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If Lexmark International\u2019s acquisition of Kofax isn\u2019t one of the document imaging industry\u2019s biggest stories of the year to date I can\u2019t come up with too many others\u00a0at the moment. But with all due respect to Lexmark International, who would have thought that the Lexington, KY based company would make one of the biggest acquisitions of the year?<\/p>\n
It\u2019s not like this is an unprecedented move on Lexmark\u2019s part. Lexmark already has a healthy software offering. After all, the company did acquire Perceptive Software in 2010. But that was then and this is now, and there\u2019s been a lot going on with Lexmark since then, some of it financially challenging.<\/p>\n
I thought it would be interesting to get a third-party perspective on the acquisition from some leading industry analysts as well as a couple of Lexmark dealers. Even though I think it\u2019s a big event, others in the industry may feel differently or not.<\/p>\n
\u201cThis news is consistent with Lexmark’s acquisition and solutions led strategies,\u201d observed Andy Slawetsky, president of Industry Analysts. \u201cLexmark gets a customer database with 20,000 names and a renowned vertically market focused workflow company. It’s a nice get for Lexmark.\u201d<\/p>\n
IDC\u2019s Keith Kmetz doesn\u2019t expect to see any major impact on Lexmark dealers. \u201cInitially, I don\u2019t think much is going to change for Lexmark traditional dealers as I believe they had access to Kofax solution through Lexmark and they should continue to have access. \u00a0Additionally, I don\u2019t think there\u2019s much overlap in accounts or in the channel between Lexmark and Kofax either.\u201d<\/p>\n
What he thinks will be interesting to watch is when and how Kofax is integrated with Perceptive.<\/p>\n
\u201cAt some point, channels from both sides will have to decide if the new offering fits in with their strategy,\u201d says Kmetz.\u00a0 \u201cFrom a vertical standpoint, Kofax has focused on financial services (a traditionally strong Lexmark vertical), so we could see even stronger presence for Lexmark in this key market as a result of the acquisition.\u201d<\/p>\n
Ultimately, he considers this a win for Lexmark. \u201cThis was a \u2018big fish\u2019 for Lexmark in their ongoing software acquisition activity as they continue to build their skill set in business process,\u201d adds Kmetz.<\/p>\n
Brian Bissett, editor of The MFP Report, tells me the acquisition of Kofax, especially at this relatively high price and given the size of the company will be a major test of Lexmark\u2019s ability to integrate it with its other software acquisitions.<\/p>\n
\u201cThere appears to be a not-so-small amount of overlap with Readsoft and Brainware (two other software offerings available from Lexmark),\u201d notes Bissett. \u201cWhile Kofax definitely boosts the size and scale of Lexmark\u2019s software revenue, it does not necessarily address the profitability challenges Lexmark has long faced in its software business.\u201d<\/p>\n
He predicts that the cost of the deal and the integration complexity might mean Lexmark won\u2019t be doing any other software deals\u2014except possibly for some very small ones\u2014for the next year or two.<\/p>\n
As to whether anyone else was courting Kofax, Bissett has some thoughts on that too.<\/p>\n
\u201cIt will be interesting to see if Xerox missed the boat by not stepping up to acquire Kofax,\u201d he says. \u201cOne could argue that Xerox has more need and ability to leverage what Kofax does, especially in the Services side of its business. It appears that the high price was the main deterrent for Xerox.\u201d<\/p>\n
A potential complication to the deal, according to Bisset, is Kofax\u2019s relationships with other vendors.<\/p>\n
\u201cIt will be interesting to see if Lexmark remains interested in allowing Kofax to continue either its longstanding partnership with Ricoh or its new partnership with Xerox,\u201d states Bissett.<\/p>\n
I also asked a couple of Lexmark dealers for their thoughts on the acquisition, particularly if it would have any impact on their product offerings.<\/p>\n
\u201cEventually it probably will,\u201d says Ray Belanger, president of Bay Copy. \u201cTo me the big question is on how we lead with solution-based offerings.\u00a0 We\u2019re doing this with MPS.\u00a0 It\u2019s easy to understand the concepts, but much more difficult for most dealers to execute.\u00a0 It\u2019s a different and more complex type of selling.\u00a0 It\u2019s also more complex to support.\u00a0 If you can\u2019t back it up, you won\u2019t be successful with it.\u201d<\/p>\n
Similarly, Barry Simon, president of Datamax, one of Lexmark\u2019s biggest dealers, doesn\u2019t expect this to change things for his dealership all that much.<\/p>\n
\u201cIt\u2019s good for Lexmark, it doesn\u2019t change anything for us,\u201d he says. \u201cI\u2019m sure that Lexmark is just continuing to try to brand themselves like with their acquisition of Perceptive. They want to be in the software business and a lot of their acquisitions are to make that stronger. The question we always ask is how does that fit into our channel?\u201d<\/p>\n
Meanwhile, Nuance, a competitor of Kofax in the document scanning market, proactively issued the following statement from Mike Rich, executive vice president and general manager, Document Imaging Division less than 12 hours after the acquisition announcement hit the news wires.<\/p>\n
\u201cThe acquisition of Kofax reaffirms the importance businesses place on enhancing and streamlining critical business processes. Companies such as Kofax and Nuance, which help organizations reduce costs, meet security and compliance needs, drive profitability and better serve their customers, are currently reshaping the capture and MFP solutions landscape. The premium Lexmark paid is a strong indicator of market growth and the current demand for end-to-end workflow software.\u201d<\/p>\n
For a\u00a0company like Lexmark to invest as much money as it did\u00a0to broaden its already solid solutions offerings, underscores not only the value it places on solutions, but provides the company with a slight advantage over some of the other secondary players in the market vying for the hearts and minds of dealers within the independent dealer channel. The challenge is making a compelling case for dealers to add these solutions into their existing product and solutions offerings.<\/p>\n","protected":false},"excerpt":{"rendered":"
If Lexmark International\u2019s acquisition of Kofax isn\u2019t one of the document imaging industry\u2019s biggest stories of the year to date I can\u2019t come up with too many others\u00a0at the moment. But with all due respect to Lexmark International, who would have thought that the Lexington, KY based company would make one of the biggest acquisitions of the year? It\u2019s not like this is an unprecedented move on Lexmark\u2019s part. Lexmark already has a healthy software offering. After all, the company did acquire Perceptive Software in 2010. But that was then and this is now, and there\u2019s been a lot going on with Lexmark since then, some of it financially challenging. I thought it would be interesting to get a third-party perspective on the acquisition from some leading industry analysts as well as a couple of Lexmark dealers. Even though I think it\u2019s a big event, others in the industry may feel differently or not. \u201cThis news is consistent with Lexmark’s acquisition and solutions led strategies,\u201d observed Andy Slawetsky, president of Industry Analysts. \u201cLexmark gets a customer database with 20,000 names and a renowned vertically market focused workflow company. It’s a nice get for Lexmark.\u201d IDC\u2019s Keith Kmetz doesn\u2019t expect to see any major impact on Lexmark dealers. \u201cInitially, I don\u2019t think much is going to change for Lexmark traditional dealers as I believe they had access to Kofax solution through Lexmark and they should continue to have access. \u00a0Additionally, I don\u2019t think there\u2019s much overlap in accounts or in the channel between Lexmark and Kofax either.\u201d What he thinks will be interesting to watch is when and how Kofax is integrated with Perceptive. \u201cAt some point, channels from both sides will have to decide if the new offering fits in with their strategy,\u201d says Kmetz.\u00a0 \u201cFrom a vertical standpoint, Kofax has focused on financial services (a traditionally strong Lexmark vertical), so we could see even stronger presence for Lexmark in this key market as a result of the acquisition.\u201d Ultimately, he considers this a win for Lexmark. \u201cThis was a \u2018big fish\u2019 for Lexmark in their ongoing software acquisition activity as they continue to build their skill set in business process,\u201d adds Kmetz. Brian Bissett, editor of The MFP Report, tells me the acquisition of Kofax, especially at this relatively high price and given the size of the company will be a major test of Lexmark\u2019s ability to integrate it with its other software acquisitions. \u201cThere appears to be a not-so-small amount of overlap with Readsoft and Brainware (two other software offerings available from Lexmark),\u201d notes Bissett. \u201cWhile Kofax definitely boosts the size and scale of Lexmark\u2019s software revenue, it does not necessarily address the profitability challenges Lexmark has long faced in its software business.\u201d He predicts that the cost of the deal and the integration complexity might mean Lexmark won\u2019t be doing any other software deals\u2014except possibly for some very small ones\u2014for the next year or two. As to whether anyone else was courting Kofax, Bissett has some thoughts on that too. \u201cIt will be interesting to see if Xerox missed the boat by not stepping up to acquire Kofax,\u201d he says. \u201cOne could argue that Xerox has more need and ability to leverage what Kofax does, especially in the Services side of its business. It appears that the high price was the main deterrent for Xerox.\u201d A potential complication to the deal, according to Bisset, is Kofax\u2019s relationships with other vendors. \u201cIt will be interesting to see if Lexmark remains interested in allowing Kofax to continue either its longstanding partnership with Ricoh or its new partnership with Xerox,\u201d states Bissett. I also asked a couple of Lexmark dealers for their thoughts on the acquisition, particularly if it would have any impact on their product offerings. \u201cEventually it probably will,\u201d says Ray Belanger, president of Bay Copy. \u201cTo me the big question is on how we lead with solution-based offerings.\u00a0 We\u2019re doing this with MPS.\u00a0 It\u2019s easy to understand the concepts, but much more difficult for most dealers to execute.\u00a0 It\u2019s a different and more complex type of selling.\u00a0 It\u2019s also more complex to support.\u00a0 If you can\u2019t back it up, you won\u2019t be successful with it.\u201d Similarly, Barry Simon, president of Datamax, one of Lexmark\u2019s biggest dealers, doesn\u2019t expect this to change things for his dealership all that much. \u201cIt\u2019s good for Lexmark, it doesn\u2019t change anything for us,\u201d he says. \u201cI\u2019m sure that Lexmark is just continuing to try to brand themselves like with their acquisition of Perceptive. They want to be in the software business and a lot of their acquisitions are to make that stronger. The question we always ask is how does that fit into our channel?\u201d Meanwhile, Nuance, a competitor of Kofax in the document scanning market, proactively issued the following statement from Mike Rich, executive vice president and general manager, Document Imaging Division less than 12 hours after the acquisition announcement hit the news wires. \u201cThe acquisition of Kofax reaffirms the importance businesses place on enhancing and streamlining critical business processes. Companies such as Kofax and Nuance, which help organizations reduce costs, meet security and compliance needs, drive profitability and better serve their customers, are currently reshaping the capture and MFP solutions landscape. The premium Lexmark paid is a strong indicator of market growth and the current demand for end-to-end workflow software.\u201d For a\u00a0company like Lexmark to invest as much money as it did\u00a0to broaden its already solid solutions offerings, underscores not only the value it places on solutions, but provides the company with a slight advantage over some of the other secondary players in the market vying for the hearts and minds of dealers within the independent dealer channel. The challenge is making a compelling case for dealers to add these solutions into their existing product and solutions offerings.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1638],"tags":[105,2169,114,2171,2170,1199,208,1198,223,228,252,272,435,328,498],"_links":{"self":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/11853"}],"collection":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=11853"}],"version-history":[{"count":3,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/11853\/revisions"}],"predecessor-version":[{"id":11870,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/11853\/revisions\/11870"}],"wp:attachment":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=11853"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=11853"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=11853"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}