SharePoint 2007: The Partner Perspective

Microsoft and SharePoint Server 2007 were the talk of AIIM On Demand 2006. Specifically, Microsoft is advertising improvements and/or new functionality in the areas of search, workflow, scalability, security, document management, and records management. Because all this functionality is going to be tied so closely to Microsoft’s popular Office desktop applications, many are predicting it will spell death for today’s ECM market leaders.

This, however, is contrary to what Microsoft itself is saying. Microsoft actually had several ECM partners in its booth, which was on the AIIM side of the show, and touted alliances with several other vendors. Hyland Software, for example, which develops its ECM application on the Microsoft platform, does not see SharePoint as a threat.

“Our customers like SharePoint as a portal framework to give users a single point of contact for several applications—ours being one of those,” said Bill Priemer, EVP and COO at Hyland. “We’ve developed a set of Web Parts that you can drag and drop onto a SharePoint page. These offer access points into our OnBase system. Microsoft loves that approach. We love that approach.”

Long-time Microsoft partner Captaris has also leveraged Web Parts to integrate its Alchemy document imaging and management application with SharePoint. Web Parts represent an API for integrating third-party applications with SharePoint. “We see SharePoint being used typically for collaboration around electronic documents,” said Eric Bean, senior director, products group, for Captaris. “Microsoft is talking about adding some archiving and records management in future releases, but there is nothing there today.

“Our Web Parts interface enables users to take any group of documents from within SharePoint and archive them into an Alchemy repository. Conversely, you can retrieve documents from within Alchemy and make them available across SharePoint. We’ve also enabled users to do integrated searches across both repositories.”

Both Captaris and Hyland also plan to leverage the BizTalk, Web services-based protocol that Microsoft has introduced for SharePoint. “We are trying to take advantage of every complementary point we can,” said Hyland’s Priemer. “However, we will not be recommending that our customers store anything long-term in SharePoint, or that they manage versions of their documents in a SharePoint repository.”

When pressed about some of the improved ECM functionality in SharePoint 2007, Priemer said it will still be a far cry from the functionality of Hyland’s OnBase. “If it turns out that SharePoint has a nice offering for managing business content, it will still be a long way from addressing what we do when it comes to transaction management,” he told DIR. “Just look at all the modules we offer specifically to address vertical markets like insurance, financial services, and healthcare, or for processes like high-volume imaging, workflow, or accounts payable processing. If it turns out customers like what Microsoft is doing on the business content side, they can make the choice to leverage two repositories—because SharePoint can’t address transactions like we do.”

KnowledgeLake already riding SharePoint

While ISV KnowledgeLake might agree that SharePoint can’t handle high-volume transaction applications out of the box, the St. Louis-based vendor certainly doesn’t believe adding a second repository is the answer. “Open Text, FileNet, Hummingbird, and everybody else’s SharePoint strategy seems to involve a dual-repository approach,” said Bob Bueltmann, VP of sales at KnowledgeLake. “But, no sane systems administrator is going to make a conscious decision to support two repositories if he doesn’t have to.”

KnowledgeLake’s claim to fame is being the only vendor we are aware of to add high-volume imaging and robust document management capabilities directly into SharePoint ’03, the current version of the product. KnowledgeLake is a former Documentum and FileNet reseller that got fed up working for The Man and decided to come up with its own software offering. KnowledgeLake leverages the SharePoint repository that many of its customers already have enterprise licenses for, but were having trouble using.

KnowledgeLake first started working with SharePoint in 2003 and since then, has image-enabled some 300 customers and is approaching some $10 million in annual revenue. Its flagship offering is an imaging module for SharePoint that introduces capabilities like content-centric workflow, streamlined meta data search, image viewing and mark-up, and audit trails. The company also has a high-volume capture module and the ability to ingest electronic documents generated by non-Microsoft applications.

“What’s especially exciting is that this year’s AIIM show really represented the coming out party for Microsoft as far as the ECM market goes,” said Bueltmann. “Until recently, when you said ECM to somebody at Microsoft, you’d probably get back a blank stare. For the past two years, we’ve been alone in carrying the banner for SharePoint as an ECM repository. We’ve been winning deals on our guts, product offering, and knowledge of the industry. We’ve been beating big-name competitors like Open Text, FileNet, and Documentum. Now, with Microsoft actively announcing its intention to go after this market, it’s only going to provide us with additional momentum.”

Microsoft marketing will provide boost

Microsoft’s marketing power is one point on which Priemer agrees with Bueltmann. “It will be nice to have Microsoft’s muscle behind this space,” he told DIR. “I don’t know if any of the competitors to date, prior to EMC getting in, really had a loud enough megaphone to do a good job.”

Of course, as we often see in American politics, being loud doesn’t always mean being right. “SharePoint is a pretty good collaboration tool, but not a good document management application,” said Paul Lord, CEO of document imaging and management ISV Westbrook Technologies. “It’s my opinion that Microsoft is just going to confuse the market, which, of course, will give us the opportunity to come in and say, ‘here’s what you really want.’ So, no, I’m not worried about competition from SharePoint.”

Microsoft needs its partners

In discussing SharePoint’s potential effect on the ECM market, it’s also important to remember that Microsoft is not necessarily known for strong direct sales. So, somebody still has to successfully sell and implement SharePoint ECM applications. Yes, KnowledgeLake has done a good job of this so far, but they too are finding it challenging to recruit good Microsoft-centric resellers into the very refined air of EMC sales. After all, if these guys are making good money on Exchange installation and support, which is very much a horizontal application, why do they want to move into something as specialized as ECM?

And, one of the challenges of working with SharePoint historically has been that despite its being aimed at mid-sized applications, it’s not the easiest application to install and work with. “As a Microsoft partner, we looked very closely at SharePoint ’03,” said Thomas Schneck, president of ISV DocuWare AG. “However, we felt it was too complex for the mid-market customers [50-500 employees] we target. Microsoft puts together a great white paper, but at the end of the day, somebody still has to deliver the functionality to the customer.”

That is where vendors like DocuWare, Westbrook, Hyland, and Captaris still have an advantage over Microsoft and KnowledgeLake. Each of these companies has spent years cultivating an ECM-centric channel. Hyland has even gone so far as to develop several vertical practices specially designed to support its resellers.

“Hyland provides us with great backfill for any gaps we may have in knowledge of specific verticals,” said Roger Tausig, CEO of Imaging Solutions, a Wallingford, CT-based VAR. “For example, recently, we were discussing a potential mortgage processing deal with a client, and Hyland brought in an expert in that area. Our customer’s secondary mortgage people started talking about post-close audits, and we just stepped back and let the Hyland person handle the conversation. It was a beautiful thing.

“We’ll know more about that specific process the next time we run into it, but it really gives the customer a warm-and-fuzzy if you know their business the first time you walk in. Document imaging is a maturing market, and customers don’t want to have to teach you about their business.”

It’s this type of support that Microsoft cannot provide without its current host of ECM partners. So, while SharePoint 2007 might make some great strides to provide additional ECM functionality, there is still going to be plenty of room for partners to provide solutions on top of it, or in addition to it. This is the strategy Microsoft has preached, and we don’t expect it to play out any differently.

And despite the fact that Microsoft is essentially giving away a lot of its ECM functionality, at least to Microsoft enterprise customers, the services and extra software built around this functionality will still command a premium. For example, KnowledgeLake, despite leveraging the SharePoint ’03 free repository, still charges approximately $20,000 to add document imaging functionality on a single-server installation. This is in the same ballpark as what Captaris and DocuWare resellers get for many of their installations.

We’re not saying next year’s release of SharePoint ’07 is going to have no effect on the ECM marketplace. After all, judging from KnowledgeLake’s success to date, SharePoint ’03 is even having a significant impact. We are saying that it’s not going to be the drastic game-changer some are predicting. Sure, products with lower-end functionality will be marginalized, but that’s always been the case in competitive markets. The bottom line is that SharePoint still appears to us, at least, as more of a platform than a completed application. And as a platform, it requires ISVs and SIs to help get it deployed. Is that help going to come from KnowledgeLake? Yes. Hyland? Yes. Captaris? Yes. Open Text? Yes… and so on down the list. That is, unless, of course, SharePoint gets marginalized by Google’s SOA-based document management capabilities…, but, really we don’t see that coming for at least another 10 years.

For more information: http://www.microsoft.com/sharepoint/, http://www.onbase.com; http://www.captaris.com; http://www.knowledgelake.com; http://www.docuware.com; http://www.imagingsolutions.com; http://www.westbrooktech.com