Lexmark Buys Data Capture Specialist Brainware In Latest Software Move

Under the terms of the $148 million all-cash acquisition, announced Monday, the Brainware business is now part of Perceptive Software, a stand-alone business formed by Lexmark following its acquisition of Perceptive in May 2010. Carl Mergele, Brainware's CEO, reports to Scott Coons, Perceptive Software president and CEO and a Lexmark vice president.

Brainware's key product is a data capture platform, Brainware Distiller, which can extract data from paper and electronic documents, validate that data and then pass that data or specific pieces of it into data management systems, financial management systems or ERP systems. In a statement, Lexmark said Brainware's platform closely aligns to the content management and business process capabilities it offers through Perceptive already.

[Related: Lexmark's Transformation Focused On Software and Services ]

"Brainware's sophisticated technology brings a powerful set of capabilities that further round out our process and content management offerings, and are especially appealing to large enterprises," Coons said in a statement. "Many of our customers use our technology to manage very high volumes of content. Brainware's proven accuracy rate in these environments gives our customers an even greater ability to drive cost out of their business and realize an enhanced return on investment from their core business applications."

Brainware was previously a strategic partner of Perceptive's -- its software powers Perceptive's IntelliCapture data capture offering.

Lexmark has staked a lot of its growth on Perceptive and several other acquisitions made since then, both for how those acquisitions broaden its appeal as a document management vendor and open it up to software-focused channel partners that didn't sell printers or copiers.

"There are great traditional resellers that have never been a part of the strategy to represent us," Coons told CRN in a November 2011 interview. "Well, we're changing our strategy and we're excited about it. Our goal is to stay in touch with Lexmark partners so that as they're ready to do more with software, we're there and we become the partner of choice."

Paul Rooke, who became Lexmark's CEO in 2010 and who has been with the company since its formation in 1991, told CRN last fall that it's imperative for Lexmark to build a software channel as a way to stay both strategic and nimble against larger competitors like Xerox and HP.

"Unlike Xerox and HP and others in the hardware business, we own our technologies, as opposed to source our technologies," Rooke said. "We can control things within the hardware in terms of instrumenting it or making it more intelligent, which gives us a big advantage. We do see them moving into more outsourcing and services, not necessarily business process technology."

Rooke and his team are working to maintain stability at Lexmark as a tough economic client roils printer vendors. Lexmark's full-year GAAP revenue, reported on Jan. 31, 2012, was $4.12 billion, compared to about $4.28 billion in 2010, and including about $5 million worth of acquisition-related adjustments. Hardware revenue, $989 million, declined 7 percent year-over-year while supplies revenue of $2.91 billion was flat, with software contributing $272 million, up 22 percent.