Follow-up on Health of Capture Market Article

As you can imagine, at last week's ReadSoft Conference, I received quite a bit a bit of feedback on the article I ran in our last premium issue (May 9) asking the question "Is the Capture Market in Trouble?"  Basically, the article asked the question if in light of Lexmark's recent offer to acquire ReadSoft, for approximately 1.5x revenue, coupled with Kofax's recent fiscal Q3 quarterly report (for 3 months ending March 31) - which included a YOY decline in sales of core capture products - might indicate that the document capture market had lost some of its luster.

Thankfully, Top Image Systems, although significantly smaller than Kofax and ReadSoft, recently reported numbers that are a positive sign for the industry. Highlights include

• 19% increase YOY in total revenue to $8.1M
• license revenue growth of 43%
• growth in all regions, including 100% growth in the Americas were revenue reached $1M
• almost .5M in SaaS sales, which led to a 36% YOY growth in recurring revenue (COO Michael Schraeder from Seeking Alpha transcript of financials conference call on the SaaS revenue: "This amount will be paid again regularly over the next 10 quarters dealing up with solid growing base of returning revenues. The total license revenue of these contracts is equivalent to approximately $4.4.")
• projected double-digit revenue growth for 2014

TIS also raised $13.7M in capital during the quarter through a "public offering or ordinary shares" that will be used to fund potential acquisitions. " At present we are actively targeting growing accretive assets that consolidate our cloud SaaS and mobile organically strategies," said Schaeder.

Of course, unlike Kofax, TIS includes does not break out its mobile capture revenue as separate from its "legacy products," so it's quite possible that TIS and Kofax are experience more similar growth rates that at first glance, as both seem to be reporting robust and healthy mobile capture practices.

Some ReadSoft Acquisition follow-up
As far as the ReadSoft price goes, Bob Fresneda, president of ReadSoft NA and SVP, Americas and Asia Pacific, stressed that ReadSoft's owners and co-founders did not just seek out the highest price for the organization. "Lexmark is a nice landing spot for ReadSoft to be drafted by a company that is willing to invest in the technology and the people," he told us.

ReadSoft CEO Per Åkerberg stressed that Lexmark has plans to enable ReadSoft to continue to operate as a "standalone company."

All that said, it was pointed out that there is a provision in the acquisition agreement that enables ReadSoft to do another deal of someone offers a bid that is at least 7% higher than Lexmark's before the acquisition closes, which is supposed to occur in about a month. 

In our opinion, ReadSoft would make a great takeover target for Open Text, which is its main competitor in the invoice processing space in SAP environments. ReadSoft also has a strong install base - an asset that Open Text typically covets in its acquisition targets. And 7% over $182M would only be $195M, which still seems like a bargain for ReadSoft. Of course, Open Text doesn't exactly have the reputation as "a nice landing place" for acquired company, so I don't know how the board would take to an offer. It might just server to drive up Lexmark's offer.

EPM & Kodak Alaris in Complicated Relationship

So, on one hand Kodak Alaris and Eastman Park Micrographics (EPM) have struck a deal, through which Kodak Alaris is going to continue to provide sales and support for EPM equipment in Europe, Asia, and Latin America. On the other hand, EPM is suing Kodak Alaris for soliciting business from EPM's North American customers, whose service contracts are currently being taken over by Imaging 411, the document imaging service provider that EPM acquired late last year.

Apparently, it's complicated....

Ensuring Security in Document Capture Applications

Not something a lot of people consider.

Check out this excellent contributed article by Parascript's Don Dew on the some of the ways organizations can ensure that their data entry operations are as secure as their back-end data systems.

New Customer Account Applications: Ensuring privacy and security in capturing sensitive information

Paperwork is often part of the first interaction point with a new customer – whether it’s new account applications or enrollment forms for employment, a credit card, or even Medicare. Because of this, information needs to be captured and entered quickly and seamlessly to provide responsive service at an important initial relationship-building stage. And, because these forms contain critical customer information – such as date of birth, social security number, and even payment data – they also need to be processed safely.

Information on applications and forms can generally be classified into two types of data: personal identifiable information (PII), and non-identifiable information (NII).  

Security, policy, and technical requirements set PII apart from NII. PII includes information such as name, address, social security number, telephone number, diagnosis, credit card accounts and email address.  The loss of PII can result in identity theft or fraudulent use of information. Meanwhile, NII includes anonymous information such as gender or age, does not identify a specific person, and, therefore, can be easier to process. 

A number of regulations make keeping personal information secure a requirement for businesses and organizations:  

•  The Freedom of Information and Privacy Act requires the disclosure of federal documents and makes it necessary for government agencies to completely remove or redact confidential information from released files.
• In the health care industry, companies and their contract providers must also comply with HIPAA in order to protect the privacy of individually identifiable health information. 
•  Financial institutions have to comply with The Gramm-Leach-Bliley (GLB) Act, which requires companies to ensure the security and confidentiality of information such as names, addresses, phone numbers, bank and credit card account numbers, income and credit histories, and Social Security numbers.
• · Many businesses also must follow PCI Standards, which provide a framework for developing a robust payment card data security process, including prevention, detection and appropriate reaction to security incidents.

With the potential for fines, penalties, lawsuits and/or embarrassment for leaking vital information, companies and government organizations are compelled to stay on top of requirements to protect sensitive information. Once this information has entered a business system, privacy is most easily managed through software encryption and permission management. However, getting information off of physical documents and into that system offers multiple opportunities for breaches, including: 1) access to information as it is being keyed in by data humans, sometimes located overseas, and/or in high turnover jobs 2) access to information located in imaged archives, and 3) access to paper originals.

Assuming that access to the original paper has been dealt with via careful retention and destruction policies, the other two scenarios can be successfully mitigated with security features built in to document capture software, acting as a first point of defense. Examples include:

Restricting access to information by only providing ‘snippets’ to validators/keyers – Document capture and recognition software solutions can enforce security at the field level, such as providing only a snippet of each form to a single operator. First name fields, for instance, can be given to one validator/keyer, social security numbers to another and diagnostics to still another, so that each piece of information on its own is benign.

Decentralizing access to information by distributing the validation/keying function - To go one step further, the information can be sent to multiple sites within the same company, completely removing and practically eliminating any chance of a security breach or misuse.

These processes ensure that any back-office human validation of forms restricts personally identifiable information by limiting the context in which it would be useful.

Preventing future information leaks through redaction – In cases where document images must be retained for archival, redaction removes sensitive information by digitally obscuring it to make documents secure for distribution. Redaction can often be efficiently achieved during the document capture process, just as sensitive information is entering an organization. Incoming documents are scanned and keyed, then sensitive fields, such as account, drivers’ license and social security numbers are automatically located and redacted by capture software, and sent to archives through a secure digital workflow.  This helps to ensure confidentiality and protect key information.  Redacted information in the archive can't be accidentally or maliciously accessed years later.

Customer onboarding is a document heavy, critical moment in the account lifecycle.  Companies need to be both responsive and protective of information that customers entrust them with on new account applications. In addition to being the law, safeguarding customer information also makes good business sense. And, with greater access to information, in a secure environment, companies can provide better service and help boost the bottom line. 

For more information, check out these videos on advanced data validation and security and locating content to protect sensitive data.

Don Dew is Director of Marketing for Parascript, a leading recognition solutions provider, online at www.parascript.com

 

Initial Thoughts on Lexmark's Offer for ReadSoft

The buzz this morning is all about Lexmark's a bid to acquire ReadSoft.

Here are some initial thoughts:

•  It appears like a done deal, as the acquisition has been unanimously recommended by ReadSoft's board of directors and, according to ReadSoft, "shareholders representing 22.9% of the shares and 41.5% of the votes have undertaken to accept the offer."
  
• It's a fairly attractive offer for ReadSoft shareholders considering it represents a 117% premium over the shareholder value when the market closed on yesterday. (The offer is $6.11 in cash for each Series A and Series B share of ReadSoft for a price of approximately $182 million, net of cash acquired.) ReadSoft shares closed May 5 on the Stockholm exchange (where the Swedish-based company primarily trades) at less than $3 per share, a value they had basically held for the past three months - which was about half of the company's 52-week high, reached last summer,
  
•  It's not that attractive of an offer if you consider that two years ago Lexmark paid $148M to acquire Brainware, a capture ISV about a quarter the size of ReadSoft. ReadSoft reported $117M in revenue in 2013 - although it has struggled recently with growth and profitability - which likely drove the share value down over the past year.

How do you integrate Brainware with ReadSoft under Lexmark's Perceptive Software practice? This is the $100M plus question and here are some thoughts:

• ReadSoft is clearly larger and more established, but Perceptive has certainly invested a lot into Brainware.
  
• Both ReadSoft's and Brainware's strongest market has been A/P, but I'm not exactly sure that they are direct competitors. ReadSoft really only took off in the A/P space after it acquired the Ebydos SAP workflow technology, and has since added similar workflow for Oracle Financials. Brainware always touted its ability to do "straight-through" processing based on three-way matches, which theoretically eliminates the need for workflows. So, Brainware's technology always seemed like a better fit in PO heavy environments where there were not a lot of exceptions, while ReadSoft was great when there were more workflow requirements. Of course, when Perceptive acquired Brainware, it touted the ability to introduce Perceptive's ImageNow worklfow into the equation and even things out a bit. I'm not sure how much that has been a factor. The bottom line, however, is that both companies compete primarily in the same horizontal market.
  
• Geographically, it seems that Lexmark is counting on ReadSoft to increase it presence in Europe, where ReadSoft generated approximately 70% of its revenue in 2013. Even though Brainware's development team is in Europe, its sales and marketing were always based in the U.S. This reminds me somewhat of Perceptive's acquisition of German ECM ISV Saperion last year, which has technology similar to Perceptive's legacy ECM platform, but was acquired to give Perceptive a stronger European ECM base.
  
• Along those lines, in our latest issue we ran a brief discussing how Perceptive was going to leverage its new Evolution Hybrid Cloud environment to potentially bring its two ECM platforms together. Perhaps it will eventually do the same with its two capture software platforms.
  
• Perceptive also gains the XBOUND document capture workflow platform, which ReadSoft acquired with foxray a couple years ago. A recent conversation with ReadSoft CMO Andrew Pery indicated that the foxray sales pipeline is improving and evolving as ReadSoft has continued to productize what had historically been software geared mainly toward customized one-off type implementations. ReadSoft had been targeting the service provider and mailroom markets with XBOUND - not necessarily a strong market for Perceptive historically.

Finally, I'm looking forward to catching up with top ReadSoft (and maybe Lexmark?) executives at ReadSoft's user conference next week.

Notes from Mitek Q2 Earnings call

As I Tweeted earlier @DIREditor, capture ISV Mitek Systems, which specializes in mobile imaging technology, recently reported strong growth for its fiscal Q2 ended June 30. But the company continues to burn through cash. It's revenue for the quarter was $4.5M (40% YOY growth), but this came with a GAAP net loss of $2.2M and a non-GAAP loss of $1.3M.

Russell Clark, Mitek CFO, from the transcript of the conference call as recorded by Seeking Alpha: "Total operating expenses were $6.7 million compared to $5.6 million in the year ago period. This year-over-year increase was primarily driven by investments in sales and marketing personnel as well as litigation costs related to protecting our IP....Q2 litigation expenses were higher than previous quarters due to the timing of expert testimony moving into Q2....It's also important to note that the $1.2 million in litigation expenses in Q2 of the current year comprised almost all of the $1.3 million non-GAAP net loss in the quarter. Our non-GAAP results will be very close to breakeven if not for these expenses."

Regarding the litigation,CEO Jim DiBello said, "We have patents infringement losses against Top Image Systems and USAA, both suits are ongoing. In the USAA lawsuit the deadline to file motions for a summary judgment is mid May with the trial date set for early September."

So, maybe things are as bad as initially appear when a company's net loss is about half its revenue. Mitek still has $31.5M in assets listed on its balance sheet, including $26M in cash and short term investments. This second figure is down a little less than $3M from six months previous.

However, in that six-month period (specifically in the last three months), Mitek's stock value has certainly taken a beating. After peaking at more than $7 per share in late January, it is now trading at less than half that, with the company's market cap, falling all the way to $95M. When you consider the $26M in the bank - it's net value is around $69M - which may actually bring them into potential acquisition territory - hostile or otherwise. However, the question is, do savvy investors know something more about the USAA case than we do? Or are they just panicking? If I was a betting man...

News on Upcoming Events from IOFM, Notable Solutions, HSA & Kofax

IOFM Preps for Second Payments Summit

Building on success of last year’s inaugural event, the Institute of Finance andManagement (IOFM) is gearing up for its second annual Payments Summit. The event, which focuses on B2B and C2B payments, is being held June 2-4 at the Hyatt Regency on the Inner Harbor in Baltimore. It features a day and a half of conference sessions, as well as an exhibition area.

Last year’s event had 100-150 attendees and IOFM organizers are expecting more this year. “Sign-ups have been steady, but we are still looking for more attendees and also have openings for exhibitors,” said RD Whitney, Executive Director for IOFM, which is owned by Diversified Business Communications. “We think we have the only event that focuses on the full spectrum of payments and provides a holistic view of payments automation.”

The Payments Summit was launched last year targeting former TAWPI members who felt alienated by the direction of IFO (the Institute of Financial Operations), which bought the TAWPI trade organization in 2011. IFO incorporated the former TAWPI show in its Fusion event, which is primarily focused on accounts payable. IOFM also hosts an accounts payable conference, but feels it is filling a market need with a dedicated A/R conference.

Last year’s Payments Summit was well received, and once again former TAWPI executive Mark Brousseau will be emceeing this year’s event. There is no headliner keynote, but the agenda features a steady stream of panels and end user presenters designed to provide peer-to-peer education. Last year’s hot topics included the challenges of managing multi-channel payment streams, as well as automating capture from full-page documents like EOB forms.

IBML is signed on as the title sponsor. Other exhibitors that Document Imaging talk readers may be familiar with include OPEX, BancTec, eGistics, Creditron, Data Dimensions, Fairfax Imaging, MAVRO, Open Scan, and Orbograph. Early attendee sign-ups include executives from industries like banking, telco, healthcare and retail, as well as trade associations and third-party payment processors.

Notable Solutions hosts inaugural US event

Capture and print management ISV Notable Solutions will be hosting its inaugural North American end user event that same week as the Payments Summit, also on the Inner Harbor in Baltimore. eNgage 2014 will run June 4-5 at the Pier 5 Waterfront Hotel. Keynote speakers include Bob Larrivee, director custom research at AIIM and Feri Clayton, director, ECM, IBM Software Group. Notable Solutions end uses from organizations like Toyota, Tulane University, and Fairfax County Government will also present.

“This event is in response to numerous requests from our customers and partners to bring together industry experts to discuss the key challenges facing organizations today,” said Mehdi Tehranchi, Notable Solutions CEO, as quoted in a press release. “We also plan on sharing the successes of those customers who have raised the bar by implementing cost-efficient systems to securely manage and gain greater participation in their business processes.”

Why Kofax Transform is Moving to Las Vegas

Kofax has apparently outgrown the locations at the San Diego Bayfront Hilton where its annual Transform event has been held the past four years. Transform 2015 will be held at in Las Vegas, March 8-11. The 2015 AIIM Conference will then be held in San Diego March 18-20. Kofax is hoping to attract a more international crowd and feels Las Vegas is a better location for that as well. Apparently, AIIM checked with Kofax before scheduling their event in San Diego, so there is no conflict here.

HSA Capture Agenda Shaping up
Finally, once again I have been invited to give my news review and predictions at this year's upcoming Harvey Spencer Capture Conference. The event is being held Sept. 3-4 at its usual location at the Glen Cove Mansion on Long Island. Other topics on the agenda include Big Data, Computational Linguistics and Semantic Understanding, and Photo and Video Understanding. Hope to see you there.

Prepping for ReadSoft User Conference, May 14-16

Looks like I'm heading down to this year's ReadSoft User Conference, May 14-16 New Orleans.. Should be a good, fun and productive event. I'm expecting to get an overview on ReadSoft's direction through a combination of attending the sessions, one-on-one interviews with ReadSoft executives and partners, and some good ole' Nawlins networking.

I visited the ReadSoft offices almost a year ago and came away with this overview of their basically two-pronged strategy: expanding their capture and P2P practices. It will be interesting to see how that strategy has evolved over the year, under the guidance of Andrew Pery, who was working for ReadSoft as a consultant when I visited last year, and was later named the company's first CMO.

ReadSoft is coming on an improved first quarter that included 27% YOY growth in software license sales and a 9% increase in overall revenue. ReadSoft's EBITDA was improved, but the ISV still lost money. According to President & CEO Per Åkerberg CEO, as quoted in the press release on the Q1 financials, "Our EBITDA result and our margins have taken clear s teps in the right direction....A gradual change in the reporting of our revenues from our support and maintenance agreements has affected this quarter’s result negatively compared to first quarter last year. This effect means no lost revenue but only a time delay in the reporting of these revenues."

AIIM 2014, Freakanomics, and Freddie Mercury

Just got back from enjoying three days at the AIIM Conference 2014 in Orlando. Yes, the weather was great - especially considering the winter/spring we had/are having up here in northwestern PA. But, as I predicted in my previous post, I ended up spending very little time outside enjoying the weather. Instead, my time was spent mostly indoors at the conference, enjoying great conversations, ideas, networking, sessions, and alright, I had a few beers.

I'll have full coverage of the event in my next premium issue of DIR, coming out next week, but I wanted to go over one thought I had, which was re-enforced by a podcast I happened to be listening to on the way home. That thought is that we in the technology industry often get way ahead of the end users. No, this is not anything strikingly new, but I think we all need a little reminding now and then.

For example, I attended a roundtable on high-volume scanner. Mark Brousseau (a former DIR editor many moons ago) was the host and, as always, he did a great job encouraging audience participation. In other words, he called people out and demanded to know why they were there. Anyhow, the biggest problem among the end users at the roundtable was manual sorting of documents. One user specifically complained about having to print and insert bar-coded separator sheets before scanning, even though they were licensing capture software from a vendor who has an auto-classification option. Heck, there are multiple auto-classification products on the market. I've seen the demos and they seem to work well enough, but as usual, in many cases the users seem to be too heads down with their operations to want to try anything new. Based on my experience covering capture technologies like OCR and IDR, I'm convinced that it's just a matter of time before auto-classification is widely adopted - it's just that that time is not here as fast as many vendors want it to be.

In addition, I heard more than one comment about the lack of technological savvy of many of the conference attendees. I think they may have felt they were talking over the attendees' heads-which they may have been. But, this is a good reality check. It helps everyone realize that the buyers are not as sophisticated as we often want them to be. After all, these attendees each spent probably a couple grand to come to the event, so they weren't there to fool around. They were looking for something - but maybe it wasn't quite the advanced something that many vendors were pitching - at least not yet. Remember, it takes an acorn to grow an oak.

Finally, all of this was re-enforced on my ride home when listening a recent Freakonomics podcast. It is titled "It's Fun to Smoke Marijuana,"and no , that's not the title of an old Cheech & Chong album (well, maybe it is too), but in this case it is referring to what is supposedly being said by Queen when you play their hit single "Another One Bites the Dust" backwards. Basically, if you don't know they are supposed to be saying that, it sounds like gibberish, but if you are listening for it, it's like how could you miss it?

The podcast is about how people's perspectives are skewed by their own knowledge. Because we know so much about advanced capture, we naturally think others should too. This podcast explains that this is not a character flaw - it's really just natural. Anyhow, just something to keep in mind when marketing to all those luddites out there.

Cheers.

Ralph

Heading to AIIM Conference 2014

Have a few minutes as I'm delayed in the Buffalo Airport for another hour it appears. Looking forward to heading down to Orlando for a few days of nice weather - even if I am going to be suffering from the eternal conference conundrum - you are stuck inside (at least) 90% of the time. But, nonetheless I'm certain the company will be good. I have a number of great appointments set up and am looking forward to catching up both on and off the record with multiple people and organizations.

There are also a lot of good conference tracks and roundtables on the agenda.

Free wi-fi in airports is a great development. I'm sitting here plugged in at one of those Southwest counters, working almost as efficiently as I would be at my home office (fingers crossed).

Speaking of hi-tech developments, I'm liking this AIIM app so far. From what I understand they are not going to have any paper agendas distributed at the event, so they are kind of forcing people to use the app. Seems to be working as there is certainly a good amount of activity on it. However, I just went through and tried to select my agenda and some of the events that were listed online seem to be missing in the app agenda. Need to figure this out, although I'll probably end up missing half the sessions I plan on hitting anyhow - as I get caught up in conversations.

Alright, plane is here. Should be boarding in a few minutes. Looking forward to seeing some of you in Orlando later today!

Scheduled for a root canal on Friday

Kofax, QAI, SPAs - Did They Help Fix Healthcare.gov?

This summer Kofax announced a $7M deal with a government agency that was among the biggest in company's history. It included more than $4M in software license revenue and $3.5M for four years of prepaid software maintenance. The deal was to a government agency and was sold through federally-focused Fulton, MD-based systems integrator and conversion services provider Quality Associates, Inc. (QAI).

At Kofax's recent Transform Conference, QAI was recognized by Kofax with its Award for Partner Deal of the Year. A few more details surrounding the customer came out. "The overall contract will help a government healthcare agency manage efforts related to enrolling uninsured citizens in state insurance exchanges, as mandated by the Affordable Care Act (ACA) – millions of paper and electronic applications and other documentation are received, reviewed and verified for completeness and eligibility, and processed in an environment that protects applicants’ personal information."

QAI is presenting this as a First Mile implementation leveraging Kofax's Smart Process Application technology. Of course, this is exactly what I was calling for as I was going through my personal experience trying to sign up for a new healthcare plan at US Government Web site. At least it appears we are all on the same page now, which may have something to do with the sharp decrease in complaints we've heard recently about the onboarding process.

Who is TIS' latest Census Win?

Top Image Systems (TIS) has been a leader in the census capture market for a long time. Recently it was recognized "as an approved vendor for the UNPFA (United Nations Population Fund Agency), the organization responsible for the execution of censuses worldwide." TIS has followed that up with the announcement of a census win that will bring it more than $1M in revenue. This includes implementing a capture and document management system.

The project is for a country in EMEA with a population of more than 15 million. So, who could this be? According to the Web site NationsOnline, there are five EMEA countries that fall between the population figure of 15-20 million (there are five more between 20 and 22 million). Those five countries are:

(We'll guess the Netherlands, but that is just a guess:)

Cameroon

Central Africa

19,406,000

Romania

Eastern Europe

19,043,000

Netherlands

Western Europe

16,733,000

Niger

Western Africa

16,275,000

Burkina Faso

Western Africa

15,731,000

Kofax Transform 2014 Kicks-Off - A Brief Look at Kapow

I am out there in San Diego Kofax's annual user and partner conference. Things kicked off last night with a reception/partner product showcase. One of the goals of my trip out here was to get a better understanding of Kapow - the data integration software company that Kofax acquired last year. I had a fairly long discussion with a Kapow salesperson last night as well as a demo. Basically, he described the "technology as the glue that binds." In other words - here's the way I understand it at least - it has the ability, without API programming, to go into any application and extract requested data. This can include both internal and external sites. And it's a two-way integration, so, if the collected data comes back in a way that indicates some sort of action should be taken, the Kapow software can also execute that action by submitting new data. And the software is designed so that these integrations can be set up by business analysts, with help from IT staff only for certain customizations.

Here's a case study of how Audi used Kapow to create an internal portal. How it fits into the Kofax platform is that it should enable Kofax's capture and Altosoft data integration sofware to be integrated with an unlimited number of third-party applications - which should push forward Kofax's First Mile strategy. The First Mile of course was the big marketing strategy pushed forward last year under then CMO Martyn Christian at Transform. All indiciations are that Kofax plans to continue down that strategic line. I'm interested to see how today's presenatations and interviews play out.

Strong SaaS and Mobile Revenue Highlights TIS 'Q4/Year-End Financials

Some highlights from Top Image Systems 4th quarter/year-end 2013 financials that were announced today:

• Fourth quarter revenue of $8M, up from 7.35M for Q4 '12.
• Year-end revenue of $29M for '13, down from $31.3M in 2012
• In 2013, mobile technology revenue accounted for10% of total and exceeded forecasts in this area by 100%
• SaaS revenue for Q4 was $360,000

Michael Schrader, COO, from the press release, “In 2013 we have reinforced our transition strategy, investing significantly in cloud and mobility and expanding our hybrid business model to gradually grow our SaaS subscription-based operations while maintaining our existing on-premise business....Current investments in our cloud-based solutions will further promote SaaS sales. In 2013 we reinforced our mobile and cloud-directed product development strategy with powerful channel and technology partnerships, product launches, patent filings and key organizational changes to drive US market growth.  We are confident that our business model transition and clear focus on our cloud, SaaS and mobile solution strategies in 2013 will drive us to maximum revenue growth.”

I.R.I.S. Partners with Scytl to Create Document Imaging Systems for Elections

I.R.I.S. recently made an interesting announcement about a partnership with Scytl, which develops election management and voting systems. I.R.I.S., which is now owned by Canon Europe, is a developer of document imaging and automatic recognition/data extraction software. The companies recently got together and successfully completed election projects in Ecuador and Honduras.

From the press release, "Scytl looked for a company that could prove efficient extraction technology to complement their offering for the Ecuadorian elections 2013. The request encompassed supporting the election specific process where: the voting slips were gathered in the polling stations and grouped into reports. These were then scanned and processed in a decentralized scenario in 105 scanning centers. With I.R.I.S.’ advanced extraction technologies, Scytl was able to capture the election results from the reports automatically."

The reason this partnership interests me so much is because of what I, and several other people, consider to be security concerns associated with electronic voting systems installed in many states in the U.S.A. that don't produce any paper records. Due to my experience with document imaging, I don't understand why we don't utilize scanners, like Scytl is apparently doing with the help of I.R.I.S.' technology. A couple years, OMR technology was tried in the NYC area, but several glitches occurred. Perhaps Scytl, which seems to have successfully pulled off two Latin American elections with I.R.I.S.' help can bring its technology North.

TIS Names New VP, Americas

Top Image Systems continues to evolve. The long-time document capture ISV, which has recently expanded into mobile capture with a focus on the banking industry, has named a new Executive VP and GM for TIS Americas. Avi Mileguir joins TIS from Click Software where he ran U.S. West region and Mexican sales for the past several years. Click Software, which markets a cloud-based workforce management software.

"We believe Avi's leadership skills and successful sales experience in cloud-based offerings will enable us to reach our revenue goals and align resources between our previous separate American branches," said Michael Schrader, TIS Chief Operating Officer, in the press release.

With the appointment, TIS has combined its Latin American and North American operations. It is also relocating Oren Ilan, its current VP of Global Engineering and who has been with the company for 14 years, to the U.S. to lead professional services for the Americas.

Mileguir's appointment seems to build on two recent developments at TIS:

• The launch of the eFLOW 5 last year
• A large recent mobile capture sale in Brazil

Regarding eFLOW 5, here's what Schrader had to say about it when we interviewed him in September: "We changed our architecture from client/server to more of a full Web-based design. Our clients want to grow more and more into branch capture and scanning at the point of origin. In addition, we are sure businesses want to move more of their software into the cloud and SaaS and PaaS models. So, in general, it’s our goal to move all our software to a Web-based architecture and have it cloud ready." This meshes with Mileguir's cloud background.

The sale in Brazil was through a partner, Xerox, which will hopefully lead to more Latin American mobile imaging sales, so that meshes with Mileguir's Latin American sales experience.

Mileguir's appointment apparently displaces Omri Gelb, who had been managing TIS North American sales, most recently as GM of TIS' North American division.

Kofax Announces $4 Million TA & Analytics Deal

Today Kofax announced it had won a $4 million contract with a Western European-based "global wealth and asset management company." The deal includes Kofax's Total Agility 7.0 smart processing application (SPA) platform, as well as Kofax Analytics software (which is based on software from Altosoft, which Kofax acquired last year). It breaks down into $1.25M worth of software licenses and approximately $2.75M of maintenance, professional services, and training charges. The deal closed in Kofax Q2 (ended Dec. 31) and was delivered in January.

The software is being used to "capture, classify, process, act upon and analyze more than 20 million financial documents received from customers each year."

Certainly a solid deal for Kofax, especially because it includes two pieces of software that are separate from its legacy (as a capture ISV) and geared toward its future vision of serving the SPA market. That said, it's worth noting that software licenses made up less than one-third of the total price of the deal. Is this going to be the standard SPA sales model due to the complexity of the implementations? As a comparison to Kofax's legacy model, for the six months ended Dec. 31, software licenses made up about 40% of Kofax's total revenue with maintenance and professional services making up the remaining 60%. In that regard, the recent SPA deal doesn't seem like that big a departure from Kofax's traditional revenue model - although it's probably worth considering that the six-month period includes maintenance contracts related to more than 15 years of software sales, which should push that percentage higher than what you'd expect as related to a one-time deal. Do you know what I'm saying?

Anyhow, I guess it's natural that as Kofax moved into more complex SPA solutions its professional services revenue should rise - as in addition to more complexity, many professional services related to capture deals have historically been managed by resellers. It will be interesting to see how this affects Kofax's long-term profitability.

Investment Funds Manager Agrees to Buy BancTec

HandsOn3, which is described as "a Santa Monica, Calif., global manager of funds" has agreed to acquire BancTec. Based in Dallas, BancTec has been a long-time player in the document and check imaging hardware, software, and services space. Lately, it has tried to transition more of its business toward document outsourcing, which seems to have been the attraction for HandsOn3. HandsOn3 apparently already owns a BPO organization named Dataforce Group, "whose services include accounts receivable management, end-to-end auto insurance, and expense and benefits management."

The plan is to combine Banctec and Dataforce, which will create a $280 million company. It's worth noting that in 2011, the last year that BancTec filed an S-1 with the SEC, it alone was on target for more than $250 million in revenue. BancTec recently announced it had opened a new BPO center in El Paso to better handle its growing healthcare claims outsourcing practice.

According to the press release on the acquisition, "The current BancTec leadership and management team will remain in place and play a key role in the growth of the combined company."

BancTec executives are not discussing the acquisition until it is completed. In 2012 BancTec had an agreement to be acquired by document outsourcing and software specialist TransCentra, but the deal was never completed. BancTec is a sponsor at this year's AIIM Conference in early April and we are looking forward to catching up with them there.

Digitech Introduces New E-Forms, Upgrades Workflow

Digitech recently released a new version of its PaperVision Enterprise software, which includes new e-forms and improved workflow technology.  (Digitech's hosted ImageSilo offering is based on this platform.) These additions are designed to address the needs of Digitech's reseller channel, as well as end users, who previously had to rely on third party ISVs to provide this type of functionality.
 
Rebecca Wettemann, VP of Nucleus Research, had this to say about the new additions: “Many businesses have covered the basics of ECM and are now turning to additional options like workflow, electronic signatures, and e-forms to further boost the ROI from their technology investment,” she said. “Unfortunately, most have had to bolt together options from multiple vendors to get a complete solution. PaperVision Enterprise includes all three options as a seamless, fully-integrated suite, making it easier to share data between functions and easier to implement than a multi-vendor solution.”

Basically, with this latest release, Digitech is expanding the ECM capabilities it is offering its mid-market customers - a natural progression in any technology market.

Ease of use, network deployment highlight FineReader 12

(Article originally appeared in DIR 2/21/14 premium issue)

New network deployment capabilities, more accurate table extraction, improved efficiency features, and compatibility with Windows 8 are some of the highlights of ABBYY’s FineReader 12 OCR application, which was announced last week. “Our primary objective when we do a product refresh is to continue to increase accuracy,” said Angel Brown, director, product marketing for ABBYY’s OCR products. “We also want to add features that make the software easier to use.

“Also, while we’ve been making inroads with FineReader focusing primarily on the SOHO and SMB space, with the new release of our Corporate Edition, which has network installation capabilities, we expect to move deeper into the small enterprise and departmental level at large enterprises. End users now have the capability of rolling out systems for potentially thousands of users, and we will be offering volume licensing discounts. We’ve sold a lot of single user licenses over the years to organizations where we plan on going back and turning those into multi-user sites.”

FineReader 12 Corporate Edition starts at $399 to work with a dual core processor and $599 for a quad-core version. FineReader 12 Professional lists for $170. CDW, Ingram Micro, and the ABBYY direct store are the three most popular sales channels for the application.

Leveraging ABBYY’s ADRT (Adaptive Document Recognition Technology) IDR, FineReader 12 improves table recognition by up to 40%, which means users have to spend less time tweaking their results. Users can also save time by extracting items like tables and quotes without having to apply OCR to an entire document. Along those same lines, users can now extract text from single pages, while OCR processing of an entire document carries on in the background. 

Windows 8 compatibility means that the application can now leverage the latest PC touchscreen features. FineReader 12 Professional is available now, with the Corporate Edition due to become available next month.

For more information: http://bit.ly/FineReader12PR

ReadSoft 2013 Revenue Growth Flat; Recurring Revenue Percentage up 6%

ReadSoft announced its Q4 2013 and year-end numbers on Friday. Some highlights:

• 2013 revenue was $118 million, which was basically flat, when considered in local currencies, compared to 2012.
• License sales, when considered in local currencies, grew 1% to $38 million, or about a third of total revenue.
• Recurring revenue, which includes both maintenance and subscription software and hosted software sales grew to $55 million, or 47% of total sales, up from 40.4% in 2012.
• "U.S. and rest of the world" sales were basically flat in 2013 - at $35.5 million.

From CEO Per Åkerberg's comments:

•  The global roll-out of XBOUND during 2013 took longer than expected and consequently we didn’t reach our full sales potential for this area
• Although our 2013 results are not where we ought to be, we believe the investments we made and actions we took in acquisitions, employees, products and organization are essential to our long -term growth, results and margins
• It is very gratifying to see that all the hard work on increasing our recurring revenues is continuing to pay off. This will have a very positive impact on ReadSoft’s future profitability. Our cash flow from operating activities remains strong. 
• During the fourth quarter our markets in North America, Asia and South Africa have shown the way with good growth and profitability.