Enthusiastic manufacturers and distributors are speaking of spectacular growth rates in sales of business-level document-management systems, led by large-volume document scanners. Intended mainly for digital document storage either for ordinary business retrieval or for archiving, these gadgets typically have a hopper (automatic sheet-feeder) that holds anything from 50 to 500 sheets of up to A3 size paper and will scan documents at between 10 and 100 sheets a minute at resolutions of 100 to 600dpi.
These scanners are obviously not the kind used by graphic designers and desktop publishers to produce pictures and other graphics for either Web sites or reproduction in publications, nor are they the SOHO market peripherals used for amateur Web and desktop publishing needs.
Instead, they are document-management devices that cost far more than an ordinary SOHO handheld. Furthermore, they have a more fundamental appeal to the reseller in that margins for document-management scanners aren't bad and the add-ons that allow the reseller to generate additional business are many.
Statistics show that sales of this type of equipment in North America are expected to reach 130,000 units this calendar year. Compared to last year's sales, that represents a projected increase of 62.5 per cent. And even if this sort of growth isn't really expected to last, these figures should be enough to get a reseller's attention.
While the Australian sales figures are not within cooee of those cited above, we have to remember the simple question of scale. For instance, the smaller market, the less-intense competition and the smaller number of resellers have all played a part in the document-management scanners market in Australia. However, that also means that the margins here are a bit more attractive.
Although the Australian market is tiny by US standards, its projected growth rate is at least as good. Statistical analyses originating in the US suggest that the document-management scanners market compound growth rate in the Asia-Pacific region, including Australia, is expected to be about 25 per cent over three years.
It's generally accepted that there are four main players in this market (in order of estimated market share): Kodak, Fujitsu, Canon and Bell & Howell. Then there's a couple of bit players; Ricoh is at the fringe and it is said that Fuji Xerox is edging in. IBM might be looking to do a partnering deal with Canon, but that's only hearsay.
Over the last three years they have sold about 2000 high-end scanner units in Australia. Year-by-year, that's perhaps 500, then 650, then 850, which might not seem much. However, looked at statistically, that represents a growth rate of about 30 per cent, compound. The international statistics point to a continuation of that trend.
Although by no means all businesses enjoy the prospect of tapping into the fast-growing, yet niche, market of document scanners, there's another important trend that needs to be mentioned here. The scanner market growth is brought about by (among other things) high CBD rents and proliferating document-storage needs: to digital rather than hard-copy document filing/storage/archiving.
Independent of the day-to-day labour and efficiency costs of merely retrieving business documents from filing cabinets, the shrinking cost of electronic storage relative to the front-office rent cost of hard-copy storage is making digital storage more attractive. The latter has other important attractions too, like fast retrieval to the computer screen for viewing and, when only viewing is required, 'discarding' - there's no need to have someone return the document to its repository. When hard copy is needed, printing out is almost instantaneous, and probably significantly cheaper than a photocopy of the original would have been.
Granted, a lot of hard copy must be retained, but most of it can usually be stored, and never needs to be retrieved, in very low-cost remote storage places.
These are the arguments that are being used successfully, and validly, by resellers in this market, but there are many more who don't carry this equipment, some of whom wonder if or why they should.
The manufacturers believe the latter should give the idea some thought. Canon's product manager, scanners, Stephen Morgan, points to the existing and projected growth rate in sales of the product. He thinks the figures from 'the only market with reliable information at present' - North America - and the Australian estimates, suggest that the 38 per cent a year growth rate has got legs.
If we assume an average unit price of, say, $10,000, the Australian document scanners market will be worth around $12 million next year, $16 million in 2001 and $22 million in 2002.
According to high-end scanner distributor ACA Pacific Imaging Centre's national manager, Seamus McGuinness, a primary reseller's margin on document scanners we're discussing here is about 25 per cent.
Given that the very bottom of this market, probably Canon's no longer new and not specially fast (but ground-breaking in its day and still reliable and useful) DR3020, retails at about $5500, and that its new and top-of-the-range DR5080C sells for $20,000, the aforesaid 25 per cent is not a trifle.
These prices (and the resulting margins) need to be considered in the context of the industry talk that other players, notably current leader Kodak, are 'coming down' into this market from higher-end positions, so that the $5000-odd model has probably had its day in this field. It need hardly be added that Canon and others are heading in the other direction and use Kodak as their tall poppy.
Second, and probably even more important, there is the extra-opportunity element known as value-adding in the channel but usually more bluntly as something like 'the opportunity to capitalise on follow-up sales' and associated prospects. There are some obvious ones among these.
No scanner will work without a computer, and there's a good chance that the client will want something fast and capacious to go with a scanner of this order. There's storage capacity, of course. Scanners are a bit thin when it comes to consumables, but an extra printer (which isn't so thin consumables-wise) might be wanted with a scanner. There's installation, including configuration, of the scanner itself, of course, and perhaps staff training. Some manufacturers, if not all, will offer extension warranties via resellers (who also have their margins) and, although some manufacturers offer maintenance direct, others might not - leaving yet another opportunity for the reseller.
All that said, however, the least definable but potentially most important additional-opportu-nity element is 'access'. That access is to the client's environment; the client's network set-up, for example, and overall software/hardware layout. Let's face it, those businesses whose IT operations have evolved perfectly from day one are rare. Most have become, at least to a degree, hotchpotches, the best of them with only minor inefficiencies and the majority with really significant bottlenecks and conflicts, often manifested in crashes and mysterious productivity-affecting glitches of one kind or another.
The access the reseller obtain to scuttlebutt when installing major systems like document-management gear, , and readily observed problems in the client's operations, is probably one of the richest sources of sales/service opportunities that the alert operator can tap. Those resellers will reap significant rewards, and usually, if they're well-qualified and efficient, the gratitude of their clients, from rectifying such problems.
Finally, there's a need to consider the reality of our time. The statistics quoted here don't go beyond 2002. What happens after that? Just a lot of maintenance contracts? Not according to today's big four, anyway, nor the other players in the market worldwide. All IT systems get cheaper, more capacious and more powerful, usually at a rate that no other industry has experienced consistently. The document-management scanner field is unlikely to be an exception, so that what has been a fairly pricey (albeit cost-effective) move for larger businesses will become not only desirable but more affordable to the smaller-scale majority.
It follows that those who position themselves now in this evolving market will be at the coalface as it burgeons in the (probably quite near) future - when tens of thousands of small-to-middle-sized Australian businesses begin to pour into it and want, typically, instant solutions. It's quite evident that the manufacturers are positioning themselves for it. They're going to need people on the ground to handle their products.
Steve Smit, account manager at scanner reseller Southmark Solutions, regards the projections of market growth as valid, and doesn't see selling the equipment as too hard a task. 'There's more to persuade the client than just money,' he says, 'but even the money argument is strong. I deal mainly with companies with an average of about 100 staff, and I've been able to demonstrate that the break-even point for such an operation when it moves from paper-based to digital document management is typically about six months after installation.
'There's an outlay to begin with, of course, and not just in hardware and software. There's setting up, archiving the paper records, training and so on, but when that's all taken into account, after about six months, there's an actual return on investment. It runs into the tens of thousands of dollars a year for a large company.
'That return, however, doesn't take into account the fact that efficiency improves sharply, the company can give its customers better, faster service and productivity increases measurably.'
Arthur Chapman, owner of multi-vendor dealer Advanced Records Management, sees the document-management scanner sector as being in much the same position as that of the fax machine in the 70s. 'Getting people to accept electronic documents was very difficult,' he says. 'The resistance was phenomenal, as it has been in scanners in the past, but we've moved a huge distance in recent years.'
Technology development has helped, he believes. 'The smarts have been taken out of the scanner and put into the software, which has made the systems cheaper.'
All of the above notwithstanding, selling scanners in this market is no snack. ACA's McGuinness points out that 'it's not like selling networks and PCs, where people [the clients] have experience; you're selling a box like a copier. It's a solutions sale, not a product sale. It's hard to sell a scanner without [the client's] understanding of how you would use it. It's usually sold as a complete solution. From the time you propose a solution to the customer to the time of sale, the sales cycle might be up to six months. We've had sales cycles of up to three years.'
It's going to require patience and commitment, but there's little doubt that businesses are running out of room to store paper on-site and will have no option but to digitise. And while there are many who are likely to initially resist the new technology, the American experience suggests that for the majority of business applications that resistance will melt with the introduction of colour document scanners.
In a comprehensive article in the July issue of the specialist magazine Imaging & Document Solutions, David Wood writes: 'Colour is already standard for electronic documents transmitted via the Internet, for business document printing and for both printing and scanning at the personal level [and] high-speed colour document scanning has been technologically possible [only] for the past four years.
However, the larger file sizes of colour images, lack of standard for colour compression/decompression, limited performance of the network and the high price of colour scanners all ensured that adoption remained extremely limited. Now, largely thanks to the Internet, these limitations have been removed or proved to be illusory.'
Wood adds that clients reluctant to consider colour were persuaded very easily once they'd had it demonstrated, and that in some circumstances it's actually cheaper (due to the elimination of rescanning in certain circumstances, and much-improved readability, particularly valuable when data-entry staff use scanned images for their work).
The three-year scope of most projections in this, as in other IT fields, reflects at least in part the fact that technology has seemed historically to improve sufficiently in that span to warrant renewal, if only upgrading, of equipment about every three years as well.what's new from . . . CanonThe CanoScan FB1200S offers high 1200dpi resolution plus the speed and flexibility of optional film and batch scanning, according to Canon.
The company claims the scanner's unique benefit is the VAROS (variable refraction optical system) technology.
This is an optical glass and lens system that allows a 600dpi CCD sensor to detect 1200dpi optical resolution by using a movable optical glass to shift the vision of the CCD sensor by half a pixel, creating a second view of the subject.
The scanner has 12-bit-per-colour channel sampling which equates to 4096 gradations per colour channel for each of red, green and blue, to allow the scanner to deliver faithful scans with over 68 billion colours.
Users can scan an A4 colour page at 300dpi in around 60 seconds and the Automatic Document Feeder (ADF-S9) option allows batch scanning of documents at up to 600dpi.
Professional users can buy an optional Film Adapter Unit (FAU-S10) that provides a high Optical Density rating of 3.3D.
The RRP for the CanoScan FB1200S is $999, the ADF-S9 option retails for $699 and the FAU-S10 option for $499.canon (02) 9805 2000what's new from . . . Bell & HowellThe 2000D FB scanner is the top end of Bell & Howell's high-performance flatbed scanner family.
The Automatic Document Feeder will allow up to 200 sheets of 20# bond, and the scanner can accommodate a wide variety of paper sizes from personal cheques to A3 paper.
The scanner offers high-speed scanning, with 65ppm in simplex mode and up to 98 images per minute in duplex mode, and top image quality, with 256 grey scale gradations and 400dpi resolution.
To facilitate duplex scanning, its Contact Image Sensor (CIS) allows two-sided documents to be scanned in a single operation.
The 2000D FB is the first A3 scanner to meet the specifications of the EPA's Energy Star Program and Low Noise Rating, according to the company.
Bell & Howell http://www.bhscanners.com
what's new from . . . Kodak
Designed for high-volume production scanning applications, the Kodak Digital Science Document Scanner 9500D handles daily volumes of 12,000 to 30,000 pages and higher.
The duplex scanner features on-board Adaptive Threshold Processing (ATP) to save time and enhance image quality.
ATP provides uniform image quality from batches of intermixed documents, eliminating the need to pre-sort documents by background colour, print density or quality, the company claims.
An advanced document feeder accepts mixed-size documents in stacks up to 1.4 inches (or approximately 200 pages) and document order is maintained, minimising the need for document handling after scanning.
The Document Scanner scans up to 160 pages per minute, equivalent to 320 images per minute in duplex mode, and image resolution is scalable from 70 to 300dpi.
The Kodak scanner retails for $147,500.
kodak (03) 9350 1222
what's new from . . . Fujitsu
The Fujitsu M3099EX/GX scanner specialises in both document and image management. The machine scans up to 60 pages per minute in simplex mode and 100 images per minute in duplex mode, with resolutions up to 400dpi.
The scanner has six special functions to streamline the scanning process:a pre-picking function that prepares the next document for reading while the current document is scannedan input hopper and exit tray that holds up to 1000 sheets, allowing you to load more documents for unattended scanningthree built-in page counters that make it easy to monitor scanned batches and the life of your consumablesa double-feed detection capability that eliminates missed images by alerting you if more than one sheet is pulled through the scanner at a timean automatic end-of-page detector that extinguishes extra white space when scanning mixed-length batchesan optional field-installable post-scan ink endorser that ensures every document scans successfully by marking each document as it scans.
The EX option with a video interface and the GX option with a SCSI interface both sell for $36,207.
Fujitsu (02) 9293 0000