BancTec Names President for Americas

Maria L. Allen has been named to what I believe is a new post as the Dallas-area-based document and transction capture specialist. Allen is Banctec's new president for the Americas, as well as a corporate senior VP.

Like a lot of the management staff that BancTec has brought on in recent years, Allen is a former EDS employee who was VP of global financial services outsourcing for HP Enterprise Services (where she oversaw worldwide BPO operations, portfolio strategy, and business development) before joining BancTec in August 2010. For the past six months, she had been serving as BancTec's group VP of global strategy and market development.

BancTec CEO and Chairman J. Coley Clark is also an ex-EDS exec who joined BancTec in 2004. Since Clark has joined the company, BancTec has increased its  BPO revenue more than 10-fold, through a combination of acquisitions and internal growth. In 2009 (the most current public filing), BancTec listed $93 million in BPO revenue. This accounted for more than a third of BancTec's overall revenue of $273 million. BPO is obviously an important part of BancTec's strategy going forward, as the other three areas of its business all reported a decline in 2009.

In 2009, $147 milllion was reported as coming from the Americas region, which Allen will oversee, and $126 million from EMEA.

Document Boss on Metastorm Acqusisition

Because the deal is not closed, apparently Open Text is not saying anymore than they already have (which hasn't been much) about the Metastorm acquisition. I really have not been able to find too much in depth analysis on the deal, but the best work I've seen is this piece from Document Boss.

Here's an excerpt: "BPM is increasingly being seen as the backbone of the ECM and related technology sector  - the glue for managing the processing,collaboration and workflow of documents and data.  Metastorm was a pure play BPM software provider, embracing Enterprise and Business Architecture, Business Process Analysis, and Business Process Management from a pure play platform approach...This acquisition is not only a good bolt- on to allow Open Text to further expand their ECM offering, but it allows them to be positioned as more of a major player in the BPM space, with access to increased market opportunities.


"In addition, the acquisition of Metastorm by Open Text speaks volumes about the importance of BPM and accompanying analytics, and we expect more core ECM companies to add robust BPM capabilities throughout 2011."

Open Text Buys Metastorm

So, by now, you've probably seen the announcement that Open Text has bought Metastorm. The question I have is why. Not that Metastorm isn't a good company in a good market - it's just that this seems like a bit of an odd deal for Open Text - most similar to the ECM ISV's acquisition of IXOS way back in 2003.

Why is the deal odd? Well, Open Text, which usually drives a pretty hard bargain, agreed to pay $182 million in cash for Metastorm, which depending on who you believe is 2 to 2.5 times Metastorm's annual revenue. My information had Metastorm on track for more than $90 million in 2009. The Seeking Alpha Web site apparently had the same info that I did, but is also reporting that "Open Text indicated that Metastorm was generating $70-75m in sales....However, we suspect that guidance assumes a bit of revenue write-downs and (perhaps) a bit of sandbagging."

Either way, Open Text does seem to be paying a bit of a premium by its standards, even if Metastorm has shown some impressive growth- it was reportedly a $25 million company just five or six years ago - and is in the fairly hot BPM space. The fact that Open Text is buying anyone that large for 2 to 2.5 times revenue in a still shaky economy comes as a surprise. I remember being similarly surprised by the 1.5 times revenue premium Open Text paid for IXOS eight years ago (IXOS was not in a hot space), but that deal's primary driver was that it gave Open Text an in with SAP, which it has certainly leveraged successfully.

Was the Metastorm deal something orchestrated by SAP, similar to Open Text's acquisitoin of Captaris for the capture technology that was immediately embedded in an SAP OEM offering? I don't know, but I certainly suspect there is more to this deal than meets the eye.

Any thoughts?

Xerox Acquires ISV/SI

Last week Xerox acquired DocuShare systems integrator WaterWare Internet Services. Water Ware, which is based in Northern California, near the Palo Alto Xerox office where DocuShare is developed, will do professional services and software development related to implementations of Xerox DocuShare implementations. They were doing this on their own previously, but now will do it in conjunction with the Xerox sales team.

WaterWare has already developed some software applications around  DocuShare, including at least a couple that include some document capture functionality. We did a story last year on one of WaterWare's implementations at an L.A.-area hospital. WaterWare is named after founder Mark Waters who is now Xerox's DocuShare Solutions manager. We'll have more on this in our next premium issue.

The acqusition of an ISV/SI like WaterWare is another indication of MFP vendors' desire to move more deeply into software and services. I'm not sure that this fufills my beginning of the year prediction that an MFP vendor will buy a capture ISV, but on a small scale, this is certainly an example of that.

Kofax Posts half-year results

The much-anticpated Kofax six-month results have been announced. As expected, they are impressive. Kofax reported 20% growth in its software business, up to $121.7 for the half-year period ending Dec. 31. Kofax also reported an adjusted EBITA of $23.5 million - up 192% from the previous year's six-month period. Kofax now has $69 million in cash (and from what I gathered talking to him a couple weeks ago, CEO Reynolds Bish is itching to invest that money, plus the $20 million from the distribution business sale, in an acquisition.)

Bish said in a press release related to the results that he expects, "our software business revenues to grow by approximately 14% on an organic, constant currency basis during this current fiscal year....we have now raised our longer term, sustainable target closer to a 20% margin."


CFO J.R. Arnold had this to say on Kofax's renewed success through its channels, "We continue to realize benefits from our hybrid go-to-market model with revitalized performance in our indirect channel, which generated 56% of applications software license revenues....OEM/POS revenues increased 6% to $12.7 million from $12.0 million in the prior year, reflecting a continuing recovery in this area of our business."

The hardware business, which was recently sold, continued to struggle. Said Arnold, "Revenue in the hardware business decreased 10% to $59.9 million in the first half of fiscal year 2011 from $66.8 million in the prior year, and its adjusted EBITA decreased to $0.2 million from $2.0 million."

Bish had previewed some of this success a couple weeks ago, but apparently for investors, the proof is in the pudding. As of this post, the stock had jumped 18% today, from somewhere around 3.5 pounds per share to over 4.25. Good momentum at Kofax. Let's hope it's a sign of strength throughout the industry...although at the recent Transform event in San Diego, Bish did say his goal was to "crush the competition."

OCR Accuracy Benefits

One of the often under-rated benefits of automated data capture technology is the accuracy improvement it can bring to a process. I was just typing a colleague's business card info. into Outlook (yes, I still sometimes use Outlook), and I accidentally typed the fax number into the field for cell phone. Luckily I caught it and saved myself the pain of hearing a loud screeching sound when I thought I was dialing a mobile phone number. As I typed in the correct number, I realized that would not have happend had a I scanned the card and used my OCR-enabled business card software, which I typically use for batch capture only.

So, yes, while we usually like to stress the productivity benefits - less manual keying - of OCR applications, there are certainly accuracy benefits as well, that can potentially further contribute to the ROI - how much depends on the value of your downstream data. Which brings me to a second instance of inaccurate data entry that I ran into this weekend: My wife had recently purchased a memorial service (I don't know if purchased is the right word, but...) for her father-in-law in our family's name. Well, wasn't it quite a surprise, when I received the church bulletin this week and saw the service was being held in memory of me! Whoops. The flowers have certainly brightened up the house though.

Recent ECM Headlines

Lot of great news stories moving over the past few weeks, that you'll see links to in our free e-mailer tomorrow. If you're not getting it, you can sign up by signing up for a free trial subscription to our premium newsletter.

Some of the featured ECM headlines in tomorrows e-mail will include:

IIS Secures Venture Funding


Open Text Earns DoD 5015.02 Joint-Certification with SharePoint 2010

Major Publisher Licenses CVision's PDFCompressor

Square 9 Softworks Partners with Pintey Bowes Canada

New Kennedy Digital Archive

Today is being celebrated as the 50th anniversary of John F. Kennedy's inaugural address. That is the one that contains the line, "Ask not what your country can do for you – ask what you can do for your country," among others. In honor of this anniversary, last week, the John F. Kennedy Library Foundation and the National Archives and Records Administration unveiled a digital presidential archive "providing unprecedented global access to the most important papers, records, photographs and recordings of President John F. Kennedy’s thousand days in office."

The new archive contains approximately 200,000 pages, 300 reels of audio tape containing over 1,245 individual recordings of telephone conversations, speeches and meetings, 300 museum artifacts, 72 reels of moving images and 1,500 photos. Technical details are available in this white paper. Technology partners participating include AT&T, Raytheon, Iron Mountain, and EMC. There are plans to digitize more materials as "staff and resources" become available. The library can be accessed at www.jfklibrary.org.

We'll conclude with this visionary quote by Kennedy, who seems to have predicted the rise of the document imaging industry, "through scientific means of reproduction…and this will certainly be increased as time goes on, we will find it possible to reproduce the key documents so that they will be commonly available…” Who knew?

Kofax Sells Hardware Business

As previewed on our blog yesterday by an Anonymous poster, Kofax has sold its hardware business. The price is listed at $23.2 million, which seems startling low what was reported as a $126.6 million business for Kofax's fiscal 2010 (ended June 30). Of course, the EBITDA was only $1.8 million, for a 1.4% margin, down from $8.8 million the previous year.

We all knew Kofax wanted to sell this hardware distribution business, which operates primarily in Europe, for some time. For a couple years, Reynolds Bish cited it as a profitable entity that helped contribute to Kofax's bottom line, but those tight margins last year, were likely the tipping point that made Kofax finally go ahead with the sale.

I guess the Anonymous poster already pointed out the irony in the fact that Dicom, which was basically the distribution business, bought Kofax in 1999. A couple year's ago, the entity's name was changed to Kofax, and now Kofax is selling off the former Dicom business, which is going to be renamed Dicom.

According to the press release, "Joachim Froning, Senior Vice President of Hardware Distribution Sales at Kofax and the anticipated Chief Executive Officer of Dicom International AG." The deal was mainly financed by Hannover Finanz, "a private equity firm headquartered in Germany." We wish the new owners the best of luck and hope they will be able to reverse the trend of declining profits.

There was also this interesting quote in the press release (from Kofax CEO Reynold Bish): “The proceeds from this transaction and the planned restructuring will better position us to focus on and further grow our software business revenues and earnings both organically and via our acquisition strategy. This is particularly timely as we recently concluded a successful half year that is materially better than the expectations previously conveyed in our Interim Management Statement dated November 4, 2010. We look forward to announcing these results on February 7.”

As of this posting, Kofax's stock shot up almost 5% following this morning's (London time) announcement of the deal. I guess for Kofax this equals addition by subtraction.

SaaS-Based Capture

One of our predictions for 2011 was an increasing availability and use of Cloud-based capture applications. Well, a couple days after our predictions came out, ABBYY announced a new portal to make its OCR and translation technology available on the cloud. In addition, we received a follow-up e-mail from CAPSYS with a link to this video on Ty, Inc., the Beanie Baby makers, discussing their SaaS-based capture and document image management implementation.

Early returns indicuate that this prediction is on target.

Oh yes, finally we will have a feature in our next premium issue on DocSolid, which is launching a cloud-based MFP-capture solution designed to be bundled with mangaed print services implementations.

Kofax Stock on the Rise

Not sure what is going on at the Kofax's European user/reseller event being held this week in Barcelona, but since Friday the company's stock value has risen more than 12%. Kofax, which is based in Irvine, CA, but traded on the London Stock Exchange due to its roots as a European hardware distributor (Dicom, which bought U.S.-based ISV Kofax in 1999), closed today with a value of 325 British pounds per share and a market cap of close to $440 million US dollars (up more than 20% from when current Kofax CEO Reynolds Bish was hired in late 2007.)

There was this announcement, which sums up some of the improvements made in various Kofax products like VRS, the KTM modules, and the MarkView for Accounts Payable software acquired with 170 Systems, but it doesn't seem like anything major. We'll look forward to catching up with Kofax execs at next week's North American Transform event. Hopefully we'll have better luck getting there than we did this week, when editor Ralph Gammon was grounded in Erie, PA on his way to the Laserfiche Institute event in LAX.

Cost of SharePoint

Spealking of the Real Story Group, parusing their blog, I came across this post from Alan Pelz-Sharpe, discussing some of the expenses associated with SharePoint implementations. Here's an excerpt that I found interesting: "The truth is that SharePoint is not a cheap option, no more so than any other document management or ECM system....What surprises both us and our customers is that SharePoint can sometimes present the most expensive shortlisted ECM option after a full cost analysis is undertaken."

This is not something I have heard many other places, but something I've always suspected. I think we need more cost analysis on SharePoint implementations in the transactional content management world.

ECM/DM Split

Received an interesting update from the Real Story Group regarding their observed split of the document management and ECM market. Real Story is a Boston-based analyst firm, formerly known as CMS Watch. It's contention is that the "ECM)technology marketplace has split into two distinct and separate segments:
1. ECM Infrastructure Vendors, that position their platforms as a set of lower-level technology services to manage high-volume, process-centric needs, such as processing insurance claims

2. Document Management Application Vendors, that configure their products to accommodate specific needs

I'm not sure I agree 100% with definition, as I think processing insurance claims is a document management funtion, but I get the gist of what they are tyring to say. It's the enterprise platform vs. line-of-business positioning. I think I would say that document management applications like insurance claims processing can be built on top of ECM platforms.

Here's the vendor positioning chart that Real Story came up with. Here's the text they included along with it:

"ECM infrastructure deals are large, but less common, as complexity and cost limit their appeal and usefulness. ECM infrastructure vendors Autonomy, Oracle, OpenText, IBM, and EMC have been acquisitive and are likely to remain so in 2011. As a result, these vendors often represent a relatively higher risk to buyers.


"In contrast, the marketplace for departmental and process-specific Document Management products is a blend of a diverse set of players, ranging from vertical and horizontal options (e.g., patient billing in healthcare), to broader, open source and low-cost cloud offerings. Example vendors include Hyland in the US....and Fabasoft in Germany. With mature product and service offerings and strong vertical expertise, these vendors often represent a relatively lower risk for buyers."

Does EMR Work?

Here's an interesting article, which the TAWPI Link-in Forum originally linked me to. It's on a study by UC-Davis about the effect of electronic medical records (EMR) on physician productivity. The bottom line seems to be that the increase in data entry required by new EMR implementations is often a hindrance to medical personnel getting their jobs done. Clearly, there is some ramp-up period, and in many cases, the systems to seem to help productivity slightly in the long-run, but not in call cases. Definitely sounds like an opportunity for better capture technology.

It's probably important to note that this study only looks at physicians productivity and not back-office administrative/billing stuff, where imaging has certainly been proven to increase productivity.

ReadSoft's Fresneda Predicts More A/P Structure

Steve McMair of the Transaction Directory published 2011 predictions from a number of transaction processing players today. ReadSoft U.S. president Bob Fresneda was among those featured. ReadSoft, a Sweden-based ISV, made its mark in North America with invoice processing solutions combining its automated data capture technology with SAP-centric workflow. In truth, its U.S. sales never really took off until the workflow component was introduced.

Not surprisingly, ReadSoft is now looking for ways to expand its process management expertise, with purchasing being a natural place to go, following invoices. In his 2011 prediction, Fresneda states, "The Aberdeen Group estimates that U.S. companies are losing nearly 25% of every dollar they spend due to maverick purchases that miss out on preferred pricing....As a result, I anticipate companies looking to standardize their order-to-cash and purchase-to-pay processes within their ERP systems in 2011."

In fairness, Fresneda isn't the only one touting the expansion of invoice processing applications into purchase-to-pay management. E-invoicing systems vendors are seeking the same type of expansion and other hosted "services" providers are diving into this realm as well. Certainly something that bears watching.

KLake Introduces Fast Search Option

Hope everyone is enjoying a good holiday season.

KnowledgeLake, the St. Louis-based ISV that specializes in document imaging for SharePoint applications has introduced a new version of its flagship software platform. Version 4.1 integrates Microsofts FAST search technology to deliver better results to users looking for documents. KLake also introduces a new document viewer that integrates into SharePoint via Web parts and can be accessed from any SharePoint Web page.

Perceptive Offers New Angle on ROI

We've certainly heard a lot of cost justifications for document imaging systems over the years. Improved workflow is probably the most significant one, with compliance/improved records management being number two. Lately, there have been efforts made to link document imaging to green initiatives. Perceptive Software recently came up with a new benefit - healthier employees. This is achieved by elminating the mold associated with box-stored documents.

From the press release:“'We had over 800 boxes absolutely loaded with education records that we didn't need to keep,' said said Doug Wamer, Antioch University Director of Record Administration and Compliance Officer."'With ImageNow, the institution felt safe eliminating the hard copies and moving to the digital form so we could access the information more quickly and better serve our customers.'

"Wamer said many of the stored boxes were filled with mold. Employees who frequently worked with the documents were getting sick, missing days of work and experiencing a range of health problems.

“'Some of our employees working with those documents would get sick for days. Getting rid of the old, moldy paper in storage was a milestone for us--it made for a better, healthier work environment where employees were able to work more efficiently,' said Wamer."

There you go.

SaaS-Based ECM

This was one of the hot areas of growth I predicted at the Harvey Spencer Document Capture conference earlier this year. I based this primarily from what I had been hearing from service bureaus, who are certainly moving a lot this way, as well as ISVs like Hyland Software and Digitech, who both seemed to be exceeding ECM industry growth rates with their SaaS businesses.

My views on the emerging strength of this market segment were reinforced by a recent conversation with SpringCM. SpringCM was a small vertically focused SaaS business that a few years ago made a big splash by launching a more general ECM-targeted SaaS business. From what I understand, they took on some venture funding, invested heavily in an improved, true-SaaS, modular architecture, and brought in former iManage/Interwoven executive Dan Carmel to run the whole thing. Carmel is a great promoter and did garner SpringCM a lot of publicity, but after I found out he was no longer with the company, I thought perhaps they had scaled back their efforts.

Does not seem to be the case.The new CEO, Chris Junker (who started this summer), is also a former Interwoven/iManage and Autonomy guy. And SpringCM is reporting a 100% growth in subscription revenue for 2010, and expects to duplicate that in 2011. They gave me some figures from Gartner  - like an estimate that in 2011, 10% of the software market will be cloud-based in 2011 and 40% of all new software purchased will be cloud-based by 2014. I got a lot more interesting stuff from my conversation with VP of marketing Roger Bottum, which I will include in an article in my next premium issue.

I will tell you that we discussed the fact that ECM is a bit more complex than many other software apps, which makes it harder to manage in a SaaS model. However, it seems it can be simplified by being packaged into vertical or horizontal apps, and imaging-based apps like contract management and invoice processing seem to be hot areas for SpringCM right now.

Docuement Security Issues

The recently publicity WikiLeaks has been generating should be bringing the issue of document secuirty to the forefront. Here's an editorial I authored for my last premium issue, wondering about the security around the recently released "cables." Basically, it's a call for more market education around the capabilties of document managment software.

Coincidentally, Toshiba America Business Solutions, one of the companies featured in the editorial because of their focus on document security, is putting on a Webinar this week on that topic. "You'll hear from Bill Blake, noted Document Security Specialist and President and COO of edocument Sciences, LLC, a  key Toshiba business partner. Bill will share strategies to effectively control and protect your organization’s critical information and avoid a WikiLeaks-type disaster in your company."

Kofax Lands Large Distributed Capture Deal

Sorry for all the three posts in one day, but I've been working fairly heads down on a project for someone and haven't had a chance to post, even though I've seen some interesting news move. This story is another example - it's about Kofax landing a $400,000 deal with Rohm and Haas, a Philadelphia-based manufacturer of chemical products and materials and a subsidiary of Dow Chemical.

I guess the cool part of this implementation to me, at least, is that it's one of those combo distributed/centralized capture applications I've been talking about, where the user captures the paper at the distributed sites, but then does the data entry centrally. I think this is more common that people in the industry generally admit, especially as the MFP capture people try to introduce more intelligence at the device.

This is the first large deal in a long time that I remember that Kofax announced that doesn't include the Kofax Transformation modules - the automated data capture stuff. Rather its for VRS, Kofax Capture, and Kofax Monitor, presumably for ensuring quality images are captured at the distributed sites, so key entry (or another vendor's data capture product) can be used at the central site on a million invoices and other financial documents a year.

SaaS P2P Provider Making News

Taulia, which offers a hosted purchase-to-pay solutions, has been making the news in the last couple weeks. At end of last month, it annouced a partnership with invoice capture specialist Brainware. It followed up this week by announcing a $3.2 million round of Series A financing.

Taulia is especially interesting to us because its management team features three ex-ReadSoft employees, all of whom were with Ebydos. Ebydos, of course, developed the SAP workflow integration technology, which ReadSoft leveraged to really break into the invoice processing market in a big way. From the way I understand it, Taulia basically enables users to take full advantage of their capture applications.

They do this be enabling a process called dynamic discounting. Here's an excerpt from an article that ran earlier this year in our premium edition that explains dynamic discounting and Taulia's buisness plan:

"Dynamic discounting is designed to eliminate a disconnect between suppliers and buyers. 'Dynamic discounting takes banks out of the purchasing equation,' explained Markus Ament, CFO and VP, products and solutions for Taulia. 'It basically enables suppliers and buyers to finance transactions themselves.'


"According to Ament, the most common arrangement today is that suppliers offer a 2% discount if buyers pay within 10 days of an invoice date. 'If the invoice is paid on the 11th day, the buyer receives no discount,' he said. 'So, if a buyer knows it is not going to get a discount, it will often hold its payment until the 30th day to maximize the interest it is receiving from its bank.

"'The problem is that this often requires the supplier to finance its business in other ways while awaiting payment. Based on today’s interest rates, the buyer might be earning 1% on its cash, while the supplier is financing its business at a much higher rate. Really, the only ones profiting from this arrangement are the banks.'

"Dynamic discounting involves creating a sliding discount scale, depending on when an invoice is paid. For example, for days 11-15, a supplier could offer a 1.75% discount, for days 15-20, 1.5%, and so on. This enables the buyer to earn more than the 1% interest rate it gets from the bank, and enables the supplier to finance its business at a lower rate.

"'Before invoice automation utilizing technologies like OCR, almost no invoices were paid within the first 10 days,' said Ament. 'Even with automation, the majority are still not paid in that time period— but many are processed well before 30 days. So, unless buyers can take advantage of a process like dynamic discounting, they’re not really getting the full ROI from their A/P automation implementation.

"Ament’s company is called Taulia, and its service is licensed by buyers and integrated with their ERP systems. 'The buyer basically sets the discount rates,' said Ament. 'The supplier selects a payment date and accepts the discount associated with that date—assuming the invoice is processed on time.'"

KnowledgeLake Comments on ECM Magic Quadrant

Gartner's 2010 ECM Magic Quadrant Report has certainly generating a lot of buzz in our industry. Several vendors have released press releases touting their positioning in the Quadrant. As I've already commented, I thought it was a fairly good year for document imaging companies as image processing maintained the same weight (15%) in the rankings as the previous year and BPM actually increased 5% to 25%, while EDM and WCM components each dropped 5%. These seemed to be favorable changes, based on the make-up of most document imaging applications.

While imaging-for-SharePoint specialist KnowledgeLake was not ranked by Gartner, it was quick to weigh in on Microsoft's positioning as the ECM market leader. "Microsoft is leading this market and our decision to focus exclusively on Microsoft SharePoint has been a key to our success and has enabled us to experience 312% revenue growth since 2007," states Ron Cameron, president of KnowledgeLake. The KLake press release goes on to explain the KnowledgeLake is more than a "document capture," vendor, which is apparently how Gartner defines them.

According to the KLake press release the company, "provides a solution for managing the content of the electronic data within SharePoint as a Document Imaging solution. This includes the searching, viewing, securing, routing and annotating of mission critical electronic content. KnowledgeLake also differentiates itself by providing a unique offering for SharePoint searching by taking full advantage of both the native SharePoint Search and FAST Search providers, delivering pin-point accurate keyword and property search results on a single page."

One interesting observation is that Gartner seems to define SharePoint as a content management infrastructure and social content management tool. Knowledge's positioning is that it takes SharePoint and makes it a transactional content management tool. My observation has been that the new features in SharePoint 2010 also move it closer toward a tool that can be used for transactional content management applications, which is what document imaging has historically addressed best.

OnBase 10 Focuses on Case Management

Hyland has released the latest version of its OnBase ECM suite. Version 10 is being positioned around "case management."  From my understanding, case management seems to be some sort of combination of traditional document imaging managment and BPM, but at the same time pulling in information and integration with mutliple other applications that also influence a case. In the press release, Hyland talks about integrating with line-of-busienss systems, as well as SharePoint for collaboration. In years past, I believe FileNet used this term, as well as EMC Documentum, and most recently Global 360 has been making a big deal about it. All these companies, and Hyland as well, feature strong BPM components in the ECM suites.

Panasonic Announces MFP Communications Hub

Panasonic System Networks Company of America, which represents the combination of the merger of Panasonic's document, communications, and security divisions, has released what it is billing as a new 8-in-1 MFP device. The new KX-MB2061 advertises "laser printing, copying, scanning and faxing capabilities, and a unique integrated telephone answering system utilizing the Internet. Voice messages and in-coming fax documents can be converted into a standard .wav file and in-coming fax documents into PDF format, both of which are accessible on Smart phones and or PCs."  And it lists for $249.

I thought this was a cool representation of the potential of integrated communications systems encompassing docucment and voice functionality. Not seen a lot of applications in this area to date, but they certainly make sense to me.

Lexmark-Perceptive Develop MFP Integration

Lexmark and Perceptive Software have announced that Perceptive's imaging and workflow software has been integrated with Lexmark's embedded Solutions Framework (eSF).  This makes sense, of course, as Lexmark, a multi-billion dollar vendor of printers and MFPs, acquired Perceptive in May. At the time, there was really no partnership between the two companies or integration between their products.

Lexmark's announced strategy has been to pretty much let Perceptive continue to run its exiting business, while trying to expand it by taking advantage of some of Lexmark's channels. This new integration, which enables Lexmark users to access Perceptive applications through their MFP touchscreens, would certainly be a nod toward the growth element of that strategy.

Nuance Announces eCopy ShareScan 5

After Canon previewed the product at September's Canon Expo, Nuance has officially announced eCopy ShareScan 5. This is the first major release of ShareScan since Nuance acquired eCopy just over a year ago. It leverages Nuance's OCR technology to create scan-to-Office, forms processing, and auto-highlight and -redaction options right from the MFP touchscreen. It also offers some improved centralized admin capabilties for better management of distributed capture implementations.

Long-time eCopy partner Canon is the first MFP vendor to make ShareScan 5 available through its salesforce and channels. The Canon press release (available through the link) does a good job explaining the different levels of the ShareScan that are now available.

In our upcoming premium issue, we will discuss some of the other moves eCopy has made and is making to help increase the market for both ShareScan and the Connectors developed by its ISV partners.

IBML Announces Next Generation of ImageTracs

The Birmingham, AL-based high-speed document scanner manufacturer has released an updated version of its popular ImageTrac line. The 5000 series is the successor to the III and IV lines, which were launched a few years back, with the ImageTrac III, eventually renamed the 3, upgraded multiple times over the years. "The 3 has pretty much run its course," acknowledged Derrick Murphy, president of IBML.

Yes, the 5000 series is slightly faster than the III and IV, rated at either 257 ppm or 429 ppm at 200 dpi, depending which version you choose. But, even though its scanners are very fast, IBML has always been about more than speed. And the new 5300 and 5400 models feature ergonomic and usability improvements as well. The new design also makes it less expensive for users to add sorting pockets in some cases. We'll have more complete coverage on these new devices in our next premium edition of the newsletter.

Ricoh Leverages Microsoft Distributed Scan Management

Ricoh Americas has announced that is has developed an MFP scan management app, based on Microsoft's Distributed Scan Management (DSM) tools that are included in Windows Server 2008 R2. DSM can be used to configure scannning processes, like scan-to-SharePoint, Exchange, or file systems folders. Once configured on a user's server, these processes can now be accessed through DSM compatible Ricoh MFPs.

According to Ron Albeck, Manager, Capture & Distribution Marketing, for Ricoh Americas Corporation, "The technology is very robust for a customer who only wants live in the MS world. It gives them complete control of their MFP from their 2008 R2 server to allow or disallow what each user can do with a complete audit trail."

There is currently no OCR available, but apparently Microsoft has owned up DSM to ISVs, like Nuance, ABBYY, and others, that can develop OCR integration with it. I'll have more on DSM in my next premium issue.

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Gartner Magic Quadrant Update

If you receive my premium newsletter, you saw Friday that I ran an article on Gartner's new report on the ECM Magic Quadrant. We mentioned that Hyland, Laserfiche, and Perceptive, three ISVs with document imaging-focused products, all made significant moves up and/or to the right, which is where you want to be on these charts. We apparently erred, however, in explaining Hyland's move. Hyland actually moved from a challenger to a leader in the ECM  market. It is now grouped with heavy hitters like IBM, Microsoft, Oracle, EMC, and Open Text.

We thought this was an interesting quote from CEO A.J. Hyland in the company's press release: “To us, product vision isn’t only about what you choose to do. It’s just as much about what you choose not to do."

A couple other interesting points that I didn't have room for in the newsletter:
1. Xerox made a significant move from a "niche player" to a "visionary," primarily, from what I can tell, due to its acquisition of ACS last year.
2. One metric that may have helped imaging companies, and I take as a sign of the recognition of imaging's importance in the ECM market (finally) is that imaging-processing related apps retained their weight of accounting for 15% of Gartner's rating, while document management and WCM each dropped off 5%. Also, BPM, which is strength of most ISVs with imaging-focused products, gained 5%, as did "Extended Components," which I'm assuming (but am not sure) could include document capture.

If you want to download a copy of Gartner's report, go to the Hyland link above and there is a link on their site for downloading the report.  

Latest on ABBYY-Nuance Lawsuit

Apparently, ABBYY's parent company is back in the lawsuit, being brought by Nuance over OCR patent infringement. According to this blog post, both ABBYY 's Cyprus and Russian location, which had previously been dismissed from the suit, have been ruled back in play. The case, which was originally filed in 2008 is currenlty being played out  in United States District Court for the Northern District of California under (case no. 08-CV-2912) Judge Jeffrey S. White.

CVision Releases PDF Compressor 5.0 with SuperFast OCR

CVision has leveraged its pattern recognition expertise to develop what it terms as "Super Fast" OCR in the latest version of its PDF Compressor software. The software is named "PDF Compressor" because of its ability to create very small PDF files from scanned images. This is achieved through the application of segmenting and JBIG compression.

In PDF Compressor 5.0 CVision, an ISV based in Queens, NY, utilizes inter- and intra-page font learning to accelerate the OCR process. According to CVision founder and CEO Ari Gross, "We can apply OCR 10 times faster than [a leading OCR vendor], with the same accuracy."

PDF Compressor 5.0 also features a "Super Accurate" mode that leverages font learning. In this mode, CVision boasts a 5-10% accuracy increase over leading OCR engines. This is based on word accuracy.

It's probably important to note that CVision does not develop its own OCR technology. Rather, for PDF Compressor, it licenses Nuance's OCR toolkit and improves upon it with its proprietary technology.

PDF Compressor is a mature products with an install base in the thousands. There are versions available that can be integrated into the workflows of leading capture platforms from Kofax, EMC Captiva, and Oracle.

Open Text Licenses Oracle Archiving SDS

Not exactly sure what this means, but according to the press release, "Open Text is obtaining a technology and distribution license specifically for the Oracle Universal Online Archive Content Management SDK. As part of this agreement, Open Text can embed Oracle technology in its products, allowing the company to fully utilize the capabilities of Oracle Database 11g as an enterprise content repository. This will also permit rapid uptake of Oracle Fusion Middleware 11g and other Oracle platform capabilities."

Here's the way I understand it, and this may be wrong: Open Text has always been a Microsoft shop, running on SQL databases, but now wants to work with Oracle databases as well. Of course, Documentum has been a long-time user of Oracle databases, and after the Stellent acquisition, Oracle has its own ECM technology to run on its database.  But, as far as Oracle is concerned, the more ECM systems that leverage its database, the better. And Open Text does have a large install base--including a lot of SAP customers and a deep SAP partnership, which really makes the expanded Oracle-Open Text partnership interesting, because, of course, SAP and Oracle are at each other's throats in the ERP market. And, we all assumed SAP was going to buy Open Text. So, maybe that's not the case anymore?

Top Image Systems Reports Profitable Third Quarter

Tel Aviv-based document capture software specialist Top Image Systems continued its trend of profitability in its recently completed third quarter. For the three months ended Sept. 30, TIS reported "Non-GAAP net income of $0.95 million or $0.09 per diluted share, compared to $0.60 million or $0.05 per diluted share (the year previous). "TIS also reported "Positive cash flow from operations of $1.10 million, compared to $0.25 million; and Adjusted EBITDA of $1.0 million compared to $0.70 million."

This is all good news for TIS, which after seven consecutive profitable quarters now has $3.65 million in the bank, a decent turnaround for a company that spent several years focused on growth, while losing money. Interestingly, the company has actually gotten smaller during its profitable run and third-quarter revenue was $5.4 million, compared to $5.9 million for the 2009 third quarter. For the year, TIS is now predicting
"revenues to be between $21.5 and $21.8 million." compared to $23.5 miillion in 2009 and $32.2 million in 2008. However, the 2008 revenue especially was inflated by lower-margin low-end software/third-party sales related to TIS's acquisition of AsiaSoft. TIS has spent the last two years divesting itself of the lower-margin stuff and re-focusing on its higher-end data capture and digital mailroom business. The result has been the increased profitability.

All this is playing out against TIS' efforts to keep its stock trading on the Nasdaq, by getting the share price over $1.00 a share for a period of consecutive days. This week, it reached $1 for the first time in a while, but had fallen somewhere in the upper $.90s as of this post. Nonetheless the stock spike and profitable quarter, in continued tough economic times would appear good signs for TIS.

Kofax Introduces New "Elite" Version of VRS

Not sure how Kofax is going to market this, or how it fits in with the VRS Standard and Professional lines, but the new VRS Elite version certainly has some intriguing features. These include centralized licensing for better control over distributed capture apps, device monitoring capabilties, and automatic profile creation, as well as some improved image processing algorithms.

VRS, of course, has been a tremendously successful product for Kofax over the years, basically creating the market for grayscale thresholding on document images. It's bundled with scanners from leading vendors like Fujitsu, Kodak (on the products picked up from Bell + Howell) and Canon, and many shops have standardized on it. However, last year's decline in scanner sales definitely hit Kofax's VRS business, and despite some discussion about, Kofax still hasn't found a way to really leverage VRS in MFP scanning environments- which account for an ever-increasing segement of the capture market. We hope to have more coverage of VRS Elite in an upcoming premium edition.

Lockheed Delivers DRIS Info to Census Bureau

With all the publicity surrounding cost overruns surrounding the 2010 U.S. Census, it's good to hear that Lockheed Martin has completed the Decennial Response Integration System (DRIS) contract on scheudle and under budget. "Lockheed Martin [NYSE: LMT] made its final set of deliveries for the population count—which included data from more than 165 million 2010 Census forms—to the U.S. Census Bureau," said a recent press release.

The release touts the delivery as the culmination of a six-year effort, which was covered extensively in DIR. Here's a story we did in Feb. of this year when things were about to go live. It dicusses the deployment of some 45 IBML ImageTrac IV scanners at three sites, which were used to scan the forms in color. The 2010 Census marked the second time, image-based data collection technology was used. And it seems like a smashing success, especially when compared to alternative data collection technologies like mobile computing, which was tried and failed this time around--accounting for an increase in the number for forms handled by DRIS. 

We also expect digital images to be accepted by NARA this year for the first time, for long-term archiving, saving millions in microfilm costs.

PDF/A-2 Standard on Way

LuraTech recently sent us this link explaining some of the new features in the upcoming PDF/A-2 standard. PDF/A is the electronic document archiving standard that was approved by ISO in 2005, but to date as seen limited adoption in North America. The PDF/A Competence Center, of which LuraTech is a member, is hoping to change that.

The technical work on PDF/A-2 is apparently finished with the standard set to be published in early 2011. PDF/A-2 can be used on more complex documents including those with JPEG 2000 compression, open font types, and those including document collections. Overall, it should make PDF/A a more versatile standard and help drive more adoption.

Laserfiche suing SAP

This is kind of cool. Long Beach, CA-based document imaging ISV is taking on SAP over the use of its "Run Smarter" slogan. According to a complaint filed by Lasefriche, Laserfiche is the owner of the U.S. Trademark for "Run Smarter" and has been using it in its materials since 2004. According to Laserfiche, SAP has been recently using the phrase in ads "too numerous to list." Here's one example, we found online.

The complaint says that SAP knew the phrase as trademarked by Laserfiche, but used it anyway. It what seems somewhat of a stretch, Laserfiche contents that SAP is trying to deceive customers into believing its software is associated with Laserfiche's. I'm not saying Laserfiche doesn't have great software, but it seems to me that Laserfiche might benefit more by being associated with SAP than vice-versa. Laserfiche does express concern that non-working SAP implementations could damage its image, which does seem valid.

Laserfiche would like some money, as well as attorney and legal fees from SAP. They also want SAP to cease and desist and deliver up any materials using the trademarked phrase for destruction.
Sounds like fun.

Document Imaging-related humor

From today's Non-Sequitor (yes, I still get the hard copy newspaper and read the comics). Please scroll to Oct. 28, if you are reading this after that post date).

It's funny because it's kind of true: In many cases inefficiencies make people feel more powerful. Inefficient process and more complex to manage than efficient ones, and managing complexity certainly has some job security associated with it. Just another challenge to selling imaging systems.

HP Announces Two new Scanners

With the scanner market predicted to bounce back this year after a decline in unit sales in 2009, we are starting to see a steady stream of new product announcements. During a recent global news conference, HP just announced a pair of new models coming out in the next few months.

The new ScanJet Pro 3000 is a desktop model that is rated 20 ppm/40 ipm at 300 dpi in color, grayscale, and bi-tonal. It has a 50 page ADF, ultrasonic double-feed detection, a TWAIN driver and comes bundled with Nuance's PaperPort and OmniPage software. It's fairly small and compact and weights five bounces. The 3000 is schceduled to ship in November with a list price of $449.

The new ScanJet Enterprise 7500 is bit more heavy duty. It features a legal-sized flatbet and is rated at 50/100 at 200 dpi in color, grayscale, and bi-tonal. The 7500 includes ISIS and TWAIN drivers, VRS, and HP's Smart Document Scan capture app, as well as ultrasonic double-feed detection. The HP Scanjet 7500 Enterprise Flatbed Scanner is expected to be available this winter for $1,399.

Konica Minolta to resell Kodak scanners

In another sign of the convergence of the MFP and document capture spaces, Konica Minolta has been announced it will be reselling Kodak scanners and Kodak Capture Pro Software. Konica Minolta and Kodak have a long history together based on microfilm sales, but the move into document scanners appears to take the relationship in somewhat of a new direction - as microfilm is a dying market, and capture -especially when being sold as part of the new managed print services (MPS) wave being currently pushed by MFP vendors, is clearly a growth arena.

For Kodak, the move represents another step in its efforts to broaden its scanner reseller channels. First you had the KAIR (Kodak Authorized Imaging Reseller) channel, who focused on mid- and high-volume scanners, then they added KDSR (Kodak Desktop Scanner Reseller), focused on distribtuted scannners - and now those two channels have been combined. You also have a lot of volume going through what Kodak calls Direct Market Resellers, which includes organizations like Dell and CDW.

Russell Hunt, Kodak's Regional Business Manager for U.S. and Canada, recently told DIR that Kodak has had to go outside its traditional reseller channel to drive significant growth. "Unless we land extraordinarily large wins, we're not seeing big growth out of our KAIR channel," he said during a recent analyst meeting in Rochester. "That's why we're reaching out more to new channels and partners like MFP vendors."

Canon and Kofax Expand Partnership

Canon recently announced that it has signed a distribution agreement with Kofax to distribute its scanners throughout the Middle East. The deal was signed by Canon Middle East and covers 15 countries. According to the press release, "Kofax will provide equipment distribution, service and fulfillment support. This marks a significant partnership following Canon’s decision last year to include Kofax’s VirtualReScan (VRS) software, the de-facto standard for scanning productivity and quality with all professional scanner models distributed in EMEA."

So, it certainly shows an expanded releationship between the two companies and is good for Kofax's hardware business, was has notably been losing revenue and profits in recent years.

Sizing the MPS Market

There's been a lot of talk about managed print services\ (MPS) in the MFP market lately. In our next previous edition, we'll examine where the rubber hits the road as far as document imaging and MPS. For now, here's an article from a publication called The Imaging Channel that speculates on the size of the MPS market.

On the high-end, it's being projected at $25 billion a year with projections to grow to $60 billion by 2013. That's fairly large when you consider that Harvey Spencer Associates has estimated the size of the document capture software market to be just $2 billion with projections to grow to $3 billion by 2013.

On the more conservative side, the MPS market is projected at $7-8 billion a year with 8-15% CAGR projections. I guess a lot of it has to do with how you define MPS.

Ralph

Mitek Launches Mobile Phone Bill Pay App

This is kind of cool.

You certainly remember Mitek, the recognition technology specialist that a few years ago dedicated its business to developing smart-phone-centric capture applications. Mitek's revenue certainly hasn't soared, but it's stock value has more than tripled since April, as the market for capturing and depositing checks with mobile phones continues to grow, or at least become more visible.

According to a recent article in American Banker on the San Diego-based ISV, "Mitek is upping the tech firm’s foothold in the burgeoning mobile RDC space by entering a number of OEM agreements, such as the one it recently inked with Fiserv....Mitek also recently signed OEM agreements with NCR, RDM, WAUSAU Financial Systems, DirectFED, and others that Mitek would not disclose. Additionally, the firm has signed deals with Clairmail, mFoundry and Monitise Americas. And a Mitek spokesperson says Bancorp Bank and Conestoga bank have announce deployments, with more bank signings expected to be announced in the near future.



The new bill pay product would apparently be marketed to similar types of organizations. Users would take a picture of their bills and then OCR/ICR would be performed to presumably populate a smart phone app, with the user keying in any data that could not be recognized. This informamtion would then be submitted to the bank to pay a bill. Very cool hybrid of electronic and traditional paper billing paying/banking and the perfect spot for imaging technology as a bridge to electronic transactions from the paper world.

Ralph

Iron Mountain Hires Ex-ACS CIO

A week after getting dinged for lowering its financial outlook, Iron Mountain has stepped up and hired Tasos Tsolakis, the former chief information officer for Affiliated Computer Services (ACS), as its new CIO. Iron Mountain obviously has a huge legacy business storing people's paper documents, which, with the continued increasing adoption of all sorts of electronic content management technology, is probably a dying market - albeit fairly slowly. However, over the past several years, I've been fairly impressed with the high-tech savvy and vision of the at least the people I talk with at Iron Mountain. Now, I know it's a huge company, and I'm only getting the biggest imaging advocates, because that's the business I'm in, but you have to like the hiring of someone with Tsolakis background.

When you are talking about document storage and management, storing paper documents is probably the lowest rung on the latter in terms of complexity and margins you can demand. What ACS (which was acquired by Xerox last year) does, outsourcing business processes for their customers, is way up the latter and that's clearly where Iron Mountain - and everybody else managing paper (Xerox, for example) would like to go.

Ralph

Healthcare Information Exchanges Create Capture Opportunities

If you didn't see it, a couple weeks ago in the premium edition of DIR, I ran a summary of a presentation given by Dr. Craig Jones, Vemont's executive director for its Blueprint for Health initiative. He discussed his state's plan to create an electronic exchange for patient information that receives information from EMR systems. This was an idea first introduced to us as last year's TAWPI-Fusion show by Accenture's Chris Deelsnyder. And, it seems to be catching on, as today Maryland announced such an exchange center is shaping up in its state as well.

According to Dr. Jones, the opportunity and challenge for capture vendors regarding around these "exchanges" is being abel to ensure that needed information is captured off the patient records - which he says is a big hurdle at the current point in time, because EMR systems are generally very not good at this.

Imaging Recommendations for Medical Records

Cintas put together this interesting list of steps for medical offices/hospitials needing to do imaging as part of their transition to EMR. Of course, the advice plays right into the services that Cintas offers, but I think it's fairly sound, and when I talked with them last, Cintas was doing a fairly brisk business in this market. Several other service bureaus seem to be doing okay as well.

Cintas, of course, is best known as "the uniform company," but they got into document shredding a 10 years back and then, to complement that bought some paper records storage organizations. Finally, a couple years ago, Cintas a couple imaging service bureaus and has rolled out the services nationwide. At last check, it's entire document managment business was doing about $60 million per quarter.

Open Source Capture

We've been hearing some good buzz around Alfresco, an open source ECM venture launched a few years back by some ex-Documentum developers in the U.K. Yesterday, we saw this announcement about an open source capture venture launched by Kofax's former head of professional services. We caught up with the CTO of Ephesoft this afternoon and will have more on them in our next premium issue.

Basically, Ephesoft offer a automatic document classification and extraction software in two flavors: a Community and an Enterprise edition, which carries an annual maintenance fee and comes with support and the RecoStar OCR engine from Open Text Document Technologies.

GruntWorx leverages Tessact OCR

I thought this was pretty cool. Remember, in 2007 Google announced it was launching an open source OCR project based on the Tesseract Code, which was developed by HP in the late 1980s and early 1990s. At AIIM that year, we interviewed document capture/OCR expert Chris Riley on what he thought would be the effects of this initiative on the OCR industry.

In our April 20, 2007 issue, Riley commented, "“The real threat to the commercial OCR market could come from independent developers who decide to take the engine and run with it. The technology’s true power could be unleashed when it is set into motion for a niche type of processing, and fine-tuned to do it well."

For more than three years, we didn't hear a whole lot about people leveraging open source OCR. However, currently we are working on a story on a company called Copanion that has leveraged the Tesseract OCR technology to create a niche SaaS application for capturing data from tax forms. Based on the number of forms they processed, we're estimating their run rate for the 2010 tax season was around $3 million and they are expecting to surpass $10 million for the 2011 tax season.

Granted, they use a lot of their own proprietary algorithms on top of the Tesseract OCR, but it's kind of cool what they are accomplishing. For more, check out this week's premium issue of DIR.

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.