Own The Business Automation Process
A lost account convinced iDatix Corporation to develop its own business automation and document management software. Now the company expects sales to grow 100% per year over the next three years because of this application.
At some point in time, almost every VAR has felt the sting of losing a big account to a competitor. Most view these instances as learning experiences -- opportunities to improve business by strengthening the weaknesses exposed by defeat. However, few react as drastically as Steve Allen.
Allen is the founder and CEO of iDatix Corporation (Clearwater, FL). Allen, an experienced designer of character recognition and forms processing software for major document management vendors, originally founded iDatix as an OEM. His vision was to construct a comprehensive document management offering by piecing together several existing products and market the solution under his own private label. Initially, this seemed like a good plan. Through his connections in the document management industry, Allen quickly established a few large sales opportunities. However, Allen soon realized succeeding as an OEM was not going to be as easy as he first anticipated. At the time, iDatix was only a two-man operation, and Allen lost his first big account simply because of the small size of his company. The client was concerned that two individuals would be unable to handle the sizeable document management needs of its organization. Since iDatix's proposed solution consisted of common content management products, the customer opted to purchase the system from a larger VAR. Allen realized that this would be a recurring problem, but he didn't have the capital to simply add personnel to his staff. Instead, Allen knew he would need to clearly differentiate his offering in order to succeed. In response, he scrapped his original plan to repackage existing products and decided to develop his own end-to-end content management and business automation solution that customers would not be able to purchase elsewhere.
The resulting application is called iSynergy. iSynergy is a software tool that automates the capture, management, workflow, and integration of unstructured information (e.g. paper, electronic documents, miscellaneous file types) into key line-of-business applications (e.g. ERP [enterprise resource planning] systems, accounting software, loan origination/servicing software). iSynergy combines processes typically performed by several different products into a single software platform. This distinctive product, plus a strong focus in the financial industry, will allow iDatix to achieve sales growth of 100% per year over the next three years.
The Expected And Unexpected Struggles Of Software Development
Even though he had the experience, the decision to develop an original software package did not come easily for Allen. "Becoming a software developer meant eliminating the immediate revenue we would have received as an OEM," he says. "I didn't have any investors, so I was faced with having to personally finance the software project. I had to take a long, hard look at the limited funds in my savings account and determine how I could hire three engineers to work on the product for a year. That was a scary proposition."
Fortunately, Allen was able to pitch the concept of iSynergy to a distribution company while the product was still in its early stages of development. The distribution company was so impressed with Allen's vision that it bought the product based on his design specifications alone. This sale was large enough to pay for a single top-level programmer and gave Allen the resources and confidence to continue developing iSynergy.
Financial struggles were an expected cost of creating iSynergy, but Allen didn't anticipate the pain of employee turnover. "Since we weren't selling much during development, I couldn't offer a lot of pay or incentives," says Allen. "I would hire lower-level engineers and train them on the advanced .NET technology required to design iSynergy. They would then use this experience to get higher paying jobs somewhere else. This was a huge setback because hiring and training a new engineer often took three months or more. If I hadn't kept losing my engineers, we could have gone to market with iSynergy a lot sooner."
Close Sales By Emphasizing Vertical Market Business Automation
Despite turnover setbacks, iDatix completed the initial version of iSynergy in September 2001. The general release automated scanning and retrieval, and it included bar code recognition, character recognition, and database intelligence to execute the indexing process without the need for manual labor. iDatix generated sales relatively quickly on this early version of iSynergy. These sales were typically for departmental applications, and the clientele spanned every field from healthcare to the food and beverage industry. However, in 2002, iDatix would meet a customer that would significantly influence the evolution and scope of the iSynergy product. That customer was NetBank (Atlanta).
iDatix first became involved with NetBank through one of the organization's subsidiary units, Market Street Mortgage (Clearwater, FL). Market Street Mortgage is a mortgage originator and was interested in the iSynergy product to automate mortgage processing. The subsidiary was impressed with the iSynergy demonstration and was on course to purchase the product when a corporate representative of NetBank halted the sales process. NetBank was pursuing a corporate vision to automate the business processes of the entire organization, including its subsidiaries, under a unified platform. In fact, NetBank had already purchased a solution from one of the leading vendors in the industry. However, when it came time to implement the incumbent solution, NetBank realized that a great deal of manual labor would be necessary to perform document indexing. The costs associated with this were substantial, so iDatix was given the opportunity to demo the product to NetBank executives.
NetBank felt iSynergy was a good solution for a mortgage originator like Market Street Mortgage because users could control how the documents were created and ensure the indexing process was automated. However, the bank did not believe the solution would work well for RBMG (Columbia, SC), a NetBank wholesale mortgage subsidiary. A wholesale mortgage company receives mortgages from outside sources, and each document is different, making them difficult to index.
"Instead of losing the sale by saying that our product didn't do that, we were determined to create a module that would meet the indexing needs of wholesale mortgage companies," says Allen. "A few weeks later, we completed a feature called RapidDoc. RapidDoc allows users to electronically assign document types to a list of images using a provided matrix, rather than manually inserting individual cover sheets to separate files."
It's Not Enough To Automate, You Must Justify The Cost
Although RapidDoc addressed the wholesale mortgage concerns of NetBank, iDatix would need to provide substantial cost justification to convince NetBank to abandon its existing automation software investment. "Under its existing solution, RBMG was paying 40 employees at an outsourcing company to capture and index 60,000 mortgage documents a day," says Allen. "I believed with iSynergy and RapidDoc it could produce the same volumes with only 15 people. In disbelief, they demanded that we prove it. We flew in a high-speed scanner, one of our servers, and a technician, and ran the solution on-site for one week at their facility. A member of their management team timed us to verify our projections. Based on the numbers from that trial, we could reach the desired volume with only 12 people, resulting in an annual cost savings of approximately $750,000 in labor alone."
Finance Is A Growth Area For Business Automation
After the proof of concept at RBMG, NetBank decided to take a close look at how iSynergy could meet the needs of all of its divisions. In January of 2003, NetBank inked a deal with iDatix that made iSynergy the business automation platform for the financial conglomerate's entire enterprise. In its first full year using iSynergy, NetBank has realized more than $4 million in savings and captured and placed online more than 26 million images.
As for iDatix, the software developer will continue to earn revenue from NetBank, as installing iSynergy in each division and linking the operations together is a process that will occur over several years. Furthermore, iDatix has gained valuable insight into the finance and mortgage industry through its relationship with NetBank. This experience is allowing the software developer to attract additional business in the financial market.
"I think the financial industry will be our strongest growth area over the next three years," says Allen. "Automation is of particular interest to the financial sector because that business is all about comparing numbers on paper to numbers in databases. To gain a competitive edge, these companies are looking to squeeze more out of their existing resources by automating processes. Our relationship with NetBank has given us a strong reference customer and a reputation as an expert in the financial domain. Now we actually receive calls from prospective financial clients. That's a nice change of pace from the days when we had to place hundreds of cold calls in order to secure a single appointment."