Bish's Nasdaq plans for Kofax

An excerpt from a story on Kofax' Transform appearing in this week's premium edition of DIR:

Kofax CEO Reynolds Bish believes a listing on the Nasdaq could have positive affects. “It has taken us quite a bit of work to prepare the information required by the SEC to list on the Nasdaq,” Bish told DIR. “Now that that has all been completed, we want to move ahead with our listing. Previously, I said I’d like to get it done by June 30, but that will likely be delayed due to a poor second quarter (ended Dec. 31). I’m thinking we will still file in the current calendar year, but not until we’ve demonstrated that we’ve turned around our business and built some momentum.”

Bish’s plan is to list Kofax on the Nasdaq through the provisions of the JOBS (Jumpstart Our Business Startups) Act, which was passed last year. According to Bish, listing through JOBS is an easier process than following the traditional listing route, which requires compliance with Sarbanes-Oxley. “Our plan is to make available on the Nasdaq the minimum number of shares we are allowed,” said Bish. “The Nasdaq listing will enable all our shares to be traded on both exchanges [Kofax is currently traded on the London Stock Exchange (LSE)], and eventually, we expect the majority of our trading will move over to the Nasdaq. This will be a positive because historically companies like ours are valued at a 30% premium on the Nasdaq compared to the LSE.”

Jazz Sound & Software Development

Came up with this one after a few nights out on Frenchmen Street in New Orleans, while in town for the AIIM Conference, Canon ICS National Reseller Meeting, and Microsoft Dynamics Convergence.

Frenchmen Street was recommended to me by the drummer in the band playing at the Canon Conference. It's an area a few blocks outside of the French Quarter and features multiple bars with jazz and other types of musical acts performing nightly. But, I'll compare trying to find the right act to software development.

The first night on Frenchmen we got there kind of late and the first band we heard had solid sound - a couple of strong horn players, but only played two songs before they called it a night. We'll call that version 1.0. It proved the concept for us and made us want to go on to the next level.

Version 2.0 was better - a strong band in a bar a little up the street. We heard several great songs, but they were crossing over a little into rock'n roll, so it wasn't pure jazz. The next night, we hit three more places, the first one being too crowded and the second - definitely too loud and too much rock. Then finally, when we were about to give up on things, we made on last stop at Vaso's on Decatur and Frenchmen and found a great trumpet player leading a band with some true jazz sound. Version five was the killer app!

Version 6.0, the next night, started out a Vaso, but was a disappointment, but version 7.0 really  hit it out of the park.

The lesson here I think is that finding a good jazz bar is like software development often is - it often takes a few tries before an ISV comes up with a truly successful product - even if the concept is proven as solid in version 1.0. Multiple times I've seen software companies struggle out of the gate before finally figuring out exactly what they need to do to successfully market their product and accelerate their growth. I'm not sure what this really proves, but I think it says that patience and persistence are important qualities when developing software, as well as finding the right jazz sound.

Options for Mobile Scanning

For several years, I've been pretty adamant encouraging vendors to fill what I feel is a hole in the document scanner market. That is connecting mobile scanners to mobile phones. I mean they are both marketed as mobile devices, why can't one talk to the other in a truly mobile, i.e. wireless, fashion?

Last month, I ran this article on Canon's WU10 appliance, which can be used to power a Canon mobile scanner, and contains a wireless radio that can transmit scanned images directly to a smartphone. In the article, I mistakenly described some of Visioneer's technology which accomplishes the same thing. Visioneer's Xerox Mobile Scanner contains a custom built Eye-Fi card that enables it to capture multi-page PDFs and transmit them wirelessly to smartphone. I was only familiar with an older version of the Visioneer mobile scanner, and I apologize because apparently this new version has been on the market for more than a year.

Visioneer President and COO John Capurso pointed out my mistake. This let to a discussion on smartphones and their role in the capture and printing space, which was predicated by a previous blog post: Document Scanners, MFPs, and Mobile Phones. My premise in that post was the tablet computers and smartphones pose a bigger threat to the MFP market than they do to the document scanner market (you really have to read the post for that to make sense.)

John does not see smart phones as a threat to either set of devices. His position is that mobile devices are (going to be) the new PC. "Mobile devices are going to be the focal point of a lot of usage of MFPs and scanners," he said. "They are going to be the peripherals that we utilize with our mobile devices, just like they are the peripherals that we utilize with our PCs today."

Great point. Basically, here's the use case he defined. If I receive a document on my mobile device that I need to print, I wirelessly access my network through my smartphone/tablet and print it on the most convenient printer. Conversely, depending on what type of document I need to capture to my mobile device, or to the cloud by passing it through my mobile device, I connect wirelessly (presumably utilizing some sort of capture app) to a dedicated document scanner or MFP (or if it's a single page document just maybe use the camera on the mobile device), drop the paper in the feeder, and drive the scanning process through my app.

Does that all make sense? It's all about creating paper capture options for the end user, which are mobile, wireless, and hopefully easy to use. Then, of course, you need to combine those paper capture options with some other data capture options on the smartphone/tablet and you've got yourselves a business solution for the future!

Cheers. I look for many of you at AIIM 2013 Conference.

A Look at Kofax's First Mile Marketing Strategy

Just got back in the office from another Kofax Transform event. Don't know many years I've been covering this event - at least since 2006. This year's event was in San Diego, and the weather was fairly awesome. The event itself was strong too, with close to 600 attendees from 25 countries.

One of the themes was Kofax's introduction of  a new marketing message that is being built around the idea of building out the First Mile (TM) of customer interaction:

That picture is Martyn Christian, CMO of Kofax, presenting on "Delivering on the First Mile." Basically, Kofax's message is around connecting "systems of engagement" with "systems of record," and it was a good thing that John Mancini, president of AIIM, and Geoffrey Moore, author of Crossing the Chasm and other books, were around to help explain this marriage. Both Moore and Mancini have spoken and written on this topics for several years. But, from my standpoint at least, Kofax is the first vendor I've heard that has developed a coherent strategy for really connecting the two.

And this strategy is built around SPAs, or smart process applications. I'm not going to get into a huge explanation of what SPAs are right now, but Forrester's Craig LeClair does a pretty good job of it in this article that appeared in last week's premium DIR.

Basically, the First Mile message is that businesses need a set of technologies to connect their evolving set of customer interactions with their back-end line of business systems. In other words, customers are communicating with businesses in an increasing number of ways - paper, e-mail, social media, call centers, etc. And businesses are under increasing pressure (due to the potential speed and ease-of-use of properly executed digital transactions)  to process these communications in an efficient and customer friendly fashion. Capturing paper communications effectively is certainly one avenue to this, but so is capturing e-mail and mobile interactions - and not only capturing these communications, but enabling customers to input them in a way that is intuitive and user friendly. Kofax is attempting to deliver on this promise with a combination of multi-channel capture, BPM, and analytics technologies

All that was pretty cool, and there was a lot more that went on at Transform that I will be covering through various avenues (multi-channel communication?) over the next few weeks. Also, next week I'm headed to New Orleans for both the Canon's ICS Division (formerly IFS) national reseller meeting and the annual AIIM Conference, as well as a stop in at Microsoft Dynamics Convergence. Let me know if you are going to be in town and want to connect.

Document Scanners, MFPs, and Mobile Phones

Mobile capture is a hot topic. A couple years ago, Harvey Spencer Associates projected a 50% CAGR for the mobile capture software market through 2015 - at which time it would reach $1.5 billion. Last time, I talked with Harvey, he wasn't backing off that figure. Capture market leader Kofax, whose Transform conference I am currently attending in San Diego, has also been bullish on capture opportunities - and probably with good reason. If you remember, it was by far the hottest topic at last year's event. And I'm looking forward to the breakout session on "Creative Uses of Mobile Capture."

But this column is not being written to argue whether or not mobile capture will take off, let's just assume it does - even with some help from oddball products like the Scandock. The question is will it cut down on the sales of document scanners? I think the answer is no, as most people will consider any mobile capture being done as additive to the batch scanning that is done with document scanners. After all, not many people are going to do batch scanning with a smartphone, which is typically what you do with a document scanner. Of course, I guess mobile capture could potentially reduce the size of the batches that need to be scanned.

However, it's my opinion that MFPs are the hardware that is in real danger with the continuing penetration of smartphones and tablets. Tablets especially are great devices for viewing documents - meaning you don't have to print the docs - which directly impacts the MFP space (and potentially hurts the document scanning space as well but less directly- because there still has to be governance built around any business documents viewed with anything, which is why multi-channel capture becomes so important to ISVs and VARs going forward).

What prompted this post was a conversation I had last week with someone who was doing ad hoc scanning on their MFP and couldn't figure out why MFPs just weren't going to replace document scanners. I tried to explain that this was a conversation we'd been having for years...but he was not convinced. And that got me thinking about smartphones and why they wouldn't replace scanners either...but MFPs.

Let me just draw one picture for you. In today's computing market, people want to do more with less. You want 100 apps on your smartphone, not 100 computing devices. And for the past 10 years, document scanners have done nothing but pack more functionality into a smaller footprint. Document scanners are sleeker, simpler to use, and higher quality than they ever were before. Can the same really be said about MFPs? I don't know the MFP market as well, but I've certainly seen a few devices in recent years that looked a lot like Frankenstein's monster due to their having so many add-ons and moving parts and pieces.

The bottom line are living in an increasingly digital world, and document scanners have always been about promoting that digitization. In contrast MFPs are still pushing printing as the primary driver. And, although they do a great job at printing, it's a dying market. Lexmark has come to this realization and that is why it has invested so heavily in software - led by its investment in long-time imaging leader Perceptive Software.

No, MFPs will never replace dedicated document scanners - but smartphones/tablets could replace MFPs.

OCR/ICR Survey Highlights Infographic

We originally highlighted the results of this AIIM survey, (sponsored by Parascript) when it first came out last summer. (Download the entire report here).

Some interesting outtakes, some of which have been highlighted below in an outstanding infographic:

• 55% of respondents who were scanning documents were key entering data
• Only 32% were using OCR with ICR and cursive recognition utilization significantly lower

 Check out the rest of this info:

Data Extraction from Forms infographic

Kofax Acquires BI and Analytics ISV - Altosoft

It's a move Kofax has been talking about for about a year now - at least since last year's Transform Conference when CEO Reynolds Bish told DIR, "One technology we may be looking at is analytics that can be embedded in our solution.” This morning's announcement of the acquisition of Altosoft is the realization of that vision. Based in Media, PA (just west of Philadelphia), "Altosoft’s software provides rapid, no-coding development of near real time reporting and dashboard applications through the use of a data integration and analytics engine utilizing in-memory techniques."

Basically, here's how I see BI and analytics fitting within the Kofax capture and BPM platform (and some of this was laid out at Transform 2012. Kofax has a full suite of technology for capturing data from paper, electronic documents, e-mails, and mobile devices. With the acquisition of Singularity, it also has a BPM framework of building and executing processes related to captured information. The BI and analytics fit in between these two pieces and help the Kofax platform execute these processes more intelligently because users can now better make sense of the data being captured.

This all ties into Kofax's new focus on Smart Process Applications (SPAs), an emerging space defined recently  by Forrester. In a recent conversation with Craig LeClair of Forrester, he described SPAs as combining technologies like capture, analytics, and BPM to address specific pain points for business - rather than providing broad infrastructures like ECM and ERP systems. LeClair basically said the time for infrastructure systems has passed and businesses now care more about addressing specific applications with multiple technologies than about installing the technologies themselves.

LeClair gave me the example of a coffee shop improving its incident report process by replacing paper forms with e-forms on tablets, as well as utilizing the tablets picture taking capabilities. From a Kofax press release, "SPAs automate both structured and unstructured work activities in support of collaborative processes. SPAs contain all or most of the following core features: document and content capture for incoming documents, forms, and faxes relevant to the business activity; embedded analytical tools designed for the business activity; collaboration capabilities for people to create content needed for the activity; and BPM tools for executing the steps involved in the activity."

Forrester is projecting the SPA market to grow from $600 million in 2012 to $3.9 billion in 2016.

Kofax, which had $87 million in the bank as of Dec. 31, 2012, paid $13.5 million for Altosoft, with additional earnouts available in over the next three years. Altosoft's 2012 revenue was $3.4 million with an EBIDTA of $500,000.

Hyland Acquires AnyDoc

Well this is one that might have occurred 10 years ago...Document imaging-centric ECM ISV Hyland Software has acquired AnyDoc Software. It's always been a good fit, as both companies have sold primarily through reseller channels and certainly have complimentary technology. Hyland and AnyDoc, in fact, share several channel partners who integrate AnyDoc's capture on the front end with Hyland's ECM on the back.

A couple years ago, Hyland made a move to go more aggressively after the capture space and even introduced some proprietary invoice capture technology that was designed to leverage its OnBase repository's integration with line of business systems. On top of that, there were rumors that Hyland was doing a fairly efficient job replacing AnyDoc capture technology with its own capture at some of the customer sites of Hershey Systems- a higher education integrator that Hyland acquired in 2010. But, our question for Hyland has always been, "Why re-invent the wheel when there is already a market full of great capture software out there?"

Of course, all that should be under water under the bridge now, as AnyDoc and its mature and proven capture technology are now part of Hyland.

Back in the mid-1990's, AnyDoc was one of the pioneers in automated data capture from documents. And, in the late 1990s, it was about the same size as Hyland. Since then, Hyland has grown to more than $230 million in annual revenue (per a recent article in the Plain Dealer), while our estimates have AnyDoc still at under $20 million. The reasons for this are likely multiple, but one definitely is that Hyland has done a much better job cultivating and growing its channel than AnyDoc has.

For example, while AnyDoc was one of the pioneers in automated invoice capture, it decided to go primarily direct with the initial version of its invoice capture software because it felt the technology was too complex for its reseller channel at the time. You can imagine the conflict that created. Meanwhile, while Hyland has introduced some direct sales into its mix, it's also done a good job moving upstream and really securing a lot of the top resellers in the document/imaging workflow space.

The synergies between the two companies should be great. AnyDoc's software, which was never its weakness, will now be available to the entire Hyland channel. Plus, Hyland larger support and development team will be able to help it move forward. In fact, there are already some ex-AnyDoc employees working for Hyland. Hyland gets a mature and robust capture product, which should only assist with their efforts in the ECM space - where leaders like Documentum, Open Text, and IBM, have also acquired capture ISVs.

TIS Projects Strong Growth for 2013

As it pre-announced in early January, Top Image Systems' 2012 fourth quarter numbers were somewhat disappointing. For the the three months ended Dec. 31, 2012, TIS reported just a 1% increase in revenue to $7.4 million. This brought its year-end total $31.3 million - still a 9% increase over its 2012 revenue.

TIS CEO Ido Schechter seemed optimistic about the capture ISV's prospects for 2012. He is quoted in the financials press release, "For 2013, we are providing guidance of revenue growth between 13% and 20%, indicating revenues of between $35.3 million and $37.7 million. We expect non-GAAP operating income in the range of $4.6 million to $4.9 million."

As we reported, earlier this month, TIS has re-organized its sales force to better sell its entire set of solutions on the global level. In addition to its document capture software, which is popular in digital mailroom, invoice capture, census, and other types of forms processing applications, TIS recently introduced a suite of capture products for mobile devices.

Part of the reason for TIS' optimistic revenue projections certainly has to do with the potential of the market related to mobile transactions. From their financials press release, "Gartner estimated that the mobile transaction market was approximately $170 billion in 2012 with 200 million mobile payment users, and estimates it will grow on average 40% per year to approximately $600 billion in 2016 with 400 million users. The pipeline of deals, variety of viable, revenue-generating use cases and market potential we are seeing for mobile capture is enormous.”

Harvey Spencer Associates has also projected low double-digit growth for the document capture market annually through 2016. These two markets combined should put TIS in a good position to realize its 13-20% growth projections for 2013.

A Closer look at Kofax's half-year numbers

Lot of interesting stuff in Kofax's report regarding its half year numbers .

First off, the Irvine, CA-based ISV's numbers were down fairly significantly:

• total revenue for the quarter was $63.7 million, which represented a decline of approximately 8% in constant currency from the previous year's second quarter (Kofax fiscal year ends on June 30, so its 2013 Q2 ended Dec. 31)
• software license sales were down significantly  - 24% - compared to the Q2 numbers for fiscal 2012. For Q2 2013, license revenue was just $25 million.

As usual, Kofax had plenty of reasons for this shortfall:

•  Apparently 2012 fiscal first half was unusually strong. CEO Reynolds Bish. "We noted that the prior year period had a very significant record. So the revenues for the first half of last fiscal year were significantly ahead of anything we had reported for that period in the past."
• That said, Bish gave two reasons why Q2 2013 revenue was lower than anticipated:

1. "We had a very large mid-seven-figure transaction slip out of the quarter into a future quarter. We still expect to close that at some point, but are not able to accurately forecast that."
2. "Our software license revenues in the Americas was also lower than we anticipated, principally because of all the changes that we began implementing in our overall sales organization during October."

Okay, so that's most of the bad news. Kofax EBITDA was also down almost 40%, but the company still managed to generate $15 million in cash through the first half of the year and has $87 million in cash in the bank.

Lot more interesting stuff that we'll get into some more details on in our upcoming issue of DIR, but basically Kofax hired Forrester to double-check some of Harvey Spencer Associates' numbers of the capture market. While Forrester's market size number were actually slightly larger than HSA's, their growth figures for capture were somewhat lower. And Bish blamed the Q2 software license decline squarely on Kofax's traditional capture business, while in the meantime spinning Kofax's future direction toward the newly defined SPA (smart process application) market.

SPA basically combines mobile and traditional capture with BPM and analytics to create high-end vertical applications. Forrester listed SPA as just a $600 million market in 2012, but with CAGR of close to 60% through 2016 - a much higher growth figure than it has for the individual capture and BPM spaces.

Bish concluded that he is optimistic in Kofax's immediate prospects for improving results, in part due to a revamped sales structure (we'll get into more detail in DIR), as well as, well, less than stellar Q3 2012 results that will be easy to improve on: "So, we certainly expect to report relatively significant year-over-year growth during the current quarter, expect that to continue into the half-year, and as a result of that, we have a pretty high level of confidence of returning to reporting more consistent software license and total revenue growth."

At last check, Kofax stock was trading at less than two and three-quarters British pounds per share on the London Stock Exchange, a drop of about 15% from what it was trading previous to the half year results being announced.

Top Image Sysems Reorganizes Sales Force

Top Image Systems, the Tel Aviv-based ISV that specializes in document capture solutions, recently announced it would reorganizing its worldwide sales force. According to a press release, "The Company is setting up a Global Solutions group to develop, manage and support market-driven solutions worldwide." Michael Schrader, who was formerly the managing director of TIS EMEA, has been appointed CTO and SVP, Global Solutions for TIS.

Historically, the majority of TIS' revenue has come EMEA, with invoice processing and digital mailroom solutions providing the primary markets. TIS also has a strong business in census processing worldwide. Last year, TIS launched a suite of mobile capture products aimed initially at the U.S. banking market and opened on office in New York City.

With the new re-organization, it sounds like TIS is now going to be selling both the mobile technology and its invoice and digital mailroom products worldwide. CEO Ido Schechter has been put in charge of TIS customer facing Field Operations Group.

Like many other public companies, TIS should be announcing its year-end 2012 results shortly. It has already projected 2012 revenue to come in at around $31 million, which represents close to 10% growth, but is lower than TIS previous guidance. In an earlier press release, TIS blamed delays in some major deals and the falling value of the Euro for the shortcomings.

There has been little mention of sales of the mobile capture technology yet, although the U.S. office has been only open since last summer. TIS has tried on previous occasions to market its traditional capture technology in the U.S. and has had some success in recent years working through its partner TransCentra - a partnership that began with J&B Software.

However, now TIS is a larger and more established company. It has also done acquisitions in the U.K. and Asia-Pacific, and with the U.S. office, it certainly has a global sales footprint established.

Kofax receives Data Matching patent

Document capture and BPM ISV Kofax has received a patent related to matching data captured from scanned documents with data from a back-end system like an ERP application. This a fairly common practice in many document imaging applications, especially involving invoice capture - one area that Kofax says it is already using the technology.

The patent is number 8,345,981 with the US Patent and Trademark Office. It's entitled "Systems, methods, and computer program products for determining document validity." Basically it describes a process for applying OCR to a scanned document, extracting information from it, identifying a complementary document in the back-end system, mapping the information on the scanned document to the info on back-end system document, and checking the info captured by OCR against the info. on the back-end system document.

Kofax originally filed for the patent in Feb. 2009. I'm not sure how its approval is going to affect the market or if Kofax plans on enforcing it, but it seems to me the practice that Kofax has described is in pretty widespread use, especially in the area of invoice capture today, and it was already being done prior to 2009. In the press release, Kofax notes that it plans to expand use of this technology into the EOB processing space.

Kofax Introduces New Digital Mailroom Technology

Kofax has introduced a new application called Kofax Mailroom Automation. It basically introduces some of Irvine,CA-based ISV's BPM technology into the world of mailroom capture.

We've been talking about the digital mailroom in the document capture industry for years. In fact, current Kofax CEO Reynolds Bish was one of the first big proponents of the technology in his days back at Captiva. And there have been several implementations of the digital mailroom worldwide to date, in several different fashions. Most ISVs in our industry look at it as an extension of line-of-business capture in areas like claims processing - only adding more lines and document types into the mix. Of course, then there are companies like Earth Class Mail that advertise the ability digitize everything and distribute it electronically - or at least give users the option of turning down paper copies of magazines...it's complicated.

Kofax Mailroom Automation falls into the first category, as Dermot McCauley, VP, solutions product marketing, explained that Kofax is going after primarily transactional documents. Kofax has always gone after these types of documents and even has installed what it calls digital mailroom applications. But, the new application introduces the ability to both track and manage better what comes into the door.

McCauley gave us the example of a customer of a bank applying for a loan and sending in the application in the mail. But, in this case, the customer is a foreign citizen and doesn't realize that the loan application required a picture of his passport is included. With Kofax Mailroom Automation, the bank would be notified that a piece was missing and the customer could even automatically be sent a correspondence asking for a copy of the passport. "The problem with many [capture-only] digital mailroom solutions is that they end up sending an incomplete or erroneous set of documents to a line of business applications, where someone has to deal with it there."

There are also some other new features around tracking and monitoring all mail in Kofax Mailroom Automation. Pricing will be based strictly on page count and will embrace Kofax's multi-channel capture philosophy. 

More in next week's issue of DIR!

Zagami Contracts with Beyond Recognition

Back in September, we did a story on an innovative classification and full-text indexing operation out of Tennessee called BeyondRecognition. Basically, its claim to fame was having successfully indexed 2.3 billion images that were given to it in boxes full of CDs and DVDs with little-to-no indexing information attached to them. BR used some glyph scraping and matching and threw some other semantic type understanding into the mix and successfully completed the project.

BR has productized its technology and is marketing it to the legal space, for help with discovery, as well as anyone else that requires classification and grouping of large volumes of documents. BR also can incorporate innovative data extraction techniques.

BeyondRecognition recently announced that is has signed on former AIIM and TAWPI Chair Bob Zagami as a member of its Advisory Board. Zagami is a veteran of the document conversion services market, most recently serving as an executive with DataBank IMX. For BeyondRecognition, Zagami will act as an authorized sales agent for BR with the intent to focus on large-scale document management processes for Fortune 500 companies. Read the complete press release.

NSi Acquires Print Management ISV

Document Capture ISV Notable Solutions, Inc. has expanded its business with the acquisition of the Enterprise Output Management (EOM) business and operations of Barr Systems. Based in Gainesville, FL, Barr develops software for managing printing from mainframe, ERP, and other data-driven applications. It's software can also be used to direct and control print jobs at both high-volume production and general office printers.

To date, NSi has made its living primarily selling capture software for MFPs. It has reported impressive growth over the past few years and in 2011 landed a multi-million with the U.S. Department of Defense. NSi's main competitor in the MFP capture space is Nuance, with its eCopy software. In 2011, Nuance acquired print management ISV Equitrac and has reported several large wins as a result of the synergy between the two product lines. NSi will position Barr's EOM software in the same way the Nuance positions Equitrac.

In addition to managing print to paper jobs, Barr's software can be used to output reports into the same workflows and back-end systems that NSi's AutoStore capture can. Barr's software can also be used to track print jobs and provide secure printing.

More on NSi's exciting acquisition in the next issue of our newsletter. Here's the complete press release.

TIS Reports 'Q4 Shortfall

Document capture ISV Top Image Systems reported that it's year-end revenue will be approximately 8% lower than the low end of its previously announced guidance. TIS expects to end the year with revenue between $30.9 million and $31.5 million, which still represents 8-10% year-over-year growth, which is about in-line with Harvey Spencer Associates projections for the capture market in 2012. TIS also expects to report a non-GAAP operating profit of $4 million to $4.2 million, which represents 10-15% growth over the previous year.

In a press release, TIS blamed the shortfall on two major factors: delays in closing several major deals (now expected to close in 2013) and the devaluation of the Euro vs. the U.S. dollar (TIS does the majority of its business in Europe, but trades on the Nasdaq.)

From the press release, "In parallel, several orders that were to close in 2012 are expected to be finalized in 2013, and the pipeline of potential sales internationally and in the United States has increased. Therefore, management remains confident regarding its ability to deliver solid growth in 2013 and will announce formal guidance in conjunction with the release of full-year results."

TIS also announced today a win for an invoice processing solution with a large U.K. retailer. The retailer liked TIS' multi-channel approach for ingesting multiple invoice formats: "paper or electronic, in any format – including pdf files by means of the unique eFLOW® PDFR (PDF Reader), xml and other popular e-invoice file types – all via one efficient workflow - integrated with SAP - on one consolidated platform." Click here to read the full press release.

Canon Introduces Unit to Enable Wireless Scanning

One of the conversations I've had multiple times over the past year has to do with how behind the times scanning technology is. No, not the scanners themselves, which are smaller, faster, cheaper and produce better quality images than ever before. In fact, in regards to "speeds and feeds," there is not much further vendors can go...But connecting a scanner to PC is pretty much being done the same way it was five years ago, when USB scanning was first introduced.

Basically, you load a driver, plug in your scanner through the USB port and scan to your computer. Of course, there has been a movement toward capturing document images with mobile phones designed to circumvent scanners altogether. But, the problem with mobile phone cameras is that image quality isn't nearly what you get from a dedicated document scanner. In addition, if users are capturing more than one or two pages, it can become very cumbersome.

A few years back, at AIIM 2010, I asked for some technology that could possibly connect the high-quality mobile scanners that were being produced with smartphones which were beginning to flood the market. Well, since then, Visioneer has introduced Eye-Fi technology into its Mobility scanner for wirelessly capturing JPEG images directly to smartphones.

Canon now has introduced a device that can wirelessly connect its personal scanners wirelessly to PCs, MACs, and mobile devices like smartphones and tablets. The new WU-10 has a USB port a scanner plugs into. It powers the scanner (through a rechargeable Canon camera battery) as well as sets up a wireless network connection between the scanner and a user's device of choice. With a PC, a user can scan just like they had a wired USB connection. With a mobile device, they can scan through a free downloadable app.

Canon will be showing the WU-10 at the CES show in Las Vegas. It lists for $169. The device has been available in Europe for a few months, but according to Canon executives, it's still too early to tell if there are any particular markets where it is gaining traction. That said, it seems like a great way to combine the high-quality images produced by dedicated document scanners with the mobility of tablets and smartphones.

BancTec Article on Co-Sourcing

Document and payment processing specialist BancTec has invested a lot of resources in the past few years increasing its footprint in the business process outsourcing (BPO) market. But according to Michael J. Alfonsi, BancTec's managing director of financial transaction processing services & finance transformation solutions, the BPO market has not grown as fast as many people had expected. From a recent article entitled, "Rethinking Document Outsourcing and Co-sourcing:" "One would think the economic downturn would have accelerated the growth in BPO, but it did not. The prevailing view on the reason why is that for many BPO adopters, the so-called low-hanging fruit has already been picked, and the next level of outsourcing, which involves full functions, got stalled as capital was being conserved during the downturn."

As a solution to this, Alfonsi is suggesting BPO providers expand their business into the area of co-sourcing.  "BPO is no longer an either/or proposition, and companies now can have both/and," he says. "Both/and is a graduated solution in which basic tasks go to the outsourcer, but both the outsourcer and the client discover the right point at which the analytics or the expertise – the very productivity – is optimized for the partners."

For more details on how to create a successful co-sourcing strategy, check out Alfonsi's full article. 

A Crowdsourcing Capture Acquisition

At Harvey Spencer Associates annual Capture Conference this past September one of our fearless predictions was that the crowdsourcing market would converge with the recognition applications. While we're not quite there yet, but we are definitely getting closer. Waltham, MA-based Lionbridge, one of the market leaders in crowdsourcing solutions, yesterday announced it had acquired Virtual Solutions. While not an automated recognition ISV,  Virutal Solutions, which is based in Camp Hill, PA, near Harrisburg, is clearly in our market. Historically, it has offered a document imaging-based service for capturing data from primarily state tax forms.

Virtual Solutions has some pretty cool technology for distributing only snippets of documents to ensure security and also has a team of home-based keyers in the U.S. to satisfy the requirements of state tax agencies. Coincidentally, we published a story this past August, in which we discussed Virtual Solutions as a crowdsourcer, even though they didn't advertise themselves as such at the time. 

Lionbridge is a $450 million organization that does the bulk of its business in translation services. It has recently expanded into more general crowdsourcing services and offers its technology as an alternative or compliment to BPO or traditional outsourcing services. It plans to leverage Virtual Solutions' task management platform to help it grow its crowdsourcing business. It also looking at expanding into document imaging-related market like claims and mortgage processing.

According to the press release, "Lionbridge expects to acquire Virtual Solutions, Inc. for a total estimated purchase consideration consisting of $3.6 million to be paid upon closing using Lionbridge’s existing cash resources, $1.0 million of deferred cash consideration, and a $3.0 million earn-out potential payable in cash over the course of three years, subject to the attainment of certain annual revenue metrics."

More on this, including interviews with principals from both sides in an upcoming issue of our newsletter.

Bish Puts Positive Spin on Kofax Results

Kofax's Q1 fiscal 2013 results were announced today. Certainly not great numbers by any means. Total revenue of $60.1 million, which represented slight (2.8%) net growth, but a .8% decline when measured in organic constant currency. Software license sales and professional services numbers were down with only increasing maintenance revenue preventing a more serious dip in revenue. And, historically, relying on increasing maintenance to drive revenue growth has not been a good sign for an ISV.

Here's an article from a U.K.-based tech Web site that does a nice job summing up Kofax's performance. Although the company is now headquartered in Irvine, CA, it still trades publicly on the London Stock Exchange.

It is worth noting that Kofax's adjusted EBITDA for the quarter was pretty much the same as last year and the company still generated $11 million in cash, ending the quarter with $90 million in the bank.

Here was CEO Reynolds Bish's spin on the numbers, "Our first quarter produced seasonally weak software license and professional service revenues and continuing growth in maintenance service revenues due to increasing renewal rates with total revenues being consistent with historical trends. This was accomplished during a quarter in which we changed our head of global sales and services in order to strengthen leadership in those areas and began implementing initiatives to gradually improve sales execution and productivity. We’re therefore pleased to report essentially the same EBITDA as that realized in the prior year period and strong cash generated from operations."

Bish also reaffirmed his guidance for the whole fiscal 2013, "which is for mid to high single digit total revenue growth on a constant currency basis and an adjusted EBITDA margin of at least that reported in fiscal year 2012."

It's my opinion that capture market conditions are changing and although Kofax is pushing forward with more cutting edge products like Mobile Capture and Web Capture, which are both highlighted in the press release on the financials, Koafx still has a large legacy traditional client/server-based business to support. Not that the market for client/server capture is dead by any means. But, trying to support this quarterly $50-million-plus  legacy business, while ramping up in new areas that might be influenced by subscription-based pricing - well, it's a bit of a conundrum. We kind of agree with Bish that the profitability number is impressive, especially (and he doesn't mention this, at least in the press release [haven't listened to the conference call  yet])  when you consider the investments Kofax is making in its new products lines and potentially new business models.