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In The Paperless Office, Hard Copies Still Rule

The classic joke in digital imaging is that the long-promised paperless office will arrive one day after the paperless bathroom.

For years, vendors have claimed that technology will reduce or eliminate paper in the workplace. But paper continues to proliferate, even though much of it is digitized for archiving before being stored physically itself, creating ample sales for experienced solution providers.

One publishing company took a step backward this year when it started requiring paper receipts along with electronic versions for expense accounts. The reason? A failed internal audit. New regulations have made companies gun shy and anxious for redundancy. They want images and paper.

“Companies are petrified. We&re scanning more expense reports than ever but companies feel they have to prove to the penny why any purchase was made on any audit. And guess what, they have to prove that they have the paper that shows you spent this much money on a meal,” says Tom Zeliff, a Boston area vice president of sales for Sourcecorp, a Dallas-based imaging service bureau and VAR.

Robert Hughet, project manager for ImageSource, an Olympia, Wash., imaging solution provider, concurs. “Even when we install document imaging and electronic workflow [systems], companies still like to handle the paper. Some industries are harder to transition than others. Judges and doctors for example, often don&t want to learn the technology. They&re tough nuts to crack.”

VARs report a brisk business selling scanning devices and software for converting paper and ink to digital images. One plus for knowledgeable partners is that imaging typically brings together legacy and new desktop and back-office applications, hardware, workflow and storage. No single vendor fills all those needs, so customers require the assistance of VARs in building multi-product solutions.

ImageSource recently completed a project for Washington State&s Employment Security Department (ESD). The application uses front-end capture gear from Kofax Image Products, Irvine, Calif., and handles the myriad forms employers fill out for employees, inputting data such as hours worked and money paid.

ImageSource sold and implemented everything from the scanners to the EMC storage devices for this job. The fact that an efficient turnkey imaging solution typically requires front-end data capture, optical character recognition, workflow and storage products, often from different vendors, makes them ideal for VARs.

Zeliff says it is becoming less common for companies to say that imaging products “didn&t make it into the budget this year.” VARs with proven track records in imaging are reaping the benefits, he and others say.

Compliance is another driver of the strong imaging market, says Robert Markham, principal analyst with Cambridge, Mass.-based Forrester Research. Other factors are plummeting prices of scanners and storage and improved image- capture quality. “VARs are integrating accounts payable, accounts receivable and implementing optical character recognition and intelligent character recognition,” Markham says.

Weymouth, Mass.-based research firm Infotrends/CAP Ventures expects the image-capture side of the business to grow 31 percent annually from 2004 to 2009, up from $128 million last year to $496 million in four years. Of particular interest to VARs and integrators on the hardware side are a range of slick multifunction devices, such as Hewlett Packard&s LaserJet 4345, says Joel Mazza, an analyst at the firm.

Printer and scanner companies are duking it out with devices that perform both tasks. Lexmark, Xerox, Ricoh and Canon all have very capable products, and most have fairly good SDKs and APIs to enable integration, Mazza said.

ImageSource leads with Kofax image-capture technology. “It&s best in class for capturing documents,” said John Linehan, system engineer for the ESD project. Meanwhile SourceCorp partners with Digitech Systems, Greenwood Village, Colo.

ImageSource&s business is about evenly divided between system integration and service bureau work, Zeliff said. Some customers would rather offload the grunt work of scanning documents while others prefer to keep it in-house.

Zeliff cited a new Digitech technology that eases integration with back-office applications. “We don&t even touch their SAP or Oracle, but through [Digitech&s] PaperVision we can integrate this front-end window. Here&s the invoice number, pull it up, draw a zone around it, set up the hot key, and it&s done.”

A demo sealed the deal with one large Boston company, he said. “They thought they were going to have to bring in some expensive Oracle guy. I can demo this: ‘Here I am in ERP,& click on the invoice number and bring up the image. It&s bringing in sales and locking in customers.”

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