Lexmark's ECM Play Reaps Rewards
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Lexmark’s ECM Play Reaps Rewards Louella Fernandes, Associate Director,
Print Services and Solutions
Quocirca Comment
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Since its $280 million acquisition of
Perceptive Software in 2010, Lexmark has
been working hard to re-position itself,
transitioning from its traditional printing
roots to a provider of business process
automation solutions.
Its recent $54m acquisition of PACSGEAR, a
healthcare ECM (enterprise content
management) provider, announced on 3rd
October 2013, is the latest in a string of ECM
related acquisitions that have broadened
Lexmark’s reach and bolstered its Managed Print
Services (MPS) market position, both worldwide
and across vertical industries.
Overall, Lexmark has invested approximately
$540 million to acquire companies that now form
Lexmark’s Perceptive Software division with
annual revenue of around $170 million, which is
just under 5% of the company’s total business.
In August 2013, Lexmark announced its $72
million purchase of the German company
Saperion AG, a developer and provider of ECM
and business process management software. In
addition to Saperion, so far in 2013 Lexmark has
purchased Twistage, a San Franciso-based
company with a cloud software platform for
managing video, audio and image content;
Seattle-based AccessVia, which provides retail
signage and Acuo Technologies of Minneapolis, a
provider of clinical management software. In
2012, Lexmark acquired ISYS Search Software,
based in Australia; U.S.-based Nolij Corp; and
Luxembourg-based Brainware.
Having exited the consumer inkjet business in
late 2007, followed by the business inkjet market
in 2012, Lexmark has made great strides in
redefining its value proposition. Its increased
focus on helping its customers “manage the
unmanaged” (whether it is content, printers or
business processes) is paying dividends.
In Q2 2013, Lexmark’s MPS revenue reached
$170 million growing by 12%, with an estimated
total contract value per win of approximately $50
million, demonstrating its strong presence in
larger enterprises. Meanwhile, Perceptive
Software revenue reached $59 million, growing
by 34% compared to the same period in 2012.
Driving synergies between printing and business
process automation are now the hallmarks of
next generation MPS contracts as enterprise
customers look beyond print to drive further cost
savings and improve efficiency. Whilst some
businesses have taken initial steps to transition
to a “less-paper” office and digitise paper-based
processes, many are still heavily reliant on
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paper-based processes, effectively operating
hybrid paper/digital business workflows.
Consequently, leading MPS providers are
increasingly offering solutions and services that
address the need to manage both unstructured
and structured content, across paper and digital
output. The most effective approach to bridge
the paper and digital gap is to leverage the
sophisticated document capture, routing and
archive capabilities of the new breed of smart
multifunctional peripherals (MFPs).
Lexmark is certainly well positioned to take
advantage of this and is already seeing success
in its cross-selling initiatives between its Imaging
Solutions and Services (ISS) and Perceptive
units. According to Lexmark it is already
maximising its large account ISS presence to sell
Perceptive software capabilities whilst growing
its MPS offering in Perceptive accounts. Over the
last two quarters of 2013, Lexmark indicates that
it has won over 20 new capture, content and
process software deals across a range of ISS
banking, retail, manufacturing, government and
healthcare accounts. Meanwhile it is also
capturing MPS deals in Perceptive Software
healthcare accounts.
Quocirca believes that Lexmark has taken the
right steps to build out its product and services
to address customer needs to drive workflow
efficiency. Lexmark has always prided itself on
its ability to deliver customised solutions due to
owning its technology and by virtue of its smaller
size relative to its competitors. Whether Lexmark
can maintain this customer responsiveness now
that it has such a large and mixed technology
portfolio remains to be seen.
Lexmark will undoubtedly face challenges in
integrating what is now a vast array of products
and solutions. As enterprises look to minimise
paper-intensive and labour-intensive processes,
business process automation will take centre
stage in the next evolution of MPS. To maximise
on the opportunity, Lexmark will need to
reinforce its brand and value proposition,
differentiating its solutions and services based on
its industry focus and broad ECM capabilities.
Market competition is intensifying, from both
well-established ECM vendors and MPS
providers, such as HP, Ricoh and Xerox that are
also actively focusing on expanding their
business process services footprint. Lexmark has
already made strong inroads and Quocirca
expects this momentum to continue in 2014 as it
refines its integration and go-to-market strategy.
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About Quocirca Quocirca is a primary research and analysis company specialising in the business impact of information technology
and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into theviews of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of real-world practitioners with first-hand experience of ITC delivery who continuously research and track the industry
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has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocirca’smission is to help organisations improve their success rate in process enablement through better levels of
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