HP Article

I met with HP at the recent info 360 show, and Palo Alto-based technology giant really seemed to have lot of good stuff going on in the ECM market. This includes the recent release of its Capture and Route document scanning for MFP  solution, as well as improvements to the TRIM records management system to make it more enterprise-ready. Word is that some of the Autonomy search technology is now being incorporated in TRIM, and that the Cardiff (remember Cardiff Teleform?) capture platform is at least being considered. HP also had some nice refreshed scanners at its booth.

That said, we recently read in Brian Bissett's excellent MFP Report that HP is having all kinds of problems with the software for its popular Digital Sender network scanner and that a fix is not expected until this fall - a year after originally planned. Not sure how much of that is reflective of the macro issues at HP, but here is an excellent article from CNN that details some of the problems HP has been having. (It's a long one but well written.)

Here's an excerpt that talks about some of the struggles that technology developers at HP have faced as a result of cost cutting measures to improve HP's struggling bottom line: "Hurd's early initiatives to pare spending were valuable and necessary. But as time went on it became harder to find waste, and the results became extreme. Employees practically needed an act of Congress to get approval to buy a piece of software. The headquarters of the tech company did not have Wi-Fi. And some minions took Hurd's edicts to self-defeating lengths. At HP's office in Fort Collins, Colo., for example, the lights shut off automatically at 6 p.m. every day, effectively forcing workers to go home. An intrepid few brought their own lamps to the office, only to be scolded by facilities managers, who told them to remove the lights."

Yes, that's pretty harsh. I'll only say that, at least in our market, HP certainly has an impressive collection of technology, people, and services - with not only their own developed stuff, but acquisitions of Autonomy, Tower, and EDS contributing as well. I'd like to see HP figure it out, but I'm not sure how much dead weight it is carrying in the overall organization.

Slew of Large Capture Deals

As we mentioned yesterday, there have been a number of large capture software deals announced in the past couple weeks, by market leaders. Here's a look a few of them:

Brainware Announces $7.5 million Deal: Brainware, now a wholly owned subsidiary of Lexmark, under its Perceptive subsidiary, announced a huge deal with the Dominican solutions and service provider Novosit. I am not at all familiar with Novosit, and its Web site is in Spanish, but Hyland, Kofax, Fujitsu, and ABBYY products are all listed. Novosit will both "use and distribute" Brainware's intelligent data capture software. We're assuming this is a multi-year deal. Brainware specializes in large deals, having announced they closed more than 10 deals worth over $1 million in 2011.

Top Image Systems (TIS) continues to build on its recent momentum. TIS recently announced four wins in Europe that combined account for over $1 million in revenue. In addition, TIS announced a $1.2 million deal for software to process the 2013 Bosnia and Herzegovina Population Census. This continues a string of successes for Top Image in the census market, which by our account includes at least a dozen wins worldwide in the past couple years. TIS also announced an expansion of its implementation with the Czech Post - one worth several hundred thousand dollars to TIS. The Czech post, as well as several other European postal services that TIS has contracts with, acts as a service bureau for processing payments and documents - a business DIR has long encouraged the USPS to get involved with. The bottom line is that TIS, which reported $7.7 million in revenue in Q1 has announced somewhere of around $3 million in software sales in just that last couple weeks.

ReadSoft recently announced a couple of invoice processing deals totaling more than $700,000.  Both are in A/P in SAP environments, which has been ReadSoft's sweet spot for awhile now.

Finally, Kofax recently announced a couple of A/P wins totaling more than $1 million. One is with "a leading provider of security and related monitoring services for homes and businesses in North America," which is adding KTM and MarkView to its existing Kofax Capture implementation. This other is with a leading supplier of components to the automotive engine industry, which is implementing multiple Kofax products, including Capture, KTM, MarkView, MarkView Advisor, SupplierExpress, and e-Transactions for integration with an SAP system.

Pingar Offers Advanced Meta Data Extraction

There have been a number of news stories that I hope to get to posting links to shortly. Been tied up catching up on some stuff, but here's one more thing from info 360 a couple weeks ago that I wanted to get to. Caught up with former Microsoft ISV manager for SharePoint partners Owen Allen at the event, and he is now working for a company called Pingar.

Based in New Zealand, Pingar does some cool stuff in the area of advanced meta data extraction. This basically involves taking batches of unstructured documents and finding relevant indexing information like people, places, business names, e-mail addresses, etc., and then taking this information and dumping it into an ECM or other back-end system. Pingar advertises its technology as a tool. It currently has a hosted/cloud version that you can play around with.

Here's the lead for the article about Pingar in my last premium issue of DIR:

There has been a lot of talk in technology circles recently about the concept of managing “big data.” Big data basically defines the rapidly growing amount of information that enterprise systems are being inundated with due to increasing electronic communication and transactions. Of course, paper documents, by their nature mostly fall outside the realm of big data—that is unless they are imaged and the information on them is somehow translated into a format a data management system can understand.

That’s where Pingar comes in....Click to read the rest of article.

Favorite Hardware Device from info360

Yes, there were some people there debuting cutting-edge technology. PiQx actually debuted this device at CEBIT, but I believe info360 was its North American debut. This product is not shipping yet, but it's very cool and has some potential.

It's a "document camera" that attaches is a laptop, but it's not the hardware apparatus that was so impressive. It's the software. You basically toss a document down on a decent background - PiQx even provides a fold-up platform you can place over your keyboard, hit scan, and the software automatically applies perspective correction and crops, rotates, and orientates the image. It even offers "finger removal" if you're flattening book pages. The high-quality images produced in such a short time were what was so impressive. PiQx advertises them as being the equivalent of 300 dpi images captured with a flatbed scanner.

Product is schedule to start shipping in Sept.

IBML Shows new Scanner at info360

IBML, the Birmingham, AL-based manufacturer of the ImageTrac line of high-volume scanners, showed off a new, not-as-high volume model at the info360 show. An OEM tabletop scanner, the new ImageTracDS 1150 still advertises throughput at up to 150 ppm. What makes it special is that it includes two output pockets and comes with IBML's Softrac Capture Suite. This potentially enables users to leverage the same scanning workflows they use with their traditional ImageTrac open track models, which are often utilized when outsorting items like coversheets and checks.

Kofax Hires ex-Mitek Exec

In response to Mitek's announcement yesterday that it has hired a new senior VP of sales, Kofax announced that it had hired Mitek's previous senior VP of sales. Drew Hyatt has joined Kofax as senior VP of mobile applications. He will be based in Irvine, CA, and assuming he lives in San Diego (where Mitek is headquartered) he will join a number of ex-Captiva employees who make the commute north to Kofax (many by train).

 Kofax introduced its Mobile Capture technology earlier this year. There was a ton of end user interest in it at the Kofax Transform event, but CTO Anthony Macciola cautioned that the product/toolkit was still in its early stages. That said, Kofax certainly has some aggressive sales plans for the technology. 

An interesting sidenote is that Kofax's technology, to me at least, seems clearly to cross into the patents Mitek has in this area, but neither Kofax or Mitek has commented this issue (even though I've asked). Part of the USAA lawsuit that we mentioned yesterday involves trying to invalidate these patents.

Kofax's stock has seen a decent bump up this week, but it may just be due to general market conditions. That said, Mitek's stock was up another 13% through mid-day, so maybe mobile capture is attractive to investors.

Hiring Spurs Stock Uptick

Investors seem to be in favor the mobile capture ISV Mitek's hiring of a new senior VP of sales and business development. Michael Diamond has experience in the mobile payment space, as well as the electronic transaction space in general (with S1 Corporation). He also spent time at IBM.

Mitek's stock value rose 14% today after Diamond's hire was announced. The value had sharply declined from a high of more than $13 per share - to a low of less than $2 per share in April after USAA sued Mitek for stolen technology and called out the validity of their patents around mobile imaging. Mitek is fighting the claims and its stock closed today at $3.35 per share, giving it a market cap of $85 million - still not bad for a company that reported just $1.2 million in revenue last quarter.

Mobile technology space is still clearly valued by investors.

Info 360 Follow-up

So, that may be the last one. At least that was rumor circulating around following the show. Apparently, Questex was talking about moving the event to a hotel in New York for next year and focusing more on educational seminars. You know, kind of the like what AIIM is already doing. I talked with one long-time event attendee, who commented something to the effect of, "That shipped has sailed."

When all was said and done, I counted somewhere north of 80 exhibitors for the info 360 (former) AIIM event and 40 for the On Demand side. Ricoh was probably the biggest name on the On Demand side (former staples like Xerox, Canon, and Sharp were all missing), and I think they were a very late addition. Personally, I had a great time networking at the event, even though it was really small and compact. I'd say I had close to 20 quality conversations/contacts at the event, and didn't even get to a couple booths I had wanted to. But, the exhibitors were not happy. Not a one that I talked to, which probably spells doom for the event.

On Wednesday, there was actually some decent traffic for a few hours early, then that was about it. Early on, everybody seemed satisfied that some end users had apparently made it to the show floor - after all, New York is a good market for imaging and content management. But then things pretty much dried up and on the second day or the event, which was actually shortened to two days for the first time I remember, there was really nobody there. 2,000 attendees total over the course of two days - that would be my generous guess.

Ricoh Convergence 2012

Out here in Vegas the Ricoh Convergence conference before heading over the New York this afternoon for the info 360 event. Convergence is Ricoh's annual dealer event and there are more than 600 people in attendance. (Heck, it may turn out to be bigger than info 360 - just kidding, I hope.) The Ricoh event is being held at the Wynn, which is really a sweet location. Full casino, for those who go in for that, and electric curtains in the rooms for us less adventurous types.

Ricoh is an interesting dichotomy in a couple ways. A dual-dichotomy, if you will. First, like many organizations in our market, it is battling with the whole dealer/reseller vs. direct sales channel conflict. Of course, Ricoh's acquisition of IKON in 2008 didn't help things on this front. IKON had a huge national sales force that has now been merged with, after many fits and starts, Ricoh's direct sales force.

At Convergence, Ricoh stated a couple times that the digestion of IKON is now complete so it can re-focus its resources on growing its business. Then, someone from Ricoh indicated the IKON assimilation is "almost" complete, and we heard that there may be more changes in July. Ricoh has already changed its management team pretty extensively since last year's Convergence event.

The current CEO of Ricoh Americas is Martin Brodigan. He's been with Ricoh a long time, most recently serving as COO of Ricoh Americas. He's been in his current position less than two months. Brodigan has been charged with turning around U.S. sales, which last year he said were "unacceptable." Ricoh apparently lost quite a bit of money. In addition to declining paper use (which, at the event, was reported at 10% worldwide and accelerating), which obviously hurts printer sales, Ricoh had supply problems caused by the Japanese tsunami/earthquake, as well flooding in Thailand. Exchange rates also negatively affected the company.

Ricoh's dealers accounted for 32% of units sold in 2011, up from 30% in 2010, which is a good trend for the dealers, but were not sure how good of  a trend that is for the former IKON.

Ricoh's second tricky conflict has to do with its legacy as a copier/printer business and its desire to move more toward professional services. Ricoh seems to have a few visionaries that are at the forefront of leading the company towards a "services-led" business model. However, there is still a ton of inertia-related to hardware sales and print click-charges that these visionaries have to fight. Much more on this in our next premium issue!

MetaSource Hosting AppX Conference

MetaSource, one of two national distributors for EMC's ApplicationXtender product, will be hosting its Second Annual National Partner meeting next week. According to a press release,  "The three-day conference for MetaSource partners and guests who offer EMC’s ApplicationXtender and Captiva Software Solutions will be held at the Borgata Hotel Casino & Spa in Atlantic City, New Jersey, June 10th-12th."

I just thought this was interesting because I just got back from the annual Cranel reseller conference, where EMC ApplicationXtender was also featured. Cranel is AX's other distributor. Even though its been years since EMC has had a major new release of this product, it apparently continues to make improvements, such as this application integration module.

MetaSource is expecting "over 80 attendees from 32 AX/Captiva partners."

ReadSoft Lands Large Capture Deal

ReadSoft's acquisition of foxray has started to pay some dividends. Today the Swedish capture and business process automation ISV announced one of the largest deals in the history of its company--worth almost 2 million Euros in an XBOUND capture software sale. XBOUND is the document capture platform that ReadSoft picked up with foxray.The customer is Debeka, which ReadSoft lists as "Germany's largest private health insurance company."

According to a press release, "The first stage of the project will be to migrate Debeka’s old input automation solution processing approximately 76 million pages per year. In the second stage the organization is planning to expand the new input automation solution across all Debeka Group’s classes." We're not sure whose solution ReadSoft is replacing. foxray does already list Debeka as a reference, saying, "For many years, foxray AG has realized various projects with Debeka. The xbound platform is used to automate the processing of housing applications for the building society and has been in active use since January 2008."

Paradatec also counts Debeka as a customer. According to a Paradatec newsletter, Debeka processes 200,000 claims and invoice images per day utilizing Paradatec's data capture. Of course, foxray and Paradatec are partners, so even though ReadSoft has its own invoice and claims capture technology, we don't necessarily see Debeka moving away from Paradatec. (XBOUND is more of a document capture/batch management workflow platform than a data capture application.)

On the document capture side, this is certainly a great win for ReadSoft. Said Bob Fresneda, who was recently promoted to president, ReadSoft North America, "I think with this nice win due to our acquisition of foxray and a couple of nice, normal wins here in our SAP AP space within the US you can see that the ReadSoft business model is working well."

Number of Large Capture Deals Announced

Delayed deals were the most prominent trend among document capture software vendors in the first quarter of calendar 2012. (Sample story from premium edition on Q1 results.)  Over the past couple weeks, it seems that maybe some of those delayed deals have been brought to close, as we've seen multiple announcements of large deals from a ReadSoft and Kofax. Four of the deals were related to accounts payable automation-with Kofax's deals coming in Oracle environments, where its MarkView process automation software has traditionally been strong and ReadSoft's in the SAP space, where it has traditionally been stronger.

 Kofax announced an A/P automation deal worth over $1 million with a "leading global cruise ship line," as well as an A/P automation deal with Helena Chemical Company in Tennessee for more than $440,000. ReadSoft, meanwhile, announced an A/P automation deal for more than $310,000 with a "a global giant in asset management," and a $470,000 invoice processing deal "with a significant international company that provides pipeline and storage facilities to the oil and refined products sector, as well as owning fuel and asphalt refineries." Kofax also won a $300,000 deal with a branch of the U.S. military for software to capture 1 million personnel health forms, medical lab reports, EKG results and other medical documents....annually."

Hopefully, this all leads to more positive second quarter results.

Cranel Event Follow-up

Had a great time at Cranel's annual North American Executive Partner event held this past week in Columbus, OH. This was the second year in a row that I attended - having keynoted the event in 2010. There were almost 70 resellers and a dozen vendor partners at the event, which VP of marketing Scott Slack said was about 20% larger than last year's event.

According to Slack, Cranel continues to grow despite a challenging landscape, which included losing Fujitsu as a partner in the past year. Cranel is a value-added distributor that focuses on the document imaging market with a combination of hardware and software products. In our next premium issue, we'll have an article featuring some insights from Slack on how Cranel has managed to stay ahead of the game.

For the second year in a row, the weather was beautiful, which was nice, because quite a bit of the Cranel event centers around golf. If you're a PGA fan, you know that Jack Nicklaus' Memorial Tournament is being held this week in Columbus. Cranel shared a house off the 12th green (a tough little par 3) where attendees were able to network and watch some great golf. We also had passes to head down onto the course.

I ended up following the Mickelson, Bubba Watson, and Ricky Fowler group for several holes, which was certainly interesting. Unfortunately, I can't disagree with Phil's complaints about the noise and the cell phones. I saw an huge amount of cell phone activity, including pictures, going on throughout the tournament with the marshals (as well as caddies) being asked to do an inordinate amount of policing related. Yes, it's a great convenience for spectators to have cell phones, but I'm thinking tournaments need to go back to banning them if that's how fans are going to act. It really was a huge distraction.  - Anyhow, that's my non-DI thought of the day.

Cheers.

EMC-Syncplicity

There certainly has been a lot of buzz around EMC's acquisition of Syncplicity,which was announced at EMC World last week. Syncplicity has been described as providing "cloud file management." I am currently at the Cranel conference, where someone described Syncplicity as a Box.net for the enterprise-meaning it's designed to have an easy-to-use interface for storing and accessing files in the cloud, but has all the security and governance you'd expect from an enterprise-level solution.

Here's a quote from Rick Devenuti, president of EMC's Information Intelligence Group (which also includes the Documentum, Captiva, and ApplicationXtender products), where Syncplicity will fall under. "In acquiring Syncplicity, we validate this concept by uniting enterprise ‘sync and share' capabilities for the cloud with governance and rigor that is synonymous with Documentum . As cloud, social and mobile dominate the way work gets done, our customers require more than simple containers for managing and sharing content."

CMS wire had a story with this quote from Syncplicity co-founder and CTO Ondrej Hrebicek on the differences between Box.net (where former EMC IIG marketing head Whitney Tidmarsh is now the general manager of Box Enterprise) and his company. From the CMS story: "Box has a web 2.0 interface, he explained. 'You have to check-in, checkout, drag and drop and so on,' he said. Syncplicity, on the other hand, is a cloud based data management platform, all of your files are consolidated in one place on the cloud. 'There’s single sign-on, instantaneous sync, security, remote wipe, end to end encryption, a policy engine, and so on…Users get all of those features without having to think about any of them at all.'"

DocPoint Hires New Executive

DocPoint Solutions continues to ramp up. The Annapolis-based SharePoint ECM systems specialist recently hired a technology industry veteran as its director of solutions and technology. Martin Hardy brings "over 15 years’ experience in information technology management, business process improvement, systems architecture, information security, system engineering and employee development" to DocPoint, which is a wholly owned subsidiary of QAI, a document imaging service bureau and systems integrator.

DocPoint, which was launched in 2008, was one of the first ECM integrators to focus solely on SharePoint applications. Its focus has paid off, as in 2012 it is expecting to surpass $10 million in sales. Hardy brings an impressive SharePoint-related resume to the table having "led over 60 major projects involving the design, configuration and implementation of enterprise-wide SharePoint solutions."

According to a DocPoint press release, "Scott Swidersky, President of DocPoint Solutions, cited unprecedented business growth and an upsurge in larger, more complex implementations as the reasons prompting the creation of this key management position. Swidersky stated, 'SharePoint 2010 has redefined the marketplace, establishing its place as a preferred electronic content management (ECM) solution....

DocPoint Solutions is securing more challenging projects that demand front-end attention to the talent mix assembled and a single point of responsibility across longer project life cycles.”

 

ReadSoft Restructures Organization

ReadSoft brought in a new CEO late last year, who has now overseen a restructuring of the ISV's operations. ReadSoft, which is based in Sweden, develops document and data capture, as well as workflow/business automation software. One of the main tenants of the restructuring is a stronger position for the company's North American operations.

Historically, North American revenues have been considered under ReadSoft's "U.S. and rest of the world" region, which also included AsiaPac and Latin America. The whole entity grew 20% in 2011 and accounted for about 30% of ReadSoft's total revenue of $99 million - with the U.S. assumed to be generating easily the largest chunk from its region. Going forward, U.S. and Canada will be accounted for as ReadSoft's North American geography, with Latin America and AsiaPac being a separate geography. ReadSoft will also continue to have Northern European and EMEA geographies.

As part of this restructuring, Bob Fresneda, who has been managing director/president of ReadSoft U.S., is now the president of ReadSoft North America. Fresneda has also been appointed as a Senior VP and corporate officer serving as part of the ReadSoft Executive Management Team.


The Executive Management Team also includes new separate CTO and COO positions with co-founder Lars Appelstal being named the CTO and Peter Sandin, former VP of Global Professional Services, taking over the title of COO.

ReadSoft will also consolidate five development centers into two: "one for Capture Automation consisting of the former solution labs Capture, Online, and XBOUND and one for ERP Automation consisting of the former SAP and Oracle solution labs." Most of these development centers were picked up in acquisitions over the years, including this year's foxray acquisition, which is responsible for the XBOUND product line.

According to a press release: " “We have been working on this for quite some time to achieve a more efficient, agile and process-oriented organization”, says Per Åkerberg, ReadSoft’s President and CEO.

“This is an exciting time for ReadSoft both on a global scale and in North America as Per Åkerberg’s vision drives these organizational changes to promote ReadSoft’s overall growth and success,” said Bob Fresneda, President of ReadSoft North America. ”After my ten years at ReadSoft, it is fulfilling to see the expanded commitment among Per and the Board of Directors to the North American region, and I look forward to working closely with them on our future success.”  

Update to DIR Archiving Page

Recently updated the Archiving Page on documentimagingreport.com. It includes a new news item about The Crowley Company upgrading its partnership with Certifi-Media. Certifi-Media is a Rochester-based company I did a feature on a few years back. They have some cool image processing technology both in the area of book scanning and comparing captured images against pre-determined standards.

MS SharePoint 2012 Conference Registration Open

Registration for Microsoft's SharePoint 2012 is now open. The conference, which appears to have become an annual event, is being held in Las Vegas, Nov. 12 -15 at Mandalay Bay. The event, which is typically well attended - the one I went to was sold out a few years back - offers 175 breakout sessions. They are advertised as such: "Learn how to better use SharePoint 2010 and get educated on the latest features and functionality from the new SharePoint!"

So, maybe it's not quite time to reveal the next generation as SharePoint, which reportedly included some more document imaging functionality, like viewing, but maybe attendees will get a preview.  At $1,500 per attendee (with $400 early registration discount), plus $200 a night in a show hotel, it's not a cheap date. But, there are typically some solid sessions, including keynotes by top MS executives. I actually got to see Steve Ballmer talking about content management there!

It's still unclear how much traction SharePoint is having in the document imaging space. We definitely get mixed reports, but many people remain bullish on its future. One look at the exhibitor and sponsor list reveals that indeed, a good number of document imaging vendors are investing in developing a SharePoint business. KnowledgeLake, Open Text, Fujitsu, Kofax, Laserfiche, and Digitech have all taken out sponsorships, with AccuSoft, AnyDoc, Psigen, and Vizit listed among the exhibitors.

Correction to Kodak Article

In Friday's premium edition of DIR, it was mistakenly mentioned that Kodak needed to work its way out of Chapter 7 bankruptcy. Kodak, of course, is in Chapter 11, meaning it is reorganizing and not liquidating. I apologize for the mistake.

Here's a link to the article (with the corrected text), which pretty much says that Kodak DI remains operating as a healthy entity - investing in R&D, new products, and personnel, even while Kodak Corporate continues to struggle.

SAP Makes Bid for Ariba

German ERP giant SAP has announced a bid to buy on-line commerce ISV Ariba for $4.3 billion. The deal is interesting for our market because Ariba provides an e-invoicing service, for which it has a deal with ReadSoft for conversion of paper invoices, as well as workflow. We're not sure how much business ReadSoft generates from that partnership, but we're thinking an acquisition by SAP would mean Ariba would convert to the Open Text platform for capture and worklfow because of SAP's OEM agreement with them.

Then again, according to one article at least, there seems to be some notion that Oracle will make a counter bid for Ariba. This SAP bid is already seven times its expected 2013 revenue, so that's certainly a good sign for B2B software entities, which is where most of the vendors in our market play. The press is playing up the deal as SAP ramping up its cloud strategy.

Heading to Info 360

Looks like I will be heading to the info360 show after all. For the first time since 1997, I was considering not attending this year's event, which used to be called the AIIM show. (AIIM has pulled its sponsorship and held its own conference in March). But, it turns out I'll be on the road that week anyhow, so I thought I'd stop in New York and see what's going on. As I've stated in an article in a premium edition of DIR, exhibitor numbers appear to be way down. Combined the AIIM and On Demand shows list about 125 exhibitors - down from close to 400 just a couple years ago.

That said, some of the usual suspects will be there: IBML, HP, Fujitsu, KnowledgeLake, OPEX, Accusoft, AnyDoc, Crowley, Digitech, and nextScan. As always, I look forward to catching up with some old friends and colleagues, and meeting some new people as well. Please call or send me and e-mail if you will be attending the event and want to get together.

Ralph

AIIM Hosting Kodak DI Conference Call

There have certainly been a lot of rumors and speculation surrounding Kodak Document Imaging since Eastman Kodak filed for bankruptcy in the U.S. Tomorrow AIIM will be hosting a Webinar during which Russell Hunt, Regional Business Manager for the U.S. and Canada for Kodak DI, will discuss Kodak DI's plans for the future.

Our discussions with Kodak have indicated that the Document Imaging business remains healthy. In fact, in the wake of the bankruptcy filing, DI was listed as one of Kodak's "core businesses," which all together generated $214 million in adjusted EBITDA on $2.3 billion in revenue in 2011. Under its restructuring, Kodak's core businesses are being counted on to support Kodak's "growth businesses" until they too become profitable.

We'll be interested to hear Hunt's update. Not sure what he will address, but we certainly haven't heard of any shortcomings in the DI market due to Kodak's bankruptcy, aside from the $1 million-plus dollars that was listed as being owed to VAD Cranel (#47 of Kodak's 50 largest unsecured creditors). We understand that all Kodak's rebate programs to its VARs were being honored. There are also a lot of obvious parts suppliers listed among the unsecured creditors, but, we have not heard of any shortness of Kodak products in the market.

Mitek Has Tough Month

It's sure been a tough couple months for Mitek shareholders. In April, Mitek customer USAA filed suit against the San Diego-based recognition technology specialist and called its mobile patent portfolio into question. That action basically cut Mitek's market cap in half from more than $300 million to over a $150 million. Mitek then followed up last week by announcing fiscal second quarter revenue results that were almost 60% lower than its Q2 2011 results. Today, Mitek's market cap was floating around $64 million.

For the three months ended March 31, San Diego-based Mitek reported revenue of $1.2 million, which created a $2.2 or $2.8 million loss, depending if you're using non-GAAP or GAAP reporting metrics, respectively. On a conference call for investors, Mitek CEO Jim DeBello reflected on the "lumpy nature" of Mitek's business model. In other words, Mitek sells to a channel that deploys it check capture technology and then markets their solutions to banks.

If you haven't been following along, Mitek is a pioneer in the market for capturing checks and data with smartphones. Mitek reportedly has 100 banks using its technology, including the eight largest banks in the U.S. In all, Mitek boasts agreements with 315 financial institutions to deploy its mobile check capture technology, which are in varying stages of implementation. Mitek's contracts typically net it around 10 cents per transaction.

Mitek also has some patents around document imaging and is planning to roll out a mobile bill paying application later this year. Mobile bill paying currently in pilot stage at a couple sites and apparently involves taking a picture of a bill and then being able to pay it with your phone. Mitek has also set up a mobile insurance quote app that it has licensed to Progressive. (Check out the Flo commercial.)

DeBello pretty much said that it has been business as usual for Mitek, the company had built up a great infrastructure of customers, and that the market Mitek is focusing on is pretty unpredictable because of its nascent nature - but also a market full of opportunity. DeBello also said the USAA lawsuit has not had a negative effect on sales but has certainly consumed some management resources.

Management Changes at Databank IMX

DataBank IMX has gone through a management shake-up. Co-founder Chuck Bauer was recently named CEO of the U.S.-based service bureau and document imaging systems integration specialist. Bauer had been serving as president COO with Fred Zaeske, who was brought in last year, serving as CEO. Zaeske, a former executive at Zebra Technologies, had been introduced to Bauer and co-founder Dick Aschman by Svoboda Capital Partners, which announced an investment in DataBank last January.

The investment was reportedly taken on to drive additional growth for DataBank, which we understood had been enjoying annual double-digit organic growth at the time. The growth plans included acquisitions, and late last year, DataBank acquired Information Access Systems, an Orlando-based Hyland and IBM Datacap reseller. Zaeske told us to expect two to three acquisitions per year from DataBank, which launched in 2005 when DataBank, Inc. acquired the assets of service bureau roll-up flameout ImageMax to create DataBank IMX.

DataBank IMX seemed to be building some solid momentum, but it's not clear why Zaeske left. In addition, Bob Zagami, director of marketing for DataBank and  a well-known industry personality, departed from DataBank shortly before Zaeske did. Aschman remains a director.

Kofax Posts Weak Q3

Document capture and BPM ISV Kofax continues to struggle. Kofax followed a weak fiscal Q2, with an even weaker Q3 (ended March 31). The Irvine, CA-based company reported revenue of $58.7 million, which represented a decline of almost 6% in terms of constant currencies. However, CEO Reynolds Bish remained optimistic and predicted a strong fourth quarter and projected low single-digit revenue growth in U.S. dollars for Kofax's total fiscal year 2012.

Said Bish in a prepared statement, "We experienced an unusual number of delayed orders in our core capture business. We have not seen material changes in the competitive landscape or macroeconomic environment and, as a result, believe these delayed orders are attributable to less than adequate execution in our core capture business. We’re taking actions to minimize the risk of this reoccurring in future quarters and should begin realizing the related benefits during the current and next several quarters.

"After a thorough review and based on our fiscal year to date results and outlook for the current quarter, for fiscal year 2012, we continue to expect high single digit total revenue growth on an as reported basis – including acquisitions to date and assuming current exchange rates, low single digit total revenue growth in U.S. dollars on a constant currency basis and an Adjusted EBITA of at least the $40.2 million reported in fiscal year 2011. This clearly implies a seasonally strong fourth quarter, which is very consistent with historical patterns.”

Especially alarming is Kofax's continued decline in its core applications software business, which as Bish clearly confirmed to DIR at Kofax's Transform event earlier this year, is the key to the future success of the company. Applications software licenses saw almost a 30% drop in sales in constant currencies. Bish said "During the third quarter our Singularity, Atalasoft, MarkView and OEM / POS revenues met or exceeded our expectations." He put the blame for software licensing shortfall squarely on the shoulders of the company's flagship document capture software business.

Nuance Promotes Rich

Nuance has named Mike Rich as the new GM of its Imaging Division, with Robert Weideman being tabbed as the GM of the billion-dollar ISV's Enterprise Division. Rich is the former CEO of Equitrac who joined Nuance through an acquisition about a year ago. Nuance has portrayed the Equitrac acquisition as having been a very successful one, helping draw both Equitrac and Nuance's eCopy business into larger deals.

Equitrac is a print management solution, while eCopy handles scanning from MFPs. "Studies are showing that more than ever users are looking to buy scanning and printing at the same time," said Rich, who indicated that he has no major plans for changing the operations of Nuance Imaging, which is on target for $230 million in revenue in Nuance's fiscal 2012 (ending Sept. 30).

Weideman,who joined Nuance from forms processing and e-forms ISV Cardiff Software in late 2001, will now oversee a $300 million a year enterprise solutions business that has to date primarily focused on voice-recognition and some natural language recognition-driven solutions. He plans to bring Nuance's imaging products more to the forefront in that division.

Rich spent five years as the CEO of Equitrac, which was generating $60 million in annual revenue when Nuance acquired it for $160 million last May. Prior to that he was the president and CEO of Voice-over-IP ISV NetSpeak. He had previously held high-level positions at AT&T.

On the surface, these moves appear to be Nuance strengthening its management team - being able to keep Rich on board by promoting him and keeping Weideman as well by moving him to a division that can benefit from his expertise. Of course, it's hard not to notice that Rich's two previous companies, Equitrac and NetSpeak, where both sold.  True, in recent years, Nuance has put quite a bit of investment into its Imaging Division, but it still makes up only around 20% of the company's overall revenue (the majority coming from speech recognition-type technology). I guess the $200 million question is, will Nuance spin-off its document imaging division under Rich?

Let me stress that nothing the Weideman or Rich told me during an interview yesterday indicated that this was a possibility, I'm just reading between the lines a bit here.

Anyhow, we'll have a more complete article based on our interview in next week's premium edition.

DocuWare Takes on Funding

German document imaging ISV DocuWare has secured a round of financing from Morgan Stanley Expansion Capital LP. The financing will be used to help the company pursue its aggressive international growth strategy. Last year, we ran an article in our premium edition of DIR where we interviewed Steve Behm, who had recently been promoted to the new position of VP of Americas. Behm discussed the investments the company was making in expanding its sales channel to improve on the already impressive 19% growth the company reported for 2010. This had brought DocuWare to to just over $20 million in annual revenue worldwide.

DocuWare also recently announced a DocuWare Europe subsidiary and named a worldwide marketing VP, as well as appointed a Canadian sales director.

The amount of the investment by Morgan Stanley was not announced, but a six-member board of directors has been created that includes two Morgan Stanley execs, as well as DocuWare's co-presidents Jurgen Biffar and Thomas Schneck. The other two members seem to be technology industry veterans, including the Chariman, who served previously as a supervisory member of the DocuWare board.

Said Peter Chung, Managing Director and Head of Morgan Stanley Expansion Capital: "DocuWare has built a tremendous, international franchise, servicing an impressive base of customers through a broad network of highly trained, go-to-market partners.  Given DocuWare’s proven success and long-term investment in quality software and partner development, Morgan Stanley Expansion Capital believes the company is well-positioned to capitalize on the significant market opportunity available to provide document management solutions to middle-sized enterprises and government agencies."

If you remember, a couple years ago, DocuWare also made a major investment in SaaS product development with an eye toward the future of the market.

Square 9 Introduces A/P Product

In conjunction with the latest version of its SmartSearch software, Square 9 Softworks has introduced a purchase-to-pay (P2P) suite. The new product combines several elements of Square 9's existing product line, including its capture, repository, workflow, and e-forms technology. It also leverages a new Web interface that is designed to help take the New Haven, CT-based ISV's product to the next level.

For higher volume P2P applications, customers can leverage Square 9's partnership with Artsyl Technologies to automate data capture. Square 9 P2P starts at $27,000 for a five-user system. Square 9 CEO Stephen Young said that for 75% of the ISV's customers, accounts payable is one of the use cases.

Square 9 has been growing rapidly since coming onto the scene with an affordable document management systems targeted at MFP dealer reseller channel. "Early on we positioned ourselves as targeting the SMB," said Young. "And, while we can still sell a three-user system starting at 2,300, we are also now focusing on scaling out and selling further upstream."

More on this in our next premium edition.

Mitek Fights Back

Mitek has fired back against USAA's allegations that the San Diego-based capture ISV stole USAA's technology. According to a statement issued yesterday, "Mitek believes that the evidence will ultimately show that Mitek's engineers independently developed its Mobile Deposit software and related patents based on Mitek's own ideas. Far from concealing the facts from USAA, Mitek launched its Mobile Deposit product in January 2008 and repeatedly and openly made USAA aware of the product at multiple points during 2008 and afterwards. USAA launched its own mobile check deposit application utilizing Mitek's patented technology in or around August 2009, more than a year after Mitek, and long after it first learned about Mitek's product."

Basically, it boils down to this:
1. Somewhere around 2005, Mitek and USAA sign contract for USAA to license Mitek's CAR/LAR technology
2. Both Mitek and USAA say they then go to work independently developing capture technology utilizing mobile phones.
3. Mitek launches its Mobile Deposit SDK
4. USAA launches mobile check capture technology
5. Mitek starts asking USAA to pony up for patented technology the bank is using in its check capture application.
6. USAA says, "peshaw, you stole that technology from us" and turns around and sues Mitek, attempting to invalidate its patents.
7. Mitek says, "What are you talking about? We're going to fight this thing."

As we've said before, this is so important to our industry because Mitek has two patents related to full-page document capture that are among those being challenged by USAA.

LEAD Technologies Announces Mobile SDK

Long time document imaging SDK vendor LEAD Technologies has announced LEADTOOLS Anywhere, an SDK designed to to help customers deploy their imaging applications on mobile computing devices like smartphones and tablets. LEADTOOLS Anywhere incorporates HTML5, JSON Web Services and native libraries for the Android and iOS platforms.

The initial release " will include a new zero footprint HTML5 viewer and extendable JavaScript library for viewing images on any browser, operating system, platform and device that supports HTML5. This viewer will include many interactive features with multi-touch and gesture support including pan, zoom, magnifying glass, annotations, window leveling for DICOM, PACS communication and more."

LEADTOOLS Anywhere comes in the wake of LEAD's recent release of LEADTOOLS 17.5, which features significant improvements in areas like PDF, OCR, and SharePoint integration.We recently took a deeper dive into those improvements in a story in our premium edition of DIR.

Mitek Patents Called into Question

Mitek's entire portfolio of patents around mobile check and document capture are being challenged by USAA The U.S. military insurance company is basically saying Mitek lifted its "Remote Deposit Capture" technology from it, while USAA was working with Mitek to license its CAR/LAR technology. Mitek has six patents related to mobile capture, the first one granted in Aug. 2010. Mitek has ridden these patents and the mobile capture technology it has developed in conjunction with them, to double its revenue in 2011, from $5 million to $10 million and a market capitalization of almost nothing to a peak of over $300 million.

Mitek's value crashed to about half the level of that peak in the wake of the USAA allegations, which were file on March 29. Basically, USAA, which was working with Mitek as far back as 2006, is claiming that Mitek stole technology (which USAA had already filed patents for) and that Mitek incorporated that technology in in its own patent applications. To add insult to injury, USAA is saying Mitek recently came back to USAA and told USAA that it would have to license the stolen technology from Mitek.

There are also some other arguments about the contract between USAA and Mitek involving page counts, so this relationship has definitely soured on several fronts.

One of the interesting sidenotes for our industry as a whole is that USAA is seeking to have all of Mitek's patent claims invalidated, which would certainly enable ISVs developing remote capture applications to breathe a little easier. After all, Kofax' Mobile Capture, which as such a hot topic at its recent Transform event, seems in certain violation of at least one Mitek patent. Not sure, if USAA would then try to enforce similar patents.

Mitek CEO James DiBello responded to the USAA claims, "We believe these claims are without merit and we intend to vigorously defend our intellectual property rights, as necessary."

Kofax Lands BPM Deal with Stock Exchange

As we discussed at length in our last premium issue, Kofax has staked a lot on sales of BPM software going forward. CEO Reynolds Bish told DIR that the Irvine, CA-based document capture specialist should do $20-25 million in BPM revenue for calendar 2012, with that figure doubling by Kofax's fiscal 2014 (ends June 30). The foundation for this growth is Singularity, a Northern Ireland-based ISV that Kofax acquired late last year. Singularity had annual revenue of $16.1 million.

So, today's announcement of a $400,000 BPM sale to "one of the largest stock exchanges in North America," is certainly good news for Kofax. According to the press release, "a leading multi-asset class financial exchange group will implement Kofax TotalAgility as its BPM and dynamic case management solution to improve the execution and efficiency of its listing processes. The software will enable the customer to automate the administrative processes needed for a company to list on the exchange in order to reduce process latency and also route the supporting documentation to its Microsoft SharePoint and EMC Documentum content management applications for easy access by employees."

Organizations utilizing SharePoint for document management are clearly one of Kofax's BPM targets, so this deal makes sense in that regard. Doesn't seem to be a capture component here, but that's not a big deal. Kofax's two technologies are complementary, but not co-dependent.

IKON Re-branded as Ricoh

It's official. This is the culmination of the 2008 acquisition when Ricoh paid $1.6 billion for the digital copier super dealer that was also the largest North American partner of its chief rival Canon. The deal seemed like an expensive proposition at the time, but it also seems to have achieved what Ricoh was looking for - increasing its U.S. distribution significantly, while putting a bit of a hurt on its fiercest rival. Xerox, which paid $1.5 billion for ACS, may have been the biggest winner in the deal.

There have clearly been some bumps in the road involving the integration of  IKON and Ricoh, including the resignation of Jeff Hickling as president and CEO of Ricoh U.S. last year. Hickling had been the president and COO of IKON and initially much of IKON's executive management was given huge roles within Ricoh's U.S. services business. We're not sure how much of the ex-IKON management structure is still in place, as the Hickling change took place shortly after the Ricoh Convergence event, which I attended and was the last time I had a briefing on Ricoh management.

Suffice to say, the acquisition of IKON should now be considered completed. It always made sense from a strategic standpoint, as MFP vendors have been forced to move from a hardware to more a services model. Hopefully, now all the logistics have been worked out.

Docville Event set for May 9

Michael Ziegler's Docville group has scheduled another event for Wednesday, May 9 in Brussels. Docville is a networking organization made up primarily of European ISV, integrators, and VARs that focus on the document management space. This will be the group's third event, with the one held last fall drawing approximately 90 attendees.

The highlight of the event are focused roundtable discussions that are led by topical experts. This event's roundtable topics include:

• From AP Invoice Processing to an Integrated P2P Approach - What are the Challenges & Opportunities?
•  The value of Business Process Management – a must have or has the battle been lost?
• From Scanning to Electronic Document Capture & Processing – Changing Platforms, Challenges & Solution Providers
  • Document Service BPOs – what are the global trends that promise profitable growth?
  • Is the Digital Mailroom having a renaissance?
  • SharePoint ECM: Leveraging Microsoft and Microsoft SharePoint Partners; Complementary or Competitive?
  • Changing Software Licensing & Delivery Models – Impact on Vendors and Customers
  • What can semantic technologies accomplish for document understanding & document management?
  • Document Service BPOs: Hybrid Records supporting business decisions and ensuring ROI is not killed by legacy – overcoming the challenge
  • What is Next for SharePoint ECM?
  • Process Automation in Human Resource Management – is the potential really there?
  • An International Government G-Cloud – What are the challenges and Opportunities for Suppliers?
  

info360 Conference and Expo

Is anyone heading to this event? It's being held June 12-14 in New York City. This is the event that used to be AIIM On Demand, and which AIIM has dropped its sponsorship of in favor of its own conference held earlier this month in San Francisco. By all accounts the new AIIM event, while purposely limited in size, was successful.

Questex, a spin-off of Advanstar, which bought what is now the info360 event from AIIM about 10 years ago, has reduced the event from three to two days - which was probably a good move based on the historical third-day lack of traffic. Tuesday, June 12 will be a pre-conference day. Looking at this year's on-line floorplan, there are only about a dozen recognizable historical AIIM exhibitors. Of course, there are probably a few start-ups in there that I haven't heard of, but this show has traditionally had a couple hundred ECM exhibitors.

A press release on the conference tracks went out today.

And AIIM has also announced that its 2013 conference has been scheduled for March 20-22 in New Orleans, with details to come.

TIS Announces Mobile Capture Technology

Top Image Systems has filed for a patent surrounding what it calls "Intelligent Mobile Document Delivery Applications." TIS actually made this announcement a couple weeks ago, but I was holding off on writing mentioning anything, because I were expecting an interview with TIS this week, which has been delayed. So, just to get it on the record, I thought I'd do a blog post today, with the hopes of accumulating more information later.

TIS, which develops the eFlow document and data capture platform, has announced new remote deposit capture (RDC) technology. This technology is being leveraged in at least three products
1. MobiCheck: smartphone check deposit
2. MobiPay: for bill paying
3. MobiCloud: for capturing any document and then releasing it to downstream processes (sounds similar to Kofax's Mobile Capture)

The technology is likely going to be targeted at the financial services market, where TIS already has a strong international business.

From what I  heard on a recent TIS earnings call, the Tel Aviv-based ISV is planning on opening a U.S.-based office to promote its mobile technology. (Once again, hope to have more details soon.)

AnyDoc Customer Wins AIIM Best Practices
On the topic of data capture, congratulations to AnyDoc and customer Johnson Smith, which won a 2012 AIIM Carl E. Nelson Best Practices Award in the medium company category. The award was presented at the recent AIIM Conference in San Francisco. I had done a short feature on the implementation in a recent DIR premium issue. It utilizes handprint recognition and has achieved an impressive ROI for the mail order catalog company.

DIR Talk Browser Stats

We're really getting some good traffic on Document Imaging Talk, and I want to thank you all for that.

I was mining the stats a bit today and came up with this bit of info.

For the past month, here are the most popular interfaces being used to access this blog:

Firefox  43%

Internet Explorer  32%

Chrome  15%

Safari  4%

I have to admit, I was somewhat surprised that Firefox is ahead of IE. Is anyone else out there seeing similar data in regards to browser usage?

Lexmark Acquires Two More Software Companies

Just a short time after announcing it had acquired intelligent document recognition vendor Brainware, Lexmark announced two more software acquisitions that are being rolled into its Perceptive ECM business. The acquisitions are of Nolij, a U.S.-based document imaging and workflow specialist in the higher education market, and Australia-based ISYS, which specializes in enterprise search.

According to the press release, Nolij Transfer is "a Web-based data integration product that enables automated data matching and upload to student information systems...in enrollment services, university development and the business office." Perceptive, of course, is already one of the leaders in marketing ECM to the higher education market. According to Scott Coons, president and CEO of Perceptive and Lexmark VP, "Nolij brings advanced system integration, unique browser based scanning and forms processing capabilities to our education customers so they can better serve their students."


Regarding ISYS, the press release states, "ISYS enterprise search solutions deliver powerful federated search, text mining, and mobile and embedded search capabilities across a wide range of formats, languages and platforms...Its class-leading Document Filters technology is the core analytics engine at the heart of its suite. Document Filters enables users to parse, extract, analyze, load and display (in high definition) content contained in hundreds of different file types. Today, more than 16,000 enterprise organizations and many of the world’s leading IT vendors use ISYS software.

We hope to provide more details of how these products will be integrated into Perceptive's ECM suite and Lexmark's business in an upcoming premium issue.

NovoDynamics Release new IDR Product

NovoDynamics, the Ann Arbor, MI-based ISV best known in our industry for its Verus Middle Eastern language recognition technology had released a new document classification and extraction product. The new NovoDocufier utilizes NovoDynamics pattern recognition expertise to rapidly classify and group documents without having to perform full-text OCR. This technology the was foundation of Novo's previous generation Coronado classification engine.

With NovoDocufier, NovoDynamics has added the ability to apply OCR-based data capture to a process. There is an intuitive process for highlighting fields the first time through and thereafter they will be captured automatically. According to Novo VP of marketing Tim Dubes, the product is currently in beta at several service bureaus. "They like the fact that it can be set up very quickly to run diverse jobs," he told DIR.

Goerke Joins ABBYY
Speaking of intelligent document capture (IDR), Alexander Goerke, the former VP of Transformation Software (KTM) for Kofax, has joined ABBYY as VP of Semantic Technology Products. According to the press release, "In his new position at ABBYY, Alexander will be responsible for development and market introduction of a new generation of software products for document understanding and information retrieval based on ABBYY's innovative semantic technology."

Goerke was most recently working on an initiative called Skilja, which is focused on the "document understanding" market.

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.

The Potential of Mobile Capture

It's certainly worth noting the capture from mobile devices was probably the most popular topic at the recent Kofax Transform conference. And it wasn't vendor-generated hype that was driving this. No, the end users and resellers at the event couldn't get enough. I attended a presentation by Bruce Orcutt, a product marketing manager for Kofax, and there were way more people than there were seats. Orcutt had recommended I attend the session just so I could see the interest. "I've done [something like 14] product launches since I've been at Kofax and I've never seen anything like this.

There are still some in the industry that have their doubts about the number of real world applications that full-page mobile document capture can fulfill. Aside from weigh bills, we've heard stuff like insurance claims processing, service technicians, and some others. Earlier today we were talking with capture industry veteran Tim Dubes about the new software developments coming out of NovoDynamics where he now works and I mentioned this incredible interest in mobile capture at the Kofax conference.

Dubes was a bit skeptical, citing Cardiff's launch of its Cross Pen Form software some 13 years ago. "Everyone was like, not everybody has a scanner, but pens, they're everywhere, and was all excited about it." Sound familiar? So I went back and looked up my 1999 article on the Cardiff/Cross product.

From the article: "The Cross module, the TELEform Digital Ink Module, is targeted at applications such as insurance claims adjustment, automotive repair, hospital work, and quality control in manufacturing. It’s designed for applications where users need to be mobile, but do not want the inconvenience of working with a
laptop computer." Sounds somewhat familiar.

More: "the main beneficiaries of the Digital Ink Module technology would be users with several remote sites. “This might include an insurance company with several adjusters in remote offices. Instead of having to send their adjustment forms to the main office via courier, using the Digital Ink Module, the forms could be sent electronically."

Anyhow, it's not an apples-to-apples comparison, because with the Cardiff stuff, you still needed a $400 electronic tablet to right on to make this work vs. a free or inexpensive app on your phone. Wi-fi and satellite networks for transmitting remote data were also unheard of at the time, but the use cases are eerily familiar and, according to Dubes, so was initial user interest, before it faded.

I guess we'll see.

Live from Kofax Transform

So, this is at least the fifth or sixth Kofax Transform I have attended. I must admit I was a little apprehensive coming out here (to San Diego) due to some of the recent financial reports coming out of Kofax, where growth has definitely slowed in the past year. But, Kofax is hardly a company in despair over flat revenue. In fact, the company has a very bullish outlook on the future and seems to have a lot of pieces in place to drive future growth to at least $550 million over the next three-four years, which was the goal that CEO Reynolds Bish stated today in an interview with DIR.

We'll have all the details of this discussion in our upcoming premium edition, but the gist of things is:
1. Last year at Transform Kofax announced it had sold its hardware distribution business (sale completed in May), which as stated at the time, completed the transformation of the company into an enterprise software player.
2. Since then, Kofax has bought BPM ISV Singularity, doubling its addressable market size.
3. Kofax is aggressively marketing the Singularity technology through its existing sales channels
4. Kofax has some very extensive mobile capture technology on the way
5. European market has been tough for Kofax, but has stabilized and Kofax has right-sized its staff in EMEA. (Bish explained that, unlike many other ISVs, Kofax actually had viable revenue coming from the southern European markets most affected by recent European economic troubles)
6. Kofax R&D investment is larger than the annual revenue of many of its competitors.
7. More acquisitions on way.

If you put all this stuff together, it certainly makes for some interesting conversations and gives you an idea of
where Kofax is expecting its growth to come from.

A look at Lexmark's Acquisiton of Brainware

Sorry it took me so long to get around to this, but I've been catching up on a few things. Chances are by now you've seen that Lexmark paid $148 million to acquire Brainware. My first reaction was "Wow. That seems like a lot of money." But, then I started doing some research and apparently, Harvey Spencer Associates has Brainware ranked ahead of Top Image Systems in worldwide market share, and, as we recently reported, TIS recently reported annual revenue of close to $30 million.

 So, Lexmark apparently paid less than five times revenue- which is still a pretty good premium. Lexmark hinted that more financial details about Brainware may be available during its first quarter earnings call in April.

For those of you who don't know Brainware, it is an intelligent data capture (IDC) ISV. From what I understand, most of the heavy lifting on the development side is done in Europe, with the sales and marketing headquartered in Ashburn, VA. Brainware has enjoyed meteoric success in the invoice capture market in the past 5-6 years.

Formed out of the ashes of the flameout of German ECM ISV SER, Brainware's management team spun the company out of a call center software business and aggressively grew sales by focusing on ROI related to invoice capture. Unlike some of its competitors, Brainware has historically de-emphasized the workflow piece of the invoice processing equation and really focused on what it terms as "straight-through processing." This involves automatically extracting enough information off of invoices so that they can be matched with P.O. and shipping data and automatically posted to an accounting/ERP system without anyone having to approve them.

Brainware has also done some high-volume forms and remittance processing implementations, but to date invoices has been its real sweet spot. It sounds like Brainware will be working closely with the Perceptive development staff on additional data capture applications in markets like higher education and healthcare where Perceptive has a strong presence.

Perceptive is the document management ISV that Lexmark bought in 2010. Lexmark paid more than 3 times revenue for Perceptive, which is in a market where companies have historically had a lower valuation than the IDC market where Brainware plays. So, Lexmark has a history of paying a good premium for software vendors.  And, if you remember, HP paid like more than 10 times revenue for Autonomy last year. That fact is hardware vendors typically have to pay a decent price to get a decent software vendor.

Part of this is because I think the general consensus is that hardware companies don't know how to run software businesses. And this was certainly a widespread concern when Lexmark bought Perceptive. But, you know what, I think because Lexmark has done such a good job allowing Perceptive to remain autonomous, there were really no similar questions that came up this time around. In the meantime, last year Lexmark acquired a BPM software provider, Pallas Athena, to compliment Percpetive and recently reported 30% organic growth for the Perceptive business.

There's a ton more I can write on this, which will show up in my next premium issue. But, for now, it appears full speed ahead for Brainware as part of Perceptive, taking advantage of the Lexmark resources. And Lexmark now has pretty much a full capture, workflow, document management suite, putting it on the cutting edge in the world of MFP vendors.

Top Image Completes strong year

Document capture software specialist Top Image Systems recently announced another strong quarter and a strong conclusion to its 2011 year. The Tel Aviv-based ISV, which sells primarily in Europe, reported 25% revenue growth for the quarter and 32% for the year. This brought its annual revenue to $28.7 million. TIS also reported a non-GAAP net income for the year of $3.4 million, which represented an 82% growth from the previous year. The company now has more than $2 million in the bank and has eliminated its debt.

TIS focuses on the banking, digital mailroom, accounts payable and census markets. TIS reported strong business in Europe, the UK, Latin America and Asia-Pac. It is also planning to open a U.S. sales office to market its mobile technology.

In the earnings press release, CEO Ido Schechter stated,  "Looking ahead to 2012, we will continue to execute our long-term growth strategy by focusing on our Digital Mailroom and Banking Platform solutions as well as on our strong global partnerships. For 2012, TISA expects growth of between 17% and 23%, revenues of between $33.5 million and $35.3 million, and Non-GAAP operating income in the range of $4.3 to $4.6 million."

Capture + MPS on the Horizon

There is certainly a lot of interest in introducing document capture and management applications into managed print services contracts. One of the most active discussions I've ever seen on LinkedIn, for example, has focused on the question of will "the next big move for MPS providers will be document capture / workflow?". The discussion takes place within "The Document Imaging Group"  and has more than 60 comments since being started a year-and-a-half ago - the last one coming just a couple days ago.

So, scanning is definitely a hot topic among those in the MPS market, but how much of it is really being sold with MPS implementations today? DIR recently sat in on a briefing about a number of MPS infrastructure players getting together to deliver a solution providing end-user information to resellers to help them improve their MPS deployments. Unfortunately, from our standpoint, the whole discussion focused on print.

We followed up with a question to Doug Johnson, senior VP of MPS for Supplies Network, a St. Louis-based organization which services some 6,000 North American resellers, providing them with products like toner, paper, IT supplies, and data storage media. Supplies Network also has a hosted MPS offering, which was discussed in the briefing. We were introduced to them through DocSolid, which offers an MFP capture platform designed for cloud environments.

Johnson told us, "To date, scanning (and particularly solutions around the scan function--content repurposing, further document workflow, storage, archival, retrieval, etc.) has largely been ignored in the MPS engagements between resellers and end users. We believe it is due to a lack of solutions that are integrated across the scanning value chain. An efforts like the one we recently discussed [on printing], eliminating white space across scanning solutions to create a seamless end-to-end solution, is needed."

 

So, while there clearly is plenty of interest in scanning in the MPS world, it seems the logistical pieces have not been put in place to really unleash it. This is not surprising, considering that printing is still the lead dog for MFP vendors and dealers, and they are still figuring out how to properly deploy it in MPS environments.

We also did a teleconference last week about a re-org at Xerox that discussed MPS, but was almost entirely focused on printing.  Here's two interesting quotes that came out of that teleconference, which may explain some of the interest in printing: "Retail printing is $700 billion market," and "direct mail is growing exponentially." (The figure I found showed that the market for direct mail is actually predicted to shrink slightly over the next five years, but it's still worth well over $10 billion annually, so I guess when you compare it to the document capture software market size of under $3 billion [per Harvey Spencer Associates], you can see why the MPS focus remains on print.)

But - remember, the document capture market is growing in double-digits and someday will catch a declining printing market (if indeed it is declining), which explains all the interest in document scanning amongst, apparently forward-thinking people in the MPS market.

KTM Developer Launches New Company

Alexander Goerke, one of the most experienced and respected developers in the field of intelligent document recognition (IDR), has started a new company. Skilja, which is based in Germany, is focused on the area of document understanding. According to the company Web site, "Skilja.com features several articles per month about the technology of document understanding and decision making...Skilja is also company that actively works in producing software for document understanding. We do this either through consulting and project management in cooperation with other companies or by programming our own components."

For the last several years, Goerke has been with Kofax, which acquired a previous company he started, called LCI. LCI's technology has been incorporated in Kofax's Transformation Modules (KTM), which have been a key element in the Irvine, CA-based ISV's successful move upstream in the document capture market. Previous to founding LCI, Goerke was with SER AG, where his team created the Distiller capture product, which is now sold by Brainware, a competitor of Kofax's in the IDR space. Georke has been in the capture market since 1993.

We look forward to following the progress of his new company, as well as reading his posts on the emerging market of "document understanding."

Former Pegasus now Called Accusoft

Tampa-based imaging SDK vendor Accusoft Pegasus is now officially known as just "Accusoft." Accusoft, which is based in the Boston area, was acquired by Pegasus in 2009 and the company has used the joint name ever since. Pegaus had previously acquired SDV vendor TMS Sequoia in 2004 and last year acquired browser-based viewing tools and application specialist Adeptol.

According to the press release, "The transition of the company name to Accusoft reflects our dedication to provide an even broader range of products to enable our customers to create top-of-line products and integrate cost saving applications," said Jack Berlin, CEO of Accusoft. "With the new direction of the brand, we continue to differentiate ourselves in the global marketplace as a company with a very diverse product portfolio of applications and SDKs."

No, I'm not really sure what that means either - maybe just that Accusoft is a more encompassing name than Pegasus? Either way, the new Web looks good.

ReadSoft Posts Strong Numbers

Document capture ISV ReadSoft finished 2011 strongly, reporting 13% growth in terms of constant currencies for both the fourth quarter and the year. This included software license sales growth of 17% for the fourth quarter and 19% for the year. This helped ReadSoft increase its operating profit EBITDA for the year to $11 million on $98 million in revenue.

According to ReadSoft's financial report, in the fourth quarter, "All three market areas improved with 'U.S. and the rest of the world' in the forefront with 18% growth." ReadSoft, which is based in Sweden, also saw 13% growth in non-Nordic European markets - a geography where its top competitor Kofax has reported recent weakness.

Also, in the fourth quarter, ReadSoft reported one of the largest deals in the history of its company. The deal was with, "a leading European high-tech manufacturing group. ReadSoft partnered with a global systems integrator to deliver its SAP-certified invoice automation solution to this company with a newly established Shared Service Center, handling accounting and purchase services. The deal is worth [$1.4 million], and includes several years of maintenance."

ReadSoft Acquires foxray

ReadSoft, a leading capture software ISV, which is based in Sweden, has acquired German document capture ISV foxray, which develops a capture framework for high-volume environments. foxray's founders came from the ticketing arm of the German airline Lufthansa, and its xbound application acts as a framework that can incorporate multiple capture processes.

According to the ReadSoft press release, foxray's revenue is approximately 7 million Euro, just over $9 million. The initial acquisition price is 7.85 million Euro, with an additional .65 million Euro worth of ReadSoft shares going to foxray's two owners, who are going to remain on board. There are earnout incentives of up to an additional 3.3 million Euro through 2014.

Kofax Reports Half-Year Revenue

In line with pre-set expectations, Kofax's revenue for the first six months of its fiscal 2012 (ended Dec. 31) was basically flat. The Irvine, CA-based document capture technology ISV reported second-quarter revenue of $70 million with half-year sales coming in at $128.5 million.

"This was very consistent with the expectations we set in November," said Kofax CEO Reynolds Bish during a conference call with investors. "We are generally pleased with our overall progress, especially in light of challenging year-over-year comparisons due to a strong six months in the previous year and in light of the overall economic weakness in Europe."

Indeed, Kofax's overall revenue in Europe was down 12% on an organic constant currency basis in Europe, with software licenses down almost 23%. Software licenses, in fact were down 9% overall compared to last year, but a 10% increase in Maintenance Services helped offset this, which we're not sure is that great of a sign.

Overall though, Kofax remains financially healthy, with $62 million in the bank, and in the last year has executed a pair of acquisitions, Atalasoft and Singularity, that Bish indicated are already producing better than expected returns.

London traders seem to take the report in stride. After a week of slight gains preceding the results, Kofax's stock value shot up slightly in early trading before leveling off and finishing yesterday at just under 310 pence per share, which was near where they started. Plans for a public offering on the Nasdaq continue to be in the works.

Kofax Lands Million Dollar Upgrade

Document capture technology specialist Kofax recently announced a million upgrade by a "leading global semi-conductor manufacturer." The manufacturer is implementing a series of Kofax technologies, including the Kofax Transformation Modules, VRS, Kofax Monitor, and the Kofax Communication Server to enhance its Kofax Capture implementation in its A/P department. The manufacturer deals with approximately 2.6 million invoices per year and posts data to an ERP system and the images to a Mobius archiving application.

There is no mention of what type of workflow technology the manufacturer is using and Kofax's MarkView was not part of the deal, but nonetheless, any seven-figure capture deal is worth mentioning.

Psigen Posts strong first-half results

Document capture ISV Psigen recently announced it had 91% revenue growth for the first half of its fiscal year, which ended on Dec. 31. The Irvine, CA-based company credited "a strong domestic market, expansion into Europe and APAC, and a long list of competitive capture replacements," as driving its growth. Also, "The most recent quarter also included several large contract signings for services and OEM deals which will significantly boost revenue through 2012 and beyond."


Psigen's Irvine-based neighbor and competitor, Kofax, is scheduled to announce its Q2 results next week.
Kofax's stock value was up about 10% in the last week- not sure if this means a favorable report is coming or just a sign of overall market conditions. We'll see.

Lexmark Reports Strong Fourth Quarter for Perceptive

Perceptive Software apparently saw its revenue jump 40% in the fourth quarter of 2011 - up to $31 million. Part of that is attributable to the acquisition of BPM and output ISV Pallas Athena, which was announced in October, but 30% of the growth is said to have nothing to do with the acquisition. The fourth quarter growth rate is probably more in line with Lexmark's expectations than the third quarter growth of 15%, in which Lexmark seemed somewhat disappointed.

Part of  Lexmark's acquisition strategy was to expand the primarily North American Perceptive business internationally - taking advantage of Lexmark's worldwide footprint. That strategy seems to be paying off. Also it seems that while a restructuring plan has been put in place at Lexmark, there will be more hiring, rather than cuts, related to the Perceptive business.