K2-TIS Alliance Targets Emerging SPA Space

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Top Image Systems is the latest document capture ISV to announce a smart process application (SPA) strategy. Leveraging a recently announced OEM agreement with workflow ISV K2, TIS recently unveiled two SPAs—invoice processing and digital mailroom. TIS has already sold and installed several implementations in the European and Asia-Pacific markets and is ramping up its efforts in North America. There are also plans to expand the relationship between the two vendors.

“Part of our strategy at the global level was to come up with a plan for delivering end-to-end solutions, or what you can call SPAs,” said Michael Schrader, COO of Tel Aviv-based TIS. “We realize that in today’s market selling capture alone is not enough. So, we decided to add BPM to our portfolio like Kofax did.”

Schrader said that TIS looked at several options, including M&A, before settling on an OEM strategy with Bellevue, WA-based K2. “We felt that a strong OEM relationship was the best way to go,” he said. “This way we can put our M&A focus on other areas like mobile technology.

“What we’ve done is taken K2’s Smartforms technology and workflow engine and integrated them into our platform. Overall, we’ve been working with K2 for about a year. The products have been on the market for a little more than three months. We really started picking up sales momentum in the last quarter.”

K2 was looking for a capture partner to round out its SPA strategy. “Our heritage is in enterprise workflow,” explained Dave Marcus, SVP, alliances and partners, for K2. “One thing we’ve seen over the past couple years is that more companies are building ECM workflow applications, in addition to traditional line-of-business workflows. In ECM workflows, unstructured content is often the dominant characteristic.

“To us, it became clear that if we were going to succeed in the ECM space, in areas like A/P and the digital mailroom, as well as other areas like contract lifecycle management, we needed to offer more than just what K2 and Microsoft [with SharePoint] offer out of the box. Capture is one area we focused on adding. Others areas [through other partnerships] include document imaging [KnowledgeLake], data integration, and digital signatures [CoSign and DocuSign].

“We wanted to create a way to enable customers who need capture to make it possible in a way that is better than saying ‘here’s an API, you’re on your own for integration.’ We wanted to go to market with something pre-integrated, so customers can focus on solutions rather than technology. The TIS relationship enables us to go head-to-head against ECM vendors like EMC, Open Text, and IBM.”

TIS’ engineers did the integration with support from K2. “The relationship with TIS is somewhat unique for us,” said Marcus. “It involves completely embedded technology, and although we spent time making sure TIS is leveraging our technology to the fullest, the SPAs are really owned by TIS. We are working with TIS on a joint marketing strategy, but the go-to-market responsibility is primarily theirs. This is different than how we go to market with KnowledgeLake, for example, with whom we have a joint marketing and co-selling agreement.”

Marcus and Schrader agreed that TIS’ experience makes it the best choice for taking the combined technologies to market. “K2 is a provider of horizontal technology. We don’t have the domain expertise that TIS does in A/P and the digital mailroom,” said Marcus. “That said, we are not building our SPA strategy around TIS. We plan on building a range of solutions, some of which will be delivered by us and some by TIS and other partners.”
“In addition to capture technology, we bring to the table a lot of knowledge in the A/P and digital mailroom markets,” said Schrader. “You need more than just workflow and capture engines to be successful. Our software has been used to process hundreds of millions of invoices worldwide, and this experience is what really enabled us to build a solution based on K2.”

Marcus said that K2 is especially excited about opportunities in the digital mailroom space. “A/P is a good market too, but there are a lot of players,” he said. “There are not as many players in the digital mailroom, and many of them are very small, along with some bigger guys mixed in. I think it’s fair to say that while it’s not necessarily part of our strategy, this joint relationship with TIS will enable us to go head to head with the likes of Kofax if we have to.”

Of course, a few years ago, there was a hot rumor that Kofax was going to acquire K2, and there are multiple implementations where Kofax is installed as an advanced capture front-end for a K2 workflow. However, the acquisition was never finalized and Kofax ended up acquiring Singularity, a smaller ISV with a similar profile to K2’s—both market workflow technology primarily to the SharePoint space. Last year, Kofax launched Total Agility 7.0, an SPA platform built on top of Singularity’s technology.

“With the acquisition of Singularity, Kofax is primarily a competitor to us,” said Marcus. “We never really went to market with Kofax. It was more of our customers wanting to integrate our technologies.”

Marcus added that K2’s technology has never been dependent on SharePoint. “We made a bet—attaching ourselves deeply to a SharePoint-centric message,” said Marcus. “We saw that as an opportunity to differentiate ourselves and participate in a market that we thought would grow significantly. And it did.

“But from day one, we’ve never had a dependency on SharePoint. One reason companies buy our software is because we don’t have a dependency on a single repository, and we license our software that way. We have customers using our software with IBM FileNet and Open Text. They provide the systems of records, and our software is used to create the system of engagement.”

The use of this terminology reminded us of Geoffrey’s Moore’s presentation at the Kofax Transform conference in 2013 when Kofax really began promoting its SPA strategy [see DIR 3/29/13]. “The way the SPA market is defined, it represents a space that we have traditionally positioned ourselves in,” said Marcus. “In the BPM space, you have low and entry-level products that provide simplistic workflow functionality, and you have dozens of vendors offering that. You also have BPM platform vendors whose technology can be extremely expensive.

“We look at the space in between. Our customers have a need for applications, but often don’t want to think about enterprise-wide BPM improvements. They just want to build apps, some of these are content-centric. We want to make that easy for them.”
Schrader characterized SPA as terminology for something TIS has been doing for awhile. “In a way, we’ve been doing SPAs for the past 10 years,” he told DIR. “SPAs can include more than a capture solution, but the way SPAs are defined does a good job describing the value our software provides. SPAs are focused on automating processes, which is what we do.”

The K2 partnership helps broaden the market that TIS can address with solutions. “We’ve done integrations with workflow technology for some targeted environments like SAP and Oracle shops,” Schrader said. “We will maintain our partnerships to enable that, but now we can sell integrated workflow solutions to a wider breadth of customers. In addition to A/P and the digital mailroom, we are looking at requirements for SPAs in areas like HR and mortgage processing.”

Marcus expects TIS’ North American SPA sales to ramp up in conjunction with its North American sales efforts. “TIS has committed a lot to its North American business in the past 12 months and we expect that to continue to increase,” he said. “We expect TIS to gain new North American business because of our partnership, as well
as their own investments in the region.”

The companies plan to work together to upsell SPA customers on wider, enterprise-wide capture and workflow initiatives. “Once a customer invests in K2 and TIS for solution X, they may realize they have 200 areas where they can leverage the same technology combination,” said Marcus. “So, we envision some strong upsell opportunities.”

SPA not dependent on cloud
Earlier this year, DIR caught up with new TIS VP and GM for the Americas Avi Mileguir, who has a strong background in selling hosted enterprise applications and is bullish on the potential of capture in the cloud [see DIR 3/28/14]. As the cloud is also a key component of Kofax’s SPA strategy, we asked if TIS and K2 have any cloud plans.

“Currently, this partnership is mainly part of our on-premise strategy,” said Schrader. “Our current cloud offerings are mostly focused around infrastructure as a service, such as offering a recognition service on the back end to integrate with our mobile capture technology on the front end. We have a similar integration with the Taulia’s (dynamic discounting) platform. That said, very soon we expect to announce our first end-to-end hosted solution.”

Schrader added that it’s important for TIS to have both on-premise and cloud strategies. “A lot of the capture and SPA market may not be ready to move quickly to the cloud,” he said. “We have to think through our strategy for each region.”

K2 is in the midst of launching its own cloud initiative—Appit. Marcus is fairly bullish on its adoption. “We think it’s important that a cloud offering have more than a hosted deployment option,” he said. “You need to be able to offer a complete hosted solution that includes features like provisioning and cloud-based order management.

“We first introduced Appit in March and are planning a formal launch for early August. Right now, we have about 30 customers in production and plan to expand in a significant way. In the next 18 months we expect to have 1,000 Appit customers and in three years we expect our hosted revenue to outstrip our on premise revenue.”

Marcus does not think that SPAs need to be hosted for the market to take off. “But our plans for cloud-based business solutions do include SPAs,” he said.

TIS reaching new heights
The K2 partnership represented TIS’ second significant alliance announcement within a month. It followed on the heels of the Taulia announcement [see DIR 5/30/14]. It’s somewhat interesting that Taulia has close ties with ReadSoft, while K2 has a history with Kofax. Is TIS’ ability to align with these organizations a sign that it is being accepted as a major player in the capture space?

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