Accumulate Government Sales With Distributed Scanning
By meeting the demand for distributed scanning in military and intelligence organizations, imaging integrator EDAC Systems, Inc. is experiencing a 40% increase in revenue despite a 50% decrease in mid-range to high-end scanner sales.
Even though sales of high-end document scanners are down, imaging integrator EDAC Systems, Inc.'s (Fredericksburg, VA) revenues are up 40% over 2001. September 2002 was a record month for this VAR with 90% of its client base in the government vertical market. In fact, September and October combined were the two largest consecutive months in the history of the company. "In comparing sales from fiscal years 2001 and 2000, we have seen a significant reduction in high-end scanner sales," says Randy Blevins, president and CEO of EDAC. "Our mid-range to high-end scanner sales across all scanner models are down 50%." Blevins can afford to be calm about this trend, though, because EDAC has adapted to its customers' increased demand for distributed scanning, especially in the military and intelligence organizations.
Until about 18 months ago when low-end scanners began to provide the speed and image quality necessary for enterprise applications, many imaging customers chose to send all of their documents to a central location. There the documents were sorted and scanned by personnel trained to use the expensive and complex high-volume scanners. The drawbacks to centralized scanning include longer turnaround times and document security. As functionality once found only in high-end scanners moves into low-end workgroup scanners, end users are realizing the financial and operational advantages of distributed scanning, This allows them to capture documents at the point where they are generated and get them into an accessible content management system immediately.
Decentralized Scanning Suited To Scattered Workforce
Blevins says the structures of both intelligence and military organizations lend themselves to the benefits of distributed scanning. Both have remote locations such as field offices or bases that must report to a central command. "The human resources are in place already," comments Blevins. "It makes sense to arm them with scanners at the point where the documents are collected. This increases efficiency and reduces time and cost." According to Blevins, a typical distributed scanning project would transmit the document images and metadata (data that describes the data) to either a database or records management application. There they can be easily accessed and queried according to security settings set up through the network infrastructure and the software itself. For example, if an intelligence agent is involved in a field investigation, distributed scanning eliminates the 24-hour minimum wait for the evidence to enter the central repository. That means analysis and reporting can begin at least a day sooner.
"Selling to the government isn't much different than selling to any customer. As a VAR, you can't just design a solution to meet the immediate requirement. You have to listen to what their goals and growth plans are and provide solutions with flexibility and expandability. We sold one customer a $100,000 scanning solution to meet a single task, but the solution was elastic enough to grow as needs changed. Once it was discovered that this particular group had document imaging capabilities, they were inundated with projects for related activities. Over the past three years, this opportunity has turned into a million-dollar program." In Blevins' experience, intelligence agencies have been drawn to distributed scanning for collecting field data. Once scanners were in the field, agents identified the HR (human resources) advantages and began scanning and managing personnel documents. Conversely, Blevins has found the military often embarks on an HR initiative which expands to other areas.
When designing distributed scanning solutions, EDAC engineers also have to take into account the personnel at each location. Whether or not field personnel do QC (quality control) and indexing depends on the level of the employee. The military may allow a low-level clerk to perform that function, but an intelligence agency isn't likely to require a skilled agent to spend time on these functions.
Blevins says many of his 2002 installations have distributed responsibility for image quality through a series of hubs. For instance, small intelligence field offices might report to regional authorities, which then report to the Washington, D.C. headquarters. The regional authorities might address image quality and send images on to the national headquarters or maintain them on-site and allow secure access privileges.
Implementing a widespread scanning solution with hundreds of hardware units might sound complicated and expensive, but Blevins reports that it hasn't affected services revenue or made undue demands on his technical staff. "When we recently deployed a project that required more than 600 scanners in the field, we only installed about 20 of the machines and the centralized software application. We sent engineers to two or three sites and trained their people to install and train others. Even though distributed scanning applications require selling larger numbers of scanners in numerous locations, we are spending roughly the same amount of time for installation, training, and support as with a centralized system, so it really hasn't affected revenues." EDAC also realizes the same support revenue for services such as a toll-free number.
Government Buying Season Generates Planned Spending, Found Money
Blevins has found that the sales cycle for his government customers is fairly long. "Typically, if the need has been established, a project manager or lead is charged with the task of finding a solution. Some projects can take as long as 18 months as specifications are written and budgets approved." Though there are generally decision makers above the project leader who must buy into the project manager's recommendation, that project leader is responsible for gathering and presenting the options.
In response to leads from existing contacts and its hardware and software vendors, EDAC often invests months helping prospective customers shape the requirements before a final statement of work is established. "Normally, we provide our up-front services at no charge. It's very rare that we will win a solution bid we didn't know about in advance. When you've done the legwork for 6, 12, or even 18 months, you have a knowledge advantage. Except in the case of box-only bids, price isn't always the differentiating factor. The government also considers best value, support, and knowledge. If one vendor understands the requirements and has provided demonstrations and other services that meet the agency's needs, the project manager can often justify a sole source recommendation to his superiors."
The government's fiscal year ends in September, and budgeted funds often have to be used by the end of the year or the agency will lose them. Sometimes this results in the agency having "found" money. "These organizations are given budgets. As priorities change, sometimes unallocated funds get pooled and reallocated in the fourth quarter of the fiscal year," explains Blevins. "Then existing programs may be expanded or secondary projects may be funded." This makes early fall a pretty hectic time for a VAR serving the government marketplace, as planned and unplanned spending come to a head. Blevins and his staff work 12- to 14-hour days during that month.
The intelligence gathered in these successful distributed scanning applications is likely to be a strategic advantage as EDAC attacks new vertical markets. The integrator recently launched satellite offices in Florida and Maryland to pursue commercial opportunities, where high-profile installations suggest that distributed scanning is gaining ground as well. EDAC's proven ability to respond to market demand for technologies like distributed scanning promises to make it a formidable competitor in that sector as well.