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Putting the Share in ShareScan: eCopy's Ed Schmid, Discusses his Company's Big Move (PART I)

31 May, 2005 By: Aaron Shea imageSource

Putting the Share in ShareScan: eCopy's Ed Schmid, Discusses his Company's Big Move (PART I)

eCopy has come a long way since
Ed Schmid launched the company in 1992 from his condominium in Nashua, New
Hampshire. Behind a combination of patience and a belief in his idea, Schmid has
taken eCopy from the bottom floor to the penthouse.

In April, the president and CEO made the biggest announcement in his company’s
13-year history when he revealed in Miami that the company would make its
ShareScan OP software— which is a document imaging and distribution software
that integrates hard copy documents directly into the workflow of critical
business processes—available to manufacturers not named Canon. For several years
eCopy has had a profitable relationship with Canon, which helped it grow to $40
million a year in revenues. It was a relationship that got so close Canon
invested $15.8 million in eCopy in 2002.

“We continue to have a great relationship with Canon, but we started having more
and more dialogue with our software partners and it became clear to us that in
order for them to partner with eCopy they really needed a product that worked on
any copier platform,” Schmid explained. “As a senior executive at one of the
companies explained to me, ‘I think you guys have a great product. It really
solves the needs of customers looking to get paper information into our
applications, but I just can’t work with a company where I have to tell my
salespeople that they have to ask what type of hardware a customer has.’”

Manufacturers including HP, Ricoh, Sharp, and Toshiba have already showed their
support for eCopy by joining the company’s partner program.

Schmid discussed his company’s big announcement, its products and the dealer
channel with imageSource.

imageSource: Back in 1992, your product did not seem necessary for the
workplace. What did you see that others did not?

Ed Schmid: I worked at offices for a number of years and worked at
companies that implemented email early on. I was always surprised, based on the
computer technology, how much paper continued to exist in everybody’s office. I
thought computers weren’t doing much of a job of helping people process their
paperwork. I thought people ought to be able to use computer networks to scan
and email documents—a much more efficient way to distribute hard copy

We had a simple idea of how we could build products that helped people get paper
off their desks and into their computers. Unfortunately, we were a little bit
ahead of our time. What we ran into was there really wasn’t an installed base of
hardware devices out there that we could add our software to. Scanners were
pretty unusual devices to be found in an office. So our business started out
really slow.

IS: How have your products evolved from the beginning to now?

ES: Basically, our initial product was a very simple scan and mail
product that allowed you to scan from a scanner and send it through various
email applications like Microsoft mail, which were local area network-type mail
systems. We found that the acceptance of the product was fairly limited.
Fortunately, in the mid-90s the Internet came along and people were actually
able to mail between companies where originally they were only able to mail
within their own organizations. That was a big change that helped drive our

We still do the basic scan-to-mail and scan-to-file, but I think we do it
differently than other companies in the industry. I think we do it better. I
think the biggest thing we have added to our product is what we call connectors.
These are pieces of software that run on top of our basic core product that
allow an individual to scan directly into a back end network application like an
enterprise content management system—something like Documentum or Interwoven’s
Worksite product. So the ability to interact directly from the copier to those
applications is really a unique feature of our product.

IS: Is your product open architecture to where any document management
product can interface with it?

ES: We introduced at the Paper Connection Forum our version 3.0 product
of ShareScan OP. It comes with a software developer kit. With that a developer
can develop a connector to their application that would run with any eCopy
environment. It’s totally open. We don’t have any qualification criteria.
Anybody can submit an application.

IS: Is a PC required at each MFP that is using eCopy?

ES: We have two implementations of our ShareScan OP product. One runs on
a ScanStation that is next to each MFP. The other version runs embedded inside
the MFP. The manufacturers can provide an environment that support embedded
solutions like Canon does with its MEAP (Multifunctional Embedded Application
Platform) architecture. ShareScan OP doesn’t require a PC next to the copier.
That seems to be a trend in the industry. Other manufacturers are planning to
introduce embedded application environments. Both Ricoh and Sharp have publicly
announced that they are going to be offering those types of environments.

IS: As far as scan-to-email and scan-to-file, what does eCopy offer that a
MFP doesn’t?

ES: First off, on the scan-to-email, one thing we offer is native
integration. Native integration means that we are actually using the programming
interfaces provided by the mail system directly as opposed to using a generic
connection. The simplest way I can describe that is we work at the copier
exactly the way it works at your desktop. If I walk up to the copier and I send
mail from a copier, the copier mailed message ends up in my sent folder at my
PC. Because we have native integration, it works just like it would at your
desktop. We’re unique in the industry there.

We have a capability called Quick Connect, which actually allows you to set up
simple workflows using scan-to-file. You can set up forms that will actually
capture data associated with that file. That file can be sent to multiple
destinations at one time. So it can be sent to different folders. With our
latest release, you can actually email that document at the same time so you can
send-to-file and email in one operation. We offer much more robust tools for
scan-to-file than just taking and scanning a document and placing it in a file

IS: When was the turning point in the industry that made you realize this
software would be necessary and used in offices?

ES: There were two major turning points. The first turning point was
around 1995-1996 when copiers started to become digital. What eCopy began to
realize, and what I think nobody else in the industry really realized at that
point, was that a digital copier is really just a scanner with a laser printer
on the bottom of it. Our view was now that copiers are becoming digital every
office is going to have a scanner—they just don’t know it yet. This is where we
focused our business in the mid-90s once we saw this trend towards digital MFPs.

Secondly, we originally introduced our product that ran on a PC that sat next to
the copier. We found that the average copier dealer didn’t act like a VAR like
we were used to in the computer business. They were organizations that were very
good at selling a box. So in 1999 we introduced a product called the ScanStation.
It was a PC with an integrated touch panel and all of the software was preloaded
on the PC, including the drivers for talking to the copier. At that point, our
business started to grow rapidly. The company grew relatively slowly for the
first seven years, but in 1999 our business grew 600 percent and it has been
growing at 40-50 percent since then.

IS: When did you get into the partnership with Canon, and what did it mean
for the growth of your company?

ES: Back in the mid-90s we were talking to all of the digital copier
companies. Canon, to its credit, was the one company that recognized that
software was necessary to drive the usage of its device. They were proponents of
partnering with software vendors to try and drive usage of their scanning
functionality and their hardware. We signed our first deal with Canon in 1996.
It has been a very successful partnership on both sides. We felt that we helped
Canon dedifferentiate themselves in the marketplace.

IS: You recently announced that you are opening up ShareScan OP to other
manufacturers, just because you have made the product available doesn’t mean
they are necessarily going to distribute it, is that correct?

ES: We had a number of companies announce support for the eCopy Ready
program. The program basically signifies that our software is compatible with
their hardware. We had Ricoh, Toshiba, Sharp, and HP say they would support the
program. We’re in negotiations with many of them to distribute our product as
well. I think Toshiba has indicated that they plan to distribute the eCopy
product and Sharp and Ricoh are looking at it. If they make the decision not to
distribute the product, we will be dealing directly with their dealers.

IS: Where is it in their best interest to promote a third party application
that actually reduces page output?

ES: First of all, these devices are multifunction devices, so the
manufacturers are promoting that they do multiple things and they need to
provide software capabilities that makes the scanning component have value.
Scanning is becoming something that the customer is more and more interested in.
We got some feedback from one of our large dealers that indicates when they
install our product the page volumes go up. People scan documents, they save
them to some back end storage system and then when they need another copy they
print it. Then they throw away the print out and then when they need it, they
print it again because it is so easy.

If you keep it as paper, it’s hard to keep track of. But if you keep it in the
system, it’s easy to get a hold of. Statistics show that usage of office paper
has doubled in the last decade. When I first got involved with office automation
in the early 1980s people were talking about the paperless office and you know
that is never going to happen. What we talk about is making the processing of
paper more efficient—not getting rid of paper.

IS: Who do you look at as
your main competition?

ES: Our main competition is really the manufacturers’ products. They
offer scan-to-mail and scan-to-file. It’s really an issue of educating the end
customer. At this point, the end customer is not that knowledgeable of what
their needs are. Often times the copier dealer channel will just go in with an
easy solution and they’ll be selling on price not on understanding the needs of
the customer. We find that for us, the battle is how do we train the channel so
they are more effective at selling in more of a solutions style. So that’s our
biggest challenge.

IS: Why don’t you sell directly to the dealer?

ES: I think having the manufacturer distribute the product gives us a
high level of credibility with their dealers and it gets a lot quicker buy in
from the dealers. If you look at the start up costs of getting out there on the
streets, it’s better to get the support of the primary manufacturer than it is
to go around to dealers on your own trying to sell. I’d rather give up some

IS: Software solutions are becoming important for dealers to sell, why is

ES: The business is really changing. The basic copier is becoming
commoditized. It becomes more of a price battle and they need to be able to
start to move more heavily into the services business such as selling software
and being able to do consulting. Stuff like that. I lived through the transition
in the computer business where a value added reseller was originally selling PCs
as part of their whole installation. Over time, the PC became so commoditized
they didn’t want to touch the PC. They just wanted to provide the services
around installing the network and configuring the network.

I think you are starting to see some of those trends take over in the copier
business where the copier dealer doesn’t enjoy very large margins on the
hardware. I think those margins are going to start to erode as the market
matures. They need to drive their service revenues and offer more of a solutions
sale to their end customers to have more value than just a piece of hardware.

IS: What are your plans for the future as far as expansion, products?

ES: We have a huge amount to do to execute everything we just announced.
We will be expanding internationally. We do about 85 percent of our business in
the U.S. I have a personal goal of going worldwide and lowering our U.S.
business into the 40-50 percent range. We should be doing more business overseas
than in the U.S. Lastly, we have 30 connector partners today. In a year or two I
want to have hundreds of connector partners because there are thousands of
software applications in the marketplace. The company that is going to succeed
is the company that is going to be able to offer the most connectivity, either
directly or through third party partners. That’s a tall order right there.


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