Nuance Promotes Rich

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

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

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

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

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

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

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

DocuWare Takes on Funding

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

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

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

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

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

Square 9 Introduces A/P Product

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

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

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

More on this in our next premium edition.

Mitek Fights Back

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

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

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

LEAD Technologies Announces Mobile SDK

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

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

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

Mitek Patents Called into Question

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

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

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

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

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

Kofax Lands BPM Deal with Stock Exchange

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

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

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

IKON Re-branded as Ricoh

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

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

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

Docville Event set for May 9

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

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

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

info360 Conference and Expo

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

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

A press release on the conference tracks went out today.

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

TIS Announces Mobile Capture Technology

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

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

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

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

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

DIR Talk Browser Stats

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

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

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

Firefox  43%

Internet Explorer  32%

Chrome  15%

Safari  4%

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

Lexmark Acquires Two More Software Companies

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

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


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

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

NovoDynamics Release new IDR Product

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

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

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

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

Zero Footprint and Mobile Scanning

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

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

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

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

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

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

The Potential of Mobile Capture

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

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

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

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

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

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

I guess we'll see.

Live from Kofax Transform

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

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

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

A look at Lexmark's Acquisiton of Brainware

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

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

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

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

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

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

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

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

Top Image Completes strong year

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

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

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

Capture + MPS on the Horizon

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

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

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

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

 

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

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

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

KTM Developer Launches New Company

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

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

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

Former Pegasus now Called Accusoft

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

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

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

ReadSoft Posts Strong Numbers

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

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

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

ReadSoft Acquires foxray

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

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

Kofax Reports Half-Year Revenue

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

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

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

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

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

Kofax Lands Million Dollar Upgrade

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

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

Psigen Posts strong first-half results

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


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

Lexmark Reports Strong Fourth Quarter for Perceptive

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

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

Orbograph Launches Cloud-Based EOB Service

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

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


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

Laserfiche Institute 2012

Spent a good bit of last week at the Laserfiche Institute 2012 event in Anaheim. There were some 1,600 people there, a ratio of 70% end users and 30% resellers, so it was a pretty good size event (apparently a 20% increase over last year's event, which was held at the LAX Hilton. The new location, the Anaheim Marriott was very close to Disney and may have helped with the increased attendance, although the reason for the move was that Laserfiche was already growing out of the LAX digs.) Had your usual number of Laserfiche government customers, but verticals like financial services, energy, and even professional sports (the Houston Texans) were represented. No earthshattering new product announcements at the event, but Laserfiche certainly continues to move forward. The message of the conference seemed to be "putting the 'E' in ECM," and Laserfiche stressed how its product is going viral at many customer sites who are ramping up installs in terms of both users and departments. We'll have more on this in this week's premium issue of DIR.

Kodak Bankruptcy Press Release

Here's a link to the official press release from Kodak on its Chapter 11 filing, which was announced last week. (The highlights were made by me when I was working my story, which appears in this week's Premium edition of DIR.) Important to note that this is a Chapter 11 filing, which means Kodak is attempting to reorganize to the satisfaction of the entities it owes money to.

As far as the Document Imaging business goes, the way we understand it, DI is considered a valuable asset and Kodak will not do anything to harm one of its more profitable business units - because that would of course harm the long-term viability of the company. And even though Kodak is being presented as a printing company going forward, DI is reportedly a "major pillar" of its reworked enterprise solutions focus.

NSi Introduces AutoStore 6.0

Notable Solutions, Inc., the Rockview, MD-based MFP capture software specialist, has introduced a new version of its flagship AutoStore application. AutoStore 6.0 features a couple new modules. One is a WebCapture feature that enables users to capture electronic documents from their desktops into workflows connected to AutoStore. The second is a standardized version of AutoStore's SmartTicket functionality.

WebCapture complements AutoStore's AutoCapture technology, a thick Windows client for capturing electronic documents. AutoStore itself is typically used for capturing paper documents with MFPs and processing them. WebCapture is browser-based app.

SmartTicket enables admins to set up bar-coded cover sheets the identify documents being scanned at MFPs. Users log-on, print the proper coversheets, and can add meta data through check boxes or keying at their PCs. The Autostore server can identify scanned documents through the bar codes on the cover sheets and then execute a workflow based on the document ID. Previously, SmartTicket had been implemented as a customized app for some of NSi's bigger customers.

More on AutoStore 6.0 in our next premium issue.

Fujitsu Introduces New Workgroup Models

Fujitsu, which has long been the leader in the workgroup and departmental segements of the document scanner market, has introduced four new models priced between $1,200 and $2,500 featuring speeds of 40/80 and 60/120 ppm/ipm at 200 dpi in color, black-and-white, and grayscale. There are sheet-fed only and flatbed models available at each speed rating.

Some of the cool new features:
Scanner Central Admin: "allows users to monitor scanner running status, update scanner drivers, check consumable status, and more, all over a network, from one location."
Enhanced Paper Protection: "A new advanced encoder inside the document feeder analyzes each passing sheet and stops scanner operation when an irregularity is detected during a page feed, helping to avoid document damage and increase pre and post scan operational efficiency."
"ScanSnap Mode” Function: The new “ScanSnap Mode” gives users that prefer the “one-button,” driverless experience of the award-winning line of ScanSnap scanners an alternative ad-hoc approach to being productive through scanning.

The new models, which go by the  names: fi-6130Z, fi-6140Z, fi-6230Z, and fi-6240Z, will be available in February. For the complete press release, click here.

Kofax Introduces Mobile Capture Technology

A little over a month after investing in a mobile apps tools specialist, Kofax has launched Kofax Mobile Capture. Mobile Capture is basically a set of apps for capturing images with smart phones and tablets, improving their image quality through the application of VRS (Virtual ReScan) technology, and passing them on to BPM and other downstream applications. There are iOS and Android versions of the technology, which capture images to a cloud-based component, Kofax Mobile Services, being hosted on Microsoft's Azure.

From the press release, "Kofax Mobile Services enhances images and delivers the content to the appropriate downstream Kofax processes. This allows Kofax customers to develop and deploy custom mobile capture applications while leveraging their existing Kofax capabilities with no change to their capture enabled BPM infrastructure."

Research Firm Finds $6 Payback for Every $1 Spent on ECM

Nucleus Research recently analyzed 37 case studies of ECM users and found an average ROI of $6.12 for every dollar spent on ECM technology. Nucleus presented its number at Digitech's recent reseller conference held at Denver's Inverness Conference Center. Digitech is a leading SaaS-based provider of ECM technology through its ImageSilo offering and also delivers on premise capture and ECM through its PaperVision line of products.

Nucleus' study found that second and third generation systems "deliver increasing ROI through more streamlined processes and greater productivity." From the Nucleus press release on the study, "In the analysis of Nucleus case studies, 62% of all returns came from direct benefits such as reduced paper or avoidance of staff or service bureau costs.  Another 38% of returns came from indirect benefits, such as productivity."

I was honored to be asked to present at the Digitech event. My presentation was entitled "News You can Use: Staying Ahead in a Rapidly Evolving Market." Basically, I encouraged VARs to embrace new technologies and selling techniques as we enter the "knee of the curve," as Ray Kurzweil calls it in his book "The Age of Spiritual Machines." I also reviewed my biggest stories of 2011 and tried to explain how I felt these stories are going to be affecting the market going forward.

Digitech made an interesting capture software announcement at the event. It released its new PaperVision Capture Desktop, which is a batch capture application to compete with Kofax Express and Kodak Capture Pro. The main difference is that Digitech is not increasing the price of Capture Desktop when it is run with higher volume scanners. The new product lists for $599 and is available exclusively through Cranel. More on this in our next premium edition.

Brainware Announces another seven-figure deal

A few weeks after announcing a $2 million sale to a European service provider, IDR specialist Brainware has announced a $1 million deal with a "U.S.-based product distributor serving the construction and retail hardware industries." It's an A/P deal initially for handling invoices and expense reports and includes integration with JD Edwards ERP systems.

Brainware CEO Carl Mergele was quoted in the press release: "For businesses that are experiencing growth through acquisition, the effective, efficient consolidation of back office operations can pose a significant challenge, requiring the reconciliation of diverse processes and legacy IT platforms. By providing the ability to capture and reconcile data across diverse transactional and content management applications, Brainware enables complex enterprises to achieve world-class performance in accounts payable without increasing headcount."

Sounds like Brainware is having some success in the emerging enterprise capture market.

AccuSoft Pegasus Releases Bar Code SDK for iOS

Imaging tools specialist AccuSoft Pegasus has released a new SDK that enables bar code reading from Apple mobile devices running iOS. The new version of Barcode Xpress Mobile complements the existing version that works with Google Android mobile operating system.

From the press release: "Barcode Xpress Mobile gives end users a frustration free experience when using their own mobile device, with faster and more accurate reads of barcodes. This in turn provides rapid access to data on their own familiar mobile phone or tablet, whether that device is iOS or Android based."

Kofax Highlights MarkView Deals

Somewhat interesting announcement by Kofax, highlighting several recent deals - totaling more than $5 million, in which its MarkView A/P purchase-to-pay (P2P) software was included. MarkView is the P2P application that Kofax picked up when it acquired 170 Systems in 2009. Scuttlebutt has been that sales of MarkView have been somewhat underwhelming since the acquisition, and this announcement is probably designed to show that Kofax now has that business headed in the right direction.

When Kofax bought 170 Systems, it was reportedly producing $28 million in annual revenue, although I was later given the impression that a good majority of that was coming from professional services. Two of the three deals highlighted in today's release include the mention of other Kofax software products sold along with MarkView, so I'm assuming the $5 million figure isn't all MarkView.

That said, that type of integration was kind of the point of the whole acquisition - to give Kofax a better competitive offering vs. ReadSoft. However, none of the deals mention integration with SAP, which has been one of Kofax's goals- and an area where ReadSoft is strong. Two of the MarkView deals do mention integration with Oracle software, which is where MarkView has been historically strong.

Basically, I'm glad to see Kofax has something to brag about regarding MarkView, but based on the content of the release, I'm not sure how excited I should be getting.

Visioneer Releases Xerox Version of Eye-Fi Scanner

Scanner vendor Visioneer has announced a Xerox-branded version of its Mobility Air scanner-the one that includes an Eye-Fi card for completely wireless mobile capture to any device with a wireless ratio- like a laptop, PC, or even mobile phones and tablets. The Xerox version of the device will list for $250 and be called the "The Xerox Mobile Scanner."

Visioneer announced the new Mobility in October.

QAI Re-Ups Multi-Million Deal with NIH

Fulton, MD-based document imaging services specialist Quality Associates, Inc. (QAI) has signed another five-year contract with the National Institute of Health. The contract, which has one base year band four renewal options, is initially valued at $18 million. It's the second consecutive such contract for QAI, which offers both document conversion and systems integration services.

According to the press release, "Efforts to transition NIH’s grant applications function to a paperless process will thus proceed uninterrupted and benefit from the expertise accrued during the initial contract period. In addition, the new contract expands the service offerings QAI will provide NIH. Notably, QAI will offer 508 compliance consulting and training and will design, install and manage end-to-end electronic content management (ECM) systems. QAI’s Microsoft Gold Certified SharePoint subsidiary, DocPoint Solutions (DPS), will spearhead the design and installation of a comprehensive end-to-end SharePoint ECM."

Kodak Bankruptcy Rumors

You've probably all seen these by now. Basically, here's the way we understand it: Kodak is attempting to sell an imaging-related patent portfolio that is reportedly worth $2-3 billion. If it can execute this sale successfully, it could potentially avoid bankruptcy. But, there seems to be some discrepancy about whether or not Kodak can execute this sale without filing for bankruptcy first, due to potential creditor claims on the portfolio.

How this is going to affect the document imaging business is unclear. When we spoke with Kodak VP Dolores Kruchten last October, after the Kodak bankruptcy rumors first surfaced, she denied that Kodak as considering bankruptcy. She also insisted that the document imaging business was profitable and that Kodak would do absolutely nothing to hurt a profitable area of operation.

From what we've read, Kodak would hope to emerge from bankruptcy as a printer-focused business, and with a former HP exec running the show, that makes sense. Of course, from our standpoint, printing is inexorably tied to document imaging, so it would make sense for Kodak to retain that part of its business as well.

That's about all we know for now. Stay tuned.

CVision Showing Mobile Recognition at CES

Recognition technology specialist CVision will be showing some new mobile technology at next week's Consumer Electronics (CES) in Las Vegas. According to the press release, "Applying their high accuracy OCR engine to the realm of mobile technology, CVision has created a recognition tool that allows users to conveniently recognize and process documents by simply taking a photo of it with their mobile devices."

CVision has received funding from the National Science Foundation to develop its "super-fast" OCR technology and apply it to smartphones and tablets. "This mobile recognition technology enables...end-users to take a photo of a document or object with their mobile device to receive real-time information."

Brainware Announces $2 Million Deal

Intelligent data extraction specialist Brainware has announced a $2 million deal with a European service provider. This customer specializes in financial and accounting processes and Brainware's software will be used for invoices and "other financial documents." This represents that latest of several large deals for the Ashurn, VA-based ISV that has seen some impressive growth in the past few years. It is also a nice size win in a European market where some have speculated there is weakness due to macro-economic conditions.

Kofax integrates Capture with DotImage

Kofax has released a new version of the DotImage SDK it acquired with Atalasoft last year. The new DotImage Enterprise Edition is desgined to image-enable Web-based line of busienss applications.

From the press release, "As an example, when processing a mortgage application, most lenders now allow prospective borrowers to apply for mortgages online but that process is typically not capture enabled. Applicants must provide paper copies of documents evidencing their proof of identity, income and other supporting information to the lender for processing. Capture enabling a lender’s portal applications allows applicants to easily scan those paper documents and submit all information electronically, thereby eliminating paper from the process. This accelerates the mortgage application process, better serves customer needs and allows lenders to be more responsive to applicants and gain competitive advantage."

Scannx Licenses ABBYY SDK

Scannx has signed an agreement to license ABBYY's FineReader SDK. SCANNX is an ISV focused on providing cloud services for scanning and capture. The ABBYY license is for traditional OCR/ICR software that will initially be incorporated in the book scanning software that is going to be bundled with the new Xerox book scanners that are being marketed by Scannx.

From the press release: "We are integrating ABBYY’s technology into our software and bundling it into a self-service book scanning center for library patrons and staff”, said John C. Dexter, president and COO of Scannx. “The book scanning center includes a 15-inch touchscreen computer preloaded with the Scannx and ABBYY software, and a patented book-edge scanner to protect the spine of the book. The scanner’s beveled edge enables students to scan to the edge of the book spine, producing clear and legible text in the center of the book. When the clear image is converted into searchable or editable text by ABBYY’S FineReader technology, the result is unmatched accuracy. Moreover, our implementation for OCR conversion is more than twice as fast as competitive systems.”

J&B, Regulus Combo Rebranded as TransCentra

In a follow-up of a story we have been covering in our premium newsletter throughout the year, the transaction processing software and services entity made up of the former Regulus and J&B Software businesses, has been rebranded as TransCentra. Regulus, a payment and billing outsourcing specialist, and J&B, a payment and document processing software developer, were each acquired by India-based technology services company 3i InfoTech in 2007-2008. Earlier this year, they were spun off and acquired by an equity investment firm. For the past few months they had still been using the 3i Infotech brand, but that was expected to change, and now it has.

In other re-branding news, AccuSoft Pegasus, the imaging SDK specialist, has re-branded the viewing technology it acquired with Adeptol earlier this year. Featuring zero-footprint capabilities, the technology is now known as Prizm Content Connect. AccuSoft has been using the Prizm brand for viewing technology since it acquired it along with TMSSequoia in 2004.

Presidential Memo Demands Improved Records Management

A recent memo issued by the office of the President of the U.S. has created quite a bit of buzz around the document imaging and records management software markets. The memo basically calls for improved records management within federal government agencies and sets out deadlines of one-month, three months, and six months, for making things happen.

From the "Purpose" section of the memo:  "This memorandum begins an executive branch wide effort to reform records management policies and practices.....  Greater reliance on electronic communication and systems has radically increased the volume and diversity of information that agencies must manage." The second part is certainly a pitch we have heard many ECM vendors make in recent years.

From the "Agency Commitments" section: "Within 120 days of the deadline for reports submitted pursuant to section 2(b) of this memorandum, the Director of OMB and the Archivist, in coordination with the Associate Attorney General, shall issue a Records Management Directive that directs agency heads to take specific steps to reform and improve records management policies and practices within their agency." Sounds like they're serious.

My take: It seems like the federal government is serious about laying out improved RM plans. This would seem to present a great opportunity for software vendors in our market. However, at least from my perspective and understanding of the federal government's financial situation: it would behoove anyone selling into this RM space to come to the table armed with ROIs, because I didn't see anything in the memo about funding.

HSA Publishes Mobile Capture Software Report

Harvey Spencer Associates (HSA) has published a report detailing what it feels are explosive growth opportunities in the market for document capture software related to mobile computers. We all know that  the number mobile computing apps are growing through the roof - riding the wave of mobile computing hardware sales. Veteran industry analyst Dave Wood has teamed up with HSA to produce "A Study of the Mobile Capture Market in the United States."

The report predicts the market to grow from under a half-million a couple hundred million (I misread the chart, sorry) dollars in 2012 to more than $3 billion in 2018. Wood projects scan-to-cloud apps to be the largest of the eight sub-segments he studies, with segments like field service, transportation, and home healthcare also represented. Wood says that small business, in particular, will benefit from mobile scan-to-cloud technology.

In a report summary, Wood discusses some characteristics he thinks will emerge as part of successful mobile capture apps. We were particularly intrigued by this comment, "Forms conceptualized in this way could, for example, permit different classes of users to interface to the app differently. In Healthcare this might mean old doctors can dictate their notes while young ones use a keypad, or old nurses use a tablet with keyboard and stylus while young ones prefer a smartphone with voice." It seems to stress the versatility required by emerging mobile capture apps - a trait that is also becoming increasingly important in the traditional batch capture market.

Click here for the press release along with contact info on how to receive more info on the report.

Top Image Lands U.S. Invoices Deal

Top Image Systems recently landed an invoice processing deal with CNH America LLC, "a leading manufacturer of agricultural and construction equipment and a majority-owned subsidiary of Fiat Industrial S.p.A." The implementation involves some 1.5 million total invoices, including over a half-million paper documents and more than 1 million EDI transactions. The implementation is being integrated with an SAP system.

According to the press release, TIS' "eFLOW EDI Visualization functionality enables CNH to identify errors in EDIs before they are processed."

This is a significant deal for TIS for a couple reasons:
1. It's a fairly large U.S. deal, and the U.S. has not recently been a very strong market for TIS. That said, Fiat is based in Italy and I believe the home office may even being using TIS technology. I actually remember having a conversation with someone from CNH at the 2010 TAWPI/IAPP Fusion event, and they were considering TIS at the time.
2. The SAP and EDI integration is interesting and builds on what we wrote in our last premium issue about capture software technology being used more and more often to handle electronic documents.

Kofax Acquires BPM ISV

Kofax has finally pulled the trigger on its much anticipated acquisition of a BPM software provider. However, instead of being the SharePoint-focused ISV many of us thought it would be, it as Northern Ireland-based Singularity. Singularity, which does its business primarily in the U.K. reportedly did  $16 million in revenue for its fiscal year ended Sept. 30, with an adjusted EBITA of $1 million.

The reported acquisition price was a maximum of $48.1 million, with $30.3 million being paid up front. In a conference call with analysts, Kofax CEO Reynolds Bish, said his company should end up paying approximately 2.9 times annual revenue for Singularity, which he said compares with the multiples that Open Text paid Metastorm and Global 360 and Lexmark paid for Pallas Athena.

Bish discussed four main drivers behind the acquisition:
1.  the opportunity to extend the offerings of Kofax's global sales force--expanding the geographical markets for Singularity.
2. the natural integration of capture and BPM for automating processes,
3. the lower total cost of ownership for customers working with a single platform for both technologies,
4. and the tight integration that can be achieved going forward.

Basically, as more ECM vendors are getting deeper into capture with their own products, either through acquisitions, development or both, capture ISVs like Kofax are being pushed to expand into ECM - and with BPM, in my opinion, the highest value area in an ECM suite (along with capture of course), it makes perfect sense for Kofax to acquire a BPM player.

There will certainly be some challenges related to integration, not necessarily of technology, but of sales and marketing - but overcoming these challenges should help Kofax continue to grow and be profitable in the future. Much more on this in our upcoming premium issues.

IBML Hires Software Veteran as New CMO

Dan Lucarini, who was most recently senior director of business development of Kofax, has been named to the new position of chief marketing officer for IBML. When I first met Lucarini he was a VP at IMR- which developed the popular Alchemy mid-market imaging software package. Lucarini then left to help start-up an e-discovery company that was eventually acquired by IMR, which was eventually acquired by Captaris. Lurarini left after Captaris was acquired by Open Text before landing with Kofax. He also been a very active member of AIIM over the years and served on the Board of Directors.

He seems like a solid fit at IBML, as the high-end scanner manufacturer continues to evolve its business model to keep up with changes in the market. Said IBML President and CEO Derrick Murphy in a press release, ""Dan’s track record of developing and executing successful product plans and building strong industry alliances will provide key leadership as we expand our product offerings."

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Kofax Invests in Mobile App Specialist

This morning Kofax announced it had made a $500,000 investment in MobiFlex, which develops the ViziApps set of tools for mobile application development. Kofax has also signed an OEM, whereby, "MobiFlex has granted Kofax the ability to ensure its exclusive global right to this technology for document centric mobile capture applications."

According to the press release, "The OEM agreement provides Kofax with the basic software tools and infrastructure needed to develop, market and deploy mobile capture applications for customers wishing to utilize smartphones and tablet computers as 'point of origination' gateways into their Kofax solutions." Said Kofax CEO Reynolds Bish, " Our customers have expressed a great deal of interest in these capabilities for some time now and we’re excited about being able to meet this demand with the release our first mobile capture software products during the first calendar quarter of 2012.”

ViziApps has apparently been used for both Android and iOS apps.

Coincidentally (or maybe not so coincidentally), MobiFlex was founded by Michael Kuperstein, who also apparently founded Symbus, and early automated data capture pioneer utilizing OCR in the document imaging industry. Symbus was acquired by Bish's TextWare back in the the mid-1990s - before I even got into this industry. They came together to become FormWare, which eventually became Captiva.

Brainware Lands Big A/P Deal

Intelligent data recognition (IDR) software specialist Brainware has landed another large deal in the accounts payable space. According to a press release that came out today, the Ashburn, VA-based ISV has implemented a system for a Fortune 50 company that is also one of Fortune's "15 Most Admired Companies." You can imagine some of the names on that list. Oh yeah, and the customer has apparently integrated Brainware's software "as part of the largest single instance of SAP in the world."

Pretty heady stuff. According to the press release, "This project was fully operational in less than 100 days of contracting with Brainware for invoice processing automation, and resulted in an immediate redeployment of 80% of the full-time manual data entry personnel previously being used to process this company’s 6 million invoices per year."

Brainware also recently issued a press release in which it stated, "Brainware is pleased that in the last year it has closed 15 transactions that exceed $750,000, of which 10 exceed $1 million."

Ephesoft Announces Large Deal

A couple months ago when we profiled the Ephesoft in our premium newsletter, CEO Don Field had told us that the open source intelligent data capture (IDC) start-up had recently bid-on and won a large deal in which it competed against several leading established capture companies. Not sure if this is the result of that, but, it nonetheless sounds like an impressive deal, involving 450 million pages of mortgage files for a BPO.

Apparently, this BPO is putting a big ephasis on Linux and open source which gave Ephesoft the advantage. From the press release, "The current Ephesoft system uses Linux-based web servers and Windows-based Application Servers," said Ike Kavas, founder and CTO of Ephesoft. "However, they are planning to have a 100% Linux platform to support their business. Since Ephesoft is the only platform today that can deploy an IDC system running on Linux and work with other open source systems such as Ubuntu and RedHat, partnering with Ephesoft was the logical choice. "


Also from the press release, "The solution will process over 450 million pages of mortgage files by automatically classifying and separating a wide variety of document types and then extracting key metadata for further processing. Searchable PDFs will be created in a tabbed format and deposited into their IBM Content Manager ECM."

Canon Singapore Integrates Nuance's Scan-to-Cloud

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

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

Crowley Acquires Wicks and Wilson

Imaging specialist Crowley Company has helped consolidate the microfilm scanning market with the acquisition of Wicks and Wilson. Crowley, which is based in Frederick, MD, got into the microfilm scanner manufacturing business with its 2003 acquisition of industry pioneer Meckel. As a result ,Crowley and U.K.-based Wicks and Wilson have been competitors for several years in the market for devices for digitizing microfilm, nmicrofiche, and aperture cards.

"This purchase will allow us to broaden our microform offering, strengthen our international presence and ensure that we continue to be at the forefront of microform capture technology," state Chris Crowley, president of Crowley Company, in a press release.

Crowley plans to maintain and the Wicks and Wilson brand. In addition to selling hardware, Crowley operates a service bureau that specializes in document archiving projects. "Having offices on two continents will allow us to take the next step in our expansion of services and technical support by allowing us to create production efficiencies and to solidify an international network of partners," added Chris Crowley.

Top Image Turns in Solid Numbers

Well, in the wake of Kofax's recent quarterly earnings report, we've been eagerly awaiting Top Image Systems (TIS) third-quarter results, which were released today. That's because TIS sells primarily in Eurpoe, which is where Kofax cited weakness that caused its quarterly numbers to fall short. Granted, TIS is probably one-ninth the size of Kofax, but still, its strong third-quarter number indicate TIS is not seeing any weakness in EMEA.

For the quarter, TIS reported a 32% increase in revenue compared to the previous year's Q3 and a 64% increase in operating income. This is pretty much in-line with the increases TIS reported in the first two quarters of the year. TIS CEO Ido Schechter gave no indication that the EMEA market was weakening and increased 2011 revenue guidance from $26 million - $27 million to $27.5 - $28.5 million. “This quarter we saw continued progress in our new growth geographies such as the UK and Asia Pacific, in addition to our traditional stronghold in Europe," said Schechter in a press release announcing the results.

So, there is certainly debate as to whether there is any significant weakness in Europe, especially to the level where it would force Kofax to lay off 60 people. There are certainly a number of people who view the weakness as a Kofax problem moreso than a market problem.

Michael Ziegler, a former managing director of Kofax EMEA who is currently working as a consultant and has co-founded the Docville group, acknowledged that whereas there may be some weakness in southern Europe due to macroeconomic conditions, the rest of the European market, including Turkey, seems very strong to him for document capture technologies. Ziegler blames Kofax's mismanagement of its formidable European channel for the company's current weakness in EMEA and said that ISVs like TIS and others have had success recently in recruiting Kofax resellers.

We'll have more on this discussion in our upcoming premium issue.

Adobe crashes Flash for Mobile

According to this article from Wired magazine, Adobe will stop development its Flash Player plug-in for mobile browsers, fulfilling a prediction made by the late Apple CEO Steve Jobs.  Apparently Adobe sent a letter to its partners yesterday telling them it will cease development of its Flash platform for mobile browsers. According to the Wired article, the e-mail says, "Our future work with Flash on mobile devices will be focused on enabling Flash developers to package native apps with Adobe AIR for all the major app stores."

According to the article, "The move indicates a massive backpedaling on Adobe’s part, a company who championed its Flash platform in the face of years of naysaying about its use on mobile devices. Despite Flash’s near ubiquity across desktop PCs, many in the greater computing industry, including, famously, Apple Computer, have denounced the platform as fundamentally unstable on mobile browsers, and an intense battery drain. In effect, Flash’s drawbacks outweigh the benefits on mobile devices."

Apple, of course, has refused to support Flash in its iOS for mobile devices, which created a chink in the armor of the previously ubiquitous multi-media technology. Personally, I have not had much luck utilizing Flash plug-ins on my Android device either.

So, why is this relevant to our market? It's probably worth noting again that Adeptol, the ISV recently acquired by AccuSoft Pegasus, originally developed its viewer on a Flash platform. Adeptol has recently expanded to embrace the HTML 5 platform, which also seems to be part of Adobe's strategy.

Weak EMEA Market Hurts Kofax

Kofax announced its fiscal 2012 Q1 results early this morning, and they were not particularly strong, with weakness in EMEA being blamed as the main culprit. For the three months ended Sept. 30, Kofax total revenues were $58.5 million, which represented 7% growth over 2011 Q1 revenue of $54.4 million. However, in terms of "organic constant currency" - which we assume means accounting for currency fluctuations and acquisitions, Kofax reported only 1% growth.

The growth was driven primarily by increased revenue from maintenance contracts, which was up 18%, while software license sales were down 4% - including a 7% drop in applications software licenses, which was offset slightly by a 7% increase in revenue from OEM/POS software license sales (which includes VRS and Kofax Express.)

"The first quarter of fiscal year 2012 yielded mixed results," said Kofax CEO Reynolds Bish in a press release. "Software license revenues in the Americas and Asia Pacific regions as well as our OEM / POS business, and maintenance and professional services revenues grew in line with our September 2011 expectations. The EMEA region conversely experienced a decline in software license revenues."


The current financial turmoil in Europe is no secret, and Kofax is taking steps to account for continued potential weakness in this geography.  “We are concerned about the continuing uncertainty and deteriorating economic environment throughout much of EMEA and the potential effect this may have on other markets, and we expect these challenges to continue or worsen until more confidence and stability return on a global basis," Bish said. "While our pipeline of opportunities continues to grow and management and the Board remain confident in our business, we are nonetheless lowering our expectations for fiscal year 2012 to low single-digit total revenue growth in U.S. dollars on a constant currency basis. However, in order to maintain the absolute EBITA reported in fiscal year 2011 during fiscal year 2012, we are restructuring our EMEA sales organization and also reducing operating expenses in other functions to a lower level while preserving our new product development initiatives and a strong balance sheet.”


Sounds like a plan.

Kofax competitor ReadSoft recently reported its third-quarter results  (same time period) as well. For the quarter, ReadSoft reported a 24% growth in software license sales in terms of local currencies and 15% growth in overall revenue. This was led by exceptionally strong numbers in its "U.S. and rest of the world" revenue (includes Australia, Brazil, and Malaysia), which showed 31% growth. Nordic markets and Benelux were also reported as strong for ReadSoft, which indicates, ReadSoft must have seen some weakness in the Germanic and other EMEA markets as well.

While Readsoft reported Nordic region growth of 10-15%, its sales "other European markets" was essentially flat.

Databank Acquires ECM Software VAR

Databank IMX, which is best know throughout our industry as a conversion services specialist, recently expanded on its solutions strategy with the acquisition of Information Access Systems, (that's a link to the investor's press release, here's the Databank release) a Florida based reseller of Hyland OnBase Solutions. The acquisition complements Databank's current software practice, which also includes Hyland software.

The acquisition was Databank's first since securing investment from Svoboda Capital Partners, which has brought on Fred Zaeske as the new CEO. I recently caught up with Fred and will have a more complete story on the acquisition and Databank's strategy in an upcoming premium issue of the Document Imaging Report. Databank's top brass, as well as the management from Information Access Systems all seem to be onboard as the company moves forward.