Nov 95 Level of Government: State, local Function: Imaging Problem/situation: Recent mergers and acquisitions have consolidated the imaging industry. Solution: As a result, some leading imaging vendors with a strong presence in the government market have grown stronger and have expanded their product lines. Vendors: Wang, FileNet, Sigma, Watermark, Unisys, BancTec, Recognition International, BIS Strategic Decisions, Bruce Silver Associates, Microsoft, UNIX, Kodak, Novell, Apple, Unisys, Wheb Systems Inc.

By Tod Newcombe Contributing Editor In July, the number of vendors in the imaging market abruptly shrunk as Wang Laboratories Inc. announced plans to purchase Sigma Imaging Systems Inc., and FileNet Corp. signed a deal to acquire Watermark Software Inc. In a related move, banking systems vendor BancTec announced in June the acquisition of document management and OCR vendor Recognition International. The shakeout heralds a long-anticipated consolidation of the imaging market. "These moves were inevitable," said Connie Moore, director of workflow, document and imaging strategies at BIS Strategic Decisions, a market research firm. "The imaging and workflow market has a lot of players. The market is now growing, so it consolidates." Bruce Silver, principal consultant for Bruce Silver Associates, agreed. "There's a sense that imaging could be a profitable business if there weren't so many people chasing after it," he said. The $20 million purchase of Sigma gives Wang workflow and imaging software for Windows NT, Microsoft's network-based operating system. Similarly, FileNet's $60 million acquisition of Watermark gives the Costa Mesa, Calif.-based firm workflow and imaging software products that run on Windows NT. For Wang, the move signals a shift away from UNIX as its open systems platform for imaging systems. "It looks like their strategic platform is moving toward NT from UNIX," said Silver. He added that FileNet appears to be staying with UNIX as its strategic platform, but has purchased Watermark to expand into the middle and lower-tier markets for imaging. Watermark's Enterprise Edition Windows NT software costs between $250 and $500 per seat. In both cases, the actions by Wang and FileNet appear to result, in part, from the deal struck last April when Microsoft Corp., agreed to put Wang's image viewer in both Windows 95 - the global operating system for PCs - and Windows NT. The deal not only opened up imaging as a software tool for everybody's desktop, it also expanded the number of open system platforms for imaging. "UNIX has been the dominant platform in imaging ever since the industry began to shift away from proprietary to open systems," said Moore. But since Microsoft struck its deal with Wang in the Spring, NT has taken on much greater importance as an operating platform for imaging. However, Moore said that despite all the attention these deals have garnered, Novell's NetWare operating system is still considered a viable platform for imaging. She pointed out that FileNet and Novell have put together a joint distribution and product strategy and that Wang has a deal to use Kodak's Novell-based imaging products. The bottom line is that both FileNet and Wang are moving aggressively to expand the number of platforms on which their imaging products will run. Their goal, according to Moore, is true interoperability of imaging on all platforms, from UNIX and NT to NetWare, OS/2 and even Macintosh. Once that happens, then market share starts to grow.

The Good and the Bad For government agencies, the recent acquisitions present some opportunities and concerns. According to Moore, Wang and FileNet are both very active in the state and local government market. (Unisys, another active imaging vendor in the government sector, has also become allied with Wang because the acquisition of Sigma included a marketing deal with Unisys). By expanding the number of products and platforms they provide and support, Wang and FileNet could make it easier and more cost-effective for agencies and departments to adopt and use imaging. Imaging technology has been singled out as an effective tool in