google. Kurzweil, who is probably most widely known for his work on artificial intelligence, but was also an early pioneer in the area of applied OCR, will talk on “The Next Wave of Intelligent Information Management.” According to the Global Directions Web site, the talk “sets the stage and explores the exponential increase in computing power, computing intelligence, and the inexorable impact they will have on transforming information management for the enterprise.”

This is in line with the event’s theme of intelligent information management. “We look at Global Directions as an educational conference,” explained Tim Palmer, VP of worldwide marketing for Kodak DI. “We want to help advance the thinking of the whole industry around understanding information and taking friction and cost out of business processes.”

The other opening day keynotes reflect this broad focus that expands well beyond the traditional areas of business for Kodak DI. In additional to Kurzweil, high level executives from IBM, Google, Salesforce.com, and Microsoft will take the dais to discuss topics like big data and analytics, smarter enterprise search, the death of the desktop, and the future of business collaboration. There will also be a panel discussion moderated by Michael Hickins, editor, Wall Street Journal/CIO Journal, that will pull together multiple keynote speakers, including Kurzweil.

“We are taking a very broad view of where Kodak DI intersects with traditional business and new business going forward. We are looking to have our brand and division associated with end users, service providers, manufactures, resellers, etc., as they think about what they need to do to go to market in the future.

“If you consider the concept of information workflow, traditionally capture for us has meant scanning paper documents. But, we realize that information is coming from more and more sources and the growth of digital information as input is increasing exponentially. In the future, we need to help businesses capture information not only from paper, but from multiple other sources.

“‘Collecting’ is probably a better term than ‘capture,’ when you talk about taking this one large stream of information and getting it all to the right places, routing it, understanding it, semantically and contextually, and making sure you have the right associations and the right conclusions are being made.”

We asked Palmer, if Kodak’s Info Insight platform, which brings semantic and contextual understanding to the table, will be prominently featured at Global Directions. “It certainly fits on the far right of the information workflow model,” he said. “But, the event is focused on themes that are much wider than our current product offerings.”

A look at the agenda
After a Sunday evening reception, the full first day of Global Directions, Monday, Sept. 23, will be full of keynotes presented in a general session followed by an exhibitor showcase where dinner will be served. Tuesday and Wednesday will feature four tracks of breakout sessions, with no more than two or three sessions overlapping at a given time. Tuesday evening will feature a “Monuments by Moonlight” bus tour of downtown D.C.

Kodak is hoping for 300-400 attendees, or about double the number from last year’s inaugural Global Directions, which was held in Las Vegas [see DIR 9/28/12]. “We are looking to make a giant leap forward with this year’s event,” said Palmer. “We felt last year was pretty successful, and we definitely learned a lot, but this year we feel we are really offering a world class conference.

“We think we have a strong enough program to attract senior IT executives at end user organizations and business process owners. Primarily we are marketing to end users with the understanding that if they show up, systems integrators and resellers will certainly follow. We are marketing the event throughout the U.S., as well as internationally. We expect a decent turnout from Central and South America, and our team in Europe is looking to bring over some top end users customers—at least a double-digit number. Just because of logistics, we think it may a little tough to attract attendees from Asia-Pac.”


Kodak is also looking for sponsors and exhibitors. It is looking for a total surpassing 20. “Anyone that believes they can make a contribution to the future of intelligent information management is encouraged to exhibit at Global Directions,” said Palmer. “We expect plenty of end users to be on hand looking for those types of partners. We are taking a broad view of this conference as an educational opportunity, and we are looking for a similarly broad representation of exhibitors.

“The bottom line is that I think we are at the beginning of a very exciting period of time that will play out over the next 5, 10, and even 25 years. I sense another revolution in the way we are going to use information. With the presentations and networking at Global Directions, we hope to help attendees bridge the gap between this revolutionary vision and the practical first steps that need to be taken. We are hoping people are able to come away from our event energized and with at least a few things that they can put into action when they get back in the office on Thursday [Sept. 26].”

Plustek Introduces New Departmental Scanner

Today Plustek announced its new SmartOffice PS456U document scanner. It's a color duplex model rated at 80 ppm. Has hard card and longer document capabilities and a 100-page ADF. Software bundle includes ABBYY FineReader for OCR and PDF creation, as well as NewSoft Presto PageManager and BizCard and some other Plustek stuff for Asian OCR as well as one touch "button" scanning. There is also some solid image processing, including auto-thresholding and multi-image output. All this comes at a list price of $849.

It's available from authorized Plustek resellers and Value Added Distributors NewWave Technologies and Ingram Micro.

Cool logo for Mobile Capture App

Got to love Scanny,....logo for a mobile capture app that utilizes OCR to transform static text (from like books, for example) into text messages. It does other things too. Runs on iPhones. Free version here.

Has Lexmark Found Formula for Software Success?

Lexmark announced its second quarter 2013 earnings (click on Q2 2013 Earnings) yesterday, with both revenue and income exceeding analyst guidance.This is certainly good news for Lexmark and its shareholders, who saw their stock jump approximately 5% in yesterday's trading. However, the most interesting thing from our perspective was how much credit Perceptive Software is being given for the strong quarter.

Perceptive is a suite of ECM software products that Lexmark began acquiring back in 2010 when it bought Kansas City-based Perceptive Software. At the time, Perceptive was a traditional document imaging/workflow ISV with about $85 million in annual revenue. Since then, Lexmark has rolled up several other ECM-related software companies under the Perceptive umbrella, including advanced document capture specialist Brainware. In Lexmark's latest quarter, Perceptive generated approximately $60 million in revenue, including 34% growth. It also achieved "a modest operating profit for the quarter."

This last point is significant because in previous quarters, while Lexmark had reported some strong growth for Perceptive, it was losing several million dollars per quarter. Here's an explanation of the Perceptive turnaround from Paul Rooke, Chairman and CEO of Lexmark, as quoted from the Seeking Alpha transcript of today's investor call. "We delivered improved Perceptive Software profitability this quarter, up $10 million sequentially and up $4 million year-to-year, driven by two factors. First, we delivered record Perceptive Software revenue, growing more than expected, driven by record licensing revenues as we closed several large enterprise customer licensing deals during the quarter. Second, this increased licensing revenue contributed to a larger gross profit margin increase than expected.

"We also stated last quarter that we were taking additional actions to further reduce Perceptive Software's cost and expense growth to improve profitability without negatively impacting revenue growth.We started to execute that in the second quarter, and we'll begin to see the benefits of these actions starting in the second half. Going forward, we expect to continue driving double-digit software revenue growth and remain committed to delivering a positive software operating margin in 2013."

That's encouraging sign number one for Perceptive.

The second positive sign are synergies that Rooke discussed, which are being developed between Lexmark's Imaging Solutions/hardware business unit and Perceptive. From the Seeking Alpha transcript: "As proof of these synergies, we're beginning to win software solution deals in ISS accounts across a range of industry segments. In fact, over the last two quarters, we've won over 20 new capture, content and process software deals across a range of ISS banking, retail, manufacturing, government and healthcare accounts, and our sales funnel continues to strengthen. We're also beginning to see the reverse happen as well, where ISS is capturing MPS deals in Perceptive Software healthcare accounts."

Basically, this was always the vision - that ISS' large global presence would be able to turn what was essentially a North American SMB-focused ISV like Perceptive, which strengths in a few vertical markets, into a worldwide, cross-industry ECM power. What's neat is that if the Perceptive success continues, the Lexmark blueprint could provide a plan that will be copied (no pub intended) by other printing hardware vendors - all of whom have at least been dipping their toes in the water regarding an increased software focus. If Lexmark can jump all in and succeed (it really has invested a ton of money and resources in Perceptive - and made more of a commitment to software than any of the other hardware vendors), perhaps the other vendors will follow.

What will this mean? It could mean acquisition/buying sprees by hardware print vendors of ECM and capture ISVs. Hyland, DocuWare, Open Text, Kofax? Could they all and more be swept off the table by hungry hardware vendors in the next couple years? If Lexmark's Perceptive plan continues to pay dividends (and admittedly, one quarter does not a successful business make, but Rooke is projecting the success to continue), then why wouldn't the other hardware vendors follow suit?

One more thing, I thought was interested that came out of the Rooke's call with financial analysts. I thought he did a very good job expressing exactly that the big vision is for a combined print/MFP/ECM conglomerate like Lexmark is evolving into. Here's a quote from the Seeking Alpha transcript:

"Lexmark is rapidly moving its value proposition from a provider of only printing solutions, a partial response to the unstructured information challenge that all of our customers' face, to a provider of unstructured information solutions, a more holistic response to this challenge, encompassing: output management, to optimize paper output, a big part of the unstructured information challenge for the time and place it's needed; content management, to make unstructured content, both paper and digital, available at the time and place it's needed; and process management, to automate and integrate those manual, often paper-based disconnected process challenges to improve workflow efficiency."  - I think that makes a lot of sense and does a good job explaining the synergies, from a technology and marketing standpoint, between print and ECM technologies.

eDiscovery Dispute Highlights ABBYY-Nuance OCR Patent Suit

This is kind of ironic - and thanks to our friends at Harvey Spencer Associates for connecting us with the link to this article, but it seems ABBYY has been ordered to pay Nuance $135,000 in a dispute over document discovery. Yes, it seems the two OCR ISVs are arguing over the exchange of documents.

U.S. District Judge Jeffrey White, whose office is in San Francisco where Nuance's lawsuit against ABBYY and Lexmark (Lexmark licenses ABBYY technology) over OCR patent infringement is being heard, ordered "Abbyy to pay Nuance $135,000 in sanctions for taking so much time handing over requested documents that the court reopened discovery and Nuance retook depositions that had already been completed."

Also from the article "ABBYY contended that it disclosed the information late because it was tied up responding to 'Nuance's multiple other discovery requests seeking massive amounts of irrelevant information,' but Judge White didn't buy that excuse. 'The court does not find the delay in production justified considering the scope of this case and the sheer amount of lawyering and the parties' investment of time and effort,' he said."

Alright, so it appears the game is on. This case has been in court since 2008, but it seems some headway is finally being made. According to the article, "All the parties were ordered to attend a settlement conference to be held no later than July 5."

If you remember, one of the predictions we made in DIR to start the year was "Some major market developments driven by ongoing patent lawsuits." Stay tuned.

Upland's Plans for Filebound

It sounds like it will basically be business as usual, at least initially for FileBound Software, which was recently acquired by an organization now known as Upland Software. FileBound is a long-time document and image management ISV that is probably best known for its SaaS or cloud-based offering, but offers on-site systems as well, and primarily sells through a value-added reseller (VAR) channel. Primarily through an acquisition strategy, Upland is building a portfolio of products in an emerging market labeled by Gartner as "project and portfolio management (PPM)," but is also looking at adjacent spaces like BPM, IT planning, resource management, and product life cycle management.

I just got off a call with Ludwig Melik, the president of Upland, who owned one of the original two companies acquired by the investment firm Silverback Enterprise Group when it decided to pursue PPM and broader spaces. Prior to the Filebound acquisition, Silverback's PPM group was known as PowerSteering Software, which was the name of one of the legacy acquired companies. "We decided to rename the organization Upland, because we wanted to start with a clean slate," Melik told me.

However, that does not mean that Upland is throwing out the successful business models of the companies it has bought. "With FileBound, we bought a successful company that is profitable and growing," Melik said. "That number one rule in that case is to do no harm.

"The best way to surmise how we are going to manage FileBound going forward is to look at the past. If you look at what has happened to Tenrox (Melik's company) and PowerSteering, both product development teams are still in place. That is the same path we will take with FileBound, and we will look for opportunities for members of the FileBound team to take a greater role across the company. For example, Sean Nathaniel, who was the CIO at FileBound, has been named Upland's VP of product development."

Upland also plans to maintain FileBound's VAR channel and if and when there is opportunity, to introduce some of its other offerings to that channel. "Our goal is to maintain FileBound's current areas of strength, to continue to develop compelling products for its customers and partners, and to take advantage of some of the increased resources that a larger organizations like Upland can bring to bear in areas like marketing," Melik said.
 

Beyond Paper: Info Insight Automates Processes

Multi-channel capture is certainly a hot topic. A couple weeks ago, we visited ibml and ReadSoft, who each discussed their expanded focus to include multi-channel capture. This week, we briefed with Kodak Document Imaging on its new Info Insight application, which was announced last week.

Info Insight is a Web-based IDR solution that is able to automate classification and capture of document from multiple inputs. Kodak is advertising it for use with scanned images, faxes, e-mail, and input from social media sources. So, from the capture side, which Kodak is calling its "integration platform edition," InfoInsight certainly has multiple channels covered.

From the output, or process standpoint, Info Insight also addresses many, what we'll call "avenues." Kodak calls this side of Info Insight its "solutions edition module." It includes assisting with both automated and manual responses to e-mails, social media input, and traditional paper correspondence. It also includes being able to track the "moods" on social media sites via a graphical screen.

No, I wouldn't say that Info Inight is deeply into what Forrester has defined as the Smart Process Application space, but it's clearly a step in that direction. Info Insight is designed to take input form multiple sources, apply technology like self-learning and artificial intelligence, as well as data aggregation, and produce some sort of response to the input. The main SPA element that I see it as missing is a true BPM engine for dynamically automating complex processes. (Yes, Kofax has trained me well in the use of the word "dynamic," but I think it makes sense here.)

All and all, it is interesting to see where the capture market is heading. I completely agree with Kodak and Kofax's and others' position that it is very important for capture companies to expand their front ends to embrace multiple channels, because clearly the generation currently going through higher education and those behind it have less use for paper than any generation in the past 100 years.

That said, the processes that paper has traditionally been a part of are not going away. So, it's very important for anyone in the capture market to realize that the future is about owning the process, not the paper, and Info Insight, and Kofax's SPA strategy, and quite a lot of what I'm starting to see show up on the market, seems to be taking this approach. Good work guys!

Andersson Spearheads ReadSoft Acquition Strategy

Since ReadSoft co-founder Jan Andersson stepped down as CEO in 2011 and joined its board of directors, one of his charters has been to guide the Swedish-based capture ISV's acquisition strategy.  Last year, we saw that strategy manifest itself in the acquisition of foxray, a German high-volume document capture specialist. Last week I was in New Orleans for a briefing on how ReadSoft is integrating the foxray capture framework into its business strategy.

foxray is a capture platform that kind of reminds me of a newer version of the InputAccel platform. It's designed to manage multiple capture workflows and can utilize best of breed components. Historically, it's integrated a lot of Kofax technology for example, but now that foxray is owned by ReadSoft, ReadSoft's capture platform will certainly be the first, but not only, option. foxray's Xbound platform also has cool features like the ability to re-use components across multiple workflows (which eases set-up) and the option to use a single verifier for multiple data capture processes. It also provides an end-to-end view of all a user's multi-channel capture processes.

foxray's Xbound system has historically been sold primarily in Germany, but ReadSoft has plans to bring it to North America targeting markets like service bureaus, healthcare, and financial services.

Last week, ReadSoft announced another acquisition that Andersson helped put together. That was of e-invoicing network provider Expert Systems. Based in Sweden, Expert Systems' hosted application is complementary to ReadSoft's thriving software business in extracting invoice information from paper. ReadSoft recently launched a new cloud version of its invoice capture software as well.

According to Bob Fresneda, president of ReadSoft North America, Expert Systems was doing between $1.5 million and $2 million in annual sales -all of which is counted as recurring revenue due to its subscription-based model. ReadSoft paid $6 million for the business.

Is ICR Technology Underutilized?

Don Dew of advanced document recognition ISV Parascript recently authored an article on the benefits of intelligent character recognition (IDR) technology that he has asked us to share with you. It discusses how ICR technology is underutilized on documents that include handprint and even cursive writing.

Here's an excerpt from Dew's article, "From name, address, social security number, phone number, or any other unconstrained or cursive information entered on a form, advanced ICR solutions can capture this data with a high degree of accuracy and make it available for use within the organization. Based on research performed by AIIM and Parascript last year, only 6% of organizations are automating this level of recognition. At the same time, survey participants estimated that they would achieve a considerable level of productivity savings if they were able to automate the recognition of hand-written text."

Here's the link to Dew's complete article on our DIR Web site.

Just for some background, Parascript develops advanced recognition technology that does both OCR and ICR. Historically, it has been best known for its cursive recognition, which is utilized by the USPS in their envelope and parcel sorting operations. Parascript also offers a document recognition-centric toolkit that includes both OCR and ICR. Parascript recently released a new version of this SDK, as well as a new version of its FormXtra Capture application, which it is moving through a recently revamped reseller program.

Harvey Spencer Associates Launches Voice Recognition Study Related to Dodd-Frank

Related to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to as Dodd-Frank), Harvey Spencer Associates (HSA) has announced the launch of a new multi-client study to identify opportunities for the use of voice recognition technologies to reduce the costs associated with compliance discovery of trading records in the banking and financial services industries. Basically, Dodd-Frank requires that traders in stocks and bonds record all communication related to their business of trading. And those records have to be made available for audits for a year, and delivered fairly quickly when asked for. Deadline for complying with this is Dec. 31. Thus, the current opportunity for implementing voice recognition software.

Spencer is known to most of us for his work in the document capture software market. Here's how he describes his expansion into voice recognition (a move which capture software ISV Nuance actually made several years ago): "It is part of expanding HSA to defining capture as ‘capturing transactional information from unstructured big data elements,'" Spencer stated in an e-mail to DIR. "Defining the inputs as documents; voice; photographs; and video, the intent is to build expertise in these different underpinning technologies which all use pattern based understanding combined with business rules (it’s really forms processing with different inputs) to extract meaningful data.

:In the case of the Dodd-Frank compliance issues, it is a matter of being able to add enough metadata to the trader’s voice recordings in order to reduce the time spent on searching and discovery.  As with forms processing in the past, we do not expect that technology can deliver 100%, there will always be manual effort – what we want to do is identify the value of partial recognition/understanding and the supplements to voice recognition that can achieve this."

Kodak's New Deal

Well, forget everything you read about Brother buying Kodak DI. Not going to happen. Kodak got a better deal from the U.K. Kodak Pension Plan (KPP). How much better? Well, in addition to receiving $650 million in cash and non-cash considerations (for both DI and Kodak Personalized Imaging (PI), which was also up for sale under Kodak's bankruptcy proceedings), the deal also settles $2.8 billion in claims that KPP had against Kodak Corporate.

Granted, claims in a bankruptcy case are not typically worth 100% of face value (or even close to 100%), but still, technically, Kodak Corporate came out $3.45 billion on the books ahead for divesting itself of DI (for which Brother had bid a net $277 million) and PI, which I'm estimating is a little more than twice as big as DI. (In 2012, combined, the two units generated a reported $1.46 billion in revenue, with DI somewhere around $400 million.) I'm guessing that in separate auctions, which is what was supposed to happen prior to the KPP deal, Kodak corporate would have been lucky to get $1 billion combined. So this is a big win.

On top of things, apparently one of the requirements of Kodak corporate's emerging from bankruptcy was that it settle with KPP, which was listed as Kodak's largest unsecured creditor. So, this announced sale takes care of multiple requirements. It also gives DI and PI and solid landing spot.

Dolores Kruchten, president of DI, said to think of KPP as a "financial buyer." "KPP operates independently of Kodak and has more than 1 billion British pounds of assets under its control," she said during a conference call this afternoon. "They have the capability to make investments and actively support our DI business."

Basically, it sounds like KPP plans to continue to operate DI and PI as a business. Said Steven Ross, chairman of KPP, as quoted in a press release, "The businesses that we are acquiring will deliver long-term cash flows to support the plan’s obligations. The financial stability that KPP will provide for the Personalized Imaging and Document Imaging businesses will be beneficial to those businesses’ employees, customers and partners.”


Kodak still has to submit its plan to sell DI and PI to the bankruptcy court for approval, but Kruchten said she does not anticipate any problems with closing the deal. Brother is stepping aside, and Kruchten did not have any insight into what it was being compensated for serving as the "stalking horse" in an auction that will never happen. Kruchten said that Kodak was obligated by law to announce the Brother deal, even while continuing to work on a deal with KPP.


"Brother understood that if we reached a deal like this, where we were able to bundle DI and PI together, its stalking horse bid would be terminated," said Kruchten. "The deal with KPP was not finalized when we reached an agreement with Brother. As you know, no deal is final until ink is on paper. When we made the agreement with Brother that was the only signed deal we had. You know what they say about a bird in hand."

Perceptive Capture Selected for Invoices by Kohler

Quote from the press release:

"We tested a number of available automation solutions, and Perceptive Software’s platform was able to extract more than eighty percent of field data from Chinese and Thai invoices sight unseen, far better than any of the others,” said Ming Zhang, Sr. Systems Analyst, IT Asia-Pacific Corporate Services for Kohler Co."


Being used for invoices that solution is powered by Brainware software, which Lexmark/Perceptive acquired last year. " The technology will be implemented within Kohler Co.’s SAP enterprise resource planning system over the course of a three-stage rollout to include shared services operations in the Asia-Pacific, North America and EMEA markets."

Kohler is a global leader in the manufacturing of kitchen and bath products, engines and power generation systems, tile and home interiors, and an international host at its award-winning hospitality and world-class golf destinations. For more information on Kohler Co. and its products, please visit www.kohler.com.

A Little More Commentary on Brother's Bid for Kodak

A lot of media outlets are reporting that Kodak Document Imaging has been sold to Brother for $210 million. I'm not certain whether or not this is actually the case. As I stated in yesterday's post, the Brother bid is actually a "stalking horse" bid, which is bankruptcy proceedings is technically the low bid in an auction that will take place following the acceptance of a stalking horse bid. The question that I cannot seem to find an answer to is what percentage of stalking horse bidders end up being the final buyer.

This piece does a nice job in explaining some of the "The Pros and Cons of Being A Stalking Horse Bidder for Assets In Bankruptcy." It explains that the stalking horse bidder has an advantage because it basically gets to sets the terms of the sale - what will be included and what will not - and once those terms are set, it's pretty hard to change them apparently. So, anyone else bidding is basically bidding on what Brother has carved out of Kodak as representing DI.

Somewhat related to that, here's what said George Conboy, president of Brighton Securities, had to say about the Brother bid. (I'm quoting from this Rochesterhomepage.com article.) "The price is a little bit light but what we can't be certain Kodak said it would be selling a certain portion of that business, probably majority but can't be sure what they are obtaining as of now."

One question, of course, is is Brother buying the Kodak brand for the DI products and services going forward?

If someone should outbid Brother, as the stalking horse it would likely be owed some sort of compensation, maybe something equal to a small percentage of the deal. I hope to have more later today - after an interview with Kodak executives.

Brother Puts Up Stalking Horse Bid for Kodak DI

Brother Industries has posted the initial "stalking horse" bid in the auction for Kodak Document Imaging. The way I understand it is that the $210 million offer will serve as the minimum bid in an auction that will take place throughout May and close in June. According to the press release on the bid, "Kodak will seek U.S. Bankruptcy Court approval of the bidding procedures at a hearing in late April and is targeting final court approval of a transaction in June."

When Kodak announced it was selling Document Imaging last August, it was advertised as a $400 million profitable business coming off a record year. There is not doubt that the uncertainty surrounding Kodak corporate's bankruptcy has negatively impacted Kodak DI's sales, but $210 million still seems like somewhat of a bargain. That said, the deal also includes  Brothers' accepting $67 million in owed service contracts - presumably stuff that can continued to be renewed, so it shouldn't have negative impact on the bottom line.

Brother would be classified as a strategic buyer as it was recently moved into the document scanner market with the release of some mobile and desktop workgroup models.When I last talked with Brother executives, they said they indicated the vendor had plans to keep moving upstream and an acquisition of Kodak would certainly be one way to do that.

Rumor has it that several venture capital/investment firms were also looking at Kodak, so perhaps there will be a higher bid between now and June. But, remember the prediction I made back in January, "Kodak DI will be acquired by a major printer vendor." The ball is in play.

Capture vs. SPA growth

In this week's premium edition, which just came out, I have a feature comparing Harvey Spencer Associates growth rates for the capture market to Forrester's as published in a study recently commissioned by Kofax.
Anyhow, here are two charts I came up with that I felt were relevant to the story (the x-axis represents billions of dollars in software revenue):

                                                                                                                                                                    
Basically, it's Spencer's contention that SPA is primarily capture technology, so the bottom chart is a more accurate representation of HSA's numbers vs. Forrester's than just comparing the black and orange lines on the top chart.