Five Truths about the Document Imaging Market

By Ralph Gammon, Editor

Document Imaging Report

http://www.documentimagingreport.com

As the editor of the semi-monthly Document Imaging Report newsletter, I have the opportunity to travel the globe discussing and covering the document imaging market. Every week, I read dozens of e-mails and have several conversations (both on and off the record) on this market. The following five opinions have been formed based on these experiences. I hope they provide you with some valuable and actionable information in your efforts to succeed in the document imaging space.

1. Digital copiers will continue to encroach on the document imaging space—Unlike sales of workgroup scanners, which seem to have slowed from their hyper-growth of the past few years, the use of digital copiers for scanning is continuing to gain momentum. And after all, what’s not to like for end users when it comes to using digital copiers for capture? Prices for scanning capabilities keep falling, while the capabilities themselves keep improving. In addition, the old pitch about users already having this hardware for printing and copying, so why not leverage it for scanning, still rings true. Our advice for VARs: Don’t try and fight the copier dealers. Instead, embrace their hardware as another on-ramp for your software, because it’s in the solutions area where you can differentiate yourself.

2. Distributed capture is here—The increased use of digital copiers for scanning is just one piece of evidence that backs this up. Our advice for VARs: Look for distributed capture opportunities, which you give you the chance to sell a lot more capture seats than you can in a traditional, centralized application.

3. Imaging remains a fertile market—We first observed increased adoption of document imaging technology in the mid-market two or three years ago, when vendors focused on the SMB space started reporting 20%-plus growth rates across the board. As far as we can tell, this SMB growth continues, and now we are hearing things like “transactional content management [translation: imaging-related technologies] have become the largest contributor to our content management revenue stream,” from enterprise ECM specialist EMC. (EMC’s ECM practice was originally founded on Documentum’s electronic document management offering, and EMC admits to only seeing the imaging light some three or four years ago.) SAP also acknowledged an increasing demand for imaging technology as being part of the impetus behind its decision to sign a worldwide OEM agreement with Open Text, after working as a referral partner for Open Text’s IXOS-legacy product line for years. Our advice to VARs: Don’t let up on your imaging sales. The sun is shining, as we’ve said before, so make your hay. The market is still only about 20% penetrated from where we sit.

4. Microsoft SharePoint is still an iffy proposition—As usual don’t believe all the hype surrounding SharePoint 2007. Yes, it adds a lot of ECM capabilities to the Microsoft platform, but it still can be unwieldy to work with and expensive to deploy. From what we understand, a more focused document imaging solution should still win out on overall cost-of-ownership when compared to SharePoint, even though parts of SharePoint are free. Our advice to VARs: If you can create your own SharePoint practice and make it work for your customers, more power to you. Otherwise, don’t be intimidated, and if your customers won’t listen, let them find out for themselves what headaches they are in for if they go with SharePoint for a document imaging solution. In most cases, we think they’ll come runnin’ back to you.

5. More acquisitions are on the way—The increasing interest by the big boys in this market can only mean one thing—more market consolidation is upcoming. Advice to VARs: Keep a close eye on your vendors, and don’t be afraid to dump them if they’re changing the playing field on you. There’s a lot of good software out there, so don’t feel you’re locked in just because you have an install base to support. We heard an interesting idea from a friend of ours, who recently suggested that any vendor signing on a new VAR with a competing install base should offer to transition that VARs’ end user base to the new vendors’ product for free. We haven’t heard of anyone doing this, but this is the type of arrangement you can look into if you’re switching vendors. Remember, experienced imaging VARs command a premium in today’s marketplace.