Kofax Hires ex-Mitek Exec

In response to Mitek's announcement yesterday that it has hired a new senior VP of sales, Kofax announced that it had hired Mitek's previous senior VP of sales. Drew Hyatt has joined Kofax as senior VP of mobile applications. He will be based in Irvine, CA, and assuming he lives in San Diego (where Mitek is headquartered) he will join a number of ex-Captiva employees who make the commute north to Kofax (many by train).

 Kofax introduced its Mobile Capture technology earlier this year. There was a ton of end user interest in it at the Kofax Transform event, but CTO Anthony Macciola cautioned that the product/toolkit was still in its early stages. That said, Kofax certainly has some aggressive sales plans for the technology. 

An interesting sidenote is that Kofax's technology, to me at least, seems clearly to cross into the patents Mitek has in this area, but neither Kofax or Mitek has commented this issue (even though I've asked). Part of the USAA lawsuit that we mentioned yesterday involves trying to invalidate these patents.

Kofax's stock has seen a decent bump up this week, but it may just be due to general market conditions. That said, Mitek's stock was up another 13% through mid-day, so maybe mobile capture is attractive to investors.

Hiring Spurs Stock Uptick

Investors seem to be in favor the mobile capture ISV Mitek's hiring of a new senior VP of sales and business development. Michael Diamond has experience in the mobile payment space, as well as the electronic transaction space in general (with S1 Corporation). He also spent time at IBM.

Mitek's stock value rose 14% today after Diamond's hire was announced. The value had sharply declined from a high of more than $13 per share - to a low of less than $2 per share in April after USAA sued Mitek for stolen technology and called out the validity of their patents around mobile imaging. Mitek is fighting the claims and its stock closed today at $3.35 per share, giving it a market cap of $85 million - still not bad for a company that reported just $1.2 million in revenue last quarter.

Mobile technology space is still clearly valued by investors.

Info 360 Follow-up

So, that may be the last one. At least that was rumor circulating around following the show. Apparently, Questex was talking about moving the event to a hotel in New York for next year and focusing more on educational seminars. You know, kind of the like what AIIM is already doing. I talked with one long-time event attendee, who commented something to the effect of, "That shipped has sailed."

When all was said and done, I counted somewhere north of 80 exhibitors for the info 360 (former) AIIM event and 40 for the On Demand side. Ricoh was probably the biggest name on the On Demand side (former staples like Xerox, Canon, and Sharp were all missing), and I think they were a very late addition. Personally, I had a great time networking at the event, even though it was really small and compact. I'd say I had close to 20 quality conversations/contacts at the event, and didn't even get to a couple booths I had wanted to. But, the exhibitors were not happy. Not a one that I talked to, which probably spells doom for the event.

On Wednesday, there was actually some decent traffic for a few hours early, then that was about it. Early on, everybody seemed satisfied that some end users had apparently made it to the show floor - after all, New York is a good market for imaging and content management. But then things pretty much dried up and on the second day or the event, which was actually shortened to two days for the first time I remember, there was really nobody there. 2,000 attendees total over the course of two days - that would be my generous guess.

Ricoh Convergence 2012

Out here in Vegas the Ricoh Convergence conference before heading over the New York this afternoon for the info 360 event. Convergence is Ricoh's annual dealer event and there are more than 600 people in attendance. (Heck, it may turn out to be bigger than info 360 - just kidding, I hope.) The Ricoh event is being held at the Wynn, which is really a sweet location. Full casino, for those who go in for that, and electric curtains in the rooms for us less adventurous types.

Ricoh is an interesting dichotomy in a couple ways. A dual-dichotomy, if you will. First, like many organizations in our market, it is battling with the whole dealer/reseller vs. direct sales channel conflict. Of course, Ricoh's acquisition of IKON in 2008 didn't help things on this front. IKON had a huge national sales force that has now been merged with, after many fits and starts, Ricoh's direct sales force.

At Convergence, Ricoh stated a couple times that the digestion of IKON is now complete so it can re-focus its resources on growing its business. Then, someone from Ricoh indicated the IKON assimilation is "almost" complete, and we heard that there may be more changes in July. Ricoh has already changed its management team pretty extensively since last year's Convergence event.

The current CEO of Ricoh Americas is Martin Brodigan. He's been with Ricoh a long time, most recently serving as COO of Ricoh Americas. He's been in his current position less than two months. Brodigan has been charged with turning around U.S. sales, which last year he said were "unacceptable." Ricoh apparently lost quite a bit of money. In addition to declining paper use (which, at the event, was reported at 10% worldwide and accelerating), which obviously hurts printer sales, Ricoh had supply problems caused by the Japanese tsunami/earthquake, as well flooding in Thailand. Exchange rates also negatively affected the company.

Ricoh's dealers accounted for 32% of units sold in 2011, up from 30% in 2010, which is a good trend for the dealers, but were not sure how good of  a trend that is for the former IKON.

Ricoh's second tricky conflict has to do with its legacy as a copier/printer business and its desire to move more toward professional services. Ricoh seems to have a few visionaries that are at the forefront of leading the company towards a "services-led" business model. However, there is still a ton of inertia-related to hardware sales and print click-charges that these visionaries have to fight. Much more on this in our next premium issue!

MetaSource Hosting AppX Conference

MetaSource, one of two national distributors for EMC's ApplicationXtender product, will be hosting its Second Annual National Partner meeting next week. According to a press release,  "The three-day conference for MetaSource partners and guests who offer EMC’s ApplicationXtender and Captiva Software Solutions will be held at the Borgata Hotel Casino & Spa in Atlantic City, New Jersey, June 10th-12th."

I just thought this was interesting because I just got back from the annual Cranel reseller conference, where EMC ApplicationXtender was also featured. Cranel is AX's other distributor. Even though its been years since EMC has had a major new release of this product, it apparently continues to make improvements, such as this application integration module.

MetaSource is expecting "over 80 attendees from 32 AX/Captiva partners."

ReadSoft Lands Large Capture Deal

ReadSoft's acquisition of foxray has started to pay some dividends. Today the Swedish capture and business process automation ISV announced one of the largest deals in the history of its company--worth almost 2 million Euros in an XBOUND capture software sale. XBOUND is the document capture platform that ReadSoft picked up with foxray.The customer is Debeka, which ReadSoft lists as "Germany's largest private health insurance company."

According to a press release, "The first stage of the project will be to migrate Debeka’s old input automation solution processing approximately 76 million pages per year. In the second stage the organization is planning to expand the new input automation solution across all Debeka Group’s classes." We're not sure whose solution ReadSoft is replacing. foxray does already list Debeka as a reference, saying, "For many years, foxray AG has realized various projects with Debeka. The xbound platform is used to automate the processing of housing applications for the building society and has been in active use since January 2008."

Paradatec also counts Debeka as a customer. According to a Paradatec newsletter, Debeka processes 200,000 claims and invoice images per day utilizing Paradatec's data capture. Of course, foxray and Paradatec are partners, so even though ReadSoft has its own invoice and claims capture technology, we don't necessarily see Debeka moving away from Paradatec. (XBOUND is more of a document capture/batch management workflow platform than a data capture application.)

On the document capture side, this is certainly a great win for ReadSoft. Said Bob Fresneda, who was recently promoted to president, ReadSoft North America, "I think with this nice win due to our acquisition of foxray and a couple of nice, normal wins here in our SAP AP space within the US you can see that the ReadSoft business model is working well."

Number of Large Capture Deals Announced

Delayed deals were the most prominent trend among document capture software vendors in the first quarter of calendar 2012. (Sample story from premium edition on Q1 results.)  Over the past couple weeks, it seems that maybe some of those delayed deals have been brought to close, as we've seen multiple announcements of large deals from a ReadSoft and Kofax. Four of the deals were related to accounts payable automation-with Kofax's deals coming in Oracle environments, where its MarkView process automation software has traditionally been strong and ReadSoft's in the SAP space, where it has traditionally been stronger.

 Kofax announced an A/P automation deal worth over $1 million with a "leading global cruise ship line," as well as an A/P automation deal with Helena Chemical Company in Tennessee for more than $440,000. ReadSoft, meanwhile, announced an A/P automation deal for more than $310,000 with a "a global giant in asset management," and a $470,000 invoice processing deal "with a significant international company that provides pipeline and storage facilities to the oil and refined products sector, as well as owning fuel and asphalt refineries." Kofax also won a $300,000 deal with a branch of the U.S. military for software to capture 1 million personnel health forms, medical lab reports, EKG results and other medical documents....annually."

Hopefully, this all leads to more positive second quarter results.

Cranel Event Follow-up

Had a great time at Cranel's annual North American Executive Partner event held this past week in Columbus, OH. This was the second year in a row that I attended - having keynoted the event in 2010. There were almost 70 resellers and a dozen vendor partners at the event, which VP of marketing Scott Slack said was about 20% larger than last year's event.

According to Slack, Cranel continues to grow despite a challenging landscape, which included losing Fujitsu as a partner in the past year. Cranel is a value-added distributor that focuses on the document imaging market with a combination of hardware and software products. In our next premium issue, we'll have an article featuring some insights from Slack on how Cranel has managed to stay ahead of the game.

For the second year in a row, the weather was beautiful, which was nice, because quite a bit of the Cranel event centers around golf. If you're a PGA fan, you know that Jack Nicklaus' Memorial Tournament is being held this week in Columbus. Cranel shared a house off the 12th green (a tough little par 3) where attendees were able to network and watch some great golf. We also had passes to head down onto the course.

I ended up following the Mickelson, Bubba Watson, and Ricky Fowler group for several holes, which was certainly interesting. Unfortunately, I can't disagree with Phil's complaints about the noise and the cell phones. I saw an huge amount of cell phone activity, including pictures, going on throughout the tournament with the marshals (as well as caddies) being asked to do an inordinate amount of policing related. Yes, it's a great convenience for spectators to have cell phones, but I'm thinking tournaments need to go back to banning them if that's how fans are going to act. It really was a huge distraction.  - Anyhow, that's my non-DI thought of the day.

Cheers.

EMC-Syncplicity

There certainly has been a lot of buzz around EMC's acquisition of Syncplicity,which was announced at EMC World last week. Syncplicity has been described as providing "cloud file management." I am currently at the Cranel conference, where someone described Syncplicity as a Box.net for the enterprise-meaning it's designed to have an easy-to-use interface for storing and accessing files in the cloud, but has all the security and governance you'd expect from an enterprise-level solution.

Here's a quote from Rick Devenuti, president of EMC's Information Intelligence Group (which also includes the Documentum, Captiva, and ApplicationXtender products), where Syncplicity will fall under. "In acquiring Syncplicity, we validate this concept by uniting enterprise ‘sync and share' capabilities for the cloud with governance and rigor that is synonymous with Documentum . As cloud, social and mobile dominate the way work gets done, our customers require more than simple containers for managing and sharing content."

CMS wire had a story with this quote from Syncplicity co-founder and CTO Ondrej Hrebicek on the differences between Box.net (where former EMC IIG marketing head Whitney Tidmarsh is now the general manager of Box Enterprise) and his company. From the CMS story: "Box has a web 2.0 interface, he explained. 'You have to check-in, checkout, drag and drop and so on,' he said. Syncplicity, on the other hand, is a cloud based data management platform, all of your files are consolidated in one place on the cloud. 'There’s single sign-on, instantaneous sync, security, remote wipe, end to end encryption, a policy engine, and so on…Users get all of those features without having to think about any of them at all.'"

DocPoint Hires New Executive

DocPoint Solutions continues to ramp up. The Annapolis-based SharePoint ECM systems specialist recently hired a technology industry veteran as its director of solutions and technology. Martin Hardy brings "over 15 years’ experience in information technology management, business process improvement, systems architecture, information security, system engineering and employee development" to DocPoint, which is a wholly owned subsidiary of QAI, a document imaging service bureau and systems integrator.

DocPoint, which was launched in 2008, was one of the first ECM integrators to focus solely on SharePoint applications. Its focus has paid off, as in 2012 it is expecting to surpass $10 million in sales. Hardy brings an impressive SharePoint-related resume to the table having "led over 60 major projects involving the design, configuration and implementation of enterprise-wide SharePoint solutions."

According to a DocPoint press release, "Scott Swidersky, President of DocPoint Solutions, cited unprecedented business growth and an upsurge in larger, more complex implementations as the reasons prompting the creation of this key management position. Swidersky stated, 'SharePoint 2010 has redefined the marketplace, establishing its place as a preferred electronic content management (ECM) solution....

DocPoint Solutions is securing more challenging projects that demand front-end attention to the talent mix assembled and a single point of responsibility across longer project life cycles.”

 

ReadSoft Restructures Organization

ReadSoft brought in a new CEO late last year, who has now overseen a restructuring of the ISV's operations. ReadSoft, which is based in Sweden, develops document and data capture, as well as workflow/business automation software. One of the main tenants of the restructuring is a stronger position for the company's North American operations.

Historically, North American revenues have been considered under ReadSoft's "U.S. and rest of the world" region, which also included AsiaPac and Latin America. The whole entity grew 20% in 2011 and accounted for about 30% of ReadSoft's total revenue of $99 million - with the U.S. assumed to be generating easily the largest chunk from its region. Going forward, U.S. and Canada will be accounted for as ReadSoft's North American geography, with Latin America and AsiaPac being a separate geography. ReadSoft will also continue to have Northern European and EMEA geographies.

As part of this restructuring, Bob Fresneda, who has been managing director/president of ReadSoft U.S., is now the president of ReadSoft North America. Fresneda has also been appointed as a Senior VP and corporate officer serving as part of the ReadSoft Executive Management Team.


The Executive Management Team also includes new separate CTO and COO positions with co-founder Lars Appelstal being named the CTO and Peter Sandin, former VP of Global Professional Services, taking over the title of COO.

ReadSoft will also consolidate five development centers into two: "one for Capture Automation consisting of the former solution labs Capture, Online, and XBOUND and one for ERP Automation consisting of the former SAP and Oracle solution labs." Most of these development centers were picked up in acquisitions over the years, including this year's foxray acquisition, which is responsible for the XBOUND product line.

According to a press release: " “We have been working on this for quite some time to achieve a more efficient, agile and process-oriented organization”, says Per Åkerberg, ReadSoft’s President and CEO.

“This is an exciting time for ReadSoft both on a global scale and in North America as Per Åkerberg’s vision drives these organizational changes to promote ReadSoft’s overall growth and success,” said Bob Fresneda, President of ReadSoft North America. ”After my ten years at ReadSoft, it is fulfilling to see the expanded commitment among Per and the Board of Directors to the North American region, and I look forward to working closely with them on our future success.”  

Update to DIR Archiving Page

Recently updated the Archiving Page on documentimagingreport.com. It includes a new news item about The Crowley Company upgrading its partnership with Certifi-Media. Certifi-Media is a Rochester-based company I did a feature on a few years back. They have some cool image processing technology both in the area of book scanning and comparing captured images against pre-determined standards.

MS SharePoint 2012 Conference Registration Open

Registration for Microsoft's SharePoint 2012 is now open. The conference, which appears to have become an annual event, is being held in Las Vegas, Nov. 12 -15 at Mandalay Bay. The event, which is typically well attended - the one I went to was sold out a few years back - offers 175 breakout sessions. They are advertised as such: "Learn how to better use SharePoint 2010 and get educated on the latest features and functionality from the new SharePoint!"

So, maybe it's not quite time to reveal the next generation as SharePoint, which reportedly included some more document imaging functionality, like viewing, but maybe attendees will get a preview.  At $1,500 per attendee (with $400 early registration discount), plus $200 a night in a show hotel, it's not a cheap date. But, there are typically some solid sessions, including keynotes by top MS executives. I actually got to see Steve Ballmer talking about content management there!

It's still unclear how much traction SharePoint is having in the document imaging space. We definitely get mixed reports, but many people remain bullish on its future. One look at the exhibitor and sponsor list reveals that indeed, a good number of document imaging vendors are investing in developing a SharePoint business. KnowledgeLake, Open Text, Fujitsu, Kofax, Laserfiche, and Digitech have all taken out sponsorships, with AccuSoft, AnyDoc, Psigen, and Vizit listed among the exhibitors.

Correction to Kodak Article

In Friday's premium edition of DIR, it was mistakenly mentioned that Kodak needed to work its way out of Chapter 7 bankruptcy. Kodak, of course, is in Chapter 11, meaning it is reorganizing and not liquidating. I apologize for the mistake.

Here's a link to the article (with the corrected text), which pretty much says that Kodak DI remains operating as a healthy entity - investing in R&D, new products, and personnel, even while Kodak Corporate continues to struggle.

SAP Makes Bid for Ariba

German ERP giant SAP has announced a bid to buy on-line commerce ISV Ariba for $4.3 billion. The deal is interesting for our market because Ariba provides an e-invoicing service, for which it has a deal with ReadSoft for conversion of paper invoices, as well as workflow. We're not sure how much business ReadSoft generates from that partnership, but we're thinking an acquisition by SAP would mean Ariba would convert to the Open Text platform for capture and worklfow because of SAP's OEM agreement with them.

Then again, according to one article at least, there seems to be some notion that Oracle will make a counter bid for Ariba. This SAP bid is already seven times its expected 2013 revenue, so that's certainly a good sign for B2B software entities, which is where most of the vendors in our market play. The press is playing up the deal as SAP ramping up its cloud strategy.

Heading to Info 360

Looks like I will be heading to the info360 show after all. For the first time since 1997, I was considering not attending this year's event, which used to be called the AIIM show. (AIIM has pulled its sponsorship and held its own conference in March). But, it turns out I'll be on the road that week anyhow, so I thought I'd stop in New York and see what's going on. As I've stated in an article in a premium edition of DIR, exhibitor numbers appear to be way down. Combined the AIIM and On Demand shows list about 125 exhibitors - down from close to 400 just a couple years ago.

That said, some of the usual suspects will be there: IBML, HP, Fujitsu, KnowledgeLake, OPEX, Accusoft, AnyDoc, Crowley, Digitech, and nextScan. As always, I look forward to catching up with some old friends and colleagues, and meeting some new people as well. Please call or send me and e-mail if you will be attending the event and want to get together.

Ralph

AIIM Hosting Kodak DI Conference Call

There have certainly been a lot of rumors and speculation surrounding Kodak Document Imaging since Eastman Kodak filed for bankruptcy in the U.S. Tomorrow AIIM will be hosting a Webinar during which Russell Hunt, Regional Business Manager for the U.S. and Canada for Kodak DI, will discuss Kodak DI's plans for the future.

Our discussions with Kodak have indicated that the Document Imaging business remains healthy. In fact, in the wake of the bankruptcy filing, DI was listed as one of Kodak's "core businesses," which all together generated $214 million in adjusted EBITDA on $2.3 billion in revenue in 2011. Under its restructuring, Kodak's core businesses are being counted on to support Kodak's "growth businesses" until they too become profitable.

We'll be interested to hear Hunt's update. Not sure what he will address, but we certainly haven't heard of any shortcomings in the DI market due to Kodak's bankruptcy, aside from the $1 million-plus dollars that was listed as being owed to VAD Cranel (#47 of Kodak's 50 largest unsecured creditors). We understand that all Kodak's rebate programs to its VARs were being honored. There are also a lot of obvious parts suppliers listed among the unsecured creditors, but, we have not heard of any shortness of Kodak products in the market.

Mitek Has Tough Month

It's sure been a tough couple months for Mitek shareholders. In April, Mitek customer USAA filed suit against the San Diego-based recognition technology specialist and called its mobile patent portfolio into question. That action basically cut Mitek's market cap in half from more than $300 million to over a $150 million. Mitek then followed up last week by announcing fiscal second quarter revenue results that were almost 60% lower than its Q2 2011 results. Today, Mitek's market cap was floating around $64 million.

For the three months ended March 31, San Diego-based Mitek reported revenue of $1.2 million, which created a $2.2 or $2.8 million loss, depending if you're using non-GAAP or GAAP reporting metrics, respectively. On a conference call for investors, Mitek CEO Jim DeBello reflected on the "lumpy nature" of Mitek's business model. In other words, Mitek sells to a channel that deploys it check capture technology and then markets their solutions to banks.

If you haven't been following along, Mitek is a pioneer in the market for capturing checks and data with smartphones. Mitek reportedly has 100 banks using its technology, including the eight largest banks in the U.S. In all, Mitek boasts agreements with 315 financial institutions to deploy its mobile check capture technology, which are in varying stages of implementation. Mitek's contracts typically net it around 10 cents per transaction.

Mitek also has some patents around document imaging and is planning to roll out a mobile bill paying application later this year. Mobile bill paying currently in pilot stage at a couple sites and apparently involves taking a picture of a bill and then being able to pay it with your phone. Mitek has also set up a mobile insurance quote app that it has licensed to Progressive. (Check out the Flo commercial.)

DeBello pretty much said that it has been business as usual for Mitek, the company had built up a great infrastructure of customers, and that the market Mitek is focusing on is pretty unpredictable because of its nascent nature - but also a market full of opportunity. DeBello also said the USAA lawsuit has not had a negative effect on sales but has certainly consumed some management resources.

Management Changes at Databank IMX

DataBank IMX has gone through a management shake-up. Co-founder Chuck Bauer was recently named CEO of the U.S.-based service bureau and document imaging systems integration specialist. Bauer had been serving as president COO with Fred Zaeske, who was brought in last year, serving as CEO. Zaeske, a former executive at Zebra Technologies, had been introduced to Bauer and co-founder Dick Aschman by Svoboda Capital Partners, which announced an investment in DataBank last January.

The investment was reportedly taken on to drive additional growth for DataBank, which we understood had been enjoying annual double-digit organic growth at the time. The growth plans included acquisitions, and late last year, DataBank acquired Information Access Systems, an Orlando-based Hyland and IBM Datacap reseller. Zaeske told us to expect two to three acquisitions per year from DataBank, which launched in 2005 when DataBank, Inc. acquired the assets of service bureau roll-up flameout ImageMax to create DataBank IMX.

DataBank IMX seemed to be building some solid momentum, but it's not clear why Zaeske left. In addition, Bob Zagami, director of marketing for DataBank and  a well-known industry personality, departed from DataBank shortly before Zaeske did. Aschman remains a director.

Kofax Posts Weak Q3

Document capture and BPM ISV Kofax continues to struggle. Kofax followed a weak fiscal Q2, with an even weaker Q3 (ended March 31). The Irvine, CA-based company reported revenue of $58.7 million, which represented a decline of almost 6% in terms of constant currencies. However, CEO Reynolds Bish remained optimistic and predicted a strong fourth quarter and projected low single-digit revenue growth in U.S. dollars for Kofax's total fiscal year 2012.

Said Bish in a prepared statement, "We experienced an unusual number of delayed orders in our core capture business. We have not seen material changes in the competitive landscape or macroeconomic environment and, as a result, believe these delayed orders are attributable to less than adequate execution in our core capture business. We’re taking actions to minimize the risk of this reoccurring in future quarters and should begin realizing the related benefits during the current and next several quarters.

"After a thorough review and based on our fiscal year to date results and outlook for the current quarter, for fiscal year 2012, we continue to expect high single digit total revenue growth on an as reported basis – including acquisitions to date and assuming current exchange rates, low single digit total revenue growth in U.S. dollars on a constant currency basis and an Adjusted EBITA of at least the $40.2 million reported in fiscal year 2011. This clearly implies a seasonally strong fourth quarter, which is very consistent with historical patterns.”

Especially alarming is Kofax's continued decline in its core applications software business, which as Bish clearly confirmed to DIR at Kofax's Transform event earlier this year, is the key to the future success of the company. Applications software licenses saw almost a 30% drop in sales in constant currencies. Bish said "During the third quarter our Singularity, Atalasoft, MarkView and OEM / POS revenues met or exceeded our expectations." He put the blame for software licensing shortfall squarely on the shoulders of the company's flagship document capture software business.