Another Big Deal in the MFP World

We're talking about the M&A activity that has taken place in this sector over the past couple years. It now appears that Canon is buying Oce in a deal that is being valued at approximately $1.1 billion. Canon has been under pressure since a buying spree by Ricoh recently culminated in Ricoh acquiring Canon's primary North American reseller partner IKON. Of course, a year earlier, Xerox had picked up another large Canon reseller, in Florida-based Global Imaging Systems.

Not that Oce equates with buying a dealer channel, but Oce does have its own sales force and channel, which will be subsumed into Canon. On the document capture front this deal probably means very little, although Oce does have some digital mailroom products and services it offers its customers. Oce was the former home of the CGK OCR technology, before it sold it to Captaris a couple years ago, as part of its efforts to concentrate further on the output market. Oce, of course, then turned around and developed/licensed new document capture technology to address the digital mailroom. Anyhow, at least Canon was able to buy someone, and Oce does have some pretty good stuff in its portfolio.

Ralph

Kofax releases Q1 statement

Kofax has released a statement regarding its fiscal first-quarter  (ended Sept. 30) numbers that sounds fairly positive to us. Apparently the distribution business continues to struggle but the software numbers seem acceptable. Here's CEO Reynolds Bish's statement:

"I’m pleased to report that we made good progress and performed better than expected in our software business this past quarter. Market conditions have stabilized and show early signs of improving to a limited extent but continue to be challenging and difficult to predict. As a result and excluding the effect of the 170 Systems acquisition, which should contribute approximately $22m of revenues after acquisition accounting, we continue to expect low to mid single digit organic revenue growth in our software business this financial year.”

Upcoming industry events

Here's a few we just posted on our Web site.

Let me know if there are anymore you'd like me to post.

Ralph

Questex Marketing AIIM Show

Questex, which recently filed for bankruptcy, has "has reduced the 2010 Conference registration fees by nearly 50%. The event is scheduled to run April 20-22 next spring in Philadelphia.

SharePoint Conference continued

Had to chance to attend a session yesterday given by the KnowledgeLake CTO and another KLake developer. They discussed some of the details behind SharePoint's improved document management features. A lot of scalability and search issues have certainly been addressed, as well as some records management stuff.We'll get into details in our newsletter, but suffice to say that with a few tools added on SharePoint can do a better job of image management than it historically has. Of course there is still no viewer and we're not sure the out-of-the-box workflow is quite there....

The session I presented on Imaging-enabling MOSS was a bit disappointing in the attendance. Of course, they moved the room following all eCopy's marketing efforts...anyhow, it sounds like some people are just starting to do basic document image and retrieval - at least our panel members from Nike and Arizona State were, but I still haven't seen much high-volume transaction content management in SharePoint.

Live From SharePoint Conference

This place is really alive. It's a nice change from most recent conference/exhibitions that I've been to. Instead of people complaining about how dead the event it, I'm seeing plenty of busy vendors here. I just sat through a full presentation in the Laserfiche booth - so the interest in imaging is obviously. I'm interested to see what sort of attendance I get at my panel presentation on image-enabling SharePoint in another hour or so.

The crowd is mostly an IT crowd, a lot of SharePoint integrators, both in-house and external contractors. The general consensus, granted, it's a fairly biased crowd, is that traditional ECM ISVs better embrace SharePoint or die. As expected SharePoint 2010 has plenty of document management upgrades. Apparently, even though 2007 represented a significant upgrade over past versions, it was still fairly short as Microsoft corporate VP Jeff Teper said the company tried to make as many improvements as possible based on the 20 document/content management suggestions it got.

This includes upgrades in areas like scabability, search, records management, workflow, and a few other areas.

More later.

SharePoint Conference

Well, we made it to Las Vegas for the Microsoft's second SharePoint Conference. Scheduled to be announced at this year's event is SharePoint 2010. The next generation of Microsoft' ECM/collaboration/portal platform. Preparing right now a keynote from Microsoft CEO Steve Ballmer on the launch. Last night's pre-conference exhibitor floor party was buzzing. Word is that there are something like 7,000 registrants here at the Mandalay Bay, and the registration lines certainly overwhelmed the staff. The exhibition floor was teeming with Microsoft developers and other IT types. There are quite a few document imaging vendors on hand. Last night we saw booths from KnowledgeLake, Hyland, Laserfiche, eCopy/Nuance, Kofax, Canon, Fujitsu, Kodak, EMC, GoScan, Psigen, AtalaSoft, Informative Graphics, SpringCM, BlueThread and I'm sure we're missing a few. Systems integrator KeyMark is also exhibiting.

Incidentally, we caught up with Mike Stuhley from GoScan who told us his company has developed a booming business capturing information on Swine Flu vaccines. He said GoScan, a fairly small Southern California-based ISV with a very easy-to-use capture interface, has landed something like five statewide contracts, as well as several counties...

This promises to be an exciting show, and we'll have complete coverage in our next newsletter.

How The Zumbox Works

Here's the explanation we received from Zumbox's PR team (They are the company being sued by Pitney Bowes for their paperless mail solution.):

As a paperless postal system, Zumbox allows for mail and other content to be sent securely as digital files. This means that a biller can send the same files that go to their printer directly through Zumbox in parallel to their paper mailings and manage the transition to paperless mail as recipients get comfortable with the new option. So in terms of technical details, the system is simply built to deliver print-ready (and other – any format) digital files to street addresses online. All mail is received at Zumbox.com where a recipient enters their street address to effectively claim their digital mailbox; there is one for every street address in the country. It should also be noted that Zumbox is a closed system, with bank-level security and complies with PCI, HIPAA and BITS security standards.

We also received a response from Pitney Bowes and the patents appear to have to do with electronic delivery and there isn't any talk about scanning or anything. 

However, we will say that we find Zumbox's digital mailroom concept very intriguing - especially when potentially coupled with a scanning/service bureau operation. 

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.