Datacap Gathers Contract Wins, Alliances

Datacap Gathers Contract Wins, Alliances

By Nick Wakeman
Staff Writer

With a growing list of contract wins and relationships with heavy hitters in the systems integration field, Datacap Inc., a developer of data capture and recognition software, is on track to double its revenues in the coming year.

In 1997, the Tarrytown, N.Y.-based company has been on the winning teams of federal, state, local and international contracts from government agencies looking for better ways to handle documents, said Scott Blau, Datacap's president and chief executive.

Work with primes including Electronic Data Systems and Unisys on contracts from the U.S. Department of Veterans Affairs, the Canadian government, and the state of Massachusetts, will help boost revenues from $5 million in 1996 to $10 million by the end of 1998, he said.


Tarrytown, N.Y.

Founded: 1988

CEO: Scott Blau

1996 Revenues: $5 million

Employees: 50

The cornerstone of the company's growth has been its data capture and recognition software that allows users to manipulate data from a variety of sources, Blau said.

Customers with large amounts of incoming paper documents and vast document archives want better ways to manage their documents and provide online access to the information, Blau said. "We are responding to developments in the marketplace," he said.

Datacap's products provide an interface that allows customers to capture data, index it and feed it into databases. "Now you can have the data as well as the [scanned document] image," he said.

Working with Unisys Corp., Blue Bell, Pa., Datacap helped develop a tax processing system for the Massachusetts Department of Revenue. Work on the $10 million project began in 1995. In June, the system won a 1997 Computerworld Smithsonian Award for uses of technology that improve society.

"That is a showcase site for us," Blau said.

It has also been a showcase for Unisys, which is touting the project to other government agencies interested in document imaging and management systems, said Barry Lurie, Unisys' project manager. Unisys had a strong document imaging practice but it was missing the data capture piece, he said.

Datacap photo

"With the market for document imaging and management growing, Datacap's portion of the field is becoming even more competitive.

- Scott Blau, Datacap's president and chief executive

"We were looking for a partner with strong data capture software," he said. Unisys' relationship with Datacap is not exclusive, thus the integrator also works with other small data capture software firms, Lurie said.

"It is a very specialized marketplace," he said.

In November, Unisys won an $8 million contract with Datacap on its team to develop a system for Canada to process corporate wage reporting documents.

Tax agencies in particular are looking for more efficient ways to process paper documents and make better use of the information once it is in an electronic format, Lurie said. Such agencies want to extract data from the forms quickly and scan it into databases as soon as possible, he said.

The pay-off is the ability to close the "tax gap" or the difference between the revenue that tax agencies collect and what is actually due, he said. Better data enables government officials to catch more mistakes and improve audits and other investigations.

Datacap teamed with Electronic Data Systems Corp., Plano, Texas, to build a system that the Department of Veterans Affairs uses to process forms tracking patient visits. Work on that project began in January, and will be used at 172 VA facilities.

In November, the company won a $2.2 million contract to help develop a document processing system able to process 50 different forms and documents for the Social Services Department of Erie County, N.Y. The integrator on the project is A.O.P. Solutions Inc., Buffalo, N.Y.

Datacap has about a 50-50 split between commercial and government work, Blau said. It is a mix he wants to keep, even though the commercial work is growing faster.

While the commercial projects outnumber those on the government side, he said, the latter are worth more in the aggregate.

With the market for document imaging and management growing - Price Waterhouse estimates it jump to more than $2 billion in 2000 from $500 million in 1995 - Datacap's niche is becoming even more competitive, Blau said.

While dominated by smaller companies, larger firms such as Eastman Software, Rochester, N.Y., also are looking at data capture software, he said.

"A big part of [Blau's] challenge will be to keep on the cutting edge of the technology," Lurie said.

Christina Burch, an analyst with the Yankee Group, Boston, said companies like Datacap must focus on how their technology fits into overall solutions to remain competitive.

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