June 22nd, 2009 — 2.0, Content management
I want to revisit a few of the relevant questions that came via the webinar I did last week with Bryan House from Acquia on open source social publishing. We got to some of these on the call, but not all, and some of the more market-level questions seem worthy of sharing.
The webinar focused on both the coming together of social software and WCM, and on open source content management; these questions do too.
Q: Why is open source a disruptive force in the social web CMS space?
I started out my part of the preso talking a little bit about The 451 Group and our focus on disruption and innovation in IT. I mentioned this includes disruptive technologies, business models or larger market changes. Open source certainly fits into the disruptive business model category (though, I know, open source is not a business model). Open source can impact how technology in a particular sector is developed, distributed, procured, priced and supported. This isn’t new in content management; open source projects like Drupal have been around for quite some time.
But as more vendors are making a go of businesses tied to open source code in content management, the dynamic is changing. Open source is becoming more of a viable option in content management for even the largest of organizations and that is something that is only going to get more pronounced. And some of the open source projects (like Drupal and WordPress) seem to do a particularly noteworthy job of tying CMS and social software capabilities (of varying types) together. An interesting fact, I think, as it shows that when a community drives software development in this area, it combines these two areas together, an indication of what the larger market may want.
Q: Tools like Interwoven or Vignette are often described as more “enterprise-ready” than open source alternatives? How big is the delta? How should I evaluate whether particular differences are important?
In general, Interwoven, Vignette et al. have had more of a focus on online marketing capabilities the last couple of years and so have more in the way of content targeting, analytics, multivariate testing and so forth to offer. But I don’t think this is what people usually mean when they say a CMS is “enterprise ready” — I think that’s more to do with things like LDAP/AD support, migration and upgrade tools, platform/commercial database support and so on. The reality is that a lot of commercial open source content management vendors do offer these capabilities but often only in an “enterprise” edition of the code that may only be available under a commercial license. The key is just to ensure that a particular distribution meets your requirements under a license that works for your project.
Q: What questions should I ask a vendor to understand how tightly integrated their social software and web content management capabilities are?
There are several models here. Some vendors have built some social capabilities directly into their WCM products, basically with the idea that most of this as it relates to content sites isn’t too much more than defining a content type (e.g., blog, comment, profile) and its attributes. Some mostly support plugging in third-party blogs, forums etc. Others have separate social software modules. In some cases these have come via acquisitions and others have been built from scratch and so integration levels vary. Some share a content repository and some don’t. So there’s quite a bit of variety and, as usual, it’s mostly just important to make sure however a vendor has done it works for your project. If you just want to add support for comments to an existing content-heavy site, using the integrated features from a WCM vendor probably works fine. If it’s a full-blown, forum-heavy customer support site, more of a stand-alone product (whether from a WCM or social software vendor) might work best.
Q: How will the recent transactions (Vignette & Interwoven) impact this market?
The consolidation at the high end of the market has a number of vendors scrambling to get some advantage. Competitor FatWire Software has a formal “rescue” program and others are certainly having similar discussions with customers. Customers looking to migrate or to evaluate a wider field of WCM options may well look at open source, as the broader availability of products from commercial vendors makes this a more viable option.
May 6th, 2009 — Content management
Open Text discussed its acquisition of Vignette on its earnings call this afternoon. The stated rationale is:
- Add last remaining major ECM play to Open Text’s portfolio.
- Access to Vignette’s customer base, improve service and support (i.e., try to stabilize maintenance revenue).
- Cross-sell opportunities.
- None of the above is particularly compelling.
- Open Text loves a bargain and apparently this one was too good to pass up. Backing Vignette’s cash and short-term investments out of the deal, Open Text only paid 1x Vignette’s trailing twelve-month revenue.
- Open Text will maintain Vignette much as it has Hummingbird – keep the products mostly separate, try to hold onto the maintenance stream, cut Vignette’s costs.
- I don’t buy into product or technology-based reasons for Open Text wanting to own Vignette. There’s tons of overlap.
- There will undoubtedly be some Vignette vs. RedDot struggles at Open Text over which is the WCM line of choice. Interesting since WCM is only a sideline for Open Text in the big ECM picture anyway.
- A bargain can still bring headaches and there will be WCM competitors lining up to benefit from uncertainty (not that many WCM players seem to spend much competitive energies worrying about Vignette these days).
Our full deal analysis is available for 451 clients.
February 19th, 2009 — Content management
I commented in late January that there seem to be two schools of thought at the moment on spending in ECM — in that post, I was talking about downturns in ECM spending overall versus serious investment in information governance-related technologies, like archiving, records management and eDiscovery.
The same dichotomy seems to exist in specifically WCM at the moment as well, though for different reasons.
On one side of the WCM coin, we have Vignette, which turned in an ugly Q4, with revenue down 29.4% year over year and license revenue totalling just $7.3m or 19.5% of revenue. And we have the Autonomy acquisition of Interwoven, which was not primarily driven by Autonomy’s desire to be in the WCM business (here’s Nick’s take on Autonomy’s drivers). We’re not saying Autonomy won’t invest in WCM, it’s too early to make any kind of judgement on that. But nobody is pretending Autonomy would have bought Interwoven if it didn’t have the WorkSite and Discovery Mining businesses and expertise in the legal industry.
On the other side of the coin, we have FatWire, which yesterday announced 40% year-over-year revenue growth in 2008 taking it to $44m. This is the first time FatWire has publicly announced a revenue number, clearly it thought it had something worth bragging about (I was pegging FatWire’s 2008 revenue at about $40m, so it beat my not-entirely-informed estimate).
Obviously FatWire is a good deal smaller than Interwoven and Vignette and is growing from a smaller base. Still, it reports an overall strength in the market domestically and internationally that is intriguing. And it’s not alone in noting strength in the sector — Sitecore made a similar announcement back in November.
Is WCM a strategic investment you have to make when IT budgets are tight? More and more business is certainly done on the Web, customers spend more time researching buying decisions on the web, a lot of Web sites are in need of update, it’s a less expensive marketing channel, and so many companies can’t afford not to invest.
The counter argument to this was articulated, ironically, by Open Text CEO John Shackleton on the quarterly earnings call when he was asked about the Interwoven transaction. He said:
…one of the concern areas would be in the web content management where like most managers if someone came to me and said our website is looking a little old. We need to spend $1 million to clean it up. I wouldn’t see that as a must-have. So what we’re seeing is it’s not critical, people are putting off those decisions to upgrade their websites. I would see that Interwoven like our web content products is seeing some softness in the market.
That from a vendor with WCM in its portfolio, though it’s hardly the company’s focus.
So what do you think? Is FatWire simply absorbing some of the business that would have gone to Vignette and that’s enough to support the growth it needs as a smaller company? Or does WCM have some legs in a tough 2009?
September 4th, 2008 — Content management
We knew Open Text had more acquisitions planned, the company said as much on its most recent earnings call. Buying Captaris will give Open Text improved fax and document capture capabilities, which are most interesting for Open Text when tied to enterprise apps from SAP and Oracle for outbound faxing of invoices and purchase orders coming from those apps.
Open Text has bid $4.80 per share of Captaris, valuing the vendor at $131m. Brenon Daly looks more at the financials of this deal over on the 451 Group’s tech M&A blog, Inorganic Growth. For 451 Group clients, our full deal analysis is here.
After two small deals earlier this summer (for Spicer and eMotion), this is a bigger acquisition for Open Text and one that may slow it down a bit on the acquisition front, as Captaris had a few recent acquisitions of its own to digest. Open Text is no stranger to assimilating acquired portfolios but it’s still no small task. As usual, Alan Pelz-Sharpe at CMS Watch does a great job outlining the potential pitfalls for customers.
Another interesting angle though is that Open Text has made a larger acquisition and it wasn’t of Vignette. There’s been speculation like this about such a deal and we don’t doubt Vignette is in play. This acquisition does make it seem less likely that Open Text will go for Vignette anytime soon.
Still, if approved, this deal should leave Open Text with at least $100m in cash and an apparent mood to buy, so there will likely be more (smaller) deals to come.
July 9th, 2008 — Content management
We covered two small acquisitions in the ECM realm this week (for 451 Group clients, our TechDealmaker service has (or will have shortly) the full deal analysis reports), Open Text’s purchase of the file format viewing division of Spicer Corp. for $12m and Hyland Software’s Liberty IMS buy for an undisclosed sum.
Neither of these deals, which are both small, is all that interesting in and of itself. Open Text is getting a bit of technology to view CAD files, large schematics and other large and complex files without having the software used to create those files installed locally. This is a good addition to Open Text’s line, particularly as it looks to sell more vertically-customized apps in markets like energy and construction. Hyland has purchased a small competitor in the SMB market, mostly to expand its customer base in a few key verticals.
What is interesting about these deals, aside from the fact that they closed on the same day at a time when acquisitions aren’t exactly booming, is that they both come from independent ECM vendors looking to carve niches for themselves in a market increasingly dominated by the likes of IBM, Microsoft, Oracle and EMC (though Hyland is majority-owned by PE firm Thoma Cressey Bravo). Both have indicated that there will be more acquisitions ahead as they look to secure their positions and future acquisitions by both vendors are likely to be more of the same.
Open Text and Hyland operate on different scales — Open Text’s revenues in calendar year 2007 were $677.8m while Hyland’s were $104m. Open Text is also securely in the enterprise market while Hyland plays more at the mid-tier and in the SMB market, though the two do compete sometimes in government accounts and for accounts payable apps.
Hyland appears to be more aggressively on the acquisition trail at the moment, noting as part of the Liberty IMS announcement that plans are to “more than double our size in the next three years” via both inorganic and organic means. But Open Text has also indicated repeatedly that it will do ‘tuck-in’ technology buys, like the Spicer acquisition.
Open Text and Hyland aren’t the only independent ECM vendors remaining nor the only ones likely to make acquisitions in the near future. Interwoven and Vignette are also here. Both made technology buys in the past year, Interwoven bought multivariate testing vendor Optimost for $51m last October and Vignette parted with just $7m for the assets of video delivery service Vidavee in April. These buys indicate that these two are more interested in Web content management (WCM) at the moment, even though both have broader product lines, and future buys will most likely continue to fill out WCM portfolios. This is in contrast to Hyland and Open Text, who are both likely to stay more to document management, records management and BPM-related acquisitions. But none of these vendors is likely to make a major buy.
That said, these vendors themselves are perennial potential acquisition targets. Thoma Cressey Bravo may be fattening Hyland up for an eventual sale, but it will likely look to consolidate more of the mid-tier ECM market first. But the others – Open Text, Interwoven and Vignette – could themselves be up for grabs by giants like SAP or HP. In either case, we’re far from done with ECM acquisitions.
May 22nd, 2008 — 2.0, Content management
I started this post more than a week ago and I want to get it out before this week is over otherwise I never will. And my weeks end on Thursdays as I’m lucky enough to be home with my two daughters on Fridays — when “social” software means trying to get them to take turns playing Peep games on the family computer.
But back to topic. I wanted to revisit Vignette’s analyst day from a couple of weeks ago and specifically, a topic that came up on the one of the customer panels. Jon Sallade, Director of Web and Internet Services at Harvard Business School, was one of the panel participants.
My question for Jon was around the use of social software on the HBS sites and how this is evolving. I asked if HBS, which only recently has decided to use Vignette for the HBS Executive Education site (they were about two weeks from launch that day so must be getting close now), has various point tools up and running for blogs and community sites and if so, what is the future for these.
His answers? Yes, and they’re still figuring that out. He noted the importance, for example, of insuring a blog as popular the one by Andrew McAfee, which is part of is purview, work well, be stable, meet the author’s needs, but still function as part of HBS as a whole. He wasn’t sure yet if that would mean supporting a bunch of best-of-breed tools or trying to consolidate on a single platform, most likely with some customizations.
It’s too early to say if this will be the predominant trend or if web services will finally make integration of multiple tools easier and eliminate the requirement to mush everything eventually into some kind of platform or “suite.”
But it does seem likely to me that as more WCM and collaboration vendors add social software capabilities to their products, more mainstream adopters (i.e., not early) will be less inclined to bring in additional tools. Unless of course features from the vendors they already work with don’t meet requirements.
May 12th, 2008 — Content management
Vignette’s industry analyst day was last Thursday and, as Guy Creese notes, these are often interesting because “Vignette personnel vanish and new people turn up to take their place with nary a word, so it’s always fun to figure out who’s missing in action based on last year’s agenda.”
Guy’s having some fun at Vignette’s expense of course, but it’s no secret Vignette has had a lot of executive turnover over the last couple of years and it hasn’t stopped. Execs on last year’s analyst day agenda gone this year include Cathie Frazzini, who led Vignette’s partner efforts for a little more than a year and long-time head of products Leo Brunnick. Dave Dutch, most recently of Level 3 Communications, has just replaced Brunnick to run product management and marketing. And Rob Amor, long-time head of Vignette’s EMEA services org, has taken on the corporate BD role from the UK.
Like Guy, this wasn’t my first Vignette analyst day and he’s also right in noting “Vignette’s Analyst Day is typically heavy with customer testimonials.” And this year was no exception. Four of the six customers that presented (including HBS and Vertrue) were fairly new to Vignette, interesting since Vignette has struggled with new license revenue in recent quarters.
Overall Vignette presented a more upbeat outlook than one might expect given the company’s recent financial results. The company has introduced several new products already this year (yes, some are OEMs and some are just enhancements, but it’s still better than what we’ve seen from Vignette in awhile) and has a few more planned before year end. It also acquired video management play Vidavee, which it claims will be integrated before the end of this quarter.
It will likely be a couple more quarters before Vignette’s largely-revamped field organization can make some hay with these new products. If it’s able to do so, the license numbers might start to turn around. We’ll certainly be watching to see.
April 24th, 2008 — Content management
Interwoven and Vignette both released Q1 numbers in the last two days and their numbers highlight the different paths these long-time competitors are now on.
Vignette announced disappointing results. Vignette’s total revenue for the quarter was $44.8 million, a 6% decrease from Q1 2007, with a net loss of $0.8 million, compared with a $4.8m profit a year ago. Particularly disappointing for Vignette was license revenue which declined 36% to $9.7m. Vignette warned three weeks its results would be weaker than expected so the news wasn’t a surprise but the mood of the call was still somber.
Interwoven, on the other hand, announced a 17% increase in revenue to $61.5m with a 12% increase in license revenue and net income of $6.1m. Interwoven has always been a fairly conservative company but even so, one of the execs on the call said something along the lines of “we’re not claiming our earnings are recession proof but…” They were downright cheerful — and with good reason.
April 17th, 2008 — Content management, Text analysis
We have long wondered why more content management vendors don’t fully embrace text analysis (or even enterprise search for that matter).
These guardians of most organizations unstructured data were beaten to the punch in terms of exploiting text by business intelligence companies, which are more accustomed to manipulating structured data. It’s great that the BI companies are starting (slowly) to embrace the idea of unlocking the value locked within unstructured text, it’s somewhat bizarre why content management vendors didn’t get there first.
We said this many years ago, in the most coherent form in mid 2005 with our report called Text-aware applications: the endgame for unstructured data (the clue’s in the title).
In report that we said:
“…while the penetration of content management systems is relatively high when compared with other ways of managing unstructured data, these systems do little at present to help analyze that unstructured data.”
and somewhat optimistically:
“Indeed, despite the CMS’s [content management systems] ability to organize, most implementations rarely attempt to push into anything that could be considered a semantic understanding of the content. This may be set to change, however, with some vendors, such as EMC, making headway in automatically parsing documents at a deeper level than just file-level metadata.”
That was a tad premature on our part.
Think about the main players and what they do to understand what resides in the documents they ‘manage.’
EMC Documentum – it has its content intelligence services classification engine sure, and it bought a federated search product many moons ago, but neither are exactly front and central to its product strategy. And ILM (try searching on that now at EMC and see what you get) only dealt with file-level metadata, not semantic metadata. However the X-Hive acquisition was an interesting one from this standpoint (see below for more on XML databases).
Vignette – bar an OEM relationship with Autonomy (which most vendors have) nothing much doing here despite the need for Web content management to increase its understanding of the text its managing to make websites more attractive to advertisers (think of using text analysis to build links to other content automatically to keep visitors on the site longer).
Interwoven – Metatagger isn’t exactly at the bleeding edge any more, although the idea is sound.
IBM Filenet – here there is hope. IBM has taken a classifier it got from its iPhrase acquisition and used it to do initial classification to help determine what should or should not be deemed a record. IBM has all sorts of text analysis toys to play with and we expect more from it in the future.
Open Text – it once had five search engines, and was a pioneer in that space. But I’m not aware of anything it does to extract meaning from the content it manages.
Autonomy – Its tagline is ‘Meaning-based computing.’ It owns a powerful classification engine but now also owns records management and a bunch of other stuff. It’s the one company that checks most of the boxes here (but isn’t a document or Web content management vendor). But as the company currently refuses to talk to us, we’re in the dark as to which bit fits where and are unable to tell our clients what benefits Autonomy could bring them as a result. If the company cares to get in touch with me, I’m here.
This post was prompted partly by a recent conversation I had with Nstein . It is morphing from being a struggling text analysis vendor laden with debt (it’s publicly traded in Canada, so the numbers don’t lie) to a fast-growing combination of Web content management, digital asset management (via acquisitions in 2006 and 2007) and text analysis, built atop an XML database licensed from IxiaSoft. Its focusing exclusively on the largest publishing companies, using the text analysis to automatically create links between new and archived content (thus pushing it up Google rankings). It competes with Mark Logic and Interwoven, mainly.
Any Gmail user that looks in their spam folder and see ads for “Spam Swiss Pie – Bake 45-55 minutes or until eggs are set,” can appreciate how crude keyword matching against content is next to useless.
There’s so much more that can be done here and so much insight being left on the table, whether it be in better website management to attract readers, voice of the customer analysis tied to BI, or government intelligence.
Tools that manage content need to understand that content – its language, its meaning, its sentiment. Otherwise, they are missing a trick.
March 17th, 2008 — Content management
I spoke with two web content management (WCM) vendors in the past week that are investing heavily in online marketing. In the WCM realm, this mostly means user-friendly tools that marketers can use to not only create content for a web site but also to test it and target it to site visitors.
A question I’ve been asking lately is, how automated can / should this targeting be? Interwoven, FatWire, Tridion and others have tools that let marketers segment visitors and then build some rules around how content should be targeted to these segments. This is a fairly manual process – segments and rules have to be manually created and managed. This is workable for sites that have a few broad segments and relatively shallow content / product catalogs. But wouldn’t be manageable with multiple, detailed customer segments and a deep product catalog.
This is one of the reasons Amazon, with arguably the deepest product catalog around, has long applied what we used to call “collaborative filtering” on its site — you know, the “readers who bought X also bought Y.” This approach has its own drawbacks to be sure (on Amazon, I get a strange list of recommendations based on the books I purchase for myself, for my kids or as gifts) but it wouldn’t be feasible for someone at Amazon to manually create cross-sell rules for every item Amazon sells.
A crew of start-ups like Baynote, Aggregate Knowledge and Loomia offer updated approaches to collaborative filtering that use more inputs (like time on page, search terms, clicks, scroll rate etc.) than early collaborative filtering tools. These vendors take different approaches (i.e., behavioral vs. contextual) but they’re similar in making recommendations automatically.
Some WCM vendors note that customers are leery of a “black box” making recommendations with live content on their sites. That isn’t surprising really. They also note that most customers are only beginning to segment customers or to get their feet wet with content testing (like multivariate testing to test layout or content success rates) and aren’t ready for automated recommendations yet. Still, Vignette just signed an OEM agreement with Baynote, so there must be some interest.
So which is the right approach? Ultimately both rules-based and automated targeting are likely to have roles to play. As emerging online marketing suites that include WCM, web analytics, testing and targeting tools come together, they’ll let the marketers choose the right approach for different types of content and/or different customer segments. But we aren’t there yet.