What Was Big In 2009?

A look back at the most significant stories covered in the pages of DIR this year.

While we started out 2009 in the midst of a worldwide economic slowdown that certainly affected our market, it appears as if things started to rebound in the second half—as several companies reported strong third quarters. Despite the difficulty in securing cash from banks and VCs (and maybe partly because of it), we saw a few major acquisitions that altered the landscape of the market. We also had one major vendor accelerate its transition to a new sales model, an ongoing lawsuit that may, or may not, have been related to one of the acquisitions, and Microsoft’s SharePoint continue to generate buzz as an ECM platform and document imaging repository.

Here’s a quick review of what we consider to be the top 10 stories covered in DIR in 2009:

1. Nuance Acquires eCopy: This was a shocker for a number of reasons, one of them being the seemingly low price that Nuance paid for the established leader in the market for adding scanning to MFPs. Okay, Nuance, might argue that it was the leader, but eCopy was reportedly a $70-million, profitable company and the published acquisition price was $54 million in Nuance stock. There has to be more to this story, and we’ve speculated on some of the possibilities. Either way, the deal creates approximately a $150 million imaging business within Nuance that should have a dominant presence in both Harvey Spencer’s ad-hoc document capture segment and the MFP scanning space.

2. Kodak Acquires Böwe Bell + Howell Scanners: You could say this had been in the works for 10 years, since Kodak first tried to acquire Bell + Howell’s entire imaging business back in 2000. At that time, SEC concerns caused the scanner business to get left behind, and although regulatory approval delayed the finalization of this year’s deal—it ultimately closed in September, eight months after it was first announced. Like Nuance buying eCopy, this acquisition brought together two fierce competitors—albeit BBH and Kodak have a bit more overlap. We’ve already heard that one major executive is leaving Kodak related to the consolidation [see bullet number 10], and we expect more fallout pertaining to both personnel and product lines in the future.

3. OCR Patent Lawsuit Remains Unsettled: The big news this year was that the cases of ABBYY, I.R.I.S. and eCopy against Nuance were combined. Of course, then Nuance bought eCopy….The suit is currently scheduled to play out in the San Francisco courtroom of Judge Jeffrey S. White of the U.S. District Court, Northern District of California. It doesn’t seem like it has had much affect yet on the imaging market (although we’re not sure how much influence it had on Nuance’s acquisition of eCopy), but a ruling in favor of Nuance could create some painful royalty obligations for competitive OCR vendors. As OCR adoption continues to increase, driven by increasing adoption of PDF and IDR technologies, this case takes on even more significance.

4. Kofax Transitions Increasingly to Direct Sales: Kofax, which only a couple years ago sold virtually 100% through the channel, reported that for the third calendar quarter of 2009, 46% of its software revenue came from its direct sales team. This transition is part of CEO Reynolds Bish’s plan to move the company upstream into larger deals. However, Bish’s channel strategy has caused some irritation among what has traditionally been the imaging market’s largest and most loyal contingent of VARs.

4a. Kofax buys 170 Systems: This is part of Kofax’s move toward more direct sales, as 170 Systems sells complex BPA solutions aimed at the accounts payable market. The acquisition puts Kofax in a better position to compete with ReadSoft, which also has its own BPA technology, for high-end deals.

5. SharePoint gains momentum as an ECM platform: KnowledgeLake, the leader in putting heavy-duty imaging applications on top of SharePoint, continued its impressive growth in 2009. We also heard that vendors like Laserfiche, Hyland, and SpringCM are making headway with their Web Parts integrations. And capture vendors like Kofax, Psigen, and eCopy, as well as viewing specialist AtalaSoft, had some SharePoint wins this year as well. When you throw in the new ECM-related features upcoming in SharePoint 2010, it appears that Microsoft’s ECM platform is here to stay and will continue to influence our market.

6. Third-Quarter Bounce: Capture software vendors Kofax, Nuance, Top Image Systems, Datacap, and ReadSoft all reported relatively strong calendar third quarters. Guidance for the fourth quarter was mostly positive as well. We’re hoping this strength spilled over into the rest of the imaging industry, but Kodak, at least, reported that in its third quarter, Document Imaging revenue was down 12% from 2008. This was fairly consistent with Kodak’s results for the first six months of 2009.

7. Less Exhibitors at AIIM Show: High profile vendors missing from this year’s show floor included Kodak, Kofax, Fujitsu, Böwe Bell + Howell, and Visioneer. The show took place at the end of the first quarter—near the low point of the recession, and a lot of attendees were missing as well. For the first time in years, educational conference attendance was down from the previous year. Questex, the show organizer, is offering discounted conference rates to try and revive attendance in 2010, but it will be interesting to see who actually shows up.

8. Enterprise Software Players Embrace IDR: This really started late last year when Open Text bought Captaris and signed an OEM deal with SAP. It continued this year with Oracle signing Brainware to an OEM agreement. On a lesser scale, agreements between ReadSoft and Hyland and Altec, and Brainware and Hyland and Perceptive Software represent similar initiatives.

9. Emergence of Software as a Service as a Viable Imaging Platform: Vendors like Digitech, SpringCM, and Hyland reported strong growth for their online ECM initiatives in 2009. SaaS has also become a popular offering among service bureaus. With businesses looking to cut expenses in a down economy, reducing IT infrastructure costs by letting someone else host imaging and ECM applications has become an increasingly popular choice.

10. McMahan Leaves Kodak: Almost two years after being brought in, primarily to ramp up Kodak’s channel program, the former Fujitsu and Visioneer executive is leaving following a re-organization triggered by the acquisition of Böwe Bell + Howell Scanners. Former BBH Scanners President Russell Hunt takes over McMahan’s roll at Kodak. During his time at Kodak, McMahan significantly retooled and diversified Kodak’s Authorized Imaging Reseller (KAIR) program.

Honorable mention: Pegasus Buys AccuSoft; Increasing Demand and Deployment of Zero-Footprint Viewing Technology; Remittance and Forms Capture Converge; Census Bureau Prepares to Capture 2010 Forms; Canon Europe Takes Stake in I.R.I.S.; Plasmon Files for Bankruptcy.

Press Releases

News for November 24, 2009

If you would like your releases highlighted on this site, please send them to Ralph Gammon at ralphg@documentimagingreport.com.