BIRMINGHAM, AL - There is no question that imaging hardware vendors are feeling pressure to increase the amount of software they sell. Recently we've seen several MFP vendors acquiring software and services companies. We've also seen dedicated scanner vendors like KodakAlaris and Fujitsu increase their investments in software. ibml, a vendor best known for its very high speed ImageTrac line of scanners, kind of had a head start on everybody.
That's because running ibml's scanners in the unique and demanding environments in which they have typically been installed has historically required intelligent capture software capable of inline processing at very high speeds. ibml developed its SoftTrac application to address these needs. Over the years, as the capabilities of SoftTrac increased, ibml saw potential for marketing the application as a standalone product to be used with other vendors' scanners as well. Then, in 2012, it accelerated its efforts by hiring long-time software industry veteran Dan Lucarini as its Chief Marketing Officer [see DIR 4/20/12].
Earlier this week, DIR sat down with Lucarini and ibml CEO Derrick Murphy and discussed the company's progress on the software front. "Our software strategy has been in place for five to six years now," Murphy told DIR. "About three years ago, our shareholders gave us the go ahead to increase our investment in that area, and recently momentum has really started building."
In addition to hiring Lucarini, ibml has
- licensed IDR software from ISV Ephesoft, which ibml has integrated and branded as its SoftTrac Synergetics line;
- continued to add postscan modules such as analytics, reporting, PDF compression, and validation to SoftTrac (along with the ability to drive other TWAIN scanners), which is now being marketed as the SoftTrac Capture Suite (SCS).
- brought to market two desktop scanners, the ImageTracDS 1085 and 1150, that offer lower barrier to entry for customers looking for a single-vendor, intelligent hardware/software capture solution;
- and fleshed out its solutions sales and marketing and professional services staffs.
All these factors have come together and helped drive several recent wins for ibml. "Last year, we started a campaign in the U.S. to sell loan processing applications," Lucarini told DIR. "We hired some new people with experience in the capture industry selling vertical solutions. And we decided to focus on three niche areas within the loan process. We wanted to help organizations close loans faster, comply with stricter regulations, and help them get away from having to ramp up staff, and all the complications associated with that (including training) during peak periods-such as when interest rates drop."
ibml also decided to focus on banks smaller than the top 50 in the U.S. "A lot of the big banks have already purchased capture solutions-and many of them are utilizing ImageTracs," said Lucarini. "We decided to focus on regional banks that are big enough to have problems that can be solved through automation but have gaps in their loan processing operations."
This vertical focus has already delivered several wins. Ironically, one is with a top 50 bank that has implemented Synergetics to improve its mortgage loan turnaround times. "Our technology is being used to compare data on a PDF form that is being prepared for HUD (the U.S. Department of Housing and Urban Development) against information that has been collected and sits in the bank's database," explained Chad Eiler, director of product management at ibml. "Synergetics is used to examine data in up to 350 fields on the PDF form. It makes notations if there is a discrepancy, which the loan originator can than use to update the PDF.
"Formerly, this was a manual review process. This was a sixfigure deal for ibml in which the ROI was based on reduction of labor for the bank. In addition, the implementation has reduced turnaround times from hours, and sometimes days, to a matter of 30 minutes, which has obvious customer service benefits."
ibml has also won two other deals in which the customers are utilizing Synergetics' strong auto-classification capabilities in post-close applications. United Bankshares, a regional bank in the northeastern U.S., recently purchased Synergetics for classification related to multiple loan processes. For mortgages alone, UBSI is able to automatically recognize 200 different form types. Another implementation is with an Atlanta-based company that provides financing for used car purchases.
In addition to Synergetics, these customers purchased SCS and ImageTracDS 1085 scanners. "We have now placed more than 50 DS units since we introduced the product two years ago and the pipeline continues to grow," said Lucarini. "DS sales have really accelerated since we introduced the lower-volume 1085 model last year. The 1085 has a price point that enables us to play in the mid-volume production market.
"It is the only mid-volume scanner that offers document outsorting. Also, in environments where customers are dealing with batches of mixed-sized documents, its left-edge alignment feeder gives it an advantage over center-feed scanners. We are selling it at a premium, so we are not winning on price. Its functionality, and our ability to integrate it into a complete capture solution, is driving sales."
Lucarini noted that as ibml's software sales have increased, so has its revenue from professional services. "We're on track to double our North American professional services revenue over last year," he said. "For every dollar of software sales, we can drive a dollar of PS." In addition to loan processing, ibml has had some early success in markets like healthcare, for classification of medical credentials, and in government, for election ballot processing. "We recently sold a DS scanner and SCS through a partner that focuses on balloting automation," said Eiler. "They are utilizing our system to read bar codes on absentee ballots and outsort any duplicate or potentially fraudulent forms. We are excited because there are a lot of county governments in the U.S. that could utilize this type of solution. In addition, we are in discussions with a national government about deploying a similar solution in dozens of locations."
These types of applications have helped fulfill ibml's vision of the value of bringing intelligent scanning benefits to lower-volume, lower-priced markets.
Staying the course
That said, Murphy noted that ibml has also had a strong year for ImageTrac sales, which have been at least been partially driven by the recent release of the new 6000 high-volume series, which ibml previewed as this spring's IOFM Payments Summit [see DIR 6/13/14]. "We just shipped the first 6000s this month," Murphy told DIR. "And we are very encouraged by what we are seeing in the market.
"The 6000s represent a very good opportunity to upgrade existing systems because of their new technology. This includes upgrades to the hardware as well as software. There are some very compelling reasons for customers to look at the new model."
ibml recently shipped one device configured with 19 outsorting pockets to a customer doing prescription processing in Germany. "Our pipeline for hardware sales is stronger than ever," said Murphy. "This goes against the metrics of many analyst predictions. When you add that to our increasing software sales, we are pretty confident about where we are and plan to continue down that path."
We asked Murphy if he would position ibml as an "enterprise capture solutions provider?" "That would be a good way of putting it," he said. "We also want to continue to add intelligence to our solutions. I've said it a million times-my view of intelligent capture is that it represents an onramp to big data analytics. We're not just about document capture any more, we also want to be an on-ramp to gather information that can be used in big data applications.
"Our goal is to bring in documents-not necessarily all from a single input like a scanner, but also from mobile and distributed devices, as well as electronic documents-and put them through a single process. So, what comes out is a perfected data stream regardless of the initial starting point. We want to purify information before it gets into a back-end system. Organizations spend considerably more time and money dealing with exceptions in a BPM system than they would if their problems were solved in their capture applications."
Murphy concluded that ibml remains focused on the capture market, even while some of the traditional leaders in the space seem to be trying to expand elsewhere. "We are satisfied with the growth potential of capture," he said. "We are still very focused on our hardware products. But, we are also focused on growing our software business.
"According to Harvey Spencer Associates (which has forecasted an 8% CAGR through 2018 for the capture software market), last year, we grew faster than the market rate. Granted, we are starting from a relatively small base, but that shows we are taking market share from other vendors-which from our experience with replacement systems, we know is true. We plan to continue down this path- executing on our long-term strategy of selling more capture solutions."