AIDC VAR Gambles On New Technology
Laser Barcode Solutions' sales grew 30% last year, but the company isn't content. It soon will start selling a technology new to it business: imaging.
Even though he operates an automatic identification and data collection dealership in Las Vegas, Darin Yokoyama is not a gambling man. Yokoyama is the the managing director of Laser Barcode Solutions, an automatic identification and data collection VAR with 10 employees. For the past three years, Laser Barcode Solutions has focused exclusively on selling data collection systems for gaming and warehousing customers in Las Vegas and the surrounding area.
Now, however, Yokoyama is taking a gamble, albeit a calculated one. Within the next six months, Yokoyama and Laser Barcode Solutions will be selling document and image management systems.
Document and image management systems convert paper documents to electronic images. Because these document images are stored electronically, users can quickly and easily retrieve them from their desktop PCs. As a result, users don't have to store documents on microfilm or microfiche or in file cabinets.
Says Yokoyama, "During the last several months, several of our AIDC customers have expressed an interest in imaging systems. And up until now, we've had to turn down their requests.
"However, I want to start fulfilling those needs. I realize the importance of having a total solutions focus. Many customers need both bar coding and imaging. And most customers would rather rely on just one company to provide both systems."
In the following pages, Yokoyama discusses how Laser Barcode Solutions is preparing for its transition into document and image management.
Identifying A Market For Imaging
Most of the inquiries that Yokoyama has received about imaging have come from hotels and casinos in Las Vegas. The city's larger hotels and casinos, such as The Mirage, process millions of paper documents a year. And, Yokoyama is encouraged by the steady growth in the number of large hotels and casinos in Las Vegas.
According to Yokoyama, casinos need to manage paper documents in several different areas:
- Guest rooms – "Some of the larger hotels have several thousand guest rooms," Yokoyama says. As a result, these hotels have to process thousands of documents every day that are generated from payments for rooms.
- Food and beverage departments – With so many guest rooms, a large casino can have as many as 10 restaurants. In addition, Las Vegas hotels frequently host national meetings and conventions, drawing more visitors. Consequently, the food and beverage departments of some hotels process thousands of documents every day.
Gamblers' activities – Gamblers who frequently spend a great deal of money in the casinos receive special privileges, such as free rooms and free meals. As a result, casino managers want to track how much certain gamblers spend. Tracking the activities of gamblers also generates paper documents, Yokoyama says.
Imaging: Bringing Benefits To A Wide Range Of Markets
While casinos need imaging, Yokoyama expects Laser Barcode Solutions to sell this technology to vertical markets other than gaming/entertainment. Before Laser Barcode Solutions begins selling imaging, Yokoyama knows it will be important to gauge the level of interest in other markets.
According to Yokoyama, other vertical markets, such as education, healthcare and military, can benefit from imaging. He adds, "Retrieving paper documents presents problems for end users. Finding a document in a large file cabinet can be time consuming. In addition, the last person who used the document could have misfiled it. Managing and accessing paper documents is a universal problem. That is why Laser Barcode Solutions believes imaging can be applied to many markets."
Overcoming The Hurdles With New Technology
Yokoyama knows it may take Laser Barcode Solutions several months, and possibly up to a year, before it is able to consistently make imaging sales. The company will have to clear several hurdles before it can become established in imaging:
Overcoming resistance to change – Most of Las Vegas' casinos are only starting to look at imaging, according to Yokoyama. Though many of the casinos have management information systems (MIS) departments, these departments traditionally have been slow to adopt new technologies.
"The MIS departments tend to be understaffed, and under-funded in terms of being able to buy technology," he explains. "The casinos' main priority is making money by enticing guests to keep coming back. As a result, evaluating new technologies traditionally has been a low priority."
In addition, Yokoyama says many of the casinos' management information systems' departments are staffed by "older" employees. Consequently, some members of this "old guard" are reluctant to adopt new technologies such as imaging.
"I recently got a call from a casino employee to whom I had sold a bar-coding system. He only needed an inexpensive cable for a personal computer. However, the employee knew that if he tried to go through the MIS department to get the cable, he would have had to wait at least a month. So he called me, and I delivered one to him the next day. That's a perfect example of the attitude that many of the MIS departments have toward technology purchases."
Becoming educated – Yokoyama wants his staff to become thoroughly educated on document and image management. So far, Yokoyama is relying primarily on trade publications and the Internet for information.
"It's easy to find information on the Internet," he says. "It's just a matter of doing a search with key words, like ‘imaging,' or ‘document and image management.' The Internet is obviously an inexpensive way of gathering information."
Yokoyama does not plan to use a consultant or outside firm to train his staff, precisely because of the expense of doing so. "It would cost us several thousand dollars to be trained by a consultant," Yokoyama says. "A larger VAR might be able to afford to do that. As a small company, we don't have that luxury."
- Developing a focus – Yokoyama isn't yet sure whether imaging will account for 50% of Laser Barcode Solutions' revenues, or 10%. "It will be important for us to decide how much emphasis we place on imaging. Eventually, we may focus equally on imaging and bar coding. But I don't want half of our employees working with imaging if it's only going to account for 10% of our overall sales," he concludes.
Integrating hardware and software – Yokoyama expects the competition for imaging sales to be significant. As a result, he knows that it will be important for Laser Barcode Solutions to integrate document imaging hardware, like document scanners, with document imaging software. "The last thing I want is to just sell hardware," he explains. "Those types of companies are a dime a dozen, and they typically don't provide added value. It's important for resellers to offer added value, by customizing software or providing systems integration services. If a reseller doesn't provide added value, what's to stop a customer from buying from the reseller down the street?"
In addition, Yokoyama says VARs and resellers also have to become involved with software - out of necessity. "Hardware margins have fallen dramatically," he adds. "Software development and customization allow resellers to offset falling hardware margins."
Finding vendor partners – Yokoyama will thoroughly research document imaging manufacturers and their products before buying from those manufacturers. "Because there are hundreds of imaging vendors, we don't want to buy from a vendor that won't be around in a year to support its products," he says.
Parlaying Bar Coding Sales Into Imaging Sales
Yokoyama isn't worried about the challenges that come with selling a new technology. However, he recognizes the significance of the transition. "We're familiar with bar coding because we've sold it for several years. And, we know all the bar-coding vendors and their products. That's not true with imaging."
However, Yokoyama wants to become involved in imaging partially because it will help him establish relationships with customers he otherwise would not.
Yokoyama concludes, "Some customers initially will only buy imaging from us. Eventually, many of those customers will need bar coding. If they're satisfied with the imaging system we provided for them, they'll be more likely to rely on us for bar coding. And, our bar-coding customers should be more likely to buy imaging from us, as opposed to a VAR they haven't worked with."