FileNet Signs $4.1-Million Contract, Its Largest Ever, With State Office

FileNet Corp. of Costa Mesa announced Tuesday that it has signed a $4.1-million contract with the state of California to provide a document-retrieval system capable of storing 5.5-million pages of credit records on optical disks.

The contract with the secretary of state’s office in Sacramento is the largest ever received by FileNet.

The FileNet system will reduce from 20 to two days the time it takes the agency to check the credit status of businesses and individuals who apply to banks for loans or mortgages, according to Anthony Miller, chief deputy secretary of state.

The secretary of state’s existing system, developed in 1965, relies on a computerized list of debtors and millions of pages of paper documents stored in file cabinets.

Under the existing system, a government worker checks the computerized list and then retrieves the required files from rows of floor-to-ceiling file cabinets containing 5.5 million documents. The documents are photocopied and sent to the inquiring bank or savings and loan.

“It’s the ultimate paper chase,” Miller said. “It’s an antiquated process that was never designed to cope with the volume we are dealing with now.”

The FileNet system will allow a state worker to sit at a computer terminal and electronically retrieve and display the document on one portion of an oversized video screen, all within 15 seconds. The rest of the screen can be used for other functions, such as writing a letter to the inquiring institution informing it of the prospective borrower’s credit status.

“It is fantastic,” said Albert Ho, president of United National Bank in Monterey Park, which specializes in foreign trade finance. “It will allow us to make credit decisions much faster. Two or three weeks is much too long for the customer to wait.”

The contract is the company’s first with the state, although it has installed similar systems for the states of New York and New Jersey.

“We hope this system will be a role model for other systems within the state government where we feel there are tremendous opportunities for this sort of technology,” said FileNet Chief Executive Ted Smith.

Smith founded FileNet in 1982 with $4 million in venture capital to develop and market the computerized filing system. FileNet made its first sale in 1984 to Security Pacific, which uses the retrieval system in its international funds-transfer department.

The FileNet system sells for up to $2 million. The company has sold and installed 135 systems, primarily to financial institutions and government offices. But it is also finding other markets. For instance, two London newspapers use the system to store and retrieve back issues.

In Orange County, the Anaheim Police Department has purchased a FileNet system to keep track of crime records, and the county tax collector’s office also has installed the system.

FileNet reads information from paper documents and digitally encodes it on 12-inch optical disks. Each disk can store images of 50,000 pages of records. Up to 204 disks are stored in a jukebox-like device that uses a robotic arm to pick up and insert the disks into a scanner unit. Eight of the devices can be combined into one system for a maximum storage of 85 million pages.

Installation of the system for the secretary of state’s office will be completed by July, 1989, Miller said. The system will store the agency’s 5.5 million existing documents and expand to include new documents, which arrive at a rate of 3,400 a day.

Although FileNet was the first to develop the technology, several other companies, including Kodak and Wang, have entered the optical-scanning and document-retrieval market in the past year, according to Smith.

For the first quarter of 1988, the company earned $1.4 million on revenues of $15.5 million. That compares to earnings of $651,000 on revenues of $9.2 million during the same period in 1987.

FileNet stock closed Tuesday at $14.50 a share, up 75 cents on the day.