I’m in San Diego today and tomorrow for Kofax’s annual user and partner conference, Transform. It’s been a while since I’ve had to complain about no conference wifi, so I’ll just get that out of the way now – seriously, it’s 2012, wifi should be ubiquitous at conferences. The session moderator just pointed out all of the countries from which international attendees have traveled, and how many of them do you think have US data coverage for their smartphones? I can’t even pick up the Hilton room wifi (which I paid for) or the lobby wifi (which is free) in the main conference area. Grrr. Also very little social media promotion: although there is a Foursquare venue, the conference guide doesn’t mention a hashtag, Twitter account to follow or any other social media links, plus no app or mobile-friendly website.
This is a bit of a FileNet reunion here, since the west coast location attracted a lot of people from FileNet who didn’t stay on with IBM after the acquisition. Many people that I know from my short period working at FileNet in 2000-1 (plus the work that I’ve done with their customers over the years) are Kofax employees or partners, and it seems to be a good fit for them especially since the acquisition of Singularity to give more weight to their “capture-enabled BPM” message. I’ve always thought of Kofax as the “gold standard” for document capture from the time that I first met them over 20 years ago, but they have fallen off my radar recently and it’s good to get caught up.
Back to the keynotes, Reynolds Bish, Kofax CEO, was up to talk about their timeline and future. He headed Captiva before their acquisition by EMC, and came on to Kofax about five years ago when it was in a bit of a slump in terms of vision. There’s been quite a bit of transformation since then – the Atalasoft and Singularity acquisitions, divestiture of their hardware business, trimming of the underperforming partners – and their financial results are starting to show, with increased revenues, no debt and cash in the bank. Their Europe numbers are down, as I expect many enterprise software vendors’ are, and Bish talked quite openly about the global economic issues causing that and what they are expecting for the coming months. They’re closing a number of deals over $1M, showing that they’ve grown far beyond their document scanning origins. They own 35% of the batch image capture market (the largest position), and hold significant market share in batch and ad hoc content capture, primarily in the enterprise market.
Their Atalasoft acquisition adds the capability to add internet portals as a point of origin for their capture platform, allowing consumers to capture their own documents and submit them through a secure portal. The Singularity acquisition, adding BPM and dynamic case management, will allow them to extend their capture workflow into full downstream process and case management. He stated that this allows them to double their addressable market, and showed statistics comparing the capture and BPM market sizes; he implied that they could achieve a similar market share in BPM as they have in capture, which is clearly not going to happen, but combining capture and BPM/case management does provide some compelling capabilities. Although other vendors, such as IBM (with the Datacap acquisition) have capture and BPM products, Kofax is pushing to have a single unified product that will be a competitive differentiator in both spaces, and through both on-premise and cloud licensing. He stated that Kofax Capture and KTM are strong products that are continuing to develop, but I assume that this new combined product will eventually offer an alternative platform for capture that extends into full BPM functionality. This is going to be very interesting to watch, since Kofax can potentially define and own this market, but also risks splitting their customer and partner base between the existing and new platforms. I also think that the existing Kofax partner base may not be the best channel for BPM, much as FileNet found in 2000 when they tried to push their new eProcess product through the existing document imaging partners (and their own sales teams) and found the results less than satisfactory.
They plan to continue with organic growth but also make some additional strategic acquisitions, and eventually augment their London Stock Exchange listing with a NASDAQ listing. I might just buy some of those shares if they can keep to their vision and work their way through some of the challenges.