In early April, Lexmark International announced the release of Kofax TotalAgility 7.3, an updated version of its flagship TotalAgility software. Although the TotalAgility release was the focal point of the announcement, Lexmark announced several other related digital transformation products from its Enterprise Software Group at the group’s annual conference.
In the midst of what was then still speculation about the future of Lexmark’s ownership, the company’s 10-year-old Inspire conference incorporated Kofax’s Transform conference for the first time, increasing both attendance and announcements and giving the impression of a company moving full steam ahead with its enterprise software offerings.
One year after announcing its intended $1 billion acquisition of Kofax, which closed in May 2015, Lexmark’s Enterprise Software Group is going strong with former Kofax CEO Reynolds Bish at the helm as its president. That forward momentum was evident most recently in the new product announcements, which, in addition to v7.3 of TotalAgility, include Kofax Customer Communications Manager (CCM) 5.0, Kofax SignDoc, Kofax Mobile SDK and Kofax Analytics for Mobile. Read more about these products in the company’s press release.
Workflow had a chance to speak to Dave Caldeira, senior vice president, Product and Solution Marketing for the Enterprise Software Group about the new releases and how they fit into the group’s overall product strategy for driving digital transformation. “We have been integrating for the last year and building out our portfolio in a go-forward strategy,” he said.
Caldeira referred frequently to the digital transformation challenge: the need to acquire, retain and grow customers, while also streamlining operations to be more cost effective and compliant. “Being able to balance investment and streamline activities from both inside and outside — it’s very important,” he said, noting some of the key areas customers are dealing with, such as the need for today’s end user to be able to make quick decisions, their desire for 24×7 service, and their demand for seamless omnichannel access. Kofax’s trademark First Mile strategy embodies this need, with “First Mile” describing the initial customer interactions — mortgage or loan application forms, for example — and the need to make them simple and fast.
However, Caldeira noted, there is often a challenge in integrating customer interaction with the systems that manage that data — systems of engagement (SOE) and systems of record (SOR). “One thing we see a lot of demand for is, ‘how do I remove friction from systems of record and bridge the gap between the customer-facing system and the ERP or CRM … [The SOR] execute inside processes but are not easy to transform into a full experience for the customer.”
The solution is in digitization of existing processes, and creating a strong digital outside and inside. The new version of TotalAgility is the “kernel for the entire set of solutions,” said Caldeira. The software integrates mobile, omnichannel capture, process automation, dynamic case management, information integration, customer communications management, electronic signatures and content management and analytics.
In its press release announcing the new products, Lexmark cites IDC Futurescape’s Worldwide IT Industry IT Predictions: “Within the next two years, two-thirds of Global 2000 enterprises’ CEOs will have digital transformation at the center of their corporate strategy; over the next three to five years, the percentage of enterprises with advanced digital transformation strategies and implementations will more than double. This scale-up of digital business strategies will drive everything that matters in enterprises’ IT investments.” In its “2016 CEO Survey: The Year of Digital Tenacity,” Gartner also noted a rise in the number of CEOs heading up digital change, saying “half of the CEOs surveyed expect to see substantial digital transformation in their industries, or for their industries to be almost unrecognizable within five years.” Digital transformation is certainly upon us, and Lexmark, with the help of a chain of acquisitions, has created an impressive, solid and well-rounded enterprise software lineup that can go far in enabling that transformation.
Of course, we would be remiss in covering a Lexmark story without mentioning the April 19 announcement that the company would be acquired by a consortium of China-based investors led by Apex Technology and PAG Asia Capital, as well as Legend Capital, part of Lenovo majority shareholder Legend Holding. Rumors had been circulating about the future of the company since its announcement last October that it was exploring strategic alternatives — most of those rumors anticipated an HP- or Xerox-like split between the hardware and software divisions, so the $3.6 billion package deal took many by surprise.
Most of the speculation and discussion so far — ours included — has focused on the hardware side of the business, which makes sense since the buyers’ primary businesses lie in that area. So what does it mean for software?
Lexmark’s push into the enterprise content space took off with its 2010 acquisition of Perceptive Software, which it followed with others such as Saperion, Clarion, and Readsoft, before the 2015 Kofax acquisition. Kofax, likewise, had expanded its business through a number of acquisitions including Singularity, Altosoft, Kapow Software, Softpro and Aia. Combined, they create a powerful enterprise software group for Lexmark — one that has driven strong performance in the “higher-value solutions” segment of its financial reports, even as the declining hardware and supplies revenue sparked the search for strategic alternatives.
Is there any reason to think Lexmark’s new hardware-focused owners might seek to divest themselves of the software group? Current statements simply say both divisions are expected to “continue unaffected and benefit strategically and financially from the transaction.”
Meanwhile, the trend of Chinese firms scooping up international companies is a hot one at the moment. Bloomberg reported that 48 days into 2016, Chinese firms had announced $23.8 billion in outbound transactions — a tally that took place upon the announcement of the $6 billion purchase of Ingram Micro by China’s Tianjin Tianhai Investment Co., making it part of the HNA Group, a Fortune Global 500 leader in aviation, tourism and logistics.
The bottom line is, it could go either way, with strong arguments for both “sell” and “keep.” It’s early days yet — we’re three days removed from the announcement at this writing, and speculation is just that. At the early-April Inspire conference, Lexmark’s Bish said he thought an announcement regarding the company’s future would come within the next 30 days, which certainly didn’t seem to impact the momentum of the conference at all.
Ultimately, the news of the sale should not undermine or overshadow the powerful strides made by Lexmark’s Enterprise Software division with the latest announcement. The firm has managed to complete an impressive amount of integration and leverage it to create powerful products that will go a long way toward the inevitable digital transformation. Regardless of what comes next, Lexmark Enterprise Software is a group with its eyes on the future and its gearshift solidly in “forward.”