The Importance of Mobile on the Future of Scanning

It seems we have somewhat forgotten about the potential impact of mobile document scanning and capture. Back in 2011, when only 35% of Americans identified themselves as owning a smart phone, Harvey Spencer Associates projected that by 2015, there would be $1.5 billion worth of software sold related to mobile capture, up from $200 million in 2011.

Since then, while smart phone usage has more than doubled, HSA's projected revenue growth for mobile capture software has not been realized. The study identified several potential use cases including field service, transportation, scan-to-the-cloud, home healthcare, assessment/survey/audit, onboarding and mobile check deposit. Of these, while we've seen some traction in markets like transportation and onboarding, the real killer app has been check scanning, which Mitek has made a $60 million-a-year business out of. 

There have certainly been a lot of efforts at developing document scanning apps for mobile devices. A quick search in the Google Play store reveals hundreds--most of them offering some basic functionality, like PDF creation, for free. The challenge has been monetizing this technology.

At the recent ABBYY Tech Summit, VP of Marketing Bruce Orcutt acknowledged that it's very hard to make money off mobile capture as a standalone app, but stressed that mobile is vital to the future of the company, as complementary technology to its capture platform. "Mobile is the preferred channel of end users," he said, meaning that people want to use their smartphones to capture documents. As phones' cameras and processing power continues to improve, this preference will only become more prevalent. 

Mobile is even more vital in less developed markets outside the U.S. During the recent Harvey Spencer Associates Capture I had dinner with Claudio Chaves, Jr., the CTO of IcAPT, an ISV jointly based in Brazil and Orlando, that has developed a cloud-based capture service. Chaves also has extensive experience working with service bureaus in Brazil. 

He explained that in Brazil, legal requirements call for mortgage documents to be printed on paper, which creates a good business for capturing them. However, he noted that one of challenges is that the images are often poor quality because people use their phones to capture them

According to my infoSource data, there were approximately 26,500 document scanners sold in Brazil last year compared to 875,000 sold in the U.S. That's 33 times as many scanners being sold in the U.S. than Brazil, which has a population of 209 million, which is more than 60% of the U.S. population of 325 million. Obviously, Brazil is underserved when it comes to document scanner sales.

But not when it comes to mobile phones. In 2017, it was estimated that there were almost 200 million smartphones in use in Brazil, giving it a penetration rate of close to 100%, considerably higher than the U.S. smartphone penetration rate of 77% (at the beginning of 2018). Like many countries with emerging economies, Brazil seems to be somewhat skipping the desktop era (at least for scanners) and moving right to the mobile era.

I don't think Brazil is unique in this transition. The question is how do we best address it? I think the continued development of better mobile capture technology is the primary way. ABBYY, for example, has shown us some very cool video streaming technology that enables users to capture multiple images of a document and utilize ABBYY's algorithms to determine the best one. I recently saw a commercial for Google's new Pixel 3 phone that offers similar functionality for photographs.

Sure, I know that everyone in the hardware market likes to say that scanning one or two pages might be fine with a mobile device, but I think the market is moving beyond that. I think the market would like to do batch scanning with mobile devices. There is of course the option of using mobile devices to drive scanners, but it doesn't seem like there has been much uptake in that area yet. No, the preference seems to be utilize the smartphone camera. And with memory increasing and the cameras improving, we think this demand will only increase in the future.

What does this mean for the future of scanners? Well, we have already started to see a decline in sales of personal (<$400) scanners in the Americas, according to our infoSource data, while sales of higher end workgroup, departmental, and low-volume production scanners grow or at least remain steady.

Of course, this could be attributed somewhat to former personal leader Neat exiting the market for scanners to focus on software, but part of the reason Neat stopped selling scanners is that they launched a mobile app that they expect people to utilize as on on-ramp. 

It will be interesting to watch how this plays out over the next few years. Will better scanning apps enable users to better capture multi-page documents with their phone? Will the evolution of TWAIN direct and similar "driverless" scanning technologies enable users to take full advantage of document scanners and MFPs for scanning with smartphones? How will the introduction of more AI, NLP, and machine learning into capture and BPM apps affect the market for scanning?

All of this is on the table. Let's just remember that mobile will have a major impact on the scanning and capture markets going forward.

The Future of the Scanning Hardware Market

As the editor and publisher of DIR, and more recently, Americas regional manager for infoSource, I've spent a lot of time covering the document-related hardware market. When I started back in the late 1990s, high-volume scanners were the primary market drivers with vendors like Kodak and Bell + Howell leading the industry. In the 2000s, we saw the rise of "distributed scanning" and explosive growth in the workgroup ($500-$2,000) segment of the market. More recently, we've seen the emergence of the personal segment (sub-$500) of document scanners, as well as more scanning on MFPs, as the act of document scanning truly becomes democratized. Of course, being able to take a picture of a document with a mobile phone, potentially puts a document scanner in everyone's pocket.

So, where is this all going? It's our opinion that the market is too fragmented and document scanning technology needs to become more standardized for it to take the jump to the next level and truly be considered mainstream technology. Basically, we need more consistent images and image onboarding/management processes to truly cross the chasm. So, how do we get there?

The new TWAIN Direct initiative is a step in the right direction. TWAIN Direct is designed to remove traditional drivers from the scanning process and enable scanners to be found on a network, similar to other peripheral devices like printers. The scanners would have to be running some bit of code in their internal memories that would enable them to connect with TWAIN Direct scanning applications, but it should be lightweight and not require a PC to act as an intermediary like document scanner drivers do today.

This is exciting because MFPs and apps on mobile devices could conceivably run similar code that would enable them to talk to those same applications. This could reduce the variety of connections that scanning software vendors have to create and upkeep and also serve to somewhat standardize the scanning process. Once we get that far, the scanning application vendors can invest their resources in what they are going to do with the scans once they get them.

I am not saying TWAIN Direct is the only way to accomplish this, but I would like to see some sort of standardized way to capture images across document scanners, MFPs and phones. They all have their place in the scanning hardware hierarchy, but for the industry to truly thrive, it is better if it's a connected, graduated hierarchy, vs. a lot of individual scanning platforms.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

German Start-Up Developing Unit for Smartphone Scanning

Here's a preview of an article that scheduled to run in tomorrow's (Oct. 16) edition of DIR:

scanPAD is a German startup that has created a new apparatus designed to enable smartphones to act as document scanners, mini photo studios, and even overhead projectors. According to a press sheet, the scanPAD leverages patent-pending nanotechnology to hold and stabilize smartphones, as well as documents. Shaped like a desklamp (see image), the scanPAD holds a smartphone in place above whatever the user is trying to capture. 

For documents, the base of the scanPAD has a microsuction surface designed to not only hold documents, but also smooth and flatten them. It is designed to work with whatever document capture app a user has installed on their phone. The reverse side of the microsuction pad features a bluescreen that enables users to take pictures with a transparent/replaceable background. The device can also be used to give video presentations utilizing printed pages or whiteboards.  

The scanPAD carries a retail list price of 249 Euros, or about $283US. There is a Kickstarter campaign underway, with a goal of raising $113,000 over the next two months. As of mid-day yesterday, 40 backers had pledged $6,500. Pledges of a certain amount get the pledger a discounted scanPAD in return. Manufacturing is scheduled to begin in Germany in January with units to begin shipping in February. 

I believe this is the third device we have covered in DIR designed to hold a smartphone to create higher quality scans. The last one was the Scandock from Atiz, a company headed by former Apprentice finalist Nick Warnock. Atiz’s Scandock lists for slightly more than the scanPAD but also offers a lighting system and software designed to ensure high-quality color images are produced. 

Added for blog: Would it make sense for someone to create an ADF version of this type of scanner? Along those lines how fast could you capture images, say, leveraging the video camera within a smartphone or tablet? Could you do it ibml fast if you had the right transport? Just some food for thought.

Top News Stories in 2014

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

What Went Down in 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Follow-up on Health of Capture Market Article

As you can imagine, at last week's ReadSoft Conference, I received quite a bit a bit of feedback on the article I ran in our last premium issue (May 9) asking the question "Is the Capture Market in Trouble?"  Basically, the article asked the question if in light of Lexmark's recent offer to acquire ReadSoft, for approximately 1.5x revenue, coupled with Kofax's recent fiscal Q3 quarterly report (for 3 months ending March 31) - which included a YOY decline in sales of core capture products - might indicate that the document capture market had lost some of its luster.

Thankfully, Top Image Systems, although significantly smaller than Kofax and ReadSoft, recently reported numbers that are a positive sign for the industry. Highlights include

• 19% increase YOY in total revenue to $8.1M
• license revenue growth of 43%
• growth in all regions, including 100% growth in the Americas were revenue reached $1M
• almost .5M in SaaS sales, which led to a 36% YOY growth in recurring revenue (COO Michael Schraeder from Seeking Alpha transcript of financials conference call on the SaaS revenue: "This amount will be paid again regularly over the next 10 quarters dealing up with solid growing base of returning revenues. The total license revenue of these contracts is equivalent to approximately $4.4.")
• projected double-digit revenue growth for 2014

TIS also raised $13.7M in capital during the quarter through a "public offering or ordinary shares" that will be used to fund potential acquisitions. " At present we are actively targeting growing accretive assets that consolidate our cloud SaaS and mobile organically strategies," said Schaeder.

Of course, unlike Kofax, TIS includes does not break out its mobile capture revenue as separate from its "legacy products," so it's quite possible that TIS and Kofax are experience more similar growth rates that at first glance, as both seem to be reporting robust and healthy mobile capture practices.

Some ReadSoft Acquisition follow-up
As far as the ReadSoft price goes, Bob Fresneda, president of ReadSoft NA and SVP, Americas and Asia Pacific, stressed that ReadSoft's owners and co-founders did not just seek out the highest price for the organization. "Lexmark is a nice landing spot for ReadSoft to be drafted by a company that is willing to invest in the technology and the people," he told us.

ReadSoft CEO Per Åkerberg stressed that Lexmark has plans to enable ReadSoft to continue to operate as a "standalone company."

All that said, it was pointed out that there is a provision in the acquisition agreement that enables ReadSoft to do another deal of someone offers a bid that is at least 7% higher than Lexmark's before the acquisition closes, which is supposed to occur in about a month. 

In our opinion, ReadSoft would make a great takeover target for Open Text, which is its main competitor in the invoice processing space in SAP environments. ReadSoft also has a strong install base - an asset that Open Text typically covets in its acquisition targets. And 7% over $182M would only be $195M, which still seems like a bargain for ReadSoft. Of course, Open Text doesn't exactly have the reputation as "a nice landing place" for acquired company, so I don't know how the board would take to an offer. It might just server to drive up Lexmark's offer.

Notes from Mitek Q2 Earnings call

As I Tweeted earlier @DIREditor, capture ISV Mitek Systems, which specializes in mobile imaging technology, recently reported strong growth for its fiscal Q2 ended June 30. But the company continues to burn through cash. It's revenue for the quarter was $4.5M (40% YOY growth), but this came with a GAAP net loss of $2.2M and a non-GAAP loss of $1.3M.

Russell Clark, Mitek CFO, from the transcript of the conference call as recorded by Seeking Alpha: "Total operating expenses were $6.7 million compared to $5.6 million in the year ago period. This year-over-year increase was primarily driven by investments in sales and marketing personnel as well as litigation costs related to protecting our IP....Q2 litigation expenses were higher than previous quarters due to the timing of expert testimony moving into Q2....It's also important to note that the $1.2 million in litigation expenses in Q2 of the current year comprised almost all of the $1.3 million non-GAAP net loss in the quarter. Our non-GAAP results will be very close to breakeven if not for these expenses."

Regarding the litigation,CEO Jim DiBello said, "We have patents infringement losses against Top Image Systems and USAA, both suits are ongoing. In the USAA lawsuit the deadline to file motions for a summary judgment is mid May with the trial date set for early September."

So, maybe things are as bad as initially appear when a company's net loss is about half its revenue. Mitek still has $31.5M in assets listed on its balance sheet, including $26M in cash and short term investments. This second figure is down a little less than $3M from six months previous.

However, in that six-month period (specifically in the last three months), Mitek's stock value has certainly taken a beating. After peaking at more than $7 per share in late January, it is now trading at less than half that, with the company's market cap, falling all the way to $95M. When you consider the $26M in the bank - it's net value is around $69M - which may actually bring them into potential acquisition territory - hostile or otherwise. However, the question is, do savvy investors know something more about the USAA case than we do? Or are they just panicking? If I was a betting man...

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

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

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

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

TIS Names New VP, Americas

Top Image Systems continues to evolve. The long-time document capture ISV, which has recently expanded into mobile capture with a focus on the banking industry, has named a new Executive VP and GM for TIS Americas. Avi Mileguir joins TIS from Click Software where he ran U.S. West region and Mexican sales for the past several years. Click Software, which markets a cloud-based workforce management software.

"We believe Avi's leadership skills and successful sales experience in cloud-based offerings will enable us to reach our revenue goals and align resources between our previous separate American branches," said Michael Schrader, TIS Chief Operating Officer, in the press release.

With the appointment, TIS has combined its Latin American and North American operations. It is also relocating Oren Ilan, its current VP of Global Engineering and who has been with the company for 14 years, to the U.S. to lead professional services for the Americas.

Mileguir's appointment seems to build on two recent developments at TIS:

• The launch of the eFLOW 5 last year
• A large recent mobile capture sale in Brazil

Regarding eFLOW 5, here's what Schrader had to say about it when we interviewed him in September: "We changed our architecture from client/server to more of a full Web-based design. Our clients want to grow more and more into branch capture and scanning at the point of origin. In addition, we are sure businesses want to move more of their software into the cloud and SaaS and PaaS models. So, in general, it’s our goal to move all our software to a Web-based architecture and have it cloud ready." This meshes with Mileguir's cloud background.

The sale in Brazil was through a partner, Xerox, which will hopefully lead to more Latin American mobile imaging sales, so that meshes with Mileguir's Latin American sales experience.

Mileguir's appointment apparently displaces Omri Gelb, who had been managing TIS North American sales, most recently as GM of TIS' North American division.

Large Mobile Capture Deals

Last week, we had Top Image Systems, in conjunction with its reseller partner Xerox Brazil, announce they had closed a deal for a 3,000 site mobile capture application involving the processing of contracts - presumably for mobile communications services. Today, Kofax announced it had landed a $1 million contract with a bank that is licensing its mobile capture technology. The bank is looking at deploying it an apps for check capture and deposit, bill paying, and new customer onboarding, and more.

These two deals are signs that the mobile capture market has evolved beyond checks and that mobile document capture is moving out of the planning and discussion stages and into the early real world adoption stage. This is also good news for vendors like Mitek and EMC, which also both recently launched new mobile capture initiatives. Mitek announced new bill paying app technology, while EMC launched the new Captiva Mobile Capture SDK-initially targeted at enabling its Captiva Capture customers to add mobile capture to their on-ramps.

Kofax Extends What's Covered in Mobile Capture Patent

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

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

From this week's premium DIR:

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

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

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

Cool logo for Mobile Capture App

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

Declining PC Sales and Document Capture

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

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

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

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

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

Options for Mobile Scanning

For several years, I've been pretty adamant encouraging vendors to fill what I feel is a hole in the document scanner market. That is connecting mobile scanners to mobile phones. I mean they are both marketed as mobile devices, why can't one talk to the other in a truly mobile, i.e. wireless, fashion?

Last month, I ran this article on Canon's WU10 appliance, which can be used to power a Canon mobile scanner, and contains a wireless radio that can transmit scanned images directly to a smartphone. In the article, I mistakenly described some of Visioneer's technology which accomplishes the same thing. Visioneer's Xerox Mobile Scanner contains a custom built Eye-Fi card that enables it to capture multi-page PDFs and transmit them wirelessly to smartphone. I was only familiar with an older version of the Visioneer mobile scanner, and I apologize because apparently this new version has been on the market for more than a year.

Visioneer President and COO John Capurso pointed out my mistake. This let to a discussion on smartphones and their role in the capture and printing space, which was predicated by a previous blog post: Document Scanners, MFPs, and Mobile Phones. My premise in that post was the tablet computers and smartphones pose a bigger threat to the MFP market than they do to the document scanner market (you really have to read the post for that to make sense.)

John does not see smart phones as a threat to either set of devices. His position is that mobile devices are (going to be) the new PC. "Mobile devices are going to be the focal point of a lot of usage of MFPs and scanners," he said. "They are going to be the peripherals that we utilize with our mobile devices, just like they are the peripherals that we utilize with our PCs today."

Great point. Basically, here's the use case he defined. If I receive a document on my mobile device that I need to print, I wirelessly access my network through my smartphone/tablet and print it on the most convenient printer. Conversely, depending on what type of document I need to capture to my mobile device, or to the cloud by passing it through my mobile device, I connect wirelessly (presumably utilizing some sort of capture app) to a dedicated document scanner or MFP (or if it's a single page document just maybe use the camera on the mobile device), drop the paper in the feeder, and drive the scanning process through my app.

Does that all make sense? It's all about creating paper capture options for the end user, which are mobile, wireless, and hopefully easy to use. Then, of course, you need to combine those paper capture options with some other data capture options on the smartphone/tablet and you've got yourselves a business solution for the future!

Cheers. I look for many of you at AIIM 2013 Conference.

TIS Projects Strong Growth for 2013

As it pre-announced in early January, Top Image Systems' 2012 fourth quarter numbers were somewhat disappointing. For the the three months ended Dec. 31, 2012, TIS reported just a 1% increase in revenue to $7.4 million. This brought its year-end total $31.3 million - still a 9% increase over its 2012 revenue.

TIS CEO Ido Schechter seemed optimistic about the capture ISV's prospects for 2012. He is quoted in the financials press release, "For 2013, we are providing guidance of revenue growth between 13% and 20%, indicating revenues of between $35.3 million and $37.7 million. We expect non-GAAP operating income in the range of $4.6 million to $4.9 million."

As we reported, earlier this month, TIS has re-organized its sales force to better sell its entire set of solutions on the global level. In addition to its document capture software, which is popular in digital mailroom, invoice capture, census, and other types of forms processing applications, TIS recently introduced a suite of capture products for mobile devices.

Part of the reason for TIS' optimistic revenue projections certainly has to do with the potential of the market related to mobile transactions. From their financials press release, "Gartner estimated that the mobile transaction market was approximately $170 billion in 2012 with 200 million mobile payment users, and estimates it will grow on average 40% per year to approximately $600 billion in 2016 with 400 million users. The pipeline of deals, variety of viable, revenue-generating use cases and market potential we are seeing for mobile capture is enormous.”

Harvey Spencer Associates has also projected low double-digit growth for the document capture market annually through 2016. These two markets combined should put TIS in a good position to realize its 13-20% growth projections for 2013.

Canon Introduces Unit to Enable Wireless Scanning

One of the conversations I've had multiple times over the past year has to do with how behind the times scanning technology is. No, not the scanners themselves, which are smaller, faster, cheaper and produce better quality images than ever before. In fact, in regards to "speeds and feeds," there is not much further vendors can go...But connecting a scanner to PC is pretty much being done the same way it was five years ago, when USB scanning was first introduced.

Basically, you load a driver, plug in your scanner through the USB port and scan to your computer. Of course, there has been a movement toward capturing document images with mobile phones designed to circumvent scanners altogether. But, the problem with mobile phone cameras is that image quality isn't nearly what you get from a dedicated document scanner. In addition, if users are capturing more than one or two pages, it can become very cumbersome.

A few years back, at AIIM 2010, I asked for some technology that could possibly connect the high-quality mobile scanners that were being produced with smartphones which were beginning to flood the market. Well, since then, Visioneer has introduced Eye-Fi technology into its Mobility scanner for wirelessly capturing JPEG images directly to smartphones.

Canon now has introduced a device that can wirelessly connect its personal scanners wirelessly to PCs, MACs, and mobile devices like smartphones and tablets. The new WU-10 has a USB port a scanner plugs into. It powers the scanner (through a rechargeable Canon camera battery) as well as sets up a wireless network connection between the scanner and a user's device of choice. With a PC, a user can scan just like they had a wired USB connection. With a mobile device, they can scan through a free downloadable app.

Canon will be showing the WU-10 at the CES show in Las Vegas. It lists for $169. The device has been available in Europe for a few months, but according to Canon executives, it's still too early to tell if there are any particular markets where it is gaining traction. That said, it seems like a great way to combine the high-quality images produced by dedicated document scanners with the mobility of tablets and smartphones.

Kofax Debuts Mobile App for Mortages

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

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

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

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

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

Kofax Mobile Early Wins

Back in March, at Kofax's annual Transform end user and reseller conference, we told you that the Irvine,CA-based Mobile Capture application was the hottest topic in town. It seems like some of that interest has already turned into business for Kofax, which today announced four Mobile Capture wins in a variety of markets. Three of the wins are with end users, in the areas of service, sales, and healthcare, and the fourth is a Mobile SDK sale to an ISV that will embed the technology in a transportation app for capturing shipping documents.

Said Drew Hyatt, SVP of Mobile Applications at Kofax, " We already have prospective users testing and evaluating Kofax Mobile Capture for mortgage applications, insurance claims, expense management, proof of delivery and accounts payable.”

Last year, while working for Harvey Spencer Associates, Dave Wood had published some fairly aggressive growth numbers for the mobile capture software market. He predicted the market to grow from a couple hundred million dollars in 2012 to more than $3 billion in 2018. Embedding the technology in other mobile apps was one of the key strategies for driving growth.

Canon Announces Print/Scan Mobile Apps

Canon has announced a pair of apps that enable users to scan to and print from their mobile phones and tablets utilizing ImageRunner MFPs. The apps are for the iOS and Blackberry operating systems.

From a press release, "The Canon Direct Print and Scan for Mobile application provides communication between Canon multifunction products (MFP) and an iPhone and iPad, allowing users to perform print and scan functions between the two devices, such as scanning from the MFP to an iOS device or printing from an iOS device to an MFP."


The iOS app is free at iTunes and will work with compatible ImageRunners and Image Runner ADVANCE devices. "Through the app users can remotely manage "scan options from an iOS device (e.g., select paper size selection, select scan resolution, duplex printing, color vs. black and white, select number of prints, collate and more)."


The app for Blackberries is also free and does basically the same things as the iOS app. It does require that users purchase a MEAP application to run on their hardware. (Go figure, a Blackberry app being more inconvenient than an Apple app....market dynamics are hard to change.) Canon seems to have an Android mobile app for scanning and printing photos but not yet for documents. Not sure why Blackberry was ahead of Android in the development cycle. Probably made sense when development started.