Wang helps Kodak to get in focus

The acquisition by Eastman Kodak of Wang's software business is, on one level, another step towards chief executive George Fisher's aim to create a clear focus for the organisation he was lured from Motorola to sort out. But the $260m (pounds 160m) deal announced last month has implications far beyond the two companies themselves.

Kodak has in recent years made great strides in document storage. It has adapted its expertise in photography to create a business imaging systems division that provides equipment covering the whole process, from capturing the document to storing it in various stages of archive form. The link with Wang's software division takes this a stage further because the acquired business specialises in the development of workflow, or the management of documents through an organisation.

Colin Barnes, the UK head of Wang Software, points out that workflow can improve "the whole business process, from end to end". For example, much of the delay in insurance companies' handling of claim forms results from the documents sitting in trays waiting for attention. Workflow can cut out this wasted time by allowing access to the documents to all people who have to add pieces of information. It can also prioritise work so that tasks with the highest value are dealt with first.

Mr Barnes adds that companies can start with document imaging and move to workflow, or the other way round. "But the key is to have them together. That's where the leverage comes."

Colin Carey, Kodak's UK head of business imaging systems, says the technology is chiefly attractive to insurance companies and other financial services operations. But it can also make major improvements to customer service,or to any paper-intensive activities, including government departments and hospitals.

Mr Carey admits that installing the equipment can be expensive - "many thousands of pounds" - but argues that in cost-benefit terms it becomes a lot more attractive. Tightly-managed businesses typically look for a rapid return on investment and this can be achieved, he says.

It is not just the buyer who faces high costs. The technology provider needs deep pockets to keep reinvesting in the software. "Just keeping up with Microsoft is expensive," says Mr Carey.

The combination of Wang's specialisation and Kodak's marketing muscle and revenue strength should create a formidable partnership in a field expected to grow rapidly. Research carried out by Kodak among Europe's top 300 companies shows great interest in the area. Almost 75 per cent of firms surveyed said they already had a document management system. Only five per cent had implemented workflow software on a corporate-wide basis, but more than a third had a workflow system at departmental level.

Looking ahead two years, one quarter of firms said they intended to implement pilot schemes and one third aimed to have a live departmental workflow system in operation. Just over one third said they were working towards installing corporate-wide systems.

Among the areas that companies felt would benefit most from the technology were customer inquiry handling, workgroup activity areas such as strategy evolution and product development, sales and marketing and accounting.

A report by the Giga Information Group last year predicted that Wang would capture over 20 per cent of the world production imaging and workflow market this year, marginally behind the leaders, FileNet and IBM. Meanwhile Kodak is perhaps the dominant player in document management, with 20,000 customers worldwide, 5,000 of them in Europe. The company entered the market through its film expertise, but it has since moved into a variety of other formats so that customers have a choice of microfilm, optical disc, writable CD, or a combination of any of them.

As part of this expansion of its activities, Kodak prepared for its recent acquisition by forging a strategic partnership with Wang Software in 1995. The company stressed that imaging and workflow systems suppliers were interdependent in the process of providing client solutions, and said it saw mutually beneficial links in this continuation of its policy of forming ties with organisations that had leadership in related fields.

Mr Fisher said last month that the acquisition of Wang Software represented "an important strategic fit with Kodak's overall imaging business". He added: "Managing vital documents and business processes, which is central to our imaging systems business, is also important across all Kodak businesses, and we believe this will help our customers more effectively to integrate imaging into their mainstream businesses."