Hyland's Take on the SaaS Model

Pretty good piece published today in AIIM's Infonomics Magazine. It's clearly got a Hyland bent to it, but it's well written and presents a couple sides to the story of SaaS vs. in-house solutions.

Pitney Bowes Sues Digital Mailroom Provider

This is interesting. The company being sued, Zumbox, doesn't seem to be a traditional digital mailroom provider in the way we think of it. Rather, they seem to have some sort of on-line network that ingests files before they are printed and then delivers them digitally to their addressee. We're not exactly sure how this works, as it's not really described on the Web site, so we've pinged them for more info. To us, it sounds like some kind of general mail version of OB10's e-invoicing network. PBI is suing Zumbox over some patents related to electronic delivery of messages. We're assume this doesn't apply to traditional digital mailroom environments, (or PBI would have sued Earth Class Mail, right?), but we really don't know.

Ralph

More OEM Deals

Couple of interesting ECM-related OEM deals were announced today, with major, major, large software vendors. First, you have Brainware announcing an OEM deal for its capture software with Oracle. The most obvious fit will be using Brainware for invoice capture in Oracle Financials implementations, but the announcement is pretty vague, so Brainware's capture could theoretically be used in a lot of ways. A couple years ago, Oracle picked up some strong distributed capture technology when it acquired Captovation, but Captovation doesn't do much data capture, so this is a great complement for that....Also, SAP has expanded its agreement with Open Text and is now offering Open Text's full ECM application. It had previously offered SAP's invoice capture and processing technology as well as its document archiving. This is another sign of how ECM is going mainstream.

Lason Spin-Off Acquired by DTI

Active Data Services, which spun out of Lason in 2002 via a management buyout, has been acquired by Scranton, PA-based Diversified Information Technologies (DIT). DIT is a $35 million service bureau with scnaning, data capture, and records management offerings. Active Data Services is a Raleigh-Durham-based entity with a combination of document input and output services, and a speciality in the healthcare vertical. It is run by former Lason employee Ken Eller. Its 2008 revenue was reportedly $15 million.

Nuance-eCopy

Nuance has acquired eCopy in a move that unites two of the largest players in the MFP capture space. Nuance's Imaging business also has other interests like OCR and PDF creation, but its PaperPort and Personalized Scanning Platform (PSP) platforms are OEM'd by vendors like Xerox, Ricoh, Konica, EFI and Konica Minolta. In fact, Nuance often disputed eCopy's claims to market leadership in the MFP capture space. eCopy itself has some powerful alliances with the likes of Canon, Ricoh, and Toshiba that helped it grow to more than $60 million in annual revenue in about a 10-year period.

There are definitely signs however, that the MFP capture space is in transition. One is the fact that the price Nuance paid for eCopy was less than eCopy's reported revenue for 2007 (and it was all stock). There has definitely been some price pressure as MFP vendors have become more aggressive about bundling scanning software with their hardware. Also, one of eCopy's largest North American resellers, IKON, was recently acquired by Ricoh - which although it partners with eCopy, does not have the history that Canon does and also offers several alternative capture products.

Couple interesting sidelights of this deal:
1. Does this make Canon, which had like a 20% stake in  Nuance, a major stockholder in  Nuance - a former Xerox spin-off?
2. This would seem to throw the longstanding relationship between eCopy and Belgian OCR ISV I.R.I.S. into a state of flux. Funny thing is, Nuance has filed suit against eCopy for using I.R.I.S.' technology, and I.R.I.S. had seemingly come to eCopy's defense.  And, oh yes, Canon just bought a stake in I.R.I.S.

I'm thinking something has to give here. Look for another related acquisition in the next six months.

This acquisition does create easily the largest developer of MFP capture software on the market. Nuance certainly now as a full stable of technology in this area. It will be interesting to see how they bring it all together. NSi and Omtool are currently the other major players with traditional batch capture vendor Kofax still trying to make inroads.

Best regards,

Ralph

New KeyScan

I don't know why, but this seems like a cool concept. Has anyone ever used one?

Ralph

TIS enjoys success in postal market

We're currently putting together a story on some of the success that Top Image Systems is having in the European and Far Eastern market. Of course, we've arleady discussed TIS' North American success as a partner with J&B Software. In the European market, TIS is enjoying success in three distinct areas: invoice capture, the corporate mailroom, and national posts. This press release that came out today discusses a deal with Swiss Post, PostLogistics that involves parcel sorting. Overall, TIS, which is like a $25 million company at best, expects to receive $4 million in revenue from postal-realted applications over the next year. The company is also ramping up its Far Eastern business- transitioning toward enterprise applications from lower-margin batch capture sales, which were the specialty of AsiaSoft, the comany it acquired a couple years back. (go to page 7)

Also, in today's news, JFL Peripheral Solutions, a Visioneer subsidiary that specializs in scanner drivers, has announced a SANE driver for Visioneer scanner. This enables Visioneer scanners to run with Linux and other open source applications. Apparrently, a TWAIN 2.0 driver, which also supports Linux (see page 3), is on the way.

Xerox buys ACS

Wow! Another hardware vendor jumps on a major outsourcing provider. Xerox, the $17 billion copier and document processing giant has acquired $6.5 billion outsourcing roll-up ACS. ACS, of course, has a huge document-centric outsourcing practice, but does all sorts of other outsourcing as well. Its current CEO Lynn Blodgett, is a former data entry outsourcing specialist, whose history actually goes back to Unibase, where he worked with current Kofax CEO Reynolds Bish.

Over the past couple years, ACS has generated more than $500 million in cash each year, but it also has $2 billion in debt that Xerox will assume. According to the Wall Street Journal, "Xerox's deal values ACS shares at $63.11 each, a 34% premium to Friday's closing price and 55 cents below the stock's record high set in February 2006. Holders would get $18.60 and 4.935 shares of Xerox for each ACS share. Xerox also will assume $2 billion of ACS debt and issue $300 million of convertible preferred stock."

The deal should make Xerox a $22 billion company with some $10  billion in worldwide service revenue. ACS' international revenue was very limited, like $.5 billion annually, while Xerox has a more mature international services business, so there should be some synergies there.

Here's a line from the presentation give by Xerox, "The lines between business process
and document management are blurring." - which makes a lot of sense. We've talked a lot recently about enterprise capture and how it needs to feed several areas of an organization, presumably with different workflows. Of course, the same can be said for document output world, where Xerox also plays.

The acquisition, of course, follows, HP's acquisition of EDS and Dell's of Perot Systems, so it's all pretty fascinating. Does this mean that people like Kodak and Fujitsu will buy document imaging service bureaus? BancTec and Scan-Optics have already started down this path.

Ralph

TIBCO Beats Street

A good sign for the BPM market, where many document imaging companies are moving their focus. Another good sign is that TIBCO noted strong performance in the financial services sector - a recovery trend which was discussed at the recent Harvey Spencer Associates Capture conference.- mainly offline, but somewhat by presenter Rich Payne, a VP and ECM manager at Carolina First bank. Payne indicated that his bank, at least, has money to spend, but he stressed that salespeople have to sell him benefits and not technology. He cited the bank's current distributed capture initiatives which reduce courier costs...

OCR Invoice Market Penetration

After Kofax just paid $30 million for an ERP-workflow specialist, we got to wondering how far penetrated the maturing market for invoice capture was. Henry Ijams of Paystream has it at about 16% for IDR adoption among Fortune 1000 companies with 45% having some sort of imaging for processing paper invoices.

HSA Capture Conference 2009

Out here at Harvey's annual Document Capture Conference. Despite some trepidation about attendance being down because of the economy, it looks like the HSA staff has pulled together another strong group of attendees. Companies represented include:

Company E-Discovery Institute A2iA A2iA Corp. ABBYY ABBYY Russia ABBYY USA ABBYY USA Anoto, Inc. Anoto, Inc. AnyDoc Software, Inc. Avnet Technology Solutions BancTec BancTec Canada BancTec Japan CVISION Technologies CVISION Technologies Document Imaging Report Eastman Kodak  Eastman Kodak Company EMC Corporation EMC Corporation Epson America Fairfax Imaging Fairfax Imaging Fujitsu Computer Products of America, Inc. Harvey Spencer Associates Harvey Spencer Associates Harvey Spencer Associates Harvey Spencer Associates Harvey Spencer Associates Hewlett-Packard IBML IBML IKON Office Solutions IKON Office Solutions Intuit Inc. ITESOFT J & B Software, Inc. Kofax Austria GmbH Kofax, Inc. Notable Solutions Inc. Notable Solutions Inc. Nuance Communications Nuance Communications Opentext OPEX Corporation OPEX Corporation Panasonic Corporation of North America Panasonic Corporation of North America Paradatec Peripheral Dynamics, Inc. Peripheral Dynamics, Inc. Peripheral Dynamics, Inc. PFU Systems, Inc. Readsoft Ricoh Innovations Ricoh Innovations Ricoh Innovations Ricoh Innovations scanR, Inc. Tangent Systems, Inc. Tangent Systems, Inc. The South Financial Group Top Image Systems PayStream Advisors Talario EMC Corporation eCopy Copanion Thinking Phone Networks, LLC
More on this event upcoming.				Ralph

Kofax Makes Acquisition, Reports year-end results

Kofax has become the latest capture vendor to add ERP-based invoice workflow to its invoice capture portfolio, with the recent acquisition of 170 Systems. 170 Systems seems to compete with Ebydos, which ReadSoft bought a number of years back and which really helped catapult the Swedish document capture specialist into a leadership role in the market for SAP-based invoice capture. As Kofax moves upstream, it certainly want to challenge ReadSoft and Open Text, which had a workflow product and bought a capture company last year. Capture specialist BancTec also announced a new workflow partner for invoice capture recently.


Also, Kofax recently reported its fiscal 2009 year-end (June 30) results. They came in with the revised expectations.

Re-furbished scanner sales

Here's an interesting brief with some metrics discussing increasing sales of refurbished document scanners.

Distributed Capture update

I think it's safe to say that distributed document capture has reached maturity, as every new implementation is no longer a major news story. As the technology has matured, I think we've all realized that there are several different levels of distributed capture, from multiple regional centers doing batch capture to remote locations doing ad hoc capture with MFPs - with several variations in between. Here's a recent announcement from ISV GoScan that shows some of the potential benefits that distributed capture has, not just on business, but on life in general. It's about the State of North Dakota implementing distributed capture to help track swine flu cases. Sure, they could have done this without imaging, but it sure seems like it's going to be a lot easier to accomplish it with distributed capture. Hopefully, it can help save some lives.

On a bit of a sour note, it was pointed out to us recently that mortgage lender Taylor, Bean, and Whitaker, which as for a long time has been a marquee customer of Datacap's distributed capture solution, has gone out of business. Of course, it was not the imaging technology, which when we talked with them was saving great amounts of money on courier expenses, that drove them out of business, but bad loans - what else? The messes we've seen in the mortgage industry have certainly detracted from imaging sales over the past year. It will be nice when things finally stabilize.

NewWave to offer Sharp MFPs

Document imaging-focused value-added distributor NewWave Technologies has added MFPs to its line of products. Specifically, NewWave announced it will be distributing Sharp's Frontier DX Series. To us, Sharp has always been on the cutting edge of scanning from MFPs. It was one of the first MFP vendors introduce single pass duplex scanning on a multitude of devices. It's OSA platform for embedded applications was also fairly revolutionary and has been leveraged by multiple capture vendors.

This is actually NewWave's second MFP-related announcement that we've covered. Last year, it announced an agreement with Pitney Bowes to enable its VAR partners to offer maintenance contracts on HP MFPs. Presumably, Pitney Bowes will also offer maintenance for the Sharp devices through NewWave, as PBI is certified to service some Sharp devices.

A/R meets document Capture

One of the observations we came away with at the recent TAWPI Forum and Expo in Washington, D.C., is that the accounts payable and accounts receivable capture markets are moving closer together. Historically, payment capture specialists, whether it be service bureaus or ISVs, have focused on A/R, while traditional document capture guys have handled the A/P side of the house. This started to change a couple years ago with the introduction of full-page IDR technology into the wholesale remittance capture space. Then, our colleague Harvey Spencer, as well as some others, started extolling on the importance of a unified view of A/P and A/R data for the CFO. While this is the nirvana of the convergence of A/P and A/R capture, it's starting to show up on less-integrated levels as well. For example, at the TAWPI event, Pepsi Bottling Group was cited for its payment capture application, which was installed by VAR KeyMark and ISV AnyDoc-both of which traditionally come from the document capture space. We've also seen an increasing interest in applying advanced workflow, another traditional full-page imaging technology, to A/R and payment processing environments.

In fact, last issue, we ran a feature on J&B Software, traditionally a payment processing vendor, fleshing out its offering with full-page document capture and advanced workflow.

Finally, we'd just like remind you that Harvey Spencer Associates annual capture conference, where this concept of converging A/P and A/R capture has been discussed for at least two years, is scheduled to run Sept. 9-10 at the Glen Cove Mansion on Long Island. It's not only a great forum where cutting edge capture markets and concepts are covered, it's a great networking event, with several high-powered capture and imaging executives attending annually.

ACS Q4

There has been a lot of talk about how outsourcing/BPO services will benefit in a down economy as businesses look to cut costs by hiring other people to perform their non-core functions. Document management is, of course, one of the functions. In our last issue, we did a pretty extensive story on document management outsourcing specialist DataBank IMX. Databank CEO Dick Aschman explained how the down economy has been a bit of a mixed blessing - as business are certainly willing to outsource more, but that some of Databank's current customers had reduced volumes due to a fewer number of transactions. ACS' year-end/fourth quarter results would seem to confirm this, as they report a record amount of revenue coming from new contracts, but only a 6% growth overall. Now, granted a 6% overall growth is nothing to scoff at from a multi-billion company like ACS, but I'm guessing their overall growth figures would have been higher in a normal economy.

Any thoughts.

Howard Dean - The winner?

Did you know that Howard Dean actually won the 2004 Democratic primary. No, that's not what the history books say, but that's the real story according to Garrett Graff, executive editor for (the?) Washingtonian. Graff gave one of the keynotes yesterday at the annual TAWPI Forum and Expo. He also helped both the Obama campaign, as well as Dean's effort back in 2004. It's his theory, that while Kerry may have won the vote, Dean's influence on the Democratic party was much greater going forward. His talk was on how Obama's campaign did really unprecidented stuff with the Internet and text messaging as well, to beat McCain (although I think his biggest challenger was probably Hillary.) Anyhow, it was a fascinating talk. More in the next issue of DIR.

Canon invests in I.R.I.S.

Canon Europe has taken a 17% state in Belgian OCR/ICR/IDR and systems integration specialist I.R.I.S. In Feb., Canon announced it would reselling I.R.I.S. capture software products in Europe and this seems to be the next step in that relationship. Canon paid $31 million for its stake, which values I.R.I.S. at around $184 million, approximately a 40% premium over its market cap and about 1.2 times revenue. Remember, however, that the majority of I.R.I.S. revenue is from systems integration and not software.

Jukebox article

I remember writing articles in years past encouraging the use of optical disk jukebox storage for document images. Rich Payne, an end user who speaks at a lot of industry events, recently wrote this article in AIIM's Infornomics saying that jukeboxes have gone the way of dinosaurs. The writing has been on the wall for many years. Unfortunately, I often found myself swayed by the energetic pitches of jukebox vendors such as Plasmon, which pretty much bet its whole company on next-generation UDO optical disk jukebox technology. Plasmon's filing for bankruptcy last fall may have been the death knell for jukeboxes. There are just too many people out there developing better, cheaper, faster, magnetic technology for a niche technology like optical disk storage to remain viable.

Ralph