from BuyersLab

May 23, 2008 - In 2004 Equitrac unveiled an aggressive plan to reinvent itself via fresh technologies, while at the same time maintaining its firm grip as a leader in print management and intelligent cost recovery. At its briefing for media and analysts held recently in South Beach, FL, Equitrac executives outlined how the Plantation, FL-based private equity company (it also has a research and support center in Waterloo, Ontario) has grown and what it’s doing to ensure success. “We’ve made an unbelievable transformation and I’m proud of all of the hard work we’ve done in embracing and executing the vision,” said Mike Rich, chief executive officer of Equitrac. “This is the culmination of four years of heavy lifting to build a new organization and products.”

As part of the company’s evolution, the executives also spoke at length about Equitrac’s card reader security system and environmental positioning, as well as the TouchPoint Console (TPC), which is the company’s innovative new solution in the document capture arena that furthers its legacy of cost recovery devices. Much of the information that was presented revolved around what Equitrac terms its “AAA”—authentication, authorization and accounting—strategy. However, it goes without saying that the company is driven by its core software offerings: Equitrac Office, Equitrac Express and Equitrac Professional. Updates on all three were provided as the latest version of each will be released during the summer.

Channel Development And Sales Figures

Equitrac’s direct sales force consists of 20 people who are responsible for calling on the legal and professional markets. Other than that, the company relies on the distribution networks of the manufacturers it has partnered with. According to Rich, 65 percent of Equitrac’s revenue is derived from business in the United States, which is where just over half of the company’s 15,000 customers are located.

Mike Delaney, vice president of channel sales for Equitrac, offered up more figures: 13 percent year-over-year (YOY) revenue growth in Europe, the Middle East and Africa; 47 percent YOY revenue growth in Latin America and the Asian Pacific region; and 94 percent YOY revenue growth in North America, which he attributed to increased sales of Office, Express and the Xerox Secure Access Unified ID System (XSA; see Partners section). “Growth was sequential in 2007—we’re gaining momentum,” he said. “Our fourth quarter numbers represented an all-time high for us in terms of results from our partners, and a portion of our strong finish was due to securing a contract with a large, national graphic arts firm. Although 40 percent of our revenue is from the legal industry, we’re seeing an incredible uptick in multiple vertical markets such as financial, healthcare and insurance, as well as engineering.”

Rich added, “Over the past year we had 360 customers implement Professional 5, and our legal print tracking revenue increased by 30 percent. We have almost 500 schools using our software, including the University of North Carolina and Indiana University. Furthermore, we’ve now achieved a virtual even split of revenue from product sales and recurring maintenance charges. We have tremendous operating leverage for a mid-size company and more infrastructure to grow without adding tons of incremental resources. On a marginal basis 60 cents on the dollar goes to our EBITA [earnings before the deduction of interest, tax and amortization expenses], which we’re striving to increase by 50 percent.”

Equitrac’s solutions, regardless of any marketing efforts, tend to be geared toward enterprises, but Rich used the example of sales of Equitrac products through Global Imaging Systems, which focuses on small and medium-size businesses (SMBs), to illustrate how things might be changing. “The impact of the Global team on us has been extremely apparent,” he said. “Dealers in that organization are entrepreneurial and exploit any opportunities. They communicate the value proposition of solutions and effectively sell them. We’re still in the early stages, but Global’s representatives are always improving their understanding of our products.

“With SMBs, we’ve found that many of our customers will start off with an interest in color cost control and add a secure login solution thereafter,” Rich continued. “Then they’ll wind up wanting more personalized scanning applications. But as more businesses grasp the concept of what we provide, more contracts will be won.”

Delaney believes that if Equitrac continues to evolve strategically and maintain existing partnerships, while also identifying and then reaching out to manufacturers it hasn’t worked with before, its channel business will expand by 30 percent in 2008. “Another initiative for us is to have sales and service reps go through technical training on our products and be certified, which helps them comprehend the full scope of our solutions,” he said. Marketing campaigns help raise brand awareness, but ultimately it’s an ongoing process of establish, monitor, measure and repeat that will bring results.”

In closing Delaney said, “The penetration rate for solutions like ours is less than 10 percent—there’s a massive opportunity for us. Latin America is basically untapped and frankly we have no competition there; we’d only have to invest a modest amount of money in order to grow quickly.”

Partners

As a third-party developer Equitrac is bound to forming relationships with manufacturers, who in turn sell its solutions through their direct sales forces and dealers. Because of this though, the company must tread carefully and be wary of not stepping on any toes. “We’ve built a business model on broad interoperability in heterogeneous environments, and this has allowed us to address a wide range of opportunities,” Rich said. “We’ve always focused on the needs of users and provided solutions that work with any technology. These two points are what has allowed us to develop deep relationships with multiple partners, while affording us the chance to react to market needs.”

Equitrac became a founding member of the Xerox EIP (Extensible Interface Platform) Consortium in 2004, aiding in the birth of that company’s open architecture technology. Three years later Equitrac was named a Platinum Partner and created Xerox Secure Access. “What we did was take a subset of Office’s capabilities and built a private-label product that combines the first two A’s—authentication and authorization—of AAA,” Rich said. “The purpose was to give Xerox a nice, neat entry into the market.” In a nutshell, XSA is card-based and provides a simple method of authentication, thus giving workers access to only those functions—copy, print, scan and fax, color and monochrome, etc.—that they’re allowed to use. Additionally, Follow-You Printing frees people to output documents at their choice of device so long as it resides on the network, regardless if it’s in New York City, Los Angeles, London, wherever. “We’ve sold 5,000-plus units of Xerox Secure Access since last August. Businesses are starting to demand this product.”

Said David Bates, vice president of product marketing for Xerox Office Group, “MFPs intimidate: they’re big and expensive and sometimes hard to use. We’re working on software that will make workers’ lives less complicated. Equitrac has had its solutions working in conjunction with our devices long before EIP was introduced—they’re really the backbone of our security.”

Equitrac is also an HP Platinum Partner; both Office and Express are distributed by that company’s direct sales force and channels, and card-based security for the commercial and professional markets is offered too, just not to the same level of XSA.

The company also partners with Canon, which has a leading share in the legal industry in regards to overall devices managed, at 48 percent, according to an August 2007 International Legal Technology Association survey.

Of course, Equitrac has relationships with other manufacturers such as Konica Minolta, Sharp, Kyocera and Ricoh, with whom it’s a Strategic Alliance Partner. The company also works with eCopy and EFI.

Environ“mental” Messaging

Sustainability has become the topic du jour for manufacturers. And while power consumption and producing devices with fewer toxic substances are still the primary concerns, “green” printing and a renewed focus on consumables are rapidly rising on the list of ways to protect the earth. “Good business practice aligns with good environmental practice,” said Chris Wyszkowski, vice president of professional sales and marketing for Equitrac. “We’re absolutely committed to this and we’ll soon hand out awards to the organizations that utilize our solutions to have the biggest environmental impact.”

Policy management, which the company describes as “Rules and Routing,” is a major component of both its solutions and green message, including that administrators can set quotas to prevent excessive printing and allow only specified users to output in color. Forced duplexing, and no color printing from Web sites or simply no printing whatsoever from Internet Explorer, are all user-programmable features.

According to Wyszkowski, 10 to 15 percent of paper waste stems from unclaimed documents sitting on the device at the end of the day, making it the largest chunk of the pie, while a smaller slice is because of documents being output on devices that are low on toner and will therefore need to be printed again. With that in mind, Follow-You Printing and intelligent routing round out the eco-friendly features that Equitrac offers: the former enables jobs to be sent to a queue where they can be released via card-reader authentication instead of simply output; and the latter automatically reroutes jobs that are sent to a device with low toner to one with a better supply.

Set Your Solution To Scan

“Scanning to an e-mail address is perhaps the most frequently used function in today’s office,” Rich said. “And while an embedded scan solution works just fine, it’s clear that a standalone device such as our TouchPoint Console also makes sense for many businesses. We launched this product in August of last year and we’ve already sold about 1,700 units.”

Billed as “cost recovery at your fingertips,” the TPC is a document capture and scan tracking solution that allows users to scan to their own or others’ e-mail addresses or file on a network folder; Equitrac hopes to add a scan to document management feature in the near future. Users can preview scans on the touch-screen LCD, and card-based identification retrieves personalized settings such as the functions they’re allowed to access, history and favorites. Also included is a USB-based QWERTY keyboard, which is easier to use than a keypad on the display of an MFP. Users can use the TPC to copy, scan, fax, apply finishing features and route the document in one step. Designed for the professional market, the device also keeps a count of scans so that customers can be charged for them.

“The TouchPoint Console was created to address the increasing use of the MFP as a document workflow appliance instead of just a copier, while making operations like scanning and job allocation easier and more personalized,” Rich said. “For professional firms where accounting and cost recovery are key business processes, the TouchPoint Console was a natural that’s been met with enthusiastic acceptance by our customers.”

And The Breadwinners…

Equitrac’s three software suites are each targeted toward a specific type of business: Office, for typical office environments such as financial, healthcare and insurance organizations; Express, for the education sector; and Professional, for the legal industry and other professional markets. “The AAA engine allows us to build specific capabilities for all different verticals,” Wyszkowski said. “For instance, the ability to accept quotas and payments from students is a key module in Express, while supporting the complicated workflows and capturing all clicks, including scans and faxes, is important for law firms.”

“We have a customer-driven approach to enhancing our products and we’re always reading e-mails,” Rich said. “Our products cover various levels of need to the businesses that use them. Office focuses on security and total cost of ownership (TCO), Express concentrates on pay-for-print and TCO, while Professional is a cost recovery and document capture solution.”

Erik Vander Ahe, vice president of product development for Equitrac, noted that more than $20 million has been spent to date on developing and improving the company’s new products, and that Equitrac’s R&D budget per year is approximately 10.5 percent of its gross revenue.

Office And Express

The latest versions of these suites, labeled 4.1, are due to be released this June. Vander Ahe noted that the theme of both is that they’ll “Fit into the Organization,” with a subhead of “Don’t Force the Customer into Our Paradigm.” The new editions of Office and Express feature better deployment flexibility, manageability and cost optimization than their predecessors.

An important component of the better deployment flexibility is improved active-active Windows cluster support. While the active-passive clustering model enables an application to failover from one to another, an active-active cluster means that the application is running simultaneously on all nodes. “The primary objective is load balancing,” he said. “With this new version, we’ve increased our cluster support so that the DCE (Distributed Computing Environment) server component that controls all devices—terminals, consoles and MFPs—can handle components that are active-active in Windows clusters.”

Other aspects of better deployment flexibility include enhancements such as automatic server discovery for Follow-You Printing and, in the advanced print client venue, peer-to-peer printing. “With Office and Express 4.1 we’re taking our complete server-based printing capability and making it available on the desktop. This means that the complete power of Follow-You Printing, as well as Rules and Routing, will be available to those organizations that employ serverless printing.”

The suites will also offer better manageability support via Active Directory synchronization filters; multiple accounting server-based enterprise licensing; SSL encryption for server-server connections; and enhanced reporting, including system snapshots, device status views, authentication audits and usage summaries.

Optimizing and reducing costs are hallmarks of Equitrac products. With Office and Express 4.1, administrators can enforce policies that enable users to print only in monochrome or in duplex mode, for example, and with true least-cost routing businesses can set devices that only certain users can take advantage of.

The company will refresh both suites in late 2008, with version 4.1.1. Based on feedback from the soon-to-be-released editions, Equitrac will enhance certain print client features while adding Konica Minolta and HP Edgeline devices as embedded clients.

Professional

The latest edition of Equitrac Professional, 5.2.3, is slated for July delivery. Its theme of “Client Options” will feature a print client refresh and embedded scan client updates.

WAN optimization and enhanced local caching are two of the improvements that have been made for Professional. With the former, businesses get a better accounting system of record with roaming profiles and validation, push to print client and distributed control systems, and specified user classes only. The latter takes into consideration the 4-99 validation rule, which caches only recently used authorized cache on a daily basis, then bypasses the WAN and implements an accounting system for 99 percent of prints made. “We’ve analyzed literally millions of print tracking transactions and from this we’ve learned about their usage patterns,” Vander Ahe explained. “We’re using the results to improve our caching algorithms such that 99 percent of print transactions will obtain their validation information from the local cache, which will enhance performance, especially across high latency WANs. The net effect is a print tracking solution without any delays to users, with quick and responsive controls.”

Equitrac will also employ a new EFI SendMe/IKON DocSend embedded client scan offering while refreshing its existing eCopy embedded client software; both solutions will use standard Professional 5 workflows, by which users can log in, search and view histories and favorites for allocation.

Another development will be adding the ability to track color usage from Canon MFPs, at which time Equitrac will be the only company able to do so. And in early 2009, Equitrac will refresh Professional with version 5.2.4., which will add an accurate cost recovery feature for reprints done with a Fiery controller, as well as adding HP Edgeline devices as a client.

This article originally posted on BuyersLab