Lexmark repositions itself to meet an array of business needs

A preschool room sat ready for students at the Center for Children at Lexmark. The child care center for employees' kids and grandkids offers child-size science equipment such as microscopes.
A preschool room sat ready for students at the Center for Children at Lexmark. The child care center for employees' kids and grandkids offers child-size science equipment such as microscopes. Lexington Herald-Leader

The Lexington Software & Firmware Development center at Lexmark is a quarter of a mile long and houses 400 employees.

It's full of sleek furniture and buffered by white noise so that it's library-quiet, and employees there are divided into tiny groups and work together on highly defined short-term tasks.

The "scrum" process — focused on short bursts of activity, quick turnaround and eliminating obstacles — allows for rapid innovation.

It's emblematic of the new Lexmark — a company poised to evolve rapidly across business challenges and geographic boundaries.

The posh software suite is miles away from the clacking of printers and ink cartridges that used to define Lexmark.

Now, much of Lexmark works within what its online video calls "the wide expanse of the unstructured" in such fields as banking, education, government, health care, insurance, manufacturing, retail and telecommunications.

Lexmark is not exiting the printing business, but the company is working to make sure that it is evolving to meet the challenges that businesses have as they manipulate data in a digital world. Think of it as less a selection of hardware than as a suite of available products and services.

Over the last few years, Lexmark has bought a handful of companies that expand its reach, not just worldwide, but across industries: The strategy shows that profits are not just in hardware, but in being in charge of strategies that drive hardware — being in a business's nuts and bolts, its basic daily systems for organizing its business and keeping track of information. That information might exist in a form that doesn't need the standard print-and-file treatment, said Tim Rowland, vice president and general manager for retail and manufacturing at Lexmark.

For Lexmark, it's a matter of analyzing what a business needs and being able to provide it, quickly and precisely — anything from forms for new employees to aisle display information for retail products.

"We are looking to provide all of these solutions worldwide," Lexmark CEO Paul Rooke said. Whether the documents are in English, German or Chinese, Lexmark hopes to have a system in place to collect them, organize them and glean from them the data that customers need, Rowland said.

"We listened to our customers and evolved the company accordingly," Rooke said.

Analyst Angèle Boyd of IDC said Lexmark's strategy has been cleverly executed.

"It's very smart, and not only smart, but they're delivering on the strategy by continuing to make the acquisitions that they have," she said. "I think the only challenge for them will be integrating the acquisitions, which they seem to be doing very well and quickly."

Lexmark's acquisitions give the company the opportunity to "cross-sell and upsell" its products to the customers of the companies already served by the Lexmark acquisitions, she said.

Leading the pack among the acquisitions is Kansas-based Perceptive Software, which Lexmark acquired in 2010. Perceptive is building a new headquarters in Lenexa, Kan., that will be double the size of its current building and will feature a dodgeball court.

Perceptive Software Division President and CEO Scott Coons said in a recent interview with Document Boss, a technology mergers and acquisitions company, that his company's knowledge of health care gives its clients "the most comprehensive view of unstructured information available from any vendor in the world."

In August, Lexmark announced its $72 million purchase of the German company Saperion AG, a developer and provider of enterprise content management and business process management software with customers including energy company E.ON, Lufthansa, Vodafone, Daimler and Siemens. E.ON's United States subsidiary had operated Kentucky Utilities and Louisville Gas & Electric before selling them in 2010.

In 2012, Lexmark acquired ISYS Search Software, based in Australia; U.S. based-Nolij Corp; and Luxembourg-based Brainware.

In addition to Saperion, so far in 2013 it has purchased Twistage, a San Franciso-based company with a cloud software platform for managing video, audio and image content; Seattle-based AccessVia, which has software that prints on-demand in stores on printers, multifunction products or handheld devices in the aisle or in production facilities; and Acuo Technologies of Minneapolis, a leader in clinical management software and the medical imaging industry.

The business journal Smart Company in 2012 wrote about Lexmark, after it announced it would stop making ink jet printers, noting that other companies were adapting to new market conditions by stepping away from long-established product lines.

The examples cited by Smart Company: IBM, which moved away from personal computers and into software services and other hardware acquisition; Kodak, which ditched film production and moved into digital photography; and Apple, which turned itself around with portable devices such as the iPod.

Rooke, who started with Lexmark as a manufacturing engineer in Texas, is a faith-oriented grandfather who espouses work-life balance. He became head of Lexmark in 2011 after Paul Curlander retired.

"It's an exciting time for Lexmark," he said. "We're building a new Lexmark."

Despite its global reach, Rooke said that Lexmark is firmly entrenched in Lexington. He cites Lexmark's ever-evolving North Lexington campus, most recently the site of a new health care clinic for employees and an elaborately designed child care center for the children and grandchildren of employees.

Although the center provides luxurious child care, it has another focus. The classrooms feature science-themed materials such as kid-size microscopes, a science, math and technology lab for tots who might work at Lexmark in a few decades' time.

"Lexington is one of our largest sites, and I expect it to remain one of our largest sites," Rooke said.

Boyd, the analyst, praises Lexmark for its bold steps into areas where other printer companies have not ventured.

Lexmark realized that it needed to control workflow, Boyd said, "to complete an end-to-end business process."

Lexmark around the World

170: Products sold in more than 170 countries.

70: Sales offices in more than countries.

3: Manufacturing control centers on three continents.

2,300: Employees in Lexington.