New price points, better performance driving solution sales

The paperless office we’ve heard about for so long is finally in sight, isn’t it? Well, maybe not. Talk to VARs and end users, and they’ll tell you paper isn’t going away anytime soon. The idea of relying on paper is deeply entrenched in the corporate psyche, and its use remains integral to businesses of every size and stripe.

Despite the longstanding legal admissibility of scanned documents, and the wide availability of scanners and content management systems, the most important documents are still archived as paper. That’s the main finding of “Document Scanning and Capture: Local, Central, Outsource—What’s Working Best,” a survey of 882 companies done last year by the Association for Information and Image Management.

The survey found that 62 percent of important documents are archived as paper. Even when documents are sent for archive scanning, 25 percent are photocopied beforehand “just in case.” Less than a third of the paper originals are systematically destroyed after scanning.

The good news for VARs and vendors, though, is that while paper will remain king in some respects, users of all sizes realize the productivity and security gains to be had by implementing document imaging and content management solutions as part of overall business-process improvements.

Most importantly, they’re buying.

Users Embrace Distributed Scanners

In fact, U.S. scanner sales are defying the weak economy, making document imaging solutions more attractive than ever. That’s the key finding of “2010 Document Scanning Forecast & Market Analysis,” a recent industry report published by Moyse Technology Consulting.

The report found that U.S. companies last year bought more than 500,000 scanners, mostly strategically positioned desktop/workgroup and departmental devices. The key reason why scanner sales are holding their own is because vendors are pushing the envelope on scanner price-to-performance ratio.

“The price-to-performance of scanners has vastly improved over the past few years as has the technology itself,” says Account Executive Alan McHale with Tech Data’s Document Imaging Specialized Business Unit (SBU). “Scanners are faster, more efficient and much easier to use than even a few years ago. The market is moving away from the big centralized scanners to smaller desktop or distributed scanners.”

McHale believes that the most popular scanners are in the 15- to 25-pageper- minute range. “These devices offer the right combination of price and performance for most desktop and workgroup users.”

Scanner prices are dropping every year while their capabilities improve, says Mitch Kadish, product manager, Document Scanners with Epson.

“I would say the prices of many desktop and departmental scanners have fallen 50 percent or so over the past 5 years,” adds Kadish. “Falling prices and rising performance are growing the market for distributed scanners by about 15 percent annually.”

The changing scanner market has opened up tremendous sales opportunities in the SMB space, says Bruce Malyon, CEO of MaxxVault, an Islandia, NY-based VAR that specializes in document imaging and management.

“Even the smallest company can now afford a rock-solid scanner,” says Malyon.

Scanning Has Never Been Easier

Another boost to the market is improved document management software, which used to be very expensive and not exactly user friendly. But that has changed. Now this software—which is often integrated into the scanner—is very easy to use and more sophisticated, making scanning as simple as pushing a button.

“Every vendor seems to have the magic green button that means scan,” says John Cassidy, president of Image Access, a Hackensack, NJ-based VAR that specializes in document imaging.

Visioneer, for example, has OneTouch technology that allows users to scan to the destination of their choice by pressing a single button, eliminating multiple steps in sending scanned documents to predetermined applications or devices.

“Advanced TWAIN and ISIS scanner drivers ensure compatibility with any workflow or EHR system,” says John Capurso, vice president of Marketing at Visioneer.

Most of today’s scanners, from vendors such as Visioneer and Epson, feature buttons that are pre-programmed to scan, e-mail or copy in searchable PDF file format. However, users can customize them to scan to a forms-processing application, an archive and retrieval location, a document distribution list or a business-process management program.

Federal Stimulus Money Drives Sales Growth

While VARs and vendors agree that document imaging is a horizontal market, everybody knows that federal government stimulus money is driving technology purchasing in two main verticals: healthcare, and state and local government.

The healthcare market has received a massive injection of funds from the American Recovery and Reinvestment Act of 2009 (ARRA). The Health Information Technology for Economic and Clinical Health Act (HITECH) portion of ARRA represents an investment of more than $19 billion for healthcare IT initiatives, including the development of standards and guidelines for Electronic Health Records (EHR). (See related article on page 8.)

“Stimulus money is driving strong sales of scanners in the local and state government sectors, as well as in healthcare,” says Kristi Kirby, senior product manager with Tech Data’s Document Imaging SBU. “In healthcare in particular, document imaging VARs will play a key role in helping doctors transition paper records to an electronic file system so they can benefit from the EHR-adoption incentives created by the stimulus act.”

The healthcare market has barely been penetrated, says Visioneer’s Capurso. He cites a recent study by InfoTrends Research Group. The study found that less than two percent of hospitals have fully implemented comprehensive EHR systems and less than eight percent have basic EHR systems. Only 4 percent of physicians’ offices have fully-functional EHR systems and 13 percent have basic EHR systems.

Healthcare aside, document imaging solutions provide VARs with tremendous opportunities as every business and organization can benefit from document imaging and an electronic filing system.

Tech Data’s McHale encourages VARs to look to utility companies. “A significant area of growth for scanning and document imaging is utilities billing,” he says. “We’re hearing annual growth estimates of nine percent, which makes a lot of sense when you consider the volume of paper-based transactions they must be dealing with.”

“Document imaging allows companies to capture, digitize, distribute, store, organize and retrieve all kinds of documents quickly and effectively,” adds Image Access’ Cassidy. “It improves processes, connects to backend business systems and helps companies to get paid faster than by relying on paper.”

A basic scanner with basic document management software is a no-risk purchase, says Visioneer’s Capurso.

“When companies consider the time they will save in filing, searching and retrieving paper, they realize a document imaging solution will pay for itself in only a few months,” Capurso adds.

Despite falling hardware and software prices, margins on higher-end document imaging solutions are holding their own very well, notes Cassidy.

He cites margins of up 20 points on hardware, up to 40 points on software, and 50 points or more on professional services.

“When you get into more complicated installations, nothing is out-of-the-box simple,” Cassidy adds. “Everything requires customization, integration with other software and sometimes ongoing support.”

While paper may never go away, document imaging has gained a strong foothold and is steadily gaining ground in businesses as part of processimprovement intiatives. VARs have a great opportunity in this space to generate high margins with a complete solutions approach.