In 2017, Hyland created some major headlines when it acquired the perceptive business unit of Lexmark International. The acquisition brought some major assets into the Hyland portfolio, including Perceptive Content, Brainware, Saperion ECM, and more. At the 2017 Hyland user conference, CommunityLIVE, the integration of those products was a major talking point. A year later, we were back at CommunityLIVE 2018, where Hyland was touting all those solutions and more. CommunityLIVE 2018 represented Hyland’s largest turnout ever, with more than 2,000 attendees, and we got a chance to sit down with President and CEO Bill Priemer to talk about those acquisitions; how the company is combining its products, people and culture; and its goal of providing a mission-critical application. Join me in the SpeakEasy.
How many employees now work at Hyland?
There are 3,300. The acquisition of Perceptive added 700, and then the OneContent acquisition added another 100. Perceptive was headquartered north of Kansas City, and that’s still a large location for us. We have a couple of hundred individuals there, and then Perceptive had about 15 additional offices, so today the whole of Hyland has 30 offices, about half throughout the U.S. and half outside the U.S. Out of that 3,300 employees, we have about 2,000 that work at our headquarters, which is now a three-building campus in Westlake, in the Cleveland area. Five hundred are located outside the United States.
Hyland is well known for its strong company culture. How do you get alignment with such a disparate structure? How do you infuse your company culture into groups not based at HQ?
The original Perceptive was actually a lot like us. It’s very interesting; there were two companies, both located in the central parts of the United States, both started about the same time, with the same kind of solution — enterprise content management. We were both niche focused, with Perceptive focused on higher education, while we were focused on the banking space. Both of us were originally vertical content management providers.
We had very similar growth trajectories and experiences over 20 years. So we were hoping that Perceptive would be a pretty close cultural match, and it turns out they were. This acquisition was our largest to date, and maybe the largest we’ll ever do as a percentage of our total size. So we really thought a lot about the cultural impact, and I think that ultimately factored into our interest in the business and our feeling that we could pull it off.
In a way, Lexmark might have done you a favor by pulling these offerings together and you now get to capitalize on that effort.
The products that they acquired were strategically sound. They might have overpaid, and the integration of the people and the technology might not have come together as quickly as they would have liked, but, yes, you could look at their plan and see that it dovetails very nicely with the plan we’re putting in place right now. And so many things about Hyland and Perceptive were similar. How they were viewing the future and their modernization effort was very aligned — amazingly aligned — to where we are taking things.
What is the biggest challenge when transitioning from ECM, which you have been doing for the last 20 years, to this concept of “content services”? A lot of it is evolutionary, I feel. Are there pricing challenges, reseller challenges or other challenges?
There are. There’s the technical work and the R&D work to be done. To your point, we’ve done similar things in the past. We had to build a web server when these products became web-enabled. We’ve had to rewrite the product a few different times. It was originally built in C and C++, and we later migrated the code over to C#. We had to move from 16-bit architecture to 32-bit. We had to support Unicode. We’ve had to do a lot of transformation work. But even with this new architecture, how we archive and store files is very solid, and that remains intact and transfers over. Also, the whole database layer, which keeps track of where things are, the metadata applied, the workflow rules stay intact, too. So the engine that is the underpinning to the OnBase product stays the same. What we’re talking about is the modernization — the rewrite of the application layer, then the user experience.
Content services evokes cloud to me, but a large percentage of your customers are on-premise, right?
Those customers who are on-premise today who want to migrate to the new offerings and stay on-premise, we’ll be able to do that. So they don’t have to be in the cloud, but there will absolutely be benefits to having us host in the cloud. That will allow continuous delivery of functionality, auto-upgrading, etc. There’s also the very real possibility that what they have today could stay on-premise and the new functionality that we make available to them, that could be on the cloud. The user experience will be seamless. They won’t know what functionality is hosted and running on our service and what’s running on theirs — it can be mixed and matched. Of course, that raises the question of licensing, pricing, etc. Today, we charge for licenses and capabilities on the back end. With the new model, we’ll be talking more about blocks of functionality that we want to charge for.
What about consumption or usage-based licensing?
The clients are very interested in that. We’ve been moving down the path of alternative pricing models in any case. Take our insurance solutions as an example — we do a lot of business there. We scale that according to the size of the insurer. So it could be consumption, it could be usage, but it also could be the size of the organization for that solution. With hospitals today, it’s mostly full-time employee based, so a larger hospital system would pay more because they have more people than a single hospital.
There is a lot of disruption going on, and you can’t go too fast or you risk leaving a large portion of your users behind, and you need them. How do you manage that?
Customers have to move at their pace. Take the customers that have spent years investing in their own infrastructure — some will want to move to the cloud more slowly. Others want all of their enterprise applications on the cloud right away, and they’ll move more quickly. I think this speaks to us being operationally very sound and able to work quickly. Can we change? If we’re going to change our licensing, then our billing practices and functions like our internal operations, our contracting, our legal process, our training, our communication, have to be really buttoned up and then also agile.
What role do some of the new technologies like RPA and AI play in the ongoing evolution of Hyland?
RPA is such a natural extension and a supplement, an area of additional automation for so many of the workflow processes that we are involved with today.
Take higher education as an example. Currently, we’re routing information out of documents and forms and data to users who are in the process of deciding whether to accept and admit a student. That’s a common use case we deal with in higher education. You have to collect all the documents, test scores, application, essays and route it through that college’s API. This RPA is stream-level technology. It’s repeatable, it’s non-programmatic, it’s all done through graphical configuration. For instance, it can save somebody a few minutes at a specific step in the process from having to toggle between screens to manually copy and paste data from one application to another. If you can save a few minutes 50 times a day across 100 people, that really starts to add up.
So RPA has been a product category in its own right. We think our customers are looking forward to having a Hyland product, configured in the “Hyland way,” that’s integrated with our workflow and our case management system. It would be an extension of what they’re doing today, an additional degree of automation.
As for AI, there is artificial intelligence built into the algorithms of our Brainware product today. This is how Brainware recognizes what a document is. It’s true AI. Through Brainware and also our medical imaging unit, NilRead, we have some researchers who have been working with AI for several years now. Now we have Hyland Labs, and AI is absolutely one of that team’s priorities. They’ll be assessing what makes sense to develop or continue to develop in-house and what may make more sense to integrate as a third-party AI engine. IBM Watson, Amazon and Google all have strong products.
What about natural language understanding?
We’ll have to see how it evolves. With all of these emerging technologies, our approach will be to take processes that we’ve already streamlined with technology like Workflow and case management and then use these new tools to more fully automate those processes. Blockchain is really interesting because you can think about it in terms of a loan document, for instance — where was that document previously? Is this information I see the true, accurate representation of this loan? Being able to have a third-party ledger that says this deed is absolutely the original is powerful. Having a persistent, external record can be extremely useful in many content services scenarios.
The great thing about Hyland, with the size of our existing base, is the sheer number of use cases that can be conjured up. Because you have to have the use case first. Then you’ll find the technology for them. What needs to be done? What do we want to make better? Where is there a payback? Where is there a pain point now among our customers?
This is now the advantage of having those 20,000 customers and being as embedded as we are in the most important processes that they have. The depth of our customer base is really going to help us. The first use cases for our RPA came from some of our healthcare customers. We started working on it three years ago — we weren’t even calling it RPA at the time.
You mentioned Hyland Labs. Is that some sort of advanced research arm that you have?
That’s exactly what it is. We’ve been very good at incrementally improving our software and responding to customers. It’s why we have this enormously feature-rich, very relevant functionality for the customer today. You end up with a product that does everything you could ever want it to do, but that gets you incremental improvement. It gives you a very relevant product today, but that doesn’t protect you from being “obsoleted” by some breakthrough technology.
And that doesn’t enable you to take advantage of some brand-new technology. That’s where our own R&D efforts come in, because a customer is not necessarily going to identify that. We need to do our own deep research on technology or ideas. These things may never become products, but they might lead us to gather some experience and some insight about a technology with ramifications for a product that we didn’t even know was coming. That’s the idea of Hyland Labs.
What is your long-term vision for the company?
I wouldn’t characterize it in terms of size, although the application of our product is ubiquitous. We’re not a niche provider — we want to sell to every company that has content to manage, processes to manage and cases to manage. That’s the whole idea of a content services platform. We want to be a core, mission-critical application that every organization needs.