MPS Plus Enteprise Capture: An Emerging Trend

When I spoke at Harvey Spencer Associates' annual capture conference a couple weeks ago, one of the predictions I made was that a digital copier vendor would buy a capture ISV. Yes, we've already seen Lexmark acquire Perceptive, and I guess in many ways, this is represenative of what I was talking about. So, I guess I should have said "another" MFP vendor will buy a capture company.

I based this prediction on the emergence of the managed print services (MPS) market, which according to the Photizo Group, has grown from $9.5 billion globally in 2006 to $20.3 billion in 2009. That stat comes from a recent e-mail I received from Nuance, which also states, that "by 2013, the market researcher estimates the market will be $59.7 billion in revenues, accounting for over 50 percent of the total distributed imaging business market."

No doubt, MFP vendors view MPS has a huge opportunity for themselves. With hardware sales struggling, software and services-based MPS gives them a way to re-invent themselves.

I just got off the phone with Joy Lipari, an executive with Xerox's MPS group who told me Xerox is integrating ACS's document management expertise into its enteprise MPS strategy. She acknowledged that most MPS cusotmers are still in the early stages of trying to reduce costs through better utilzing their printing resources, but added that there is certainly interest in adding document scanning to MPS platforms.

"The advantage of MPS is that it enables you to track how often someone is participating in a process," she said. "For instance, you might find that one department is utilizling a vertical capture solution 100% of the time and another, only 2%. MPS enables you to monitor these types of metrics."

How the emerging concepts of "enterprise capture" and MPS will come together exactly remains to be seen - but we're confident there is something there.

In the mean time, here's some more from that e-mail from Nuance, which discusses: "Five Areas Where Print and Document Capture Value Converge in Managed Print Services Strategies:"

1. Authentication

- For Print Management Users: Authentication means security at device or “Who are you?” It can involve a variety of methods from PINs to smartcards to biometrics.
- For Document Capture Users: Authentication involves a single sign-on in Microsoft Office-based workflows that feeds credentials to downstream business applications such as content management systems.

2. Authorization
- For Print Management Users: Authorization provides access to features and addresses: “What are you allowed to do?” It can restrict or allow print, copy and fax options.
- For Document Capture Users: Authorization helps to deliver a personalized or role-based workflow experience by allowing only the applications the user needs to be presented.

3. Accounting
- For Print Management Users: Accounting enables charge-back to internal billing systems or the ability to bill back externally for print and copy functions to recover the costs of fixed assets and supplies.
- For Document Capture Users: Accounting provides the means to charge-back internally or bill back externally for value added document services or processes.

4. Audit Trail
- For Print Management Users: Audit trails provide a rolling history of print and copy activity – helping an organization maintain a log of what has been done internally.
- For Document Capture Users: Audit trails produce a compliance-oriented history of document behavior - allowing an enterprise to always know: “who has scanned what, to whom, and how?”

5. Cloud Computing- and Server-based Tickets or Tokens
- For Print Management Users: These capabilities provide pull-printing or “follow me” printing for secure release and waste reduction. Users can print to the cloud or server, and release at the device.
- For Document Capture Users: These capabilities deliver bi-directional interplay with content management systems or forms. It can also provide an application-based scan trigger with delayed scanning integrated with a ticket or token.

2010 Census Forms on Track to be Saved as Digital Images

If you remember, after the 2000 U.S. Census, in which digital imaging was used for the first time to capture data from the forms, the forms were all transferred to microfilm before being submitted to NARA (National Archives and Records Administration) for long-term storage. This was after the Census Bureau had originally thought the digital images would be good enough for archiving. But, apparently, there was some disagreement over who would be in charge of ensuring that electronic images remained current, so a "human-readable" format - microfilm, was chosen.

Shortly thereafter, the PDF/A - A for "archiving" initiative was undertaken. We're not saying that NARA and the Census Bureau have agreed that PDF/A will be the long-term electronic format, but it's at least now an option - and over the past 10 years, people have certainly increased their focus on perserving electronic documents for lengthy periods of time.

Regarding the 2010 Census forms, which were once again captured digitally for data processing, early signs are that they will be archived as electronic images. From the timeline I've seen, most of the data extraction should be done by now and the information should be being prepared for submission to the President's office.

Here's an e-mail we recently received from the U.S. Census Bureau, ""The DRIS program considers all images used in the Census to be permanent records and has and will maintain them with links to the data throughout the life of the program. The referenced "blog" on the NARA website is a very accurate description of the activities being worked between Census and NARA to prepare the formal records schedule."

The "referenced blog" attempts to dispel some rumors that no images of the forms are going to be saved - only the data.

Ralph

NYC OMR Voting Implementation Proves Disastrous

Long-time readers of DIR  know that I've been a proponent of OMR-based voting ever since the 2000 presidential election controversy involving punchcards, hanging chads, and a future Nobel Prize winner. Knowing the great forms processing technology that was out there, I was somewhat shocked to realize that this old-style data capture method was still in use.

Of course, the 2000 election was followed by a wave of transition to touchscreen voting machines, which have their own issues associated with them. Can you say "black box voting?"

Gradually, after many conversations on this topic, I came to believe that some sort of image-based OMR scanner would be the best solution. You'd get a system that was mark-based, for simplicity, and you'd have an image of the ballot for archiving purposes. Well, for this month's primary, it seems the New York City area went with some sort of analog OMR-system, with disastrous results.

The primaries took place the week of Harvey Spencer Associates recent document capture conference and Spener was scathing in his commentary about the implementation. He said something to the effect that this is a black-eye for the industry caused by much less than state-of-the-art technology being used.

The vendor for the system was Election Systems and Software (ES&S) - clearly not one of the leaders in the document imaging market. At Harvey's event, we did catch up with Todd Radtke of Scantron, which is the leader in OMR-based test scanning in North America. He confirmed something we'd heard before-that the barrier to entry of having a system approved for use in federal elections is so high - like over $1 million per system to apply for the testing, that Scantron has chosen not to participate in the election market.

Oh yeah, apparently the awarding of the NYC contract to ES&S is under investigation.

TIS Wins $2 Million Invoice Processing Deal

In a good sign that big invoice processing deals are still out there, Top Image Systems just announced it had completed installation of a 1.5 million Euro (almost $2 million) deal with an Italian power company. The customer is running an SAP ERP system. Because there has been so much focus on the capture of invoices in SAP environments over the past few years, especially by vendors like ReadSoft and Open Text, we often wonder how many big deals of this nature are left, and the answer we typically get is that the market is only 25% penetrated at most.

Historically, TIS has been strongest in Europe, but espeically Germany, so it's a good sign for them to win such a big deal in a market other than Germany. And apparently, there are still big invoice processsing deals out there to be won.

PBMS Signs Deal with IMERGE

Pitney Bowes Management Services, whose new president was featured in the last issue of DIR,  recently signed a reseller agreement with long-time imaging consulitng firm IMERGE. IMERGE will support PBMS customers with records management iniatives, expescially in the life sciences and healthcare markets. PBMS focuses mainly on outsourcing the mailroom services at Global 2000 organizations. Records management, including digital mailroom services, are a growing part of its business, which also includes print and physical mailing services.

PBMS has several hundred customers worldwide. In a press release, Betty McAlvany, director, Product Management, for PBMS stated, “Our customers face increasing pressures in the healthcare space to meet deadlines for selection and implementation of Electronic Medical Records systems, cost-cutting and efficiency, all of which have a significant impact on their records management strategies. Through our relationship with IMERGE, we will continue to offer our clients the full breadth of records management operational expertise they have come to expect and trust from PBMS, along with premier consultative services, helping ensure that all aspects of their records and information management initiatives are addressed.”

SaaS ECM Continues to Gain Momentum

In preparation for my presenation at Harvey Spencer's upcoming annual Capture Conference, I was going over my 2009 predictions, one of which was "SaaS ECM continues to outpace traditional software market." Each year at the Capture Conference I grade my predictions from the previous year before announcing my latest predictions. Well, a week ago, I had a feeling that this particular prediction was correct. Now I am certain.

That certainty is based on a couple things. First off, I got an e-mail from Digitech Systems, touting how one of its VARs, Polar Imaging in Ontario, had leveraged its ImageSilo SaaS application to grow close to 50% in 2008, and continue to grow in 2009. Then I got this release from Hyland Software touting its opening of an Australian data center, on the heels of its success with a U.K.-based data center, to accomdate its growing SaaS business.

Steve Todd, CEO of Polar, indicated that SaaS is much more widely accepted than it was even 18 months ago-- and now customers that formerly insisted on receiving scanned images on CDs, have done an about face and only want to talk about SaaS. Both Todd and Ron McClellan of Hyland (who is quoted in the press release) stress the flexibility that SaaS offers. "“Organizations in the market for on-premise ECM are often choosing to work with us specifically because we also offer a SaaS product,” said McClellan. “This is because the right deployment method today may not be right tomorrow."

Todd added that SaaS is a great way to demo imaging technology and that once customers see their documents on-line, they will often be convinced to go live with a SaaS imaging implementation.

One interesting sidenote, that is also likely related to Hyland's decision to build data centers in other countries, is that Todd said Polar ran into some Patriot Act issues when it first tried to leverage Digitech's U.S.-based data centers. But, apparently that has been taken care of, as almost's all Polar's customers are in Canada.

Kofax Lands $2.35 million deal in Czech Republic

Speaking of the education market, Kofax landed another large deal recently, this one with an educational agency in the Czech Republic. AutoCont, a long-time Kofax VAR, won the deal which is Inworth $2.35 million to Kofax. This includes, Kofax Capture, Kofax Transformation Modules and scanners, as well as professional services. 

The implementation will be used to "capture information from more than eight million pages of examination papers received annually from more than 1,500 high schools." Seems like the education market is adopting more imaging worldwide.

Hyland Acquires Hershey

Hyland has acquired Los Angeles area-based ISV Hershey Systems. Hershey has a Web-based ECM platform that has recently been targeted primarily at the higher education market, where it boasts some 200 installations. Hyland already has a fairly strong higher education practice, which was boosted by a 2006 acquisition of one of its reseller partners Matrix Imaging.

The education market seems to be a growing vertical, as we recently completed a briefing with MFP capture ISV Notable Solutions, Inc., who also told us that education was one of its major focuses.

BancTec Lands Deal With IRS

BancTec, the Dallas-based payment and document capture specialist announced it has won a deal for 13 high-speed scanners with the IRS through Northrop Grumman. The scanners will be used in the IRS' four corporate returns processing centers, as well as a test center. BancTec's IntelliScan devices are open track scanners that feature in-line OCR, bar-code reading, and sorting capabilties and can process seveal hundred pages per minute.

IAPP-TAWPI Capture Conference Moved

I apologize for any confusion created by my previous e-mailer, which listed the annual TAWPI Document Capture Conference as still taking place in December. In the wake of the TAWPI's merger with the International Accounts Payable Professionals (IAPP) organization last year, the event has been moved, both physically and the date, and the focused tightened.

The new date and place is February 7-9, 2011, at the Omni Dallas Hotel Park in Dallas. The new focus is financial document mangement. According to Tom Bohn, CEO of IAPP, the changes were made to "breathe new life" into the event, which suffered a down year last year. More details in our next premium issue of DIR.

KLake Named to Inc. 5000

Congratulations to imaging-for-SharePoint ISV and specialist KnoweldgeLake for being named to the Inc. 5000 list of the fastest growing comapnies in America.

From the press release:
"KnowledgeLake has experienced 312% revenue growth since 2007. It has experienced growth and profit every year, has had zero job cuts and continues to grow with a conservative focus. KnowledgeLake added over 300 new customers in 2009, has over two million licensed users in 35 countries, and its products ship in 11 languages."

We've heard great things about KnowledgeLake's growth from the company's executives and this helps validate it. A lot people think KnowledgeLake is going to be facing some stiffer competition as everyone else in the market is jumping with both feet into the SharePoint space. However, KnowledgeLake, which has been the leader in imaging-for-SharePoint solutions pretty much since it was founded, has a 5-year head start, including a really good understanding of SharePoint 2010 and how it can be used as a fairly powerful platform on which to build imaging and document management solutions. In other, we expect this growth to continue at least into the near future.

--Ralph

Correction to DIR Article on eGistics & Peladon

In last week's (Aug. 6) issue I ran a story about eGistics teaming with Peladon to win a large health insurance claims processing contract with a major BPO (presumed by me to be ACS) with a large state Medicaid organization (believed by me to be California.) Note: Peladon and eGistics are under NDAs, and the names that I've named are speculation by me based on the timing of the ACS contract with Calilfornia and the volumes - which are 1.5 to 2 million claims per month - not per year, as I reported in DIR. Sorry about the mistake.

IBM Acquires Datacap

In kind of a surprising move, Big Blue has picked up document and automated data capture ISV Datacap, for an undisclosed amount. Why is this a surprise? Well, because everyone thought Kofax was the natural target for IBM. Kofax, after all, has had an OEM agreement with FileNet (which was acquired by IBM in 2006) since 2005. And Kofax CEO Reynolds Bish had sold his previous company, Captiva, to IBM/FileNet's big ECM competitor EMC.  But, it was not to be. (at least not yet???)

Datacap, it's worth noting, had a relationship with FileNet going back to 2002 (see story on page 8). I remember Datacap CEO Scott Blau being somewhat miffed by the OEM agreement with Kofax. But he always maintained that the relationship with FileNet/IBM remained strong. I guess that proved to be the case.

Maybe coincidentally, Datacap and IBM are headquartered about 15 miles from each other, just north of New York City.

Just last week, ReadSoft's Bob Fresneda was telling us that he expected more consolidation in the industry, so there must have been rumors floating about.

The deal makes sense if you look at Datacap's legacy business, which was primarily larger accounts with complex data capture requirements - technology IBM clearly did not have. Recently, Datacap had begun marketing some mid-market invoice/unstructured forms capture stuff targeted at the channel. We're not sure that will fit in with IBM's goals.

Paradatec, another advanced data capture specialist that has partnered with IBM worldwide, could also suffer some fallout from this.

More later.

Adobe Acquires ECM Specialist Day Software

Adobe has announced plans to acquire Swiss ECM specialist Day Software for $240 million. I covered Day when it was a start-up back in 2002 (see story on page 6), At the time, Day was marketing something called a ContentBus and here's what we said: "The ContentBus,which is designed to apply a single set of content management controls to the multitude of data and document repositories that presumably exist within large companies. 'The goal of most ECM vendors is to get their customers to move all their content into a single repository. We offer all the benefits of content integration without the heavy lifting it takes to move the content,' said Day's VP of markering. Day boasts of 110 customers worldwide, mostly in Germany and Switzerland. It’s North American customers include the consumer electronics division of Sony and sportscaster Jim Rome’s Web site."

Day was also high on integrating multiple content repositories through the JSR (Java Specification Request) standards.

Quite frankly, I hadn't heard much about them until Adobe announced its acquisition, which seems to be for something like 5 times revenue. Day reported revenue of approximately $25 million for its last, which represents 47% growth.

Day has apparently found its niche, as here's what the Wall Street Journal article has to say:

"Day Software's products help companies manage the unstructured content–including files containing animation, video, photos or text–that are used to power company websites.


"The software also helps with social media by managing content gathered from external sources, such as customer reviews or blog postings. For example, companies can use the software to trigger a business response to content gathered from Twitter or Facebook.

"Day Software counts General Motors Co., McDonald's Corp. and Intercontinental Hotels Group as its clients. Within the last quarter, Day Software signed a host of new clients, including BMW AG and Hyatt Hotels Corp., said Day Software Chief Executive Erik Hansen in the interview. The company, which has seen licensing revenue grow at least 70% in each of the past four quarters, has doubled its sales and marketing presence in the U.S. over the past nine months, Hansen added.

Check Fraud Scheme Utilizes Images

I guess it it had to happen sooner or later. We spend a lot of time touting the security of electronic document technologies over paper, but now it appears that Russian hackers have broken into major check image repositories and used the images and associdated data to create some $9 million in couterfeit checks. I guess this isn't the first time there have been security breaches associated with document imaging. I remember a few years back there was a redaction screw up with some secure DoD documents, but this one is way bigger in scope. It also leverages modern print technology, which is very closely tied to the imaging market.

Remember a few years back when Frank Abignale- the guy the movie Catch Me if you Can spoke at a TAWPI event? Frank is now an expert in preventing check fraud. I'd be interested to hear his opinions on the latest generation of check scammers and what we can do to stop them. eWeek seems to suggest throwing more technology at the problem, which makes sense, as long as the good guys can keep moving faster than the bad guys.

Ralph

Atalasoft Reports Strong Growth

We also need to give props to MA-based ISV AtalaSoft, which recently reported 56% growth for the second quarter. AtalaSoft has some great zero-footprint imaging tools and also has launched a growing SharePoint viewer business. It recently hired industry vet Paul Yantus to help manage and accelerate its growth.

This last three blog posts tell us the imaging industry is bounding back nicely over the first half of the year and especially in the last three months.

Lexmark reports strong quarter

Lexmark had an extremely profitable quarter. "For its second quarter, Lexmark said it earned $85 million, or $1.07 a share, on $1.03 billion in revenue, compared with a profit of $17 million, or 22 cents a share, on sales of almost $905 million in the same period a year ago."

Now, Lexmark only acquired document imaging ISV Perceptive in May, so we're not certain how much this contributed to the strong quarter, ended June 30, but it is a good sign that Lexmark's business plan seems to be working....and Perceptive is certainly part of that business plan.

According to press release: "Lexmark said its results were spurred on by strong sales of printing hardware and supplies, as well as managed-print services for business customers." In the MFP world, document imaging seems to fall fairly close to the MPS initiatives, so, as I said, this is a good sign for Perceptive and our market I think.

Kofax Reports Strong Software Sales

Just back from vacation, and it appears not a minute too soon, as the news reports have been rolling in. Yesterday, you probably saw that Kofax announced a strong second-half and 2010 fiscal year for software sales - saying year-end results will between $213 and $215 million. This represents over 25% growth from fiscal 2009, when Kofax reported $169 million in software sales. That's a gross growth of some $45 million, at least half of which was organic. Kofax did acquire 170 Systems in Sept. 2009, and based on 170s trailing revenue of $28 million, maybe $20 million in growth can be attributed to that acquisition, but even a $25 million increase in software sales is quite impressive.

Kofax's hardware distribution business did decline from fiscal 2009, but only slightly, as it's projected to come in at $125 to $127 million, down from $129 million. Kofax CEO Reynolds Bish has always cited the hardware business as low-margin but profitable, and in the wake of the shortfall he seems to be cutting costs to maintain that profitability, as Kofax announced it will be eliminating 20 hardware redundancies (jobs?) to improve efficiencies.

Kofax clearly faces challenges related to its hardware business, but if it can keep growing the software business at 25% annually, the hardware business will continue to become a smaller and smaller percentage of overall revenue and eventually investors will stop paying attention to it.

Perhaps in answer to some of its hardware challenges, Kofax has announced that it will now be reselling IBML scanners in EMEA. If you remember, Bish had a lot of success reselling IBMLs when he was with Captiva. In fact, I believe at one point Captiva was IBML's leading reseller.

KnowledgeLake Honored by Microsoft

For the second straight year, St. Louis-based document imaging ISV has been honored by Microsoft in its Information Worker Solutions, Enterprise Content Management Partner of the Year category. For 2010, KnowledgeLake was named a finalist, after winninng the award last year. This year's winner was a company called Content and Code, out of the U.K., which seems to specialize in EDM and intranet solutions. KnoweldgeLake was one of three finalists.

KnoweldgeLake Partner and ECM/imaging roll-up, Global 360 was named the Visio Partner of the Year.

IKON to Resell Kofax Front Office Server

Digital copier/MFP dealer IKON has added Kofax's Front-Office Server to its product list. IKON, which has sold scanning solutions around its MFPs for several years, also carries capture products from vendors like Nuance eCopy, EFI, and NSi. Front Office server can run as an embedded application on multiple Ricoh devices. Of course, Ricoh now owns IKON..


IKON also sells solutions built around dedicated scanners and lists Kofax Capture in its product portfolio, as well.