What’s the matter with imaging?
Recently, we resisted changing the name of our publication to something such as the ECM Report, even as the Association for Image and Information Management (AIIM) has clearly refocused itself on ECM. We simply see so much untapped opportunity in the document imaging market. Kery DeCamp, executive VP at ECM software vendor Perceptive Software, agrees with us.
“There is still a tremendous desire for end users to have a great imaging solution,” DeCamp told DIR. “Over the past couple years, we’ve added more collaboration, electronic document management, and workflow functionality, because that’s where our customers are pulling us.
“However, we are still selling tons of software directly related to scanning. One thing that drives me crazy is the way people in this industry try to make things more than they are. They start trotting out terms like ‘enterprise content management’ and throwing around multi-syllabic words. However, there’s still huge life in the market for simply converting paper to an electronic format. It’s amazing how the extraordinary value of document imaging gets lost in the hyperbole surrounding ECM.
“I see figures showing that the ECM market is growing 10% annually. If you took document imaging out of the equation, I wonder if it would be growing at all. If you look at a large ECM specialist like EMC Documentum, why’d they buy Captiva? To get more deeply into imaging. And, to a lesser extent, what about Open Text buying IXOS?”
Dealers driving imaging sales
Further evidence of the recent boom in imaging can be seen in the success that digital copier vendors are having with document imaging sales. It’s no secret (but it’s also probably not as well publicized as it could be) that imaging sales through digital copier dealers are driving the fastest growing segment of the document capture space. According to Harvey Spencer Associates, the ad hoc and desktop capture segment grew 31% in 2005, compared to an overall market growth of 18%. This segment includes the scan-to-desktop and scan-to-e-mail applications that have historically been the primary use of capture on digital copiers.
According to Paul Lord, president and CEO of Westbrook, his company has enjoyed 225% growth over the past three years, primarily from increased sales through digital copier dealers. “Competitive CEOs think I’m crazy, but the key to our recent growth has been our ability to transition box movers into solutions sellers,” Lord told DIR. “The digital copier channel has a lot of advantages over the traditional imaging VAR channel. One is that dealers have a tremendous install base. Another is that dealers from a single vendor don’t compete with one another, because the copier companies assign territories. And each dealer has several salespeople working these territories.”
Greg Schloemer, president of DocuWare Corporation, the American arm of Munich-based DocuWare AG, concurs with many of Lord’s sentiments about the copier channel. “We believe dealers are the future of this market,” he told DIR. “The copier channel has a lot of resources, and dealers are not afraid to invest money and people in fixing problems. From a technical standpoint, as connecting copiers to the network has become the norm, there have definitely been improvements. As far as service, dealers’ geographical coverage is superior to what we are used to in the micrographics and traditional imaging channels.”
Like Westbrook, DocuWare stresses the fact that ECM software can be used to increase hardware revenue. “We tell dealers that for every dollar of software they sell, they can expect to pull through $2-3 worth of hardware. We base these numbers on research from firms like IDC and InfoTrends. In addition, we talk about revenue associated with professional services related to solutions, including pre- and post-sales support. We also explain that software maintenance contracts can create a recurring revenue stream.
“Finally, we talk about how scanning can increase print volume. We estimate that every captured document is printed six to 10 times. [This increases consumables revenue, and, in copier circles, we’ve heard toner referred to as “liquid gold.”] It’s often just a lot harder to read documents on a computer screen. There are good reasons the copier channel is currently embracing document imaging.”
The other big growth driver
Having said all this, it’s important to note that Perceptive Software, doesn’t necessarily focus on the digital copier channel at all. Rather, Perceptive, which has some 2,000 installations since launching its ImageNow product line in 1994, has a direct sales force that handles the majority of its business. ImageNow’s strength lies in capitalizing on another of the biggest growth drivers in our market today—application integration.
“One of our major strengths is our ability to place documents within the context of a business process,” said DeCamp. “We have patents around a collection of technology rolled up into something we call our ‘learn mode.’ This functionality allows customers, without any programming, to quickly integrate our product with any Windows-based application. Coupled with our BPM functionality, this gets them the precise documents they need, when they need them, without having to leave their core applications.”
We asked DeCamp for more details about the learn mode. “It’s a graphic tool that enables customers to target an application down to the screen level,” he said. “The data displayed on that screen can be used to retrieve the appropriate documents. For example, by doing some simple clicking and dragging, a user could identify five items to be used for pulling up invoices on screen 20:1 within their Lawson accounts payable application. These items might include ‘name’, ‘account number,’ ‘date,’ etc. Then, each time the user goes to that particular screen and wants to see an invoice related to the displayed data, they just click on an ImageNow icon, and the correct image will automatically be retrieved.”
DeCamp added that ImageNow can be more tightly integrated through programming commands. “Customers with special business needs take advantage of our programming mode, however, 100% of our customers take advantage of the learn mode,” he said. “This helps us deliver rich solutions at a lower price than many of our competitors. For every dollar our customers spend on software, they spend an average of only 20 cents on professional services.”
Perceptive’s success ranges across markets. “We’ve have installations in healthcare, insurance, all levels of government, manufacturing, media, retail, and education,” DeCamp told DIR. “At least 50% of our business is driven through integration with software from one of the major ERP vendors. Most of the time, our customers deploy ImageNow to help with often-repeated core processes. These could be in accounts payable, supply chain management, and/or human resources.”
Ahead of the curve
Perceptive’s focus on painless integration of ECM functionality with line-of-business applications has proven to be very visionary (perhaps not coincidentally, the company was known as Perceptive Vision until a couple years ago). In fact, the whole SOA (services oriented architecture) wave currently sweeping our industry is also based on painless integration. Considering Perceptive’s success, it’s not surprising that both DocuWare and Westbrook have plans to more aggressively embrace application integration.
Westbrook has been at the forefront of promoting SOA-based ECM and document imaging. As far back as 2003, the company brought in a new CTO to focus on development around a .NET architecture. That development morphed into SOA.
At this year’s AIIM show, Lord told DIR that Westbrook was in the process of mining its customer base for Fortis SOA beta sites. When we caught up with him recently, Lord told us three such sites had been established. “We were looking at specific criteria, and we think we have implemented a perfect combination of sites,” he said. “One is a high-volume transaction and throughput customer. The second has a massive seat count of concurrent users. The third involves integration with a legacy environment of mainframe and Unix systems.”
Lord estimated Forts SOA would be released to general availability in Jan. 2007. “But we aren’t under any hard deadline, so that could be pushed back to March,” he added.
Westbrook is in the process of hiring sales and marketing personnel to discover and develop more leads in the enterprise space. “Our current product line is focused on the mid-market, and we want to hit the ground running when Fortis SOA is released for general availability. We plan to spend 2007 establishing ourselves in the SOA marketplace, and by 2008, I expect the lion’s share of our revenue to be coming from our SOA product. I see us having a small window to take advantage of a technological inflection point.
“Even though the market might not be fully SOA ready, I think users want to make sure they invest in, and embrace SOA systems. They might not be ready to fully implement it, but when it comes time to spend, you can be certain users will not be buying document management that does not employ SOA.”
Westbrook plans on seeding the market initially with direct sales of Fortis SOA. “I expect we will sell the first 20 deals direct,” Lord told DIR. “That will provide us with reference points and credibility. I don’t want our partners working on deals and getting shut down when they can’t come up with reference sites. We’ve already started working with some of our partners who have a better understanding of BPM and have the infrastructure to support SOA sales.”
Westbrook has even trademarked a new tagline for Fortis SOA: “Interoperable by Design.” “Because we have built this product from the ground up, it’s important to remember that we have designed services like workflow and records management to be interoperable from the beginning,” said Lord. “In most legacy ECM offerings, you have separate modules bolted together.
“Once our product hits the streets, we are counting on industry analysts to differentiate it from products that are, as you say, ‘like putting lipstick on a pig,’ when it comes to SOA functionality. [Translation: They are legacy products in an SOA wrapper.]”
DocuWare launches ISV program
DocuWare is also embracing SOA, although it is not quite as far down the path as Westbrook. For the time being, DocuWare is focusing on more traditional application integration. It recently announced an ISV program and is aiming to sign up close to 40 partners worldwide by the end of next year. “We have a goal of becoming the simplest and easiest document management partner for ISVs to work with,” Schloemer told DIR. “We’ve formalized a process to make that happen.”
For a nominal feel, DocuWare ISV partners receive the company’s SDK and related support. “We see document management as integral to every company’s application environment,” said Schloemer. “We are looking to embrace partners from all walks. This includes horizontal ISVs in areas like ERP, and vertically specialized developers in markets like healthcare, student records, and financial applications. It’s our view that once an application embraces document management, that application has increased value to its customer base.”
Today, DocuWare’s toolkit is based on proprietary APIs, but according to Schloemer, Web services protocols are coming in short order. “Today, even if a solution comes with an imaging component, it’s usually tightly wrapped around a single application,” said Schloemer. “It does not embrace all document types within an organization. The trend we see is toward integration with multiple applications.”
Trends creating opportunities
For those of you scoring at home, with this article we have addressed what we view as two of the most important trends in document imaging today. The first is the continued growth of imaging sales through digital copier dealers. The second is the move toward integration of ECM technologies, including imaging, with line-of-business and other enterprise applications. However, we want to stress that the more things change, the more they remain the same.
By no means do these identified trends, or other trends, such as ECM market consolidation and the emergence of Web services, mean that traditional document imaging is dead. In fact, especially worldwide, the potential document imaging market remains something like 10% penetrated. Many of these new developments merely represent new avenues for success in the large number of businesses that still rely primarily on paper processes.
For more information: http://www.imagenow.com; http://www.westrbooktech.com; http://www.docuware.com |
