Build Tomorrow's Solutions Today Using Toolkits
VARs with programming expertise can use toolkits to increase revenue by beating vendors and competitors to market with cutting-edge solutions.
By definition, VARs depend on third party hardware and software to provide solutions, but the value-add they provide is the key to profitability. Services such as consultation and design often have higher margins and are important ways to differentiate from competitors. For many VARs, offering self-branded or custom applications built with SDKs (software development kits or toolkits) is a competitive advantage, especially when end users have specialized needs requiring functions not yet available off the shelf.
"VARs with professional services capability should consider the opportunities to use toolkits," advises J.D. Moons, product marketing manager for Kofax Image Products, Inc. (Irvine, CA). "With margins eroding on equipment, creating an application is a source for additional revenue as long as the toolkit offers an easy vehicle for development. From a support point of view, VARs can also generate additional revenue because they collect the annual maintenance themselves."
The support issue is a double-edged sword. A poorly designed product or lack of adequate support personnel could be more costly in the long run. When selecting toolkit technology, it's important to look at the support provided by the vendor. "Support is a big issue," admits Jack Berlin, president of Pegasus Imaging Corp. (Tampa, FL). "When we work with VARs who've dealt with multiple toolkit vendors, it always comes up. I would encourage VARs to look at it carefully and balance the cost with what they get. As a toolkit vendor, we have people who want us to write the whole application and bombard us for information and others who ask no questions at all. VARs shouldn't have to pay for support they don't need, but they have to expect to pay for programming expertise." Berlin emphasizes that vendors should supplement premium support with free or less expensive options such as a FAQ (frequently asked questions) section on the Web site, newsgroups, and e-mail support.
Focusing on a specific vertical or business process such as accounting gives VARs an asset that can be resold to customers in a target market. "Despite all of the robust imaging products on the market, VARs are still using toolkits," says Jim Vickers, general manager of Pixel Translations and chief marketing officer for parent company Captiva Software Corp. (San Diego). "Some view in-house solutions as a one-off, but integrators who are ahead of the curve are looking for unique solutions that can be recreated and sold to other customers. For example, Hershey Technologies [a San Diego-based integrator] used toolkits to build an advanced remote scanning application for the military when everybody else was just talking about distributed scanning because it had identified a specific need." As a result, the VAR is linked more closely with the end user solution, and many end users want the assurance of local support.
Of course, there's never a return without an investment. When building a solution with an SDK, VARs have to consider the labor and licensing costs. "It's important to look at the development time because that can get very, very expensive," says Berlin. "Even when a VAR has developers in-house, it seems like there is always more work to do than programmers to do it. Programmer salaries aren't quite as high as they were at one time, but a project that drags on can get expensive. If a toolkit will save days of time that can translate into a few hundred dollars a day." However, VARs need to be realistic about what they can expect to develop and support in-house. "The imaging business is tougher because fewer people are doing projects," observes Berlin. "If things are good, VARs will sell what they are good at. When things get tight, we see VARs taking projects they wouldn't have taken normally and aren't qualified for." In the end, the VAR that takes on a project that is beyond its abilities loses money and possibly customers.
VARs also have to be cognizant of the licensing costs when computing the price they will charge for such solutions. Some toolkit vendors require the VAR to pay a royalty whenever a solution that incorporates the toolkit is sold. Others pass a usage cost on to the customers directly. At least one toolkit vendor also allows the VAR to make a certain amount of revenue before it begins collecting additional royalties.
Take Advantage Of Imaging Hardware, Market Trends
Vickers contends that remote imaging applications are still evolving and many VARs are using toolkits to create solutions for this expanding market opportunity. In addition to remote scanning and viewing, Vickers says that VARs are also building distributed data entry applications as well. For some time, MFPs (multifunction peripherals) have been cited as an opportunity to expand the scope of distributed imaging applications. With few production products on the market for those users, forward-thinking VARs are making their own. "Many solution providers want imaging tools for MFPs as they are trying to break into the front office," comments Vickers. "VARs that have the capability to integrate MFPs increase their opportunities to make sales. We've also had some inquiries from very large customers who say they are planning to move more scanning to MFPs or have at least considered it."
The nature of remote scanning has also increased demand for Web tools. "Since 1996, we've seen a surge in Web-deployed technologies," reports Berlin. "Use of applets, Java, or ActiveX is growing. They are being used in more commercial applications and extended to databases and communications." However, Berlin says that the biggest movement in the toolkit industry is the rapidly growing acceptance of .NET, which offers programming support for Web services initiatives. For VARs who build their own solutions, this could be very good news. ".NET offers more acceleration of large-scale applications," says Berlin. "The managed concept also gets you out of DLL [dynamic link library] hell while making your project more secure and controllable."
Toolkits help VARs keep up with the latest trends in document scanning hardware. With the premium for color scanning practically eliminated, many end users have opted to purchase color-capable scanners. However, there are still few color-capable software applications. VARs can use color imaging toolkits to build solutions that solve specific end user pain points instead of waiting for an off-the-shelf product.
An increasing number of scanner vendors are also offering multi-streaming capabilities. This function allows users to simultaneously create multiple images for specific uses. For example, a black-and-white image scanned at a higher dpi (dots per inch) might be generated for forms processing while a lower resolution color image is created for use in customer service. As has been the case with color, scanner manufacturers have begun offering this capability long before many ISVs (independent software vendors) have products on the market.
While needs and expectations are becoming increasingly complex, end users are also demanding simplicity. "Many VARs are using toolkits to create 'green button applications,'" says Moons. "Most off-the-shelf products are too complicated. Many vendors have been adding features and neglecting small, easy-to-use applications. End users like FedEx have used toolkits to build very simple, fool-proof scanning applications, which only require the user to push a button, and it works. FedEx has 1,000 sites using this kind of distributed application."
"VARs have to differentiate themselves," adds Berlin. "This economy has them working harder than ever for a sale. They often find themselves competing one-to-one on cost. But VARs that can offer a specialized turnkey vertical solution that solves a business problem clearly communicate to customers that they understand the market and its needs. End users will often pay more for that."