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Market & Competition

The market for Document Automation is experiencing steady growth. Legislation and regulations will increase the demands on better control and clarity with regard to administrative processes. The anticipated annual growth of the market for document automation software is approximately 17 percent until 2009. The global market is expected to amount to approximately SEK 14 billion in 2009, according to Harvey Spencer Associates Inc.

ReadSoft is the leading supplier in the largest sub-segment, Data Capture for Process and Transactions Management. In 2005 it represented 34 percent of the total market. This segment is expected to grow by 9 percent during 2006.  

Requirements drive the market

The use of Intelligent Data Recognition (IDR) is on the rise. It is picking up speed particularly within invoice management. The potential is enormous as IDR can be used both to manage all incoming information and to integrate with various business support systems (ERP systems). With solutions for invoice management that are interlinked with SAP and Oracle-based workflows, the cost savings are very large.

In many ways, IDR can also decrease the need for EDI solutions and standardized XML formats (used to structure and organize information and data). Insurance firms and banks will easily be able to check that documents contain the right information, for example.

The market for digital mailrooms has not yet really gained momentum, but there are clear signs that something is happening in this field. The collective IT investments are increasingly aimed at such areas as alignment and agreement with regulations, business intelligence, data integration and security.

Ever-higher demands are being set on being able to retrieve and process information from business documents. Companies, authorities and organizations do not want to build their own systems for this. Instead they see the possibilities of saving money by using document-management solutions.

Extended integration of IT systems and thereby also ERP integration are increasingly important. Faster, more effi cient and less expensive ways of managing the document fl ows are a must. Here, the software’s ability to retrieve information from documents such as forms, schedules, invoices and letters plays a major role.  

Global economy favors ReadSoft’s solutions

The global economy is driving regulations that are limitless and aim to prevent fraud and other violations. Consequently, companies with global operations must install common systems that follow a certain standard. ReadSoft’s solutions do this.

One example is Basel II, which entails that every bank that does business in different countries must have risk management systems. This is a typical example of global regulations driving the market.

Another example is the US Patriot Act, which affects all companies that export to the US and all those who live in the US and have a bank account abroad. The American corporation act, the Sarbanes Oxley Act (SOX), affects both companies in the US and the rest of the world. Within the EU, directives have been issued that aim to harmonize different kinds of business operations throughout the Union. During 2008, regulations similar to SOX will also enter effect in Japan.

These regulations mean that every listed company must standardize and control its information more effi ciently and securely. IT systems will also become increasingly similar in all countries. The winners in these global changes are companies that can offer the customers solutions that make the business processes much more efficient, more secure and clearer.      

Competition  

The document management software market is fragmented, but is being consolidated. The segment represents 34 percent of the Data Capture market with an estimated value of approximately SEK 4 billion in 2009. There is a pattern that larger companies buy small companies to gain access to technology and new markets. This is according to Harvey Spencer Associates in its report from June 2006, “Software Document Capture Supplier Vendors”. The market is changing through increased ecommerce and the need to process information more rapidly. Document volumes are growing at the same time as competition is intensifying. A few trends that Harvey Spencer sees are:

• The American market is maturing. More small companies are experiencing considerable pressure. The smallest players are disappearing, changing direction or being bought up.
• The largest players in the industry have a broad range in their product offerings and can reach out to both North America and Europe. It is becoming increasingly   more important to be able to form partnerships and new channels to markets.
• Examples of this include EMC, which acquired Captiva, and Dicom, which acquired Kofax, while IBM acquired FileNet during autumn 2006.
• Invoice processing is offered by more and more companies. The most advanced suppliers offer integrated SAP solutions.
• The electronic mailroom, which transfers and forwards incoming letters electronically, is viewed with growing interest.

There are some 40 competing software companies for document automation in the world. ReadSoft is the market leader within the segment for process and transaction management. This market segment is the largest in the total market for documentautomation software. The five largest companies represented about 40 percent of the market for process and transaction management in 2005.

It is difficult to make a statement about the strengths and weaknesses when it comes to the underlying technical solutions, as they are not visible or presented to the market to any great extent. Some of our global competitors are listed in the table below. Our competitive advantage is understanding the customer’s commercial operations and business processes in combination with proprietary solutions.

Our global presence – with subsidiaries in thirteen countries and partners in another 55 markets – means that we can offer very powerful solutions to users anywhere in the world.