This article originally appeared in the Nov. 21, 2014 issue of DIR

Relationship Offers ECM ISV Entrée into Fortune 500 & Global Markets

ECM is among the hottest technologies for digital copier vendors these days. Xerox became the latest MFP vendor to increase its stake in the ECM market—recently signing a reseller agreement with Cleveland-based ISV Hyland Software. Initially, Xerox will target Hyland’s OnBase suite at its cadre of large, Fortune 500 managed print services (MPS) customers.

“We have thousands of MPS customers worldwide,” said Dale Johnson, Xerox’s senior director, Global Workflow Automation, for large enterprise organizations. “It’s our view that as we move into the next generation of MPS, it’s really about automating and simplifying customers’ document environments. To do this, we have to focus on business process management, which OnBase provides.

“Historically, Hyland has had success selling to mid-sized and even some larger companies. Through this partnership, Xerox can bring Hyland into the C-level suite at some very large Fortune 500, Global 250-type organizations. Our long-standing relationships in the MPS space give us that type of access. Hyland has tried to gain access to these types of accounts in the past, but has not been able to. Also because of Xerox’s global presence, we can expand Hyland’s penetration into other countries.”

Ed McQuiston, Hyland’s VP of Global Sales, agreed that the Xerox relationship has the potential to extend Hyland’s market reach. “We have already started to develop leads with Xerox and have focused on their top tier of enterprise customers,” he said. “These are some huge corporations that Hyland has traditionally had to work to get the attention of. We just don’t have the incumbency that Xerox does.

“That incumbency creates a distinct advantage for Xerox and a trust. Even though Hyland has been around for a long time and more recently has been listed as a leader in the Gartner Magic Quadrant, Xerox has some trusted relationships that go back much further. These customers believe Xerox will bring the best products to the table and that is very meaningful for us.

“Xerox also broadens our international reach. Outside of U.S., we are starting with them in Europe, and we recently expanded our scope to include regions like Latin America, the Middle East, and Southeast Asia. Expanding our international reach is a core focus for Hyland over the next few years [as evidenced by its recent attempts to acquire ReadSoft, see DIR 6/27/14], and Xerox contributes to our ability to do that. Xerox has people on the ground worldwide that are attractive to us.”

McQuiston noted that Xerox’s hardware component should also help even the playing field for Hyland when competing against other major ECM vendors. “Most other large ECM players, including Perceptive with Lexmark, IBM, and EMC, are selling a broader proposition than standalone software,” he said. “That means it’s possible for these vendors to offer software as part of a contract bundle with their hardware, which often appears more attractive to customers.

“Xerox will be able to do the same thing with its MPS agreements. The Hyland component can be marketed as a value-add in a broader offering vs. a standalone ECM tool. From a Xerox perspective, ECM helps create more stickiness to their MPS contracts. It takes MPS beyond the commodity level. Xerox also has additional offerings in areas like e-discovery that can complement OnBase and enable us to compete better with larger vendors like IBM and ECM that have broader portfolios.”

McQuiston added that Xerox’s being in the MFP hardware business brings with it some distinct advantages. “Xerox’s hardware footprint creates a unique position from an on-ramp perspective,” he said. “More and more customers are looking for distributed points of capture throughout their organizations. Xerox’s MFP footprint becomes very meaningful when you consider that.

“We plan to leverage Xerox’s hardware by working together on panel-level integration that offers more than just click, scan, and ingest functionality. We envision leveraging some of our technology like integration with ERP systems, as well as Xerox technology in areas like security, to create some specific niche applications. One example might be HR self-service kiosks, where employees onboard themselves through a touchscreen.”

Xerox’s Johnson added that the MFP vendor has some Hyland-specific integration plans. “Our Extensible Interface Platform (EIP) enables our partners to configure the user interface on our MFPs,” he said. “The advantage when working with a close partner like Hyland is that it’s our technology so we can further customize it if we want to.

“We are also working on a mobile component but I can’t share much. It’s very exciting and we’ll tell you more when it’s announced this spring. I can say that it’s an application that will be able to be applied in a multitude of areas, with an emphasis on workflow automation.”

A Focus on Workflow Solutions
Xerox launched its Workflow Automation Group last year to focus on selling complex solutions such as ECM. “Mike Feldman (a former HP executive who joined Xerox in 2013 and is currently President of Large Enterprise Operations for Xerox Technology) set up Workflow Automation about a year ago,” said Wasim Khan, senior director, Workflow Automation. “For awhile, we’ve had offerings like DocuShare and FreeFlow [print server technology]. But, we felt we needed a dedicated organization with more focus.

“Our goal is to provide solutions that help our customers reduce their paper and automate their processes. Having a dedicated group is helping us develop a shared methodology, shared tools, and a consistent method for delivering value to our clients on a global basis.

“Delivering workflow automation solutions has meant adding new offerings to add value for our MPS clients. We are adding components like ECM, data analytics, intelligent capture, and enterprise file share and sync.”

In fact, on the same day the Hyland partnership was announced, Xerox announced a partnership with Datawatch, an ISV that offers software for data analysis and discovery. Xerox also debuted an internally develop file sync and share platform—Xerox Digital Alternatives. “Instead of printing documents for reading, sharing, or signing, through Digital Alternatives users create PDFs that can be accessed through their PCs or tablets,” said Karl Hofmeister, Global Offering Manager, MPS Offering Development, Large Enterprise Operations, Xerox. “Digital Alternatives supports electronic signatures, annotations, and simplified workflows. It enables users to sync their files across multiple devices and executive ad hoc digital workflows.

“There are three trillion pages printed annually. Workflow automation is a better way to move forward. The idea is to print less within structured business processes. However, at some point within those processes, prints are often made to complete day-to-day tasks like signing and reviewing documents. Digital Alternatives can minimize that printing.”
Xerox’s Workflow Automation Group has a dedicated sales force. “Some of our more complex solutions require the right level of skill set,” said Khan. “We expect Workflow Automation solutions architects to be involved with our Hyland sales.”

“Solutions definitely require a more mature sales model than our traditional MPS sales,” added Johnson. “We also have a dedicated Workflow Automation implementation team. We are not experts on Hyland and Datawatch yet. There is going to be a learning curve, but as knowledge transfers, we will take on more and more responsibility.”

“Xerox has a sales force that knows very well how to move hardware equipment,” said Hyland’s McQuiston. “It is neither our, nor Xerox’s, expectation that the broader sales force will suddenly become experts in ECM. They instead will look for opportunities where ECM can be a fit. We have armed them with questions to ask and indicators to look for that show a potential for OnBase.

“Once these opportunities are uncovered, Xerox has a next tier that will be their ECM team. They will come in and really drive OnBase sales with support from Hyland. We will communicate with Xerox’s account managers and sales engineers and provide back-up when needed.

“Xerox’s intent is to certify personnel to implement OnBase and take the first line of support calls. We plan to support Xerox similar to the way we do our VARs—because on a very large scale, they are pretty much functioning as one of our resellers. The main difference is that they are focusing on the high-end enterprise space.”

According to McQuiston, Hyland’s history of support for its reseller channel played a role in Xerox choosing to partner with the ISV. “For all of the MFP vendors we partner with, Xerox, Konica Minolta, and HP, if you start looking at Gartner’s Magic Quadrant for ECM, we are a pretty attractive dance partner,” he said. “As I mentioned, most other ECM leaders are selling hardware, if not MFPs. Also, we’ve been selling through partners since our inception in 1991. We have a better framework for managing partnerships than our competitors do.”

Xerox has already had a number of salespeople travel to Hyland’s offices for training. “They have been getting certified in anticipation of the partnership,” he said. “Xerox is really putting some commitment behind its words.

“I have been involved with this partnership since it was conceived, and I grilled Xerox executives about their commitment level. For Hyland, the support necessary to enable a relationship of this size to thrive is not insignificant. These types of partnerships are expensive bets to make.
“Xerox executives told me they wanted the company to become experts on our product and be able to sell and implement it without Hyland having to lead the charge. They see Workflow Automation as a practice in and of itself within Xerox—and OnBase is a key part of their strategy. It’s not going to happen overnight; we know we have work to do on our side to help Xerox get wins and build some momentum. But, so far, Xerox has lived up to everything they have promised.”

Next-Generation MPS
As we mentioned, Xerox is the third major MFP vendor that is now partnering with Hyland. “Our message is that we are vendor agnostic,” said McQuiston. “All MFP vendors are staring into the abyss a little bit from a revenue generation standpoint. I think the numbers bear out that print continues to decline, toner sales continue to decline—really the commoditization of the MFP market has all the vendors chewing each other up. Some leaders like Xerox and HP got into MPS and it allowed them to extend their hardware margins for a little while.

“At first MPS represented a unique offering that was not as price sensitive or commoditized as hardware. But, that is starting to change. The vendors realize they have to add value if they want to refresh their MPS agreements every three years. They also have to account for declining print and toner volumes. They have to fill that offset and OnBase can provide the digital component they lack.”

HP sells OnBase through its Imaging Printing Group (IPG), which also resells software from Kofax, ReadSoft, Perceptive, Omtool, and Nuance (eCopy). (HP Worksite [the former Interwoven/iManage product acquired with Autonomy] and the former Cardiff and Tower Software products are sold through HP Autonomy—which is slated to be split from IPG in the near future.)  Konica Minolta packages OnBase in vertical solutions sold as part of its EnvisionIT suite [see DIR 12/6/13].  Konica Minolta Business Systems USA has also been rolling up a nationwide footprint of Hyland resellers [see DIR 4/25/14].

McQuiston sees Hyland’s various MFP vendor relationships as complementary. “Konica Minolta has a very strong SMB presence, while the Xerox relationship is targeting larger corporate customers,” he told DIR. “In addition, their worldwide geographic focuses are a bit different. Konica, for example, is especially strong in Southeast Asia—in countries like Singapore, Hong Kong, and Australia. We see plenty of white space for both vendors to compete, and I don’t expect a lot of conflict.”

And while Konica has had a strong focus on specific vertical solutions utilizing OnBase, Xerox is still determining its vertical strategy. “Hyland offers multiple offerings into different verticals,” said Johnson. “We are still determining specifically what we will be covering. Our focus initially is to work with our MPS customers where we have established relationships and go to market from there.”

McQuiston sees Xerox targeting slightly different verticals in different geographies. “Worldwide, Xerox is strong in a lot of vertical markets that align with our vertical strengths,” he said. “In Europe, I expect them to focus mainly on financial services and insurance, with healthcare added to the mix in the U.S. Higher education and government are also important markets.”

Because Xerox is selling OnBase in conjunction with its MPS offering (which is typically sold through a subscription model), we asked if Xerox would be leveraging Hyland’s OnBase OnLine cloud offering. “We are looking at cloud and on-premise models,” said Johnson. “It really depends on our customers’ requests and requirements.”

“I think it will be a hybrid relationship,” added McQuiston. “There are some things we might work on that will be niche offerings that we look to bring to market in a pre-packaged cloud type approach. But, as we get into complex, broader ECM rollouts, customers typically want that on-premise. We are prepared to offer OnBase through Xerox in either fashion.”

Khan concluded that OnBase helps broaden Xerox’s solutions portfolio. “Some solutions are content-led and some our process-led,” he said. “If a customer requires strong document management capabilities, then our own DocuShare product may be the right fit. But, if the solution requires a heavy emphasis on a BPM engine, maybe OnBase is the right choice. Our goal is to really provide value-added solutions.”

For more information: http://bit.ly/Xerox-Paperless; http://www.onbase.com/en/about/media-room/press-releases/xerox-partnership