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Open Text to buy Captaris in OCR battle

Open Text to buy Captaris in OCR battle

Waterloo, Ont.-based Open Text Corp.'s planned acquisition of Captaris Inc. is a move to bolster presence in the document and records capture space in light of rival players and a market that is heating up, said one analyst.

The US$131-million acquisition of the Bellevue, Wash.-based vendor of business process automation software will render Open Text optical character recognition (OCR) technology, which according to George Goodall, analyst with London, Ont.-based Info-Tech Research Group Ltd., is the core engine that operates other capture technologies like Captiva and Kofax, for instance.

The OCR engine was acquired early this year by Captaris through the purchase of a division of Germany-based Oce Document Technologies GmbH, and "Open Text has really done an end run around the mall to basically acquire the core engine," said Goodall.

An Open Text spokesperson said the company is not commenting on the planned acquisition until formal approval has been reached. The transaction is expected to close by the end of the calendar year.

Interestingly, Captaris' acquisition of Oce occurred at around the time that rival Oracle Corp. bought Captivation, said Goodall. And, EMC Corp., some years prior, had been early on the capture technology bandwagon with its purchase of Captiva.

Following Thursday's announcement of the intended acquisition, Open Text touted as a motivation the broadening partnership offerings from tighter integration with its invoice management products that work with SAP and Oracle.

But Goodall noted that Open Text failed to mention integration with the Microsoft platform, especially considering one of Captaris' strengths is its workflow offering, a .NET-based technology for which Open Text support "has been a bit weak".

And while Goodall doesn't anticipate much duplication in product functionality, he does see some aspects of Captaris product line, in particular the RightFax line, "that really don't fit well at all" with Open Text's line. "I don't think Open Text is a good home for that kind of appliance-based, fax-based type of thing," he said, "especially when Open Text is really focusing on software and service, that type of hardware play is a little harder to pull off."

According to Vinay Nair, analyst with Toronto-based research firm IDC Canada Ltd., Open Text already has a substantial share of the Canadian market, and acquiring Captaris will only serve to increase its global presence. Existing customers won't be massively affected by the companies' union, he said, "but there will probably be some hesitation as people start to figure out exactly what does it mean from a roadmap perspective."

Goodall said that although the capture market is hot right now, the major players in this space have been spoken for and the next iteration will be improving or replacing document delivery, as in the electronic presentation of traditional paper-based documents. Things should get interesting when the market comes to that, he added, because the space is home to myriad small niche players, fragmentation, and a diversification of business strategies.


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