Documens Boss

The last few years have witnessed an increasing interest and activity in the outsource services market in general, as organisations in both the public and private sectors outsource their non core, but mission critical, business processes. The need for organisations to achieve compliance, reduce operational costs and improve efficiencies of their business processes are just some of the major factors influencing the outsource services sector and, in particular, for those applications that are very document intensive.
 
Added to this, is the growing adoption of SaaS (software-as-a-service) and the availability of high speed internet bandwidth, which is further contributing to a services led mentality on behalf of the buyer. This is resulting in an increasing acceptance and adoption of document hosting by a third party service provider.
The nature of the decision maker is also changing, with the emphasis shifting from the CIO to the CFO and business focused executive functions within the organisation, especially in a period of economic downturn, where driving costs out of the business and improving operational efficiencies is a significant factor. The buyer is increasingly the Financial Director, more interested in annuity based service level agreements that can dramatically reduce the cost of such operations and limit the complexity of in-house systems. 
 
Document Capture – the “on ramp” for business process
The growth in performance and accuracy of IDR (Intelligent Document Recognition Technologies) is now allowing organisations to link ever-increasing volumes of paper based and electronic information with mission critical business activities such as invoice processing, loan origination, new account openings and other forms processing related applications. High volume scanners can now automatically handle, sort, de-skew, index, capture and route electronic documents into workflow processes, giving rise to fully functional digital mailrooms, either in-house or as an outsourced service.  Such intelligent capture software can now also be integrated with MFD’s (multi-function devices) so that paper documents can be captured and recognised at source and input into the relevant business process. Scanning is no longer just a back office or outsourced function for the archiving of legacy documents but the “on- ramp” for a more dynamic business process.

Opportunity or Threat?
At the top end of the market there have been some significant deals in recent months by major software/hardware technology companies seeking to diversify their markets for more consistent revenue streams by buying and bidding for business process outsourcing firms. Examples include Xerox’s acquisition of ACS ($6.4bn), Dell’s acquisition of Perot Systems ($3.9bn) and HP’s acquisition of EDS last year ($13.9bn). Further, many of the enterprise software firms are realizing the value of annuity based product & pricing models rather than that of traditional license server pricing, making the BPO area an attractive area to invest in.
The good news is that this is also fuelling the growth in the document outsourced services sector and is likely to drive up the value of such service businesses. On the other hand, there will be increasing levels of competition and a need for a clear articulation and differentiation of service capabilities, along with a focus on specific markets and applications. 

While the paper mountain is not going away, just having scanning or archiving service capabilities may not be enough, although many organisations still choose to outsource the storage of their physical documents, with on-demand electronic access and traditional box storage still proving very profitable. However, not only are more and more documents electronically created, the increasing adoption of intelligent MFD’s to capture and process physical documents at source will limit the need for outsourced scanning services and the BPO’s will increasingly leverage the full benefit of their services by extracting value for a specific business process.

Size Matters
Unlike the “film, file and forget” days of the microfilm industry or the scanning and archiving service bureaus that emerged in the mid 1990’s, the big change is from scanning to archive versus scanning as an input to a business process. With over 400 document scanning or related document outsource service companies in the UK alone, the competition just got tougher, as existing and new BPO players will recognise the opportunities to add document scanning/capture and hosting services as part of their portfolio of services. With fierce price competition in the basic scan-to-archive area, it is clear that more complex value added, document processing services will increasingly be the differentiator to accelerate growth opportunities.
Further, many smaller or medium size document scanning service companies are often vulnerable for their dependence on one two major clients that make up the majority of their annual revenues, the loss of any one of which would severely impact their bottom line.  Such companies can often struggle to secure multi-year service level agreements with their clients nor do they have the necessary marketing and sales muscle to generate significant new business, leaving them further exposed to competition. Those that have made or are adding more than just scan-to archive services offerings may be well advised to re-position themselves more as a BPO and consider allocating more marketing resources and higher levels of sales capability.
Size matters and the stakes just got higher.

Key Factors
1. There is an increasing trend for organisations to outsource their non core but mission critical document intensive business processes
2. More and more service companies are adding more complex business process services to manage these processes and capitalise on this opportunity
3. Existing and new BPO players are adding document scanning, hosting and processing services to their offering. Size and ability to establish multi year service level agreements will be an increasing differentiator in the market.
4. The advances of IDR (Intelligent Document Recognition) software have dramatically improved the accuracy and speed of document and data capture and integration with the business process.
5. The rise of MFD’s (multi function devices) is making it more attractive for users to scan their documents at source, extract value and route to the respective business process.
6. The scan-to-archive market is likely to become more price competitive as service companies chase the same clients.
7. There is a growing acceptance and adoption of outsourced document hosting services
8. Box storage is still a viable complementary service for the archiving of legacy documents, with the addition of “on-demand” ad hoc scanning to add value.