Lexmark 2014 Annual Report Download - page 16

Perceptive Capture and Perceptive Search, which provide the aforementioned intelligent data capture and search capabilities, enable
businesses to dramatically improve the efficiency of processes in accounts payable, accounts receivable, order management and
benefits processing, as well as transcript processing in higher education, by extracting needed data automatically from business
documents received as paper or electronically in a variety of forms such as PDFs and TIFs. Perceptive Capture’s very high rate of
data extraction is achieved through the use of patented search and machine learning technologies that allow its extraction rate to
improve with time. This extracted data is matched against master data from existing customer systems to intelligently integrate with
ERPs or other systems and speed the business process. Perceptive Search provides business users the ability to search virtually any
repository in their IT environment, to identify needed documents or information stored within those documents. This includes the
creation of entities and relationships that uncover patterns related to the desired information.
• Marketing and Distribution — Perceptive Software
Perceptive Software uses a direct to market sales and demand generation approach, employing internal sales and marketing teams that
are segmented by industry sector — specifically healthcare, public sector (which includes higher education and government), and
commercial, which spans areas such as retail, banking, insurance and manufacturing. With its headquarters in Lenexa, Kansas,
Perceptive Software also has primary business offices in Denver, Colorado; Ashburn, Virginia; Bloomington, Minnesota; Pleasanton,
California; Berlin, Germany and Helsingborg, Sweden, as well as employees co-located within ISS offices around the world.
Perceptive Software also offers a channel partner program that allows authorized third-party resellers to market and sell Perceptive
Software products and solutions to a distributed market, as well as an OEM program which includes Perceptive Software’s offerings
within channel partners’ existing solutions to their customers.
Perceptive Software offers to license its software products and solutions in a variety of ways. The traditional method is to offer
licenses perpetually, with customers paying up front for the software/solution and then paying for on-going maintenance and support
services, generally on an annual basis. This traditional model can be hosted by the customer or Perceptive Software.
Perceptive Software also offers its software and solutions under a Software as a Service (“SaaS”) model where customers pay on a
subscription basis. Such payments can be made quarterly or annually. Under the SaaS business model, Perceptive Software generally
manages and operates the system and associated infrastructure in its secure data centers, allowing the customer to maintain focus on
their business and customers. The SaaS option offers the benefit of lower initial cost to the customer and enables them to take
advantage of newly available features quickly and easily. Finally, customers may also subscribe to Perceptive Software product and
solution licenses on a recurring basis (quarterly or annually) with customers managing and operating the system and associated
infrastructure on the customer’s premises.
• Competition — Perceptive Software
Perceptive Software is a leading developer of content and process management products and solutions, including intelligent capture,
ECM, BPM, DOM and enterprise search. Perceptive Software takes an end-to-end approach to content and process management
solutions. With its Content in Context™ methodology, Perceptive Software offers the flexibility and scalability to automate virtually
any business process and manage the entire lifecycle of any content elevating the value of an organization’s transactional content.
Perceptive Software’s principal method of competition is to provide specific industry/sector and back office process solutions,
combining its software platform and products that have the ability to be quickly and easily configured and integrated with a large
number of business applications. The market for Perceptive Software’s products is highly competitive, and the Company’s
management expects competition will continue to intensify as the capture, ECM and BPM markets mature. Perceptive Software
competes with a large number of ECM providers, including document management and web content management businesses, as well
as companies that focus on document imaging, workflow and capture. Competitors in the ECM market space include larger
competitors such as EMC’s Documentum, OpenText, and IBM’s FileNet, as well as various smaller competitors, such as Hyland.
Perceptive Software competes with a number of BPM competitors including Appian, IBM, OpenText and Pegasystems. Competitors
in the capture market space include many of the traditional ECM providers listed above as well as smaller competitors such as Kofax.
Competitors in the Search space include Google Search Appliance, HP Autonomy and Coveo.
• Backlog — Perceptive Software
At December 31, 2014, Perceptive Software had a backlog of software license, maintenance, and professional services agreements
with customers in the normal course of its business, most of which is expected to be recognized as revenue in 2015, though the terms
of many SaaS deals extend for multiple years. The dollar amount of Perceptive Software backlog is not material to an understanding
of the Company’s overall business.
Research and Development
Lexmark’s research and development efforts focus on technologies associated with laser printing, fleet management, connectivity,
document management, ECM/BPM/DOM software, intelligent data capture, enterprise search, healthcare VNA and other customer
facing solutions. Lexmark also develops related applications and tools that enable the Company to efficiently provide a broad range of
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