Insights into Current ECM Market from DocuWare's President

Today, DocuWare announced the first two applications in its Kinetic Solutions program. Kinetic Solutions are pre-configured to manage specific business processes and sit in the DocuWare cloud. The first two iterations are for accounts payable and human resources.

These are not surprising places to start - as they are two of the most popular areas for businesses to begin their ECM implementations. DocuWare is a Germany-based ECM vendor that has been successful in the U.S. through a strategy of first buying one of its early U.S.-based solution providers (ALOS) and then focusing on recruiting MFP dealers to form the bulwark of its reseller channel.

DocuWare was also one of the first traditional ECM vendors to recognize the significance of the cloud. In 2010, the company earmarked one million Euros for Web-based and SaaS initiatives, which eventually led to the launch of the DocuWare Cloud in 2012. Cloud adoption ramped up gradually but by the end of 2017, the ISV was projecting the over half its new customers would be choosing the Cloud - a high rate compared to most legacy ECM vendors.

So, to us it seems that DocuWare's leadership has proven to have some keen insights when it comes to ECM adoption trends. And, in its latest press release announcing the first two Kinetic Solutions, President Juergen Biffar offered his views on three current trends he is seeing. “We are seeing three signals in the market,” he said. "First, because of its attractive economics and simplified IT impact, there is escalating demand for cloud services versus traditional on-premises software. Second, functional utility is not enough – clear, intuitive usability is now expected. Third, companies are more inclined to deploy a narrow, departmental solution versus trying to configure complicated, legacy software. Enterprise-focused software that requires lengthy and complicated professional services is witnessing softer demand."

There has been a lot of talk in the ECM market about the emergence of "content services" and breaking down monolithic ECM solutions into "microservices" that can be consumed in smaller bits and used to assemble process-specific applications. With its Kinetic Solutions, DocuWare has kind of taken this approach, but instead assembled the microservices on its own into "micro-solutions" designed to be more manageable than a traditional ECM platform. This makes perfect sense for the mid-market businesses that they target who probably want something more "out-of-the-box" than a series of configurable ECM services.

This seems to be a good approach on DocuWare's part and should help the ISV continue to increase its percentage of cloud sales, which should also lead to continued success into the foreseeable future.

Today's Financial Services Market Demands Innovative, Stable Capture Solutions

Dell EMC’s Enterprise Content Division (ECD) has been a long-time leader in the document capture software market. It is probably best known for high-volume, back-office implementations, but like everyone else trying to stay competitive in the market, ECD has done a lot to address more modern capture initiatives. This includes the introduction of Web services, cloud, and mobile technology.

Following is a piece I developed with input from ECD, discussing how its software addresses the evolving requirements of today’s financial services organizations:

I recently had the opportunity to attend to a presentation by Chris Surdak, the author of a book titled “Jerk” with the subtitle, “Twelve Steps to Rule the World.” It’s about how to thrive in the emerging era of digital transformation. One of his main premises is that “information is the new wealth,” which he attempted to demonstrate through a slide showing that the three most highly valued public companies in the world today—Apple, Google, and Microsoft—are in the information management business.

Financial services companies, of course, are involved in managing traditional wealth, but that doesn’t mean information management is not important to them. The current movement of big banks toward partnering with Fintech start-ups or launching their own Fintech spin-offs, is an example of this.

Document capture is another area where financial services organizations must stay current if they want to keep pace. Banks and other organizations specializing in wealth management have been long-time users of document capture technologies. But, as the technology continues to evolve, and innovations like agile deployment and mobile capture are introduced, many financial services providers have not fully embraced these advancements. Rather, they continue to operate their capture operations like monolithic, hard-coded silos.

In his presentation, Surdak noted that three pillars for success in this era of information management include immediacy, quality, and intimacy. A modern document capture platform can help a financial services organization build all three. It can help them more quickly turn around customer submissions with more accurate and targeted responses, which will in turn increase their levels of intimacy.

Let’s take a look at some of the characteristics financial services organizations should be looking for in their capture platform:

Openness
It was an ancient Greek philosopher who first came up with the idea that “the only constant is change.” In today’s world of constant information flow, change comes even faster. And customers don’t care if back-end systems can keep up with this change, they just want results. (This attitude was defined by Surdak as “disengagement,” which is another user characteristic in the information economy.)

If a financial services organization needs to make a change, such as adding a capability or workflow to their capture process, they better be able to do it fast. Unfortunately, according to a 2015 World Retail Banking Report by Capgemini, less than 15% of banking executives rate their back-office digital capabilities as “advanced.”

One characteristic of an advanced back-office system would be openness. In other words, how easy is it to integrate a new capability like an OCR engine to handle a different language or to integrate to a different repository to quickly onboard an ECM system that might have been part of an acquisition?

One example of an open capture platform is ECD's Captiva. From its early days, the software has been designed to accommodate third-party services, and over the years the APIs have matured and become even more accessible. Captiva offers its own set of services that can be inserted where needed and its platform can also leverage third-party software to add capabilities like handwriting recognition, foreign language OCR, specialized PDF processing, advanced forms recognition, and more.

Cloud
To complement its on-premises Captiva application, earlier this year Dell EMC’s Enterprise Content Division (ECD) announced Snap as part of its new LEAP cloud ECM platform [a brief video presentation on Snap]. Optimized for lower volume distributed capture applications, like account opening at a branch office, Snap doesn’t offer Captiva’s complete breadth of capabilities. But it’s designed to be very easy to deploy—with a target time of five minutes to configure a new document type. To assist with set-up, ECD is offering an option of outsourced document capture design available through the Snap interface.

The simple and fast set-up of Snap has two big advantages in today’s information age. If everything works well, an organization will have improved both accuracy and the turnaround time compared to manual capture operations. If it does not work out, which we all know is the case all too often with capture, the user finds out quickly and can try again. The concept of reducing time to failure is gaining traction in this age where there is so much pressure to reduce turnaround times in all areas.

The bottom line is that Snap offers a relatively inexpensive and quick way to launch multiple document capture workflows. This enables a financial services organization to keep up with business models that also need to be able to change rapidly based on intelligence being gained from an ever-increasing influx of information.

Mobile
As the volume of transactions completed over mobile devices continues to gain momentum, mobile document capture can’t be far behind. After all, the primary reason people implement document capture is typically related to some sort of business transaction. For a financial services organization this might be new account opening, a money transfer, or applying for a loan. Well, guess what? As more users embrace mobile banking (According to the Federal Reserve’s 2016 Consumers and Mobile Financial Services Report, 43% of adults that have both mobile phones and bank accounts reported using mobile banking—up from 39% a year earlier ), more financial services transactions are also going to move to mobile.

Users have already proven they are comfortable depositing checks into their accounts utilizing their smartphones. According to the 2016 Mobile Deposit Benchmark Report, about 41% of banking customers have used a mobile deposit service. Because of their small size and relatively simple and consistent layout, checks were a natural place to start with mobile capture. Technology has now advanced to the point where automating capture of data from larger and more complex documents is also possible.

What if a customer is applying for a loan through their smartphone, for example, and the bank requires copies of W-2s and recent pay check stubs? Or what if an insurance company is asking for proof-of-loss documentation to settle a property damage claim? There is technology, like Captiva Mobile Capture, that can enable users to easily and successfully capture high quality images of these types of documents. Captiva Mobile Capture can be integrated with Captiva’s RESTful services or with an automated data extraction application on a server to complete the transaction processing. This type of integrated system can be configured to provide an end user with immediate feedback on if their document was received, if it included the appropriate information, and whether or not their submission can be moved along to the next step. This is the type of turnaround that people are seeking in today’s world.

ECD Capture – innovative yet mature
A lot of what we are talking about is cutting edge and modern technology. As a long-time capture market leader, ECD might not be the first vendor you think of as developing next-generation technology. ECD’s duplicity, however, is one of the advantages to working with them. They not only can address and understand high-volume traditional back-office capture applications, they can also help organizations move forward with their cloud and mobile initiatives. As so often happens during a period of transition, there will also be instances where legacy applications and modern initiatives will need to be weaved together. As one of the few vendors with interests on both sides, ECD can be counted on not only to provide expertise across the board, but also to be impartial with respect to the type of technology being deployed.

So, if you are a financial services organization looking to move your capture technology to the next generation, don’t look at ECD as purely a legacy vendor. Yes, their history in the market guarantees they are that, but their introduction of a modern architecture, as well as cloud and mobile capabilities, demonstrates that proven technology vendors can also drive innovation.

Top News Stories in 2014

 This article originally appeared in our Dec. 19, 2014 premium issue.

What Went Down in 2014

A review of our five biggest news stories/trends in the past year. We’ve listed them in reverse order, like a countdown.

5. Convergence of call center and capture markets: It’s the natural evolution of multi-channel capture to eventually include voice. Conversely, as call centers evolve into contact centers, they are starting to embrace document-centric communication. Then there is everything in between: e-mails, Web sites, text messages, social media, etc., that is somewhat unconquered, and this is where the convergence is starting to occur.

At this year’s Harvey Spencer Associates Capture Conference, customer experience management (CEM) consultant Michael McBrien showed a slide depicting an ideal contact center where social, Web, in-person, phone, and mobile communications were all integrated. When asked if anyone is actually doing this, his answer was no.

That said, from the capture market perspective, we are starting to see these elements come together through initiatives like Kofax’s First Mile SPA (smart process application) strategy [see DIR 3/28/14], Kodak Alaris’ partnership with German IDR/AI specialist ITyX, and even document outsourcing specialist BancTec’s recent merger with Dataforce Group [see DIR 8/22/14]. From the contact center side, it was good to see a respected industry veteran like McBrien show up at the HSA Conference.

4. Kofax misses consecutive quarters: The year started so auspiciously for the Irvine, CA-based capture and SPA vendor. At the annual Transform conference held in March, Kofax was riding four straight quarters of software license and overall growth. In addition, an IPO on the Nasdaq (which was completed in Dec. 2013) was paying off, with Kofax’s market cap soaring to around the $750M mark

Then came Kofax’s fiscal Q4 2014 and Q1 2015. For the quarter ended June 30, Kofax reported a non-IFRS YOY decline in software license revenue of 7.5% and a YOY decline in EBITDA of 38.9%. For the quarter ended Sept. 30, Kofax reported a YOY non-GAAP decline in software license revenue of 3.5% and an adjusted EBITDA decline of 47.8%. For Q1, Kofax’s margin was just 6.3%—when in March CEO Reynolds Bish had set a goal of reaching 20% margins within three years.

In both quarters, Bish blamed the shortfalls on large seven- and high-six-figure “core capture” deals that had slipped into future quarters. After the more recent miss, Bish went so far as to say that Kofax will be putting more focus on its “mobile and new or acquired products,” hoping they will pull through traditional capture sales—and get capture back to “single-digit growth.” “We are now accelerating the reallocation of resources and expenditures into this fast growing part of our business,” said Bish [see DIR 10/10/14].

But then a funny thing started happening. In the past month and a half, since Kofax announced its fiscal Q1 results on Oct. 30, the ISV has issued no less than five press releases touting software deals in the high-six to seven-figure range, mostly focused on automating document capture processes. When you couple this with Kofax’s continuing to increase its number of $100,000 (mostly capture) deals (even during its Q1, the number of six figure deals increased by 33%), maybe the capture market isn’t in as bad of shape as Kofax had thought.

3. Increase in onboard imaging processing (IP) technology in document scanners: We’ll admit this isn’t a very sexy story in and of itself, but to us it is the sign of something bigger. In 2014, three leading scanner vendors announced enhanced on-board image processing features: Fujitsu introduced PaperStream IP, which has replaced Kofax VRS as its bundled IP technology [see DIR 1/31/14]; Visioneer embedded IP on a chip with its new On Board Acuity [see DIR 7/18/14]; and Kodak Alaris introduced a new embedded version of its PerfectPage technology [see DIR 6/13/14].

So, what’s the big deal? This trend may help scanners run at closer to rated speeds today, but down the road is when the big benefits could come. More onboard IP creates the potential for removing the PC (where IP has historically been run) from the scanning equation. Not surprisingly, Fujitsu, Visioneer, and Kodak Alaris are all members of the TWAIN Working Group, which is actively working on a new TWAIN Direct standard, designed to connect scanners to applications without going through traditional drivers. EMC Captiva (which develops ISIS drivers) has undertaken a similar initiative with its Cloud SDK.

One end game of these initiatives is that they will enable scanners to be run by a multitude of alternative computing devices such as network devices, phones, tablets, netbooks, and who knows what else. They should also simplify development of capture applications. This trend of more onboard IP is helping move document scanning into the 21st century and beyond.

2. Rise of Cloud computing in ECM: I don’t think we’ve hit the tipping point yet, but in 2014 there were multiple small movements this way that are starting to add up: You had reseller IDT telling us that 40% of its new business is coming from cloud sales [see DIR 11/7/14]. You had Captricity, a 100% cloud-based crowdsourcing capture ISV, securing a $10 million round of Series B funding [see DIR 8/1/14]. You had Ephesoft, which has a purely Web-based cloud friendly capture platform, getting a minority investment from Fujitsu [see DIR 8/1/14]. You had capture ISV TIS buying cloud document management provider eGistics [see DIR 7/18/14]. And you had Box announcing workflow technology at BoxWorks and Dropbox revamping its Dropbox for Business; in the meantime, you had SharePoint experience some growing pains as Microsoft tried to reposition it as part of its Office 365 cloud offering.

As I said, there wasn’t a tidal wave of ECM cloud adoption, but rather a large number of smaller waves in that direction that combined can be equally powerful, especially if they continue to gain momentum in the upcoming year.

1. Lexmark acquires ReadSoft: Far and away the biggest story of 2014 was Lexmark’s acquisition of ReadSoft. The drama played out publicly over a period of four months, from May to August, with the Lexington, KY-based MFP vendor finally paying the equivalent of US $255 million for the market leading capture ISV, which is based in Helsingborg, Sweden. Counter bidding by Hyland Software drove up the price from Lexmark’s initial offer of $182 million.

By all appearances, the acquisition began innocuously enough when Lexmark announced its initial bid on May 6. Although the price seemed relatively low by capture market standards based on its multiple of 1.5x ReadSoft’s 2013 revenue, it did represent a record premium of 117% over market cap for a company trading on the Stockholm Exchange. Lexmark’s offer was unanimously recommended by ReadSoft’s board and included a provision that the board would only consider a competing offer if it was at least 7% higher than the Lexmark offer.

About a week before the acceptance period for the offer was scheduled to conclude, in mid-June, Hyland, probably Lexmark’s Perceptive Software’s most direct competitor in the ECM market, made a bid of approximately $198M, which was 8.7% higher than the Lexmark bid. Lexmark quickly countered with a $200M bid, because, well, they did not have to adhere to the same 7% premium.

Reading the ReadSoft and Hyland statements surrounding the bids led DIR to believe that Lexmark has made some promises regarding future employment of ReadSoft personnel that Hyland was unwilling to match [see DIR 6/27/14]. We also got the impression that Hyland was feeling a bit jilted by ReadSoft’s preference of Lexmark as a suitor. Apparently Hyland had been in talks with ReadSoft prior to the original Lexmark bid that had reportedly ended abruptly.

This all led to Hyland’s buying up of approximately 11% of ReadSoft’s outstanding shares, which it felt voided a 90% share requirement provision in Lexmark’s bid, and then making another bid of approximately $210M. Lexmark countered with a bid of $224M, which included an option to waive the 90% provision [see DIR 7/18/14]. Hyland took one more shot, which Lexmark answered with its $255M bid that included purchasing outright all the shares of ReadSoft’s two co-founders. This gave Lexmark a voting majority and effectively closed the deal [see DIR 8/22/14].

The bidding war was great for the capture industry, as it effectively increased the acquisition multiple of one of the market leaders to 2.2x revenue, a much healthier figure than the one associated with the original bid. The reasons for the acquisition on Lexmark’s side are clear. These include helping it reach its goal of $500 million in revenue for Perceptive Software in 2016 and increasing its European ECM presence. At the same time it helps Lexmark avoid the higher tax rates associated with repatriated profits by investing them in a European acquisition.

Hyland would also have benefited greatly from ReadSoft’s European presence, including its well regarded SAP integration in accounts payable applications. But, in the end it could not compete with Lexmark’s deeper pockets and whatever employment agreements were reached between Lexmark and ReadSoft. Curiously, at the same time it was acquiring ReadSoft, which has recently operated at around a break-even level, Lexmark was touting a goal of reaching 25% operating margins for Perceptive, which, for Q3 (minus some partial quarter numbers from ReadSoft), reported just 3.8% margins [see DIR 11/7/14]. Lexmark clearly has its work cut out.

Somewhat ironically, a couple months after it bowed out of the ReadSoft bidding, Hyland signed a partnership with Xerox. Part of the goal of that relationship is to help the ECM ISV expand its international reach [see DIR 11/21/14]. This should help even the playing field with Perceptive somewhat, although we still wouldn’t be surprised to see Hyland acquire a European ISV to supplement its efforts.
Those are some of the high points of our news coverage in 2014, a year which also included another successful AIIM Conference [see DIR 4/11/14], a strong rebound in Kodak branded scanner sales (now being sold by Kodak Alaris) [see DIR 10/24/14], Harvey’s Spencer Associates celebrating its 10th annual Capture Conference [see DIR 9/12/14], and Nuance buying MFP capture rival Notable Solutions.

Industry Pioneer Passes
Finally, we would be remiss if we didn’t mention that 2014 was also the year that we lost one of the industry’s true pioneers, Nien-Ling Wacker. Wacker founded Laserfiche in 1987, a company that has been one of the leaders in the document imaging and management space since I started working in the market in 1998. Despite the company’s consistent growth, Wacker did her best to maintain her personal touch in the business. Whenever I would see her at events, should always made time to hold a real conversation and never failed to ask how I and our publication were doing, even as I interviewed her about Laserfiche.

Wacker received many accolades throughout her career, including the AIIM Pioneer of the Year Award in 2002, National Luminary of the Year by the Mothers in Business Network in 2005, and City National Bank’s Entrepreneur of the Year in 2009. In 2006 she was inducted into the National Association of Women Business Owners Hall of Fame in Los Angeles. She is also remembered for her “Red Shoes” story, the moral of which is along the lines of “make hay while the sun shines,” which Wacker certainly did during her tenure with Laserfiche.

Nien-Ling’s husband Chris has taken over as Laserfiche CEO. Karl Chan has been promoted from CTO to president.

Top Image Systems to Buy eGistics

Document capture ISV Top Image Systems (TIS) has announced plans to acquire cloud archiving specialist eGistics. TIS will pay approximately $18M for Dallas-based eGistics, which had 2013 revenue of $10.6M. eGistics has historically focused on the financial services market - which has also been the primary focus of TIS' recent North American efforts. TIS has also positioned itself as a cloud player in the capture space, so this acquisition dovetails nicely with what it has been trying to do.

TIS plans to leverage eGistics cloud infrastructure to rollout several of what is terms "smart processing applications" in areas like invoice processing, the digital mailroom, bill paying, account opening, mortgage processing, and employee onboarding. We recently detailed how TIS is partnering with workflow ISV K2 on SPAs that it is bringing to market. TIS also has plans to market its software to eGistics blue chip customer base, which reportedly includes "4 of top 5 U.S. banks."

The acquisition will triple TIS' U.S. headcount to more than 65 employees. According to TIS Executive Chairman Izhak Nakar, as quoted in a press release, "As a result of this powerful strategic combination, TIS Americas will be the largest business unit in terms of revenues. Reinforcing our commitment to growing our presence in the U.S. market, the acquisition significantly accelerates this important strategic initiative, giving us tremendous talent, two offices, and a more comprehensive suite of offerings to cross-sell to a broad installed base.”

The acquisition is expected to close in Q3 and be accretive to TIS' bottom line as eGistics reported a 2013 profit of $1.52M. eGistics shareholders will receive 50% cash and 50% stock from TIS. As of the end of Q1 2014, TIS had $15.7M on its balance sheet - more than $13M of which came from a recent public offering of ordinary shares.

Strong SaaS and Mobile Revenue Highlights TIS 'Q4/Year-End Financials

Some highlights from Top Image Systems 4th quarter/year-end 2013 financials that were announced today:

• Fourth quarter revenue of $8M, up from 7.35M for Q4 '12.
• Year-end revenue of $29M for '13, down from $31.3M in 2012
• In 2013, mobile technology revenue accounted for10% of total and exceeded forecasts in this area by 100%
• SaaS revenue for Q4 was $360,000

Michael Schrader, COO, from the press release, “In 2013 we have reinforced our transition strategy, investing significantly in cloud and mobility and expanding our hybrid business model to gradually grow our SaaS subscription-based operations while maintaining our existing on-premise business....Current investments in our cloud-based solutions will further promote SaaS sales. In 2013 we reinforced our mobile and cloud-directed product development strategy with powerful channel and technology partnerships, product launches, patent filings and key organizational changes to drive US market growth.  We are confident that our business model transition and clear focus on our cloud, SaaS and mobile solution strategies in 2013 will drive us to maximum revenue growth.”

Digitech Introduces New E-Forms, Upgrades Workflow

Digitech recently released a new version of its PaperVision Enterprise software, which includes new e-forms and improved workflow technology.  (Digitech's hosted ImageSilo offering is based on this platform.) These additions are designed to address the needs of Digitech's reseller channel, as well as end users, who previously had to rely on third party ISVs to provide this type of functionality.
 
Rebecca Wettemann, VP of Nucleus Research, had this to say about the new additions: “Many businesses have covered the basics of ECM and are now turning to additional options like workflow, electronic signatures, and e-forms to further boost the ROI from their technology investment,” she said. “Unfortunately, most have had to bolt together options from multiple vendors to get a complete solution. PaperVision Enterprise includes all three options as a seamless, fully-integrated suite, making it easier to share data between functions and easier to implement than a multi-vendor solution.”

Basically, with this latest release, Digitech is expanding the ECM capabilities it is offering its mid-market customers - a natural progression in any technology market.

From this Week's DIR: ECM as a Service and Enterprise Archiving

Here's a couple quotes that were thought were pretty cool from stories appearing in this week's premium edition of DIR:

From our story on the evolution of mobile scanner manufacturer Document Capture Technologies (DCT) towards more of a cloud-based services strategy: "“Basically, the goal is to take all the features of ECM and expose them as APIs that application developers can consume like any other service. This will change the economics of how ECM is delivered. Users will be able to pay as they go and add services.”

- Karl Etzel, COO, DCT

From a story on EMC's new InfoArchive enterprise archiving system: "Putting e-mail content in one silo and database content into another does not enable organizations to get their arms around all their information very effectively. InfoArchive represents a single unified archive that can support any unstructured content source and structured data source in one place. It’s a game changer in terms of providing full visibility into all information. It will enable next-generation solutions that are not isolated to leveraging one type of data.”

- David Mennie, EMC, IIG

Cool Stitching Feature in Kodak Alaris-HTI EOB Offering

Yesterday, Kodak Alaris announced it has teamed up with HTI Healthcare to offer an explanation of benefit (EOB) solution. The solution basically involves healthcare providers and third-party bill payers utilizing Kodak scanners and Capture Pro Software to feed HTI's system--which is a cloud-based EOB processing service. HTI then returns relevant extracted data to the providers and billers, along with - get this - "fully indexed patient claim 'stitched' images—a single image showing only the needed patient claim record, including all required EOB header information to identify the payer. Stitched images are a vast improvement over the outdated redaction process that left large gaps in the content of the document." We thought that was pretty cool. Bottom line is that it's good to see continued improvements in the evolving paper EOB processing market. 

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.

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.

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.
 

Declining PC Sales and Document Capture

One of the biggest high tech stories of the past couple days seems to be this precipitous drop in PC sales, which IDC reported fell 14% in the first quarter of 2013 compared to the first three months of 2012. The most obvious reason for this is the increasing adoption of tablets and smartphones for computing that was formerly exclusively done on PCs. This reminds me of statement Visioneer President and COO John Capurso made to me a few weeks ago about mobile computers becoming the new PCs.  Looks like a very prescient thought right now.

I happened to be on the phone earlier with document capture software market industry analyst Harvey Spencer, and I asked him if he thought declining PC sales might affect document capture sales. He thought not very much.

We initially conjectured that it might negatively impact document scanner sales, but concluded that might not be the case either, as most current PCs have enough horsepower to run whatever  document scanner a user would need to run anyhow. Spencer added people are already doing more scanning on MFPs than ever before, and that this indeed may be having a negative affect on document scanner sales, but if people are going to buy a document scanner, they don't necessarily need a new PC to run one anymore.

Spencer added that he felt the increase in cloud computing may be negatively impacting PC sales as "users no longer need more powerful PCs to run new applications; they can now license the latest version of Office, for example, on the cloud." This is an interesting dichotomy, as Windows 8 was supposed to drive more PC sales, but Microsoft's latest version of Office would appear to be working in the opposite direction.

Spencer concluded that he expects cloud deployments will begin to have an effect on document capture revenue this year, with some large implementations being purchased through a subscription model rather than a traditional capital expenditure. Not a major impact yet, but the beginning of a trend that bears watching.

Zero Footprint and Mobile Scanning

The concept of capturing a document without having to utilize a traditional scan client is emerging as a hot topic in our market. A few weeks ago I had a conversation with former ImageSource CTO Shadwick White, who recently launched a start-up CloudPower that is focused on creating cloud-based ECM solutions utilizing next-generation tools. This includes leveraging technology from vendors like Box.net and Google to create innovative ECM solutions. Of course true to his roots, White is also working on some proprietary zero-footprint scanning technology that he plans to debut shortly.

Zero footprint scanning was also a topic at the recent Kofax Transform conference, as Kofax was promoting the newest version of the DotImage SDK that is acquired with Atalasoft last year. Atalasoft has always promoted zero-footprint document viewing, but  historically, its scanning has been done with an ActiveX TWAIN driver. Atalasoft is apparently working on some Java-based scanning technology that will enable it to do "minimal footprint" scanning at least.

Remember Kofax's Document Scan Server? That was actually some pioneering technology in the area of zero-footprint scanning, as it leveraged Web-services calls to move images from a utility attached to a scanner to server-based apps. Kofax actually showed it way back at AIIM 2006. When I caught up with CTO Anthony Macciola at Transform, he indicated that the DSS initiative is still alive but that it originally failed due to technology costs at the time.

"Atalasoft has a mandate to try and achieve zero footprint scanning," Macciola told me. "In fact, the next release of its SDK will have a browser plug-in that will interrogate the system and user has, and if they have the right components, such as Silverlight running on Windows 7, they might not need to use a driver to scan. As the Windows OS matures, it's possible zero footprint scanning could be even more common."

And, of course, EMC Pixel has released its Captiva Cloud Toolkit, which is designed to enable ISVs with cloud applications to capture without traditional drivers. Instead of a traditional ISIS driver, there is a Web services-oriented piece loaded onto the PC connected to a scanner. The cloud-based piece of the SDK can make calls this PC-based software to drive a scanner. When we spoke with EMC's Sean Baird late last year, he indicated that several hardware vendors and some ISVs as well were working with this SDK.

So, there's quite a bit being done to move scanner drivers into the 21st century it appears, not to mention all the mobile capture stuff where drivers are actually replaced by apps.

Orbograph Launches Cloud-Based EOB Service

Recognition technology specialist Orbograph has launched a cloud-based service for capturing data from Explanation of Benefit (EOB) forms in the healthcare industry. Orbograph, which has its sales and marketing operations based in Billerica, MA, has long been a leader in the check capture space. It recent years, it has looked to move into the document imaging market, leveraging its Key-Pay Convene platform, which basically applies Orbograph's automatic recognition technology to capture as much data from forms as possible, and then uses a fleet of keyers to enter any data that couldn't be recognized with a high enough confidence rate. We're assuming the same type of concept is being utilized in the new P2Post™(paper-to-post) Healthcare Revenue Cycle Management (RCM) solution.

P2Post has been implemented at a "major US pharmacy provider." According to the press release, "Orbograph P2Post can provide savings of 40-60% compared to the manual entry of EOB Service Line information, which can approach 40-50 cents per service line. The Orbograph P2Post solution was also benchmarked during the proof of concept process with near zero defects or errors on the EOB data originating from documents with single service lines to as many as 900. This accuracy level is up to 10 times superior to manual processes."


EOB's have long been an area of focus in the document capture market, and lately we've been seeing more signs, like this announcement) that our industry is finally making some progress in this area.

Canon Singapore Integrates Nuance's Scan-to-Cloud

Nuance has announced that Canon Singapore will be making Nuance's eCopy Scan-To-Cloud technology available as a standard feature on its ImageRunner Advance MFPs. The technology takes advantage of Nuance's OmniPage cloud service to apply OCR to document captured with the MFPs. The documents can currently be captured to three destinations: Evernonte, GoogleDocs, and/or SalesForce.com. The application interface is embedded in the touchscreen of the MFP.

According to a Nuance spokesperson, "Canon Singapore is the first MFP distribution entity to offer access to the eCopy Scan-to-Cloud service, and the only one at the moment. Nuance is making this service available to other distribution partners, and they expect that additional partners will begin to offer eCopy Scan-to-Cloud over the coming year."

Brainware and KnowledgeLake get together

Document imaging for SharePoint specialist KnowledgeLake has added Brainware as a partner. KnowledgeLake offers document capture and image management for SharePoint, but does not have any ADR - advanced document recognition technology, which Brainware offers. From Brainware's standpoint, the deal makes sense for Brainware as it attempts to increase its footprint in the Microsoft market. Earlier this year, Brainware announced it was making its ADR software available on Windows Azure.

Brainware Launches SaaS Option on Azure

Intelligent document recognition specialist Brainware has launched a SaaS-version of its IDR software, which is being hosted in Microsoft's Azure platform. We are certainly intrigued by the potential of Azure, and some of the data integration potential a Windows cloud platform presents. Some of that potential is discussed in this article on M-Files, a document management software vendor that has also selected Azure for its SaaS platform.

Not exactly sure of the details behind the Brainware SaaS deployment, although they did announce that invoice automation will be the first application. (Makes sense as that is there  We plan to talk with Brainware to get some more details for an upcoming article in our premium edition.

EMC Partners with Box

Probably should have seen this coming, ever since former EMC Chief Marketing Officer Whitney Tidmarsh was named the general manager at Box.Net. Last week, at EMC World, EMC and Box.Net announced a partnership. According to the press release, "EMC is working with Box to deliver integrated content management in the cloud."

I think this paragraph from the press release best describes what the partnership could accomplish: "The Post PC era gives birth to the 'new user,' who interacts with information from a variety of sources, across a multitude of devices, and considers Microsoft applications as part of the experience, not the driver. Integrating Box's cloud layer and user-friendly interface with EMC Documentum delivers the new mobile and external collaboration capabilities required for businesses to make better, faster decisions. These cloud-enabled joint solutions strike the right balance in giving users easy-to-use tools for accessing information regardless of device, with the control IT expects for capturing, managing, processing and preserving content."

Basically, at the AIIM show this year, where Box made a big splash, it received high marks for its user interface, but the ECM-savvy AIIM crowd was not at all impressed with Box's traditional content management capabilities. Hence, the marriage with Documentum. Good stuff I think.

Autonomy Acquires Iron Mountain Digital Assets

I'm not sure why this is a good move for Iron Mountain aside from the fact that it generates some cash. According to a press release, Autonomy has agreed to pay $380 million in cash for a business with a run rate of $130-$140 million that includes "selected key assets of Iron Mountain's digital division including archiving, eDiscovery and online backup." I'm assuming this includes Iron Mountain's growing document scanning business, which was certainly integrated with the e-discovery business.

I like the deal for Autonomy and have echoed the setiments of CEO Dr. Mike Lynch in the past: ""In 2007 we correctly predicted the merging of regulatory archiving and search, and we believe we are now seeing the next phase where the convergence of regulatory archiving, back-up and data restoration with operational processing of data in the cloud is coming to pass." - A lot of my view was formed by conversations with Dr. Johannes Scholtes, the CEO of Zylab, another vendor with a focus on search, so I guess it would make sense that I agree with Autonomy's strategy.

Apparently, Iron Mountain felt it couldn't compete in the emerging cloud-based storage market.