Taking A Fresh Look At SMB Imaging
Collaboration applications offer alternative to traditional ECM repositories
Over the past couple years, we’ve run a number of stories discussing the downstream movement of document imaging systems and their increased traction in the SMB space. A number of factors are driving this transition, including adoption of PDF, scanning from digital copiers, less expensive dedicated document scanners, improved distributed capture software, and increasing attention being paid to records management and archiving.
Our opinion on the potential in this space has been backed by the financial results of imaging vendors focused on SMBs, studies from AIIM (the trade organization), as well as a recent report from IDC citing that the workgroup and departmental digital/paper management market is expected to hit $333 million worldwide in 2005. The IDC report goes on to predict a five-year CAGR of 16.8% and revenue of $615 million in 2009.
These are great numbers, especially when you consider that high-end enterprise content management players like FileNET, Open Text, and Interwoven are not growing at nearly this pace—and they represent leaders.
So, who is going to capitalize on the adoption of imaging by the SMB market? Most likely, it won’t be the big boys, as they have shown little adeptness nor gumption for moving their products downstream. The motto in our industry has always been that it takes 10 times as much effort to sell 10, 10-seat systems as it does to sell one, 100-seat system. This leaves mid-market-focused players like Hyland, Laserfiche, Westbrook, DocuWare, and a number of others to clean up—and from reports we’ve received over the past couple years, they have been. However, as the market continues to move downstream, we wonder how low these vendors will be willing to go. Some of them have already expressed plans to look upstream, not down, for future growth.
As a result, we see some opportunities emerging for vendors of low-cost document imaging alternatives. But, how do you cost-effectively sell into a market that others have left behind because of low margins? By changing the rules of the game, of course. This summer, we talked with Traction Software (http://www.tractionsoftware.com), a corporate blog software vendor that exhibited at AIIM 2005. By leveraging WebDAV (Web-based Distributed Authoring and Versioning) protocols, Traction has come up with what it feels is an effective document management-lite system for the SMB space.
However, Traction is small, and corporate blogging is still very much an emerging market. To us, blogs represent the next generation of collaboration software—which is more mature and has been on the market for at least five years now. A couple years ago, there was a big push to envelope collaboration into the ECM space, and it is now most certainly an embedded piece of the ECM infrastructure.
As its name suggests, collaboration software enables the effective sharing of electronic documents. Throw on some back-end versioning, auditing, and archiving controls, as well as some workflow, and voila, you’ve got yourself the makings of the document management system. Add some imaging functionality, and you start to see where we are going…
One of the most popular collaboration software products is Microsoft’s SharePoint. Another is EMC’s Documentum eRoom application. Both are considerably less-expensive than a full-fledged ECM system, but by tweaking them correctly, users can often achieve their needed functionality. We recently spoke with a pair of vendors that offer such tweaks.
The first is St. Louis-based KnowledgeLake, which has introduced a document imaging suite that leverages the SharePoint repository. “We basically take SharePoint and put it on steroids,” said Chuck Nash, president of KnowledgeLake. “We increase both its scalability and security.” The second vendor we talked with was Visioneer, which in conjunction with Documentum services partner Daybreak ICS, has developed an imaging on-ramp for eRoom.
Following is a look at each of these vendor’s efforts to bring document imaging functionality to the collaboration space.
Filling In SharePoint’s Holes
According to Nash, there are more than 220,000 installations of SharePoint deployed today, running on more than 34 million desktops. “SharePoint is part of the package that Microsoft enterprise application customers receive,” Nash told DIR. “Our strategy enables these customers to leverage their Microsoft maintenance costs and SharePoint repositories in their ECM solutions.”
Nash is very familiar with the ECM market. In 1996, he co-founded Doctex, a document imaging reseller that in 1998 was sold to SourceCorp (then known as F.Y.I.) for $6 million. Doctex was a reseller for the likes of FileNET, Documentum, and OTG. After a couple years with Cap Gemini Ernst & Young, in 2000, Nash went back into business on his own, helping to found KnowledgeLake.
“We started with FileNET again, but this time around, we also decided we wanted to develop some of our own intellectual property,” said Nash. “Margins for resellers of traditional ECM products have gotten really tight. The big ECM vendors have started deeply discounting software to win installations and secure maintenance contracts. If you look at their financial reports, maintenance is where they make their real money these days.”
KnowledgeLake was first introduced to SharePoint in 2003. The rest, as they say, is history. “When we first saw SharePoint 1.0, it was very weak and relied on Microsoft’s Access database,” Nash told DIR. “However, as we talked with Microsoft and began to get educated on where they were going, we started to see potential. So, we developed a suite of products around SharePoint. This suite hit the market at the beginning of this year. In the third quarter alone, we signed up 42 new customers, and by the end of the year, I expect to have more than 200 new customers and $10 million in revenue—all generated from SharePoint-related sales.”
According to Nash, KnowledgeLake is the only imaging/ECM vendor that leverages SharePoint as the repository. “This significantly lowers the cost of an ECM installation,” said Nash. “We offer conversion services to move documents and images from legacy ECM applications into ours. After that one-time charge, and the cost of our software, which is very competitive, I’d estimate our customers are paying about one quarter the maintenance charges they’d pay for a traditional ECM solution. Conservatively, I’d say we’ve already replaced 15 FileNET systems, not to mention Optika, Documentum, and Legato.”
KnowledgeLake’s suite improves the capture, viewing, indexing, and workflow capabilities for both paper and other electronic documents using the SharePoint repository. “Yes, with Office 12 and Windows Vista, Microsoft has promised to improve the document management and workflow capabilities of its own products,” said Nash. “But we are their exclusive imaging partner. We fill in some of the holes they are not going to address. We know this because we are a member of Microsoft’s Technology Advisory Panel for Office 12, and Microsoft has even set up an office for us at its Redmond campus.” [For more on Microsoft’s ECM strategy, try this white paper: http://www.documentimagingreport.com/fileadmin/DIR_Press_Releases/ECM_-_A_Microsoft_Approach.pdf]
Nash added that with KnowledgeLake’s product line, a complete Microsoft-based, ECM solution is available today. “If I based my business on Office 12 and Windows Vista, you know how many employees I’d have?” Nash asked facetiously. “Of course, we also offer a clean upgrade path that will integrate with whatever Microsoft introduces.”
According to Nash, the bulk of KnowledgeLake’s success has been with mid-market customers with 500-2,500 users. “We have also landed enterprise deals for more than 100,000 seats,” he told DIR. “Our largest deal, in terms of volume, is with Scottrade Financial Services, which has used our software to capture and store 40 million back-file documents, and is adding three million more annually.”
To date, KnowledgeLake has primarily sold direct, but recently began efforts to cultivate a channel. “When an end user needs support for its ECM system, it’s much easier for them to find a certified Microsoft partner, than a certified FileNET or a Hyland partner,” said Nash. “We want to leverage Microsoft’s large channel and are starting by working with the small percentage that understand ECM. Still, with thousands of partners to pare down from, we see a significant opportunity. We plan to launch a full-scale partner program early next year.”
A Paper On-Ramp For 10 Million Users
The Visioneer and Daybreak alliance isn’t nearly as mature as KnowledgeLake’s work with Microsoft, but it still bears watching. According to Kara Cleaver, president and COO of Daybreak, there are more than 10 million seats of eRoom deployed at thousands of customer sites worldwide. eRoom is the name of the collaboration vendor and software product that Documentum acquired for $120 million in 2002 [see DIR 10/18/02].
Visioneer and Daybreak have partnered to create a scan-to-eRoom application leveraging the OneTouch interface on Visioneer’s Xerox-branded workgroup scanners. Daybreak, which advertises one of its specialties as unlocking the full potential of eRoom installations, has helped develop a connection interface, e4e, which is being sold in packages of 1,10,25, or 50 seats.
“Up to this point, the majority of documents that have lived in eRoom are electronically generated,” said Cleaver. “While it’s not been impossible to put images into eRoom, it can be very labor intensive. We have one customer using a dedicated station to scan to an FTP site and then downloading the images onto the network just to get them into eRoom. And those images aren’t even searchable.”
The OneTouch/e4e solution leverages ScanSoft technology that is bundled with Visioneer scanners to create searchable PDFs filed in eRoom through the e4e interface. “With this solution, document images are no longer second-class citizens,” said Cleaver.
Cleaver estimated that 30-40% of eRoom customers currently use some sort of document imaging technology. “We were getting feedback from our customers that wanted an easier way to get paper into eRoom,” said Cleaver. “We work with some of the largest eRoom customers, who have several thousand seats installed. I’m not saying they will install scanning for every eRoom seat, but there is some significant potential just based on a percentage.”
In addition to large enterprise installations, Cleaver added that there are a number of smaller eRoom deployments not connected with ECM repositories like Documentum 5. “We believe many of the smaller installations are being used as document management repositories,” she said. “e4e is a great vehicle for adding a workgroup scanner as a paper on-ramp in these instances.”
Cleaver noted that, to date, Documentum has not done too much to integrate its SMB-targeted AX document imaging application (the former OTG stuff) with eRoom. “We’ve been hearing a lot of noise that this is going to happen,” she said.
Whitney Tidmarsh, VP of solutions marketing, EMC Software Group, said further integration between eRoom and AX is definitely on the way.
The AX partner channel, of course, is a natural vehicle through which Visioneer can market its scanners. According to Rusty James, Visioneer’s VP of channel sales, since he was brought on board this spring, the company has signed up close to 600 VARs. “We are in the process of comparing our channel with Documentum’s and determining what synergies can be leveraged,” James told DIR. “We also think the eRoom integration presents an opportunity for SMB VARs who might not be married to an ECM product line and may want to leverage eRoom.”
The e4e solution, which made its debut at last week’s Documentum Momentum event in Las Vegas, will be sold through Visioneer’s two-tiered distribution model.
John Capurso, Visioneer’s VP of enterprise marketing, indicated the company will leverage its OneTouch functionality in similar applications in the future. “eRoom is utilized in the front office, where ease-of-use is a necessity,” he told DIR. “We have some key core technology for creating searchable PDFs and loading them into a software application with the touch of a button. There are plenty of situations where this can be leveraged, some of which we’ve thought of, and some I’m sure we haven’t.”
For more information : http://www.knowledgelake.com; http://www.daybreakics.com; http://www.visioneer.com; http://www.documentum.com/eroom |
