They Still Believe In Imaging

Dear Editor — I am a VAR. Some of my contemporaries say there is no imaging market. My public relations firm says, "If you see it in Business Solutions, it's so." Please tell me the truth. Is there an imaging market?

Yes, faithful VAR, there is an imaging market. It exists as certainly as workflow and knowledge management and Web management exist, and you know that they abound and give your life its highest competitiveness and profitability. Alas, how dreary would be the world if there were no imaging! It would be as dreary as if there were no VARs.

Is this the year for imaging? Market forecasters have repeatedly predicted a $10 billion year and have been repeatedly proven wrong. First, they blamed the shortcoming on ERP (enterprise resource planning). Then, they pointed the finger at Y2K.

Burdett Hallett and Jay Linhart, partners and co-founders of Matrix Imaging Products (Costa Mesa, CA), aren't worried. In fact, they say the imaging market is booming.

The cost of imaging systems is dropping, said Hallett and Linhart. This makes it possible for more companies to manage their documents digitally, and that means more installations for Matrix Imaging. Founded in 1996, Matrix Imaging, a 12 employee, $5 million company, designs and installs systems to capture, process, store, and manage document images.

According to Jay Linhart, "The percentage of imaging users is rapidly climbing at the same time the hardware cost keeps dropping. We sold many more Kodak scanners this year than last year, but their average price is way down. Our dollar revenue didn't climb as rapidly as the number of systems installed and the number of scanners sold. The cost of an imaging system PC, scanners, storage devices, and software is roughly half what it was two years ago."

Hallett added, "From a financial perspective, the entry point into the Kodak scanner line a few years ago was about $40,000. Now it's $9,000. The average cost to the consumer has dropped proportionately to kind of price drops you've seen in the PC industry. So, installs are going up, but the average price is going down." Hallett continued, "A small company looking to scan 2,000 pages per day can get full indexing, storage, retrieval capability, and professional service for about $25,000. We can provide a medium-sized company with three to five users processing 3,000 to 5,000 images per day with a nice system for $40,000 to $60,000. Also, the days of walking into a Fortune 500 corporation and discussing a half million dollar imaging system are over. Component-based imaging allows you to lower costs while retaining functionality."

Component Imaging Equals More Sales For VARs
What's component imaging? Hallett said, "For us, it's the ‘best of breed' in scanning, optical jukebox, scanning applications (ability to scan, index, and enhance images), and retrieval software. The primary vendors we work with are: Kodak for scanners; Kofax for capture software; Plasmon for storage devices; and OTG for their suite of retrieval software products. Component software packages scale from a single user to the enterprise level with hundreds of users." Hallett offered an example. "A customer can start out with a pilot implementation. During that time, its employees get comfortable looking at images on a PC screen and being able to move them around electronically. Then, the customer can add applications and users, building momentum within the corporation." Linhart added, "With component imaging, you get open imaging without getting locked into proprietary file formats. You can integrate several different products."

This means new life for imaging VARs. According to the GartnerGroup's "State of the Document Technologies Industry 1997-2003" which was prepared for the AIIM International Industry Study, "Component imaging is expected to grow at a 62% rate from 1998 to 2003, more than twice the average for all [other imaging] technologies." Microfilm-based imaging, according to Hallett and Linhart, is becoming a thing of the past. There are still companies that use microfilm, and Matrix Imaging continues to support them. New film-based imaging sales are expected to drop at an 11% rate over the same five-year period.

Imaging Bridges The Digital Gap
"Imaging is the on-ramp to the information highway," quipped Hallett. "Today we're dependent upon PCs and the Web, but that's a small fraction of the information that is available globally. Most information is sitting static in file cabinets. Imaging technology bridges the gap from historical files gathering dust in file cabinets to a digital medium. Sometimes people in the document management arena disparage imaging as outdated. But, they're forgetting that about 80% of the world's information is on paper."

Looking toward the future, Linhart said, "In the new millennium, it's going to look kind of funky to have a file cabinet." But he also thinks it's important to make sure the technology doesn't make conducting business more difficult than it was before the new tool was introduced. "From the user perspective, a company must be careful of changing the way it does business in order to use a new technology," he added. Linhart and Hallett have seen companies implement enterprise-wide solutions in which the tools that were supposed to improve productivity were too expensive and required extensive employee training. Linhart stressed, "I think it's a mistake to expect users to completely change their jobs. In brief, technology should be tailored to match what the users want to do and how they want to do it.

"Ideally, you'd empty the file drawers into a bucket and out would come images on your hard drive," said Linhart. "Right now, you have to remove staples, but you don't have to do much more than that. We can index with bar codes and OCR (optical character recognition). Clients can feed documents into scanners fast enough to get the cost down to a penny a page. That's our philosophy. If you get the cost down low enough, nobody's going to have filing cabinets."

Hallett added to the discussion of imaging's future. "Imaging will continue to be widespread in its usage. It's well positioned for acceptance by users. The next big wave will be a substantial growth in color imaging. It'll take two or more years to educate the marketplace, and then the penetration of color will be significant." Linhart agreed. "People will be asking why we ever used black-and-white scanners (the same way we can't imagine watching black and white TVs anymore)."

Getting documents into digital form will be a necessary business practice, according to Hallett. "Customer service representatives who have to tell a customer, ‘We can't find your file,' or ‘Let me put you on hold while we pull your file,' are going to be at a competitive disadvantage. Customer relationship management practices will have to respond at the speed PC networks can provide."

Imaging! It lives and lives forever. A thousand years from now, faithful VAR, nay 10 times 10,000 years from now, it will continue to make glad the heart of technology.

Questions about this article? E-mail the author at annd@corrypub.com.