Transition to Cloud Helps Drive Triple-Digit Growth

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The SMB has always been the great untapped market for imaging and document management technology. Market leaders like IBM, EMC, Kofax, and Open Text typically target the Global 2000. And even players positioned more in the mid-market, like Hyland, DocuWare, Laserfiche, and Square 9, typically try to aim toward the “M” rather than the “S.” After all, the adage has always been that it takes more resources to sell and service ten $10,000 deals than it does to close and implement one $100,000 deal.

However, with the evolution of cloud software, market dynamics are changing. The cloud has the potential to greatly reduce the barrier for entry for software deployments—from both a vendor and user standpoint. What used to involve on-site technicians, server installations and managing individual Windows clients, now can be accomplished for multiple customers from a single cloud—with the application accessed through standard browser interfaces.

Taking advantage of this model, as well as the subscription-based pricing that typically goes with it, SMB-focused eFileCabinet saw its revenue grow 108% last year. “People in the SMB have been looking at document management systems for a long time,” said Matt Peterson, president and CEO of the Lehi, Utah-based ISV. “I think we are starting to see the jumping off point where they are purchasing systems to meet their needs.”

eFileCabinet has been around since 2001. When we profiled the ISV back in Nov. 2008 [see DIR 11/14/08], Peterson said its software had been installed at 3,000 organizations using more than 20,000 seats. At the time, he said eFileCabinet was growing 12-13% annually. In a recent press release touting the ISV’s 2014 growth, it was reported that eFileCabinet now has more than 11,000 corporate customers and 149,000 users.

“We were growing at about 20-25% annually in the three-year period prior to 2014,” said Peterson. “In 2014, we transitioned to a subscription-based pricing model for both our cloud and on-premise offerings, which accounts for most of what we are currently selling. I think that transition contributed to our increased growth. We also invested heavily in sales and marketing—we tripled the size of our sales team last year. We had been generating enough interest to validate that.”

eFileCabinet goes to market primarily through an inside sales team. “We have a channel that we’ve had some success with, but we find a direct sales model works better for us,” Peterson said. “Our sales reps do a lot of demos on GoToMeeting. Because of our experience with multiple vertical markets, we are often able to show customers the specific feature set they are looking for.”

eFileCabinet began life as an application targeting accountants but has since spread its wings to address multiple verticals. “Healthcare, for example, is now very important to us; it’s actually mushroomed into several sub-verticals,” said Peterson. “We’ve seen a lot of implementations in places like medical offices, clinics, and retirement centers. We advertise that we can help make our customers more HIPAA compliant.”

While its company name reflects a fairly simple storage and retrieval application, which is where the product started, the ISV has added multiple advanced features over the past few years. “These include retention alerts, routing and notifications for basic workflows, zonal OCR, and a file sharing system,” said Peterson

The file sharing system is called “Secure Drawer” and while it is cloud based, it can be integrated with eFileCabinet’s on-premise offering. “Secure Drawer has been a big win for us, because a lot of our customers are people like accountants, financial planners, and insurance agents,” said Peterson. “They can have hundreds of clients that they want to share files with on an annual basis. An accountant for instance, can keep all their clients’ tax documents in Secure Drawer so customers can reference them any time they like.”

This sharing functionality is similar to the service that popular ISVs like Box and Dropbox offer. “Recently we’ve seen quite a few people navigate over to our software from those applications because they are looking for a more full-blown document management application,” said Peterson.

eFileCabinet launched its cloud application two and a half years ago. “The interface is very similar to our on-premise version and the feature set is nearly identical,” Peterson said. “The subscription price is the same for both on-premise and cloud implementations.

“We think it’s an advantage to have both models. Everybody is pushing cloud software, but not everybody is ready for it. A lot of customers want to know that if they buy our on-premise software today, they can migrate to the cloud when they are ready without a big transition.”

In fact, with the release of the latest version of its software, eFileCabinet has introduced a new “Cloud View” feature for its on-premise users. “Cloud View backs up all the data in an on-premise deployment in a cloud account,” said Peterson. “In addition to providing automated back-up, on-premise users can access that Cloud View through their browsers, including those on their mobile devices. It provides read-only access, but it also helps create a bridge to a full-blown cloud deployment.”

Peterson estimated that 33% of eFileCabinet’s customer base is currently deployed on the cloud. “That includes customers that bought our software more then 10 years ago,” he said. “2014 was the first time we sold more cloud than on-premise. So, we are starting to see a shift, although in the upper echelon of the SMB, in accounts that buy 50 seats or more, people still want to install their software on-premise.

“I think a lot of the increasing demand for cloud has to do with improved broadband speeds. In many cases, performance with a cloud application is now the same as it is with on-premise.”

Peterson added that customers’ security concerns about the cloud have also largely been alleviated. “We host our software on Amazon Web Services, which allows us a lot of flexibility to scale quickly,” he said. “We’ve been on AWS since we launched, and it’s been very good for us. Hosting our own cloud would have been cost prohibitive, and the cost of using third-party services like AWS continues to go down due to economies of scale.

“A few years ago, we received a lot more questions about where our application was hosted and what type of redundancy we had—and we have a white paper that addresses all that. But, we really don’t get those questions anymore. I think most people are using applications like Google Drive and Dropbox, and because of that they’ve come to trust cloud technology.”

Building customer loyalty
Whether it’s a cloud or on-premise deployment, Peterson considers eFileCabinet’s implementation support and training to be a differentiator. “We have a dedicated implementation team,” he said. “There’s an option for on-site work, and we have quite a few projects on-site every month, but we handle the majority of our implementations online.

“We include a small implementation and training fee with all our packages. We want to be able to hold our customers’ hands through the installation and configuration process until they are up and running. We make this fee mandatory, because we want to guarantee success. We think this contributes to our very high retention rate.”

eFileCabinet also has a number of OEM customers for which it has done custom development work. These include large insurers like New York Life and OneAmerica for which it has integrated its document management software with their agency management systems. “We have a robust API that has enabled us to customize our software for some of our bigger customers,” said Peterson, who added that he expect
s to be announcing more similar partnerships in the near future.

Focusing beyond paper
eFileCabinet has three different versions of its product with different feature levels. The Performance version starts out at $30 per month, per user, and the Enterprise version at $55. “Our average deal size is right around 10 users,” said Peterson. “We still sell a lot of one to three user deals, but we also sell up the food chain to 20 or 25 users and that is climbing. We’ve even had several sales the included more than 50 users recently, and that didn’t used to be the case.

“When we talk to our customers many of them say they have been looking at document management for some time, but that it has been cost prohibitive for them to purchase a system with the features they want. We aren’t the cheapest solution out there, but for the features we have, we think we offer a good value.”

Peterson said that scanning is important to both cloud and on-premise customers. “The first thing everybody starts out thinking they want to do is scan their paper so they can store it as PDFs,” he said. “To accommodate larger jobs, we just introduced SQL database integration for our scanning client. However, we also try and take our customers’ blinders off.

“We stress that while being able to scan paper is important, paper use will dwindle in the future. We explain how eFileCabinet can also be used to manage incoming e-mail and attachments, Office files, and even multi-media. We encourage our customers to use it as a central repository for all their files.”

To supplement its repository, eFileCabinet is preparing to release a new mobile app. “It will have 95% of the features of a full-blown user interface,” said Peterson. “Users will be able to execute retention commands and workflow approvals right from the app. It will be available for both iOS and Android.”

eFileCabinet will also continue to increase its sales staff—with plans to double its size in 2015. “While we may not reach triple-digit sales growth again in 2015, we are shooting for high double digits,” said Peterson.

And, while to date eFileCabinet has primarily focused on the North American market, there are French and Spanish versions of its software available and international expansion could be on the horizon.

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