Imaging Market Holds Its Own In Large Verticals

But despite the technology's penetration into a wide variety of industries, the market hasn't escaped the IT spending slump, which, according to research firm Gartner Dataquest, has hit certain segments hard.

Vendors that sell printers, copiers and fax machines have had to compete with other technology initiatives for investment dollars, said sources at Gartner Dataquest. Accordingly, spending on these document-output devices will decline by 11 percent this year.

But that decline is "somewhat tempered" by the imaging services and supplies business, which focuses not just on new sales but on the installed base of products, said Gartner Dataquest Vice President Andrew Johnson.

There also appears to be some good news on the product development side. Johnson said new printers due out later this year should boost business for vendors and VARs.

"By the second half of this year, there will be a wide selection of $1,000 color page printers that will allow greater sales opportunities,something new for [VARs to talk about," said Johnson.

Executives at software vendor LaserFiche, Long Beach, Calif., said their company has thrived, even amid the tough selling environment of late.

"We had our best year ever last year, despite the economic downturn," said Tom Wayman, director of marketing at LaserFiche, which sells its products almost exclusively through the channel and serves more than 17,000 customers.

His explanation? Imaging and document management technology appeals to businesses looking to work more efficiently and stay competitive.

Also, companies don't want to get involved in custom projects that may cost them several hundred thousand dollars and take months to implement, said Jereb Cheatham, senior technologist at LaserFiche. "Customers want something that works out of the box or can be deployed in a couple of weeks," he said.

LaserFiche products are used by city governments in almost every county in the United States, said executives at the company. One VAR in Washington, for example, has sold LaserFiche solutions to all five branches of the federal government, Wayman said.

Solution providers have also helped the vendor expand its reach into the financial services industry via credit unions, and into the construction and wholesale-foods markets.

"The VARs that have done the best for us do the integration and create their own value-add to set themselves apart from other resellers," said Cheatham.

Also, some horizontal applications of imaging technology are helping to bolster the vertical focus of both vendors and solution providers.

LaserFiche, for example, has had some success in the records management departments of corporations. And ScanSoft, a Peabody, Mass.-based vendor, has added human resources departments as a horizontal focus within the key verticals it serves,government, law, health care and insurance. The vendor targets the SOHO market and department workgroups in larger organizations.

"Any document-intensive business is a prime target for these technologies," said Bill DeStefanis, vice president of product marketing at ScanSoft.

The vendor has seen a counterpoint to the constriction of IT spending in falling hardware prices, a trend that's made production-quality scanners affordable for more small businesses.

DeStefanis said he is starting to see the deployment of networked digital copiers from Canon, Xerox and Ricoh in smaller organizations. And ScanSoft will try to ride that trend out of the downturn by leveraging channel partners.

"Working with networked digital copier [solution providers and VARs is really a big part of our strategy going forward in the next 12 months," said Sebastien Gard, product manager for ScanSoft's PaperPort paper management software line.

In addition, two other trends bode well for the imaging and document management market, said Bob Markham, senior industry analyst at market-research firm Giga Information Group. Despite the dream of the paperless office, "the amount of paper has not been reduced," Markham said. "And the amount of content created electronically has increased dramatically."