Predictions of consolidation in the Content Management (CM) vendor arena have appeared in nearly every major industry prognosis over the past two years. Gartner Group, for example, recently reiterated its prediction that half the CM vendors in existence in mid-2001 would leave the marketplace by the end of 2002. Analysts consistently advise prospective CM buyers to tread carefully because their vendor may not stick around. But fortunately, the story goes, fewer vendor choices will finally bring greater clarity and sharper differentiators to this otherwise very messy product landscape.
In fact, the number of CM vendors continues to rise. Industry growth has come through greater demand among CM buyers, but also expanding product functionality as well as successful partnerships. This has allowed most vendors to crow, in the words of Mark Twain, "reports of my death have been greatly exaggerated." The marketplace certainly cannot sustain its current breadth of vendors in the long run, yet it remains unclear when and how any serious industry consolidation will occur. In the meantime, evolving business models and feature sets have created just the kind of clearer segmentation and transparent product differences that were supposed to emerge following an industry contraction.
Minor Consolidation in 2001
To be sure, some products have disappeared outright in the last year. Macromedia discontinued development of the popular Spectra CM package shortly after acquiring Allaire, makers of the ColdFusion platform on which Spectra was based. When industry veteran eBusiness Technologies (eBT) folded in Spring, 2001, it prompted broad speculation that other mid-sized vendors would soon follow. But the end of the year found only one other collapse, when Xerox pulled the plug on its CM stepchild, Chrystal Software, makers of the Astoria package.
Across the board, the past year has seen fewer mergers and acquisitions than anticipated, and the repercussions from those that did transpire have not been particularly severe. divine purchased OpenMarket and Eprise as part of a broader roll-up of software and services firms. Customers wary that OpenMarket was gong to run out of cash are now assured that the code rests with a more liquid owner, at least for the time being. Likewise, Microsoft purchased nCompass Labs, (makers of the Resolution CM package), but did not make significant structural changes in its rebranded Content Management Server product. Longtime nCompass users should be pleased with the ease of upgrade, though as a consequence the product lacks expansive XML features and is not yet a true .NET server.
Source Code Management (SCM) vendors have also been acquisitive, but here again, users are probably better off for it. SCM vendors Starbase and Merant purchased CM products eXpressroom and Collage respectively in 2001. They no longer aggressively market them as standalone packages, but both Merant and Starbase have largely kept product architectures intact while integrating with their SCM suites. Significantly, market leader Rational chose to partner rather than buy, offering a modified version of Vignette as part of the Rational SCM suite.
Meanwhile, major independent vendors with venture funding and established client bases keep chugging along with new contracts and expanding services business. Consider eGrail, which recently landed a major installation at the U.S. State Department and is well-positioned to take advantage of growing federal government IT spending. Michael Quint, eGrail's director of corporate communications, sees fresh projects as a sign that the CM market is weathering the economic downturn very well. "Our investors continue to support us," he says, "because they know this is one of the fastest-growing software markets."
Release the Hounds
Thus, consolidation has been more the exception than the rule. My latest estimate puts the number of CM vendors at more than 225, and radoes a week go by when an announcement touting a new product doesn't cross my desk. Much of this growth is taking place in mid-market and lower-end segments, where a large potential customer base is just beginning to tap the benefits of automated Content Management.
Microsoft was supposed to capture the mid-market by putting its beefy marketing and R&D muscle behind its new CM product. But dominance over the mid-market hasn't happened yet and probably won't anytime soon. Microsoft benefits from a powerful reseller channel, but suffers from a challenging pricing model. With licensing at nearly $40,000 per CPU—which translates to $120,000 for an entry-level staging and production environment—Content Management Server is by far the most expensive product in Microsoft history. This price-point is a hint: Microsoft is not trying to dominate on mid-market, but rather, focus its attention on enterprise customers, leaving the mid-market open for a plethora of smaller vendors.
Some of these vendors are targeting niche markets. MedSeek recently developed a CM package specifically for the healthcare market. Longtime vendor Enigma now focuses on catalog and parts aftermarket extranets. The lower end of the market has also experienced substantial vibrancy in the past year. Industry stalwart Ektron has issued new versions of its CM packages—which start at $3,000—amid growing sales. CityDesk debuted last December with a desktop-based CM product that costs $349 per seat.
Managed and Application Service Provider (ASP) content management vendors have also seen growth. Longtime player Atomz is diversifying its offerings, while newcomer CrownPeak entered the market last year with a highly sophisticated (and pricier) hosted system. Web consultancy and managed services provider, XOR Inc., took a look at packaged CM offerings for its clients and concluded that high costs and customization challenges would preclude them from the mid-market. So XOR launched its own, hosted CM solution at the height of the recession in late December 2001. Phil Hollyer, senior vice president at the 300-person company, points out that the XOR's new "OpenContent" service helps land new business. "We find that content management is a core piece of functionality that virtually every eBusiness initiative needs," he says.
XOR is part of a broader trend: regional integration firms are increasingly bringing their own CM packages to market. Many such offerings are built on the Spectra source code that Macromedia put into the public domain. Steve Drucker, CEO of Washington, DC training and development company, Figleaf, argues that the demise of Spectra actually made the CM market more robust. "It would have been difficult for a ColdFusion-based CMS to compete against Macromedia, owner of the ColdFusion platform," he notes. But Figleaf declined the opportunity to build its own package and now integrates CommonSpot, a ColdFusion CM from Paperthin.
Jason Meugniot, CM practice lead at Los Angeles integrator Guidance, agrees that building a custom package doesn't make sense. "Our clients are not looking for solutions in a vacuum," he says, "they want systems that integrate with other departmental and enterprise applications." Meugniot says this prompted Guidance to work with vendors like Percussion and Microsoft, whose packages can interoperate easily with other systems.
Finally, the past year has witnessed the maturity of open source CM solutions. At least three open source platforms (Zope, Midgard, and ArsDigita) are entering their third year of active use as CM packages—a critical threshold for any community-supported software project.
Major Vendors Retrenching
In the enterprise CM arena, there has been little M&A activity, with exception of OpenMarket. Interwoven and Vignette are still burning through IPO cash; both have cut costs and maintained service revenues even as licensing fees have flatlined. Broadvision reaffirmed its commitment to the content management space with a revamped version of its CM software that provides for cleaner integration with its personalization modules. Percussion and Stellent, who also target enterprise installations, but typically at lower cost, have found success amid tightening belts.
Longtime vendor Documentum, with its large installed base and seasoned professional services team, has maintained strong inroads into heavily-regulated industries like pharmaceuticals and insurance as part of a successful (albeit incomplete) transition from document manage- ment to CM. The company's December 2001 acquisition of digital asset management (DAM) vendor Bulldog signaled an expansion into new industries (media and entertainment) and broadened Documentum's product line.
A Little Dab of DAM
Documentum's acquisition of Bulldog sheds light on a new and important vendor strategy: greater connections to other enterprise systems. Many analysts have touted a convergence between DAM and CM. Much the same way that CM grew out of publishing roots to insinuate itself among the Global2000 by empowering everyday businesspeople to manage text content, DAM is slowly expanding out of its media and entertainment roots to a broader corporate audience by enabling marketing staff to better control the creation, archiving, and custom retrieval of media assets. Whitney Pidmarsh, vice president of product marketing and Documentum points out that, "even in a mainstay market like pharmaceuticals, companies are extending regulatory requirements to marketing environments where digital branding assets are critical."
Chris Lynn, vice president of marketing at DAM vendor MediaBin, sees a clear convergence with CM. "Now that everybody can pause and catch their breath, people are realizing that these two are closely linked and better be working off the same databases," he says. Although CM products excel at creating and managing templates, according to Lynn, "they don't get at how a JPEG fits into that template—somebody upstream does that work." MediaBin's software enables dynamic repurposing of media source assets for both Web and print environments. CM vendor Day has taken a similar tack. Its Communiqué product enables content contributors to manipulate images directly within the system.
Other CM packages typically handle media assets as generic static files. Like its competitors, Pidmarsh says, Documentum "could always store, route, version, and distribute media assets. The difference now is native treatment of the content as a unique type, rather than a black box." Bulldog adds specialized capabilities—like video logging, storyboarding, indexing text, streaming, and dynamic thumbnail generation—that other CM systems can't match, Pidmarsh explained.
Joe Ruck, senior vice president of marketing at Interwoven, counters that his company's TeamSite product handles nearly all the rich media management needs among its customer base, and that sophisticated requirements can be addressed through partnerships with DAM vendors. "Specialty needs within the entertainment industry only comprise 1%-2% of our customer base," he says. Similarly, the mid-market remains uninterested in DAM, according to industry specialists. Says Figleaf's Drucker, "in the $50,000-$250,000 range, no one is talking about asset management." Other analysts point out that if industry leader Bulldog sold for only $11 million, the overall DAM market could not be very large.
Many CM vendors have focused instead on partnerships with portal and application server providers. Stellent (formerly Intranet Solutions) began to see strong customer demand for portal integration in early 2001, when major application server vendors like BEA and IBM built personalization and portal modules on top of their standard offerings. Michael Rudy, Stellent's vice president of business development, says "we see tremendous movement within the Fortune1000 to use portals as the way to bridge all their different applications, including content management." Stellent has built special connectors, called "portlets," for several portal vendors, but has no formal partnerships with DAM suppliers. Likewise, eGrail and Percussion are developing integration components for major application server vendors.
Perhaps no one has been more aggressive in this approach than Interwoven. Notes Ruck, "our customer base views content management as an infrastructure underneath their other initiatives, so we have to work with portal and application server vendors."
Suite versus Sweet
Buyers, then, have a clear choice between purchasing complete, integrated product suites or taking a "best-of-breed" à la carte approach. Documentum's suite offers broad capabilities from a single vendor. Similarly, Vignette sells integrated modules for commerce, personalization, and portals, as well as content management. One goal of this model is to reduce integration expenses at a time when the marketplace is waking up to the substantial consulting cost multipliers on top of licensing fees.
Others counsel a best-of-breed approach, adding specialized services for different needs only as they arise. MediaBin's Lynn notes that DAM integration need not be particularly difficult. And Meugniot of Guidance argues that the current market wants tactical solutions that can be more cost-effective. "The 800 pound gorilla can come with an 800 pound price tag," he says.
The View From Here
With VC capital scarce and the lower end of the market becoming more of a commodity, Gartner remains bearish on the newer vendor entrants, but bullish on the marketplace at large, asserting that 2002 will be the year of significant CM adoption. At the upper end of the spectrum, the CM marketplace is clearly expanding horizontally within the enterprise, sustaining a large pool of vendors through more partnership and revenue opportunities. Several vendors have already felt market demand picking up in early 2002, and paradoxically, this rising tide may continue to lift smaller and newer vendors. Consolidation will certainly come to the CM industry—you could rephrase Twain and argue that "rumors of its health have been greatly exaggerated"—but no one can safely predict when or how.
Interwoven's Ruck asserts that a shakeout has already happened. "The top 4 to 5 vendors make up the bulk of the market; that kind of distribution is not uncommon in the technology industry," he says.
So what is a prospective CM buyer to do? Conduct the same due diligence that you would on any other major piece of server software. Look carefully underneath the covers: as the CM industry matures, key differences among the various packages have become more readily apparent. Do your research, get help if you need it, then pick the platform that's right for you.
SIDEBAR: A CM Shortlist
This is not a complete run-down of CM vendors and products, but a good shorlist of offerings in distinct categories. This list is maintained at www.cmswatch.com/ContentManagement/Products/.
Major Enterprise Platforms
Large-scale packages that cover CM from production to publishing and distribution. Quarter-million dollar licensing fees are the norm, but expect to pay 1- to 3-times that in services for a complete solution.
divine—(OpenMarket) Content Server
Documentum—4I CM Edition
Stellent—Content Management Suite
Vignette—Content Management Suite
These packages also target the enterprise market, but at low six-figure cost; they still typically require substantial integration.
eGrail—Enterprise Content Server
Gauss—Interprise VIP Enterprise Content Management Platform
Microsoft—Content Management Server
These packages target mid-market firms or enterprise departments. They carry 5- to low 6-figure licensing fees, and typically require some level of integration.
divine—(Eprise) Participant Server
Merant—PVCS Content Manager
PaperThin—CommonSpot Content Server
The packages are available under open-source licensing terms.
ArsDigita—ArsDigita Community System (ACS)
Zope—Content Management Framework
These products target very simple requirements, at low 5-figure (or less) pricetags.
These are hosted CM packages that charge a monthly service fee.
CrownPeak Technology—Advantage CMS