Document demand

The channel is poised to play a significant role in the delivery of document management solutions in the Middle East.

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By  Andy Tillett Published  April 25, 2005

Next big thing|~|docmanjeanclaude200.gif|~|Jean Claude Broido, EVP and general manager EMEA at EMC|~|Document management is still a niche area for the Middle East channel, but the sector looks poised to become a hot area for resellers. Although there are hardware and software vendors already in the Middle East, developing and implementing document management solutions, they remain highly specialised, expensive and geared towards big businesses. As the Middle East market matures and companies strive for greater efficiency and increased compliance, the need for information management is reaching down to the small and medium business (SMB) market. Channel Middle East takes a look at how solutions are becoming more accessible, how vendors are adapting to this change, what moves the bigger players are making, and how the regional channel will be affected ‘The next big thing?’ is how most people in the channel react when you ask them what document management means to them. Generally that response is after a period of silence as document management is, unfortunately, still a difficult concept to define. This difficulty in explaining the concept is also the biggest obstacle that the document management channel has to overcome. The market exists and businesses need to manage documents, but they just don’t realise it yet. “People have a lot of documents and our question is, how do we help our customers get maximum value from those documents?” says Jean Claude Broido, EVP and general manager Europe, Middle East and Africa (EMEA) at document management products, services and solutions vendor EMC. Broadly speaking, document management is the conversion of an office’s day-to-day operations from paper-based to digital documentation. On the surface it is much like an electronic version of a filing cabinet. Underneath, however, managing a company’s documents is an integral part of streamlining business processes and making them more efficient and competitive — an essential selling point for resellers to capitalise on. Hardware vendors are making this process easier for the channel. They too recognise that the future of the document is electronic, and are diversifying into software and services that allow true document management solutions to be deployed. “You wouldn’t think that we would say this at Lexmark, but we don’t necessarily want people to print. We want companies to stop wasting and only print the documents that are necessary,” says Anthony Soufiar, printing and services division (PSSD) specialist at printing giant Lexmark. ||**||Market landscape|~|docmandicomboys200.gif|~|Angelo LaDuca, regional sales manager at Kofax (left) and Lars Jeppesen, managing director at Dicom Middle East|~|Managing documents involves converting them from pieces of paper to electronic documents, and then storing them in a way which makes them both quickly and easily accessible and retrievable. In a typical company this is implemented by scanning documents and storing them in a relevant place on a central network, avoiding unnecessary duplication. Presently, complex document management is almost exclusively the preserve of large accounts with a one-tier channel-to-market in place: vendors work closely with their customers and systems integrators to apply a tailored solution to each individual business, depending on the type of information they handle. The market landscape features several global vendors offering hardware, software and services to create a comprehensive document management solution. Some still focus on one area, such as Hewlett Packard who, in the field of document mangement, offer hardware-based solutions. Vendor consolidation has seen many storage and information management companies vertically integrate by snapping up software vendors. Recent activity has included data storage solutions behemoth EMC buying document management services pioneer Documentum for US$1.7 billion in 2003. Software storage and management company Veritas acquired the world leader in e-mail archiving software, KVS for US$225 million last September. Swiss company Dicom has evolved in recent years from being a value added distributor (VAD) to a full information capture solutions provider with its own software arm, thanks to the acquisition of information capture programme developer Kofax. Electronic content systems management vendor Filenet claims this leaves smaller players out in the cold. “We are the only independent software company totally devoted to electronic content management solutions. Local companies can’t apply for business critical projects at enterprise level; these require a comprehensive set of functionalities, high performance and a strong research and development investment as a guarantee for the future,” says Alessio Gallo, international sales director, South Europe, Middle East and Africa at FileNet. As demand for document management rises, it leans towards a two-tier structure. Vendors are keen to recruit value-added distributors and resellers, and offer very attractive partner schemes. Typically these include training, access to MDF and, in some cases, exclusivity in a geographical region. Resellers have to become skilled at implementing and using the vendor’s solutions. In return they gain the potential for very high profit margins. “The average ratio [for partners] in Southern Europe is three times more revenue from professional services than hardware sales,” claims Angelo LaDuca, sales manager Southern Europe and Middle East at information capture software development company Kofax. Most vendors have only one central office in the Middle East and need partners to give them a local presence and take their products to market. “In the future, we will most likely be searching for companies to become certified service providers. At present we have to look after all sides of the business ourselves, which means a lot of travelling to different countries and handling different accounts. As it becomes too much work we will need to outsource,” explains Soufiar. A lack of skilled resellers promoting solutions isn’t the only problem stemming from the low-key profile of document management solutions. Ignorance on the part of customers is also a major factor. Paper and document flow typically concerns administration departments — it is a matter of infrastructure. This is an area that isn’t usually a company’s main focus when it comes to streamlining overheads. ||**||Who’s buying?|~|docmanbenoit200.gif|~|Benoit Feracci, VP sales Southern Europe at EMC|~|The only companies that can afford complex document management solutions in their current format are those at enterprise level, such as oil and gas providers, or those forced to through industry compliance, such as the financial sector. “In EMEA a lot of financial institutions have been pioneers. They have had enforced regulation and had to assess the value of different types of information in the context of compliance. They have had to implement systems to manage information,” says Simon Taylor, business development and integration manager at archiving software provider KVS. Compliance is an issue of progressively greater importance in the Middle East. Governments are increasingly insisting more and more documents be submitted electronically by their contractors, particularly in countries with more developed IT systems such as Saudi Arabia, the UAE and Qatar. Recent scandals such as ENRON have meant tightened constraints in both Europe and America. Any Middle East company trading with businesses from these areas, even through a dedicated Middle East office, has to comply with these constraints. If they don’t, they will lose their contracts, as well as their reputation. As the market grows, sectors outside of those traditionally associated with document management are implementing systems, such as manufacturers and retail stores. The next step is towards even smaller businesses. With a desire to streamline and become more cost-efficient to boost profits, organisation and the ability to recall information has become vital. Solutions such as document management are increasingly becoming a valuable tool for companies working in the small and medium business (SMB) sector. “I think that at the moment we’re at the point between the pioneering stage of this technology and the breakthrough stage. We’re seeing more people educating themselves and taking a proper look at the issues,” says Taylor. In a complex field such as document management, addressing a solution for the SMB market is difficult. Strong demand usually means the development of a generic out-of-the-box solution. Document capture hardware is already incorporating features and functionality geared towards the end-user. The latest generation of printers and scanners are including features to scan and organise documents at the point of capture. “Our latest hardware can scan straight into a folder, network folder or send the scanned document straight to an e-mail address,” says Alok Mohan, multi function printer category manager at HP Middle East’s imaging and printing group (IPG). “This cuts down on administration and all documents can be labelled at point of capture.” Even at this basic level, box-shifting is not an option “It’s one thing to talk about a concept for document management, it’s another to actually see it working for real. We like to give our resellers the chance to earn extra revenues and extra margins by going beyond the plain box. We educate them and train them more and more, so that when they go to the customer, they can talk at the right level and show them how a solution can work,” continues Mohan. This is a step towards basic document organisation, but software is where the issue becomes more complex. With an area as specific as document management, can a single piece of software be developed as an out-of-the-box solution, which is broad enough to cover the needs of different businesses, and at the same time specific enough to offer them an effective solution? Documentum believes this is possible and is preparing to capitalise on the current market shift. “We can see the trend and movement, and we are developing and investing a lot of our resources into application development, because we see that the way the market is going is a ready-made application. That is something we are investing in strongly. We also see some value-added resellers moving in that direction,” says Benoit Feracci, VP of sales for Southern Europe at EMC. Even if a generic document solution is created, in the enterprise space, a more tailored solution will be the only truly effective one. An area of the market with such complex and specific requirements will not disappear due to the introduction of more standardised software. ||**||Future market |~|docmanmoemc200.gif|~|Mohammed Amin, general manager EMC Middle East region|~|“Today what customers want is exactly what they need for them. You can’t come in and restrict them; they want you to come and build the software around them. They need that versatility in their software and they need it managed by solutions providers. I’m not worried. I don’t think out-of-box will affect us — it is restricted. For small companies who can’t afford a solution or archiving, it might be cheaper than ours, but couldn’t be as effective,” says Soufiar. The bigger question with an out-of-the-box solution is how long such solutions will remain profitable. Resellers have to assess what profit margins a solution of this nature can offer, and calculate how long they can sustain them in the marketplace. It is likely that as the need for document management becomes more commonplace, it will become more integrated into mainstream offerings. “I think that someone will soon develop a generic software package. The most obvious candidate for that would be Microsoft. It is like networking; as it becomes more commonplace, it will become integrated into things like office packages,” remarks Mark Ward, IPG business solutions manager EMEA at HP. Document management is an opportunity that is sprouting on the market landscape, and with a little encouragement will flourish. The scope for the channel to make profits in both the enterprise and SMB sectors does exist. Resellers can easily exploit these openings if they take a little time and apply themselves. The common ground that all areas of the market share when it comes to document management is the need for specialised knowledge, and the strong focus on providing integration and services such as after-sales support. Document management remains an embryonic area for the Middle East channel to address. It is a segment that stretches up from the individual PC user — think Windows Explorer for starters — right up to the largest enterprise managing huge document libraries. Given this breadth, there are opportunities for resellers of all sizes to carve out a niche. To do this effectively, they need to identify the correct vendors to work with, partner efficiently and invest time and resources in taking their message to market. Document management is not for everybody but when you look at the level of investment that major vendors such as EMC has already made, you just know that the opportunity is real. ||**||

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