It’s a difficult time for IT decision-makers buying or upgrading content management systems. On the one hand, the world’s largest software companies – including IBM, EMC, Microsoft and Oracle – now control the lion’s share of a market previously governed by hundreds of relatively small, independent players. Their offer of content management as part of a wider suite of software has forced the smaller vendors to rethink their value propositions – around niches such as vertical markets or specific technology areas. But the upshot in both cases is that not all of today’s products are going to survive.
The good news for the smaller vendors is that the consolidation underscores the fact that content management is now widely recognised as a central part of any client-facing organisation. A survey of CIOs by Rethink Research in 2003 found that while content management systems were seen as important and complex, they were not deemed mission critical. But the thinking has moved on.
A recent survey by AIIM Europe, showed that almost 30% of UK organisations are now deploying and implementing enterprise-wide content (document and records) management capabilities, almost twice as much as in the organisation’s 2005 survey – moreover almost half of the respondents plan to spend more on such technologies in 2007.
That epiphany is coming about because users can’t readily get hold of the information and documents they need to do their job – and that is hampering the running of day to day business. Research from IT advisory house Butler Group estimates that the average information worker spends a quarter of their day searching for the relevant information to carry out given tasks.
Adding to the impetus is the proliferation of unstructured data. Open source enterprise content management (ECM) vendor Nuxeo, estimates that 80% of the information held within a typical organisation today is unstructured data, and that figure is only set to increase with the continued growth of email, VoIP and instant messaging, as well as the explosion in the use of Web 2.0 technologies such as blogs and wikis.
That is turning the ECM market into an overwhelming and confusing place for those buying technologies to support such business activity.
What remains after three years of rapid consolidation is a largely divided market, with the software giants such as IBM/FileNet, Oracle/Stellent and EMC/Documentum on one side of the equation, and on the other, the smaller independent ‘pure-play’ ECM vendors such as Vignette and Interwoven, and alongside them suppliers like Mediasurface, Tower Software, FatWire, Trillium and Xythos, with a narrower technology target.
Innovate or die
Increasingly, smaller niche players often have their sights set on a particular industry vertical, a technology area of ECM or, in some cases, a geographical region. Mike Davis, an analyst at consultancy firm Ovum, says that these companies still have a strong role to play, especially for those tackling the requirements of vertical industries. “I think there is quite a lot of space for verticalised content management players. What they have done is taken basically generic technology and added a level of domain expertise to it.”
That is acknowledged by Robin Daniels, senior product marketing manager, EMEA at web content management specialist Vignette. He suggests that it is very difficult for vendors to operate across all sectors; most independents remaining particularly strong in two or three. “The sectors that we are really heavily focused on in the UK are telco/media, financial sector and the public sector,” he says. In that way, it can offer the most apt technology to targeted customers. “These [larger] vendors are in danger of becoming “the jack of all trades, [and] the master of none,” he says.
Erik Hansen, senior vice president and general manager EMEA at Interwoven, agrees that it certainly becomes an incentive for customers if they can see other companies in their sector successfully deploying and implementing a specific ECM technology – and that can be at any level of the sector. Interwoven is currently seeing considerable success among high end customers players in the electricals sector – with new signings including Philips, Schneider and ENI.
“A major proportion of these large conglomerates have now understood that this game can only be played with a serious enterprise platform behind it. If you are a major organisation like Schneider or ENI you want to make sure you get engaged with [a vendor] who really has proven that they can do this kind of large-scale deployment,” says Hansen.
But he argues that the ability to handle scale has little to do with the actual size of the provider. Indeed, the large, all-round players may be at a disadvantage because of the instability and generic problems regarding integration of their new technologies with the rest of the portfolio following a major acquisition, he says: “I think all of the stuff with consolidation that has so far happened has proven that it gives the power to those who are stable.”
That notion that bigger doesn’t necessarily mean better is widely held. “Sometimes they end up losing touch with what the customer actually wants because they try to offer way too much [and] the content management just ends up being part of a much larger stack of software,” contends Vignette’s Daniels.
At the same time, it is possible to argue that the larger players are not able to innovate as quickly as the smaller more niche vendors. With extensive product roadmaps and integration considerations, larger players are not renowned for their fast-paced innovation. “Mid-sized organisations such as ourselves, innovate faster because that is how we survive. If we don’t innovate, we die,” says Daniels.
But do these smaller players really have the resources to become a significant force within the market? Bhavesh Vaghela, marketing director, content management, EMEA at Oracle (which assumed ownership of Stellent in December 2006 ), thinks that more specialist companies are going to find it difficult to compete in the rapidly reshaping competitive landscape, as customers demand richer functionality and higher levels of integration.
“It’s very difficult [for them] to start thinking of a broader view of enterprise content management which is where the customer demand is going; and [they] won’t be able to cover the full spectrum,” says Vaghela. His colleague, Andrew Gilboy, director of business development, content management, EMEA at Oracle concurs: “Oracle has 275,000 customers, 19,000 partners and $15 billion revenue so we’ve got a huge resource behind us. And they can’t get that.”
Of equal, or if not greater importance, when considering the scope of an ECM vendor is the infrastructure consideration – buying from a larger vendor will increase the users’ ability to standardise across multiple platforms. And according to research conducted by IT services house Accenture, standardising the IT infrastructure is a top priority for IT leaders in 2007. “You wouldn’t buy 30 different versions of ERP, you wouldn’t buy 30 different CRM systems; you standardise on one,” argues Gilboy.
Also on the checklist of priorities when it comes to IT budget allocation in 2007 is to expand the use of open source software within their organisation, according to research by market watcher Forrester. This is good news for companies like Nuxeo, an open source ECM provider which has recently launched in the UK.
“Our main advantage when compared with the proprietary vendors is that we don’t have licence fees; so our product is much cheaper than the proprietary ones,” says Arnaud Lefèvre, VP sales and marketing at Nuxeo. As with other open source vendors, Nuxeo makes it money by charging a subscriptions for support and technical assistance, plus fees for integration services. “On some projects people don’t want to go with open source [ECM] because they think it is risky, so we provide the integration service,” says Lefèvre.
Not surprisingly, commerce ECM vendor play down the threat of open source. For Hansen of Interwoven, cost is relative. “Value is always the issue. And as value goes up, cost is redefined.”
A lot of that value often comes through when organisations are pursuing the customer-facing aspects of web content management. Organisation operating on the web need to be able to provide their customers with relevant, personalised, hyper-targeted content, in order to drive business. “Customers are now relying heavily on the online experience. And you had better get your act together if you want to win,” says Hansen.
Vignette’s portal offering aims to do just this. Sitting on top of the web content management system it dictates how information gets delivered, and creates a deep level of personalisation. “The business driver for choosing a personalisation solution is because it leads to more sales,” says Daniels.
An added dynamic to that has been the proliferation of Web 2.0 technologies, such as blogs, wikis and RSS feeds, which are following their success in the consumer world with the penetration of the enterprise. This may be where the smaller niche players come into their own as hotbeds of innovation. Certainly, Vignette’s Daniels seems to think so: “It’s sexy for customers because they come to us [for] the technologies that enable them to deliver a next-generation experience for their customers.”
It is important not to see Web 2.0 as a quick fix, he says. “Web 2.0 is a long-term strategy which companies are going to have to embrace if they are to be successful.” His vision of this new collaborative era of technology is to use it to create a dialogue between the company and the end user or customer with the end goal of targeting products or services more successfully. “By listening to your users you can actually create much better products, rather than having this notion of creating products in a vacuum,” he says.
At Ovum, senior analyst Mike Davis, isn’t wholly convinced of the validity of so-called Web 2.0 technologies among large businesses. “If you think about what the drivers are for ECM in larger enterprises, they are things like compliance. What you don’t want is people self-publishing into a content management system without checks and balances. Once that information is in the system it is there forever,” he argues.
"Customers are now relying heavily on the online experience. You had better get your act together if you want to win."
It is still unclear whether the smaller players have a lucrative future or will end up being consolidated into the larger vendors. But, even as that plays out, further ECM models are appearing on the scene.
In April, customer relationship management (CRM) software-as-a-service company Salesforce.com threw a wildcard into the equation with its acquisition of web content management start-up Koral.
While taking the software as a service (SaaS) model and applying it to ECM technologies is an interesting development, it remains to be seen whether it will have substantive impact on the ECM market. Analysts, such as Davis, agree that if nothing else, it will foster interest in the SaaS model. “One of the things Salesforce.com has done is taken away some of that fear that organisations had about putting the corporate tools on someone else’s server, outside of their control. But Salesforce has proved that it can be safe, it can be controlled, it can be secure,” he reasons.
But one vendor that is certain to make waves in the content market is Microsoft, even though the release of Microsoft Office SharePoint Server (MOSS) 2007 at the end of last year drew mixed reviews. Analysts at sector-watcher CMS reported that the product’s “new capabilities” were still balanced by its “old limitations”.
Nevertheless, Interwoven’s Hansen concedes that companies are indeed beginning to consider Microsoft’s offering but thinks that, at this stage, it is more suitable for smaller deployments. “[Large companies] are quickly coming to the conclusion that it’s still not an enterprise platform, but for the mid-market it is a really good opportunity,” he says.
In any case, for the next few years the choice-points for ECM purchasers are not going to become much simpler.