Celebrate Distributed Scanning Success

There is no denying that ECM (enterprise content management) VARs have been enthusiastic promoters of document scanning for a long time. And why shouldn’t they remain excited about the technology? After all, Business Solutions magazine publishes stories month after month about VARs who continue to be very successful selling scanning solutions. Many years ago, scanning was primarily a centralized process requiring dedicated operators and was, for the most part, restricted to an enterprise-level technology due to the high cost associated with implementation and operation. However, vendors and VARs alike recognized the revenue-generating opportunity that results from making the technology more affordable and accessible to a wider range of end users. The result? Distributed scanning.

Imaging-focused VARs are leveraging distributed scanning to broaden the scope of their own document management solutions. According to statistics compiled by Moyes Technology Consulting, distributed scanning technologies used to account for less than 50% of the market’s hardware sales. This figure has grown to represent more than 80%. In fact, sales of distributed or workgroup scanners have grown from less than 50,000 units shipped in 2002, to over 400,000 in 2007, making it the most important segment in the scanning industry. Adjamian Affiliated, Inc. is one VAR that understands the value of distributed scanning as part of a complete document management solution. However, rather than remaining comfortable in strong, established vertical markets such as accounting, finance, or government, this VAR has taken distributed scanning beyond the confines of the ‘typical’ office and out to the job site trailers of some of the largest construction projects across southern California.

Prospecting A New Distributed Scanning Market? Think Big.
Adjamian Affiliated had no shortage of ‘traditional’ document management customers. Currently, 60% of Adjamian’s revenue is generated from accounting and finance customers. But, that didn’t stop the company from pursuing new, untested vertical market opportunities. The VAR was already providing document management solutions to a handful of property management companies, and a few of these clients also engaged in real estate and property development. “It’s not a market we went searching for; they came to us asking if we could capture all the information from their property development operations, as well,” says Allen Adjamian, president and founder of Adjamian Affiliated, Inc. “While working with those clients we literally stumbled into a couple of other projects in real estate development and I said, ‘Hey, I think we’re on to something here – let’s make some calls.’”

It is important to note that Adjamian isn’t targeting the small-scale builder that is constructing a new home or two. Instead, major construction companies that are undertaking multimillion-dollar projects are the target customer. “We sat down and compiled a specific list of successful property development companies, and they range from small, 20-person operations that focus on high-profile, niche developments [such as bridge building]  to the largest master developers in California,” says Adjamian. One of the companies on that list was SunCal, a $15 billion master developer.

SunCal was struggling with massive amounts of paper requiring frequent, back-and-forth transport between job sites, the corporate office, and sometimes customers for quick processing. The documents could include anything from hand-drawn sketches to contract or bid changes requiring signatures from multiple parties before work could continue. “In this industry, an idle hour is a costly hour,” says Adjamian.

Click here to check out an article on workgroup scanning.

(In California, a job site construction worker can average $75 to $100 per hour.) “If information is requested, it’s not just a single person waiting for it. It’s usually a foreman and 20 to 30 other workers.” To eliminate these delays, the VAR created a distributed scanning environment that could operate right at each job site. “Our distributed capture solution integrated Visioneer’s OneTouch scanning technology with Laserfiche document management software,” says Adjamian. To make the solution viable in even the most remote environments, the VAR designed the solution to leverage the Web-based capabilities of Laserfiche. Now, on each job site, workers could connect a laptop, Visioneer scanner, and broadband card to scan job applications, time cards, material requests, and so on. Corporate can make decisions on these items in the same day, if not hour. The distributed scanning deployment at SunCal consisted of 100 Visioneer scanners and generated nearly $300,000 in revenue.

Success Comes From Understanding Your Market
According to AIIM’s (the ECM association) Industry Watch published July 2007, the construction market as a whole accounts for less than 5% of the distributed scanning market. Although the thought of a wide open market sounds like an enticing reason to jump right in, Adjamian cautions that this may not represent a great opportunity for all document management VARs. “The most important challenge is identifying your marketplace,” says Adjamian. “Are there enough players [prospects] to make pursuing this market worthwhile?” he asks. In California or Vegas the answer is yes, but perhaps the answer in your own backyard is no. 

To stay current with construction market activity, Adjamian keeps an eye out for which companies have current or proposed projects in the works. “Simply paying attention as you are driving down the freeway can reveal which companies have major projects going on,” says Adjamian. He goes on to mention seeing ‘coming soon’ billboards announcing new shopping malls or even seeing large parcels of land being cleared for development. “We also advertise in and subscribe to the leading trade magazines, such as Construction Today, and make it a point to call the developers showcased in each feature story.” Additionally, monitoring public zoning notices and RFPs can help to identify companies vying to be involved in large construction projects. For VARs that don’t restrict themselves to regional sales initiatives, Adjamian also suggests investigating opportunities in disaster-stricken locations, such as New Orleans, that are in the rebuilding process. “Project development companies from across the country bid on and perform jobs in these areas,” says Adjamian. “This can present a prime sales opportunity for a market-savvy VAR.”

The VAR has found that sales in the construction vertical are almost always made at the C-level, and it is usually the company owner making the purchasing decision. “You must be a good negotiator,” says Adjamian. “Don’t expect it to be easy, and anticipate that they will ask for a better deal every time. They are generally expert negotiators as they deal with much more complex deals and much larger numbers than our own industry.” According to Adjamian, the key difference between property development and finance is that developers will ask for a steep discount and make it seem as if they are ready to walk. “Succeeding in negotiation comes down to three things — good salesmanship, knowing exactly what your value proposition is, and being able to effectively support it,” says Adjamian. “You have to have your rebuttals ready, or else you will stumble and stutter and end up either losing the deal or signing a deal that makes you no money at all.”

Investigate The Health Of The Vertical Market
Considering all the negative news concerning the economic slowdown and the effects of questionable mortgage lending practices, some might question Adjamian’s judgment in targeting the construction and property development vertical. However, FMI, the nation’s largest provider of management consulting and investment banking to the construction industry, recently released its 2008 U.S. Construction Overview. The report forecasts a 5.8% growth in construction for 2008, representing a reversal of the 3.7% decline in 2007. In addition, while current U.S. census information reports a modest 3.5% decrease in private construction spending in February 2008 versus February 2007, public construction spending actually experienced an 8.2% increase in the same time period.

“I don't believe the potential of a slowdown is a real threat at all,” says Adjamian. “We’re making a lot of headway — at least in southern California — and I don’t think we’ve touched the tip of the iceberg yet.” The VAR has partnered with about one dozen property development companies to date and anticipates this number to reach 100 within the next five to seven years. Overall, the VAR is on target for 50% growth in 2008, with 15% to 20% coming from the construction vertical.

According to Adjamian, for any VAR looking to excel in a new market, the key is to pick a vertical and stick with it for the long term. You must know your potential customer’s industry as well as your own. Many vertical markets are highly specialized, and a jack-of-all-trades VAR may be able to acquire a few customers, but a master of the industry is likely to acquire many.