Kofax' Bold CEO Decision

Earlier this month, DICOM Group, the parent company of Kofax, named a new CEO — Reynolds Bish. This announcement sent shockwaves through the document imaging and data capture industry given that Bish was previously the cofounder, president, and CEO of Kofax’ most formidable competitor, Captiva Software. Bish cofounded Captiva in 1989 and served as the company’s president and CEO until 2005 when the capture software vendor was acquired by EMC Corporation. Some surprise and concern has surrounded Bish’s appointment as DICOM’s CEO, not only because of the former rivalry between Kofax and Captiva, but also because of some vastly different sales philosophies that existed between the two companies. For example, when Bish headed up Captiva, the company focused heavily on direct sales. Kofax, on the other hand, has built its business using an indirect sales channel of VARs and systems integrators to push its products. Bish’s appointment as DICOM’s CEO has brought with it questions regarding Kofax’ channel intentions and future longevity in the space. At the same time, this hire brings with it the promise of continued long-term success for Kofax given the proven track record Bish has in the data capture market. I had the chance to speak one-on-one with Bish one week into his new role to discuss his objectives, goals, and ultimate vision for DICOM, it partners, and end users.

Integrated Solutions: What made you decide to pursue the CEO opportunity with DICOM?
Bish: The CEO position at DICOM was an interesting opportunity for me because I know the company and the document imaging and data capture market. I could speculate about some of the issues DICOM was facing, and thought I could add some value by helping the company address some of those issues. Furthermore, over the time I competed with Kofax, I developed a lot of respect for the people here, the products it delivers, and the indirect channel it maintains. I felt the company has a great deal of assets and strengths, but didn’t believe it was getting the kind of shareholder value it deserved. I thought there was a great opportunity to improve communications with the financial community to accelerate revenue growth and improve the overall profitability of the company. We had some success in this regard at Captiva, and I feel we can execute a similar plan to create the kind of share price and stock volume the company deserves.

Integrated Solutions: Did you or DICOM have any aversions to you joining the company?
Bish: I didn’t have any reservations about joining the company, but I’m sure DICOM did. There was a perception among some board members that hiring me as CEO would be like letting the fox in the hen house. There was also quite a bit of concern that, given Captiva’s propensity toward direct selling, I would come in, run over their channel, and convert everything over to a direct sales model. Hopefully, in my first week, I’ve been able to alleviate a lot of these concerns.

Integrated Solutions: What is your stance as far as the channel is concerned at DICOM. Do you have any plans to change it?
Bish: From my point of view, the channel is one of the great assets of DICOM. I don’t want to do anything to jeopardize the value of that asset. To the contrary, I would like to work with the channel in an attempt to maximize our mutual success. It is too early for me to determine what, if any, direct selling may or may not be appropriate here. Even if we do conclude that some direct selling may be beneficial, we’re not going to do it in a way that would jeopardize our channel relationships.

Integrated Solutions: Given your involvement in selling Captiva to EMC, is your appointment as CEO at DICOM an attempt by the board to groom the company to be sold?
Bish: Not at all. To the contrary, the board was very clear in its desire to build long-term shareholder value. The board isn’t interested in just fixing a few things, putting some lipstick on the company, and then selling it. I wouldn’t have been interested in doing that either. Our immediate goal is to take a look at DICOM’s existing strategies, reallocate resources or prioritize different projects where it makes sense, and then layout a new strategy to get us where we need to be over the next three years. There is absolutely no plan to sell the company.

Integrated Solutions: What are some of the primary areas you feel you can immediately offer some value at DICOM?
Bish: Historically, Kofax has focused more on what I would call document capture or scan-and-index applications. These applications offer a relatively low-value proposition, and growth in this segment of the market has declined to mid to low single digits. On the other hand, higher value applications such as forms processing, classification, and data extraction have accelerated in terms of the growth. This growth is largely attributed to the fact that these types of solutions are being implemented more frequently, and customer success stories are beginning to emerge that show the significant ROI these applications can produce. DICOM has already begun to make some significant strides toward focusing more on these higher-value applications. The company has added forms processing capabilities to its portfolio and has brought them to market under the Kofax Ascent platform. The company has also begun to develop some solutions-oriented and vertical-market focused products in this category as opposed to just selling a pure platform. DICOM has also begun to standardize its products on a single brand name to eliminate some of the confusion in the market created by the series of acquisitions (e.g. Neurascript, LCI) DICOM has made over the years. While the company has taken steps in the right direction, a significant amount of my time and energy will be focused on continuing to emphasize and accelerate these types of efforts.

Another area I feel I can immediately begin to offer some value to DICOM is around business management. DICOM grew quickly through company acquisitions and, as a result,  is somewhat disjointed from a structural point of view. DICOM currently operates much like a holding company with a lot of separate little profit centers spread throughout the world. I think we need a little more integration and consistent application of management practices across the enterprise going forward.