Automation System Marketplace 2001: Closing in on Content

In some ways, the inevitable changes in the 2000 automation marketplace paralleled those in the past: mergers between automation vendors and acquisitions by larger conglomerates. However, in 2000, some vendors also responded to the demand for innovative solutions by introducing exciting new products in the areas of content delivery and personalization.

By far, the most discussed move of the year was the purchase of Endeavor by publishing giant Elsevier. However, perhaps the most surprising one was the acquisition of CARL by The Library Corporation (TLC).

As for sales of automated systems, the year started off slow for almost all vendors. Many institutions had spent their technology budgets on Y2K fixes and upgrades, so the 1999–2000 fiscal year left potential buyers with few funds for big new purchases at the beginning of the calendar year.

The acquisition of Endeavor by a larger company didn't surprise most in the industry, nor did the entry of a content provider into the automation marketplace. However, that the purchaser was Elsevier Science raised several questions. It's no secret that many librarians, particularly ones in Endeavor's targeted academic market, retain suspicion of Elsevier due to the pricing of its scholarly journals. Whether fairly or not, Elsevier is often portrayed as the "wolf at the door" of academic library budgets. So, what impact will the Elsevier corporate presence have on Endeavor? What role will Elsevier play?

While current Endeavor management must remain for a specified time under the purchase agreement, some in the industry speculate that longtime staff may eventually leave Endeavor. At the same time, others quietly applaud the arrival of a financially strong content provider in the automation marketplace. Elsevier's deep pockets can finance the costly development and support of today's technologically complex library system. Already, the monetary infusion at Endeavor has doubled its development staff.

We can expect to see more content providers entering the systems arena. Automation vendors still being run by an aging founder might be prime targets for future acquisitions. For librarians, such consolidations may make sense because an increasing number of library services are being designed around the provision of electronic content. Collaborations among systems vendors and content providers, whether through mergers or alliances, will enable libraries to offer the necessary linkages between local collections and online materials.

The acquisition of CARL Corp. by TLC in June caught more people by surprise. Though speculation had been mounting about the future of CARL, few realized that the partnership between CARL and TLC in Singapore during the late 1990s would bring the two companies together. Since the introduction of its Library•Solution product in 1997, TLC has tried to position itself as a company that could serve larger libraries. CARL's historic strength has been with very large library systems, particularly public library ones, so the merger is logical. By acquiring CARL, TLC has placed itself as the vendor of choice when current CARL customers seek to upgrade.

A new face among automation vendors is Patrick C. Sommers, who took over as president of Sirsi in January. However, Sommers is not new to the information industry: he has been the president and CEO of Dialog Corp. and former president of Dun & Bradstreet Information Resources. Sommers will run the Sirsi operation, while founders Jim and Jacky Young will focus on the company's technological developments. In an era where automation executives often hop from one vendor to another, leaders from other segments of the information industry may bring new ideas and perspectives.

Estimated library systems revenue for 2000 based on this survey are no more than $440 million—though that figure should be treated with caution, since this year's survey garnered fewer responses and included more estimates. The figure is below that of the three previous years, partly due to slow sales early in the year, too. Last year's survey included 26 vendors. This survey includes responses from 19 vendors, though revenues were also estimated for vendors not covered and those that did not specify revenue. Profiles below are based in part on company-supplied answers to survey questions.

Inadvertently, the survey was not sent to the following companies: CASPR, Geac, and Sanderson. The following companies were not able to complete the survey in time for the publication of this article: Fretwell-Downing, SIRS Mandarin, SydneyPLUS.

Of the 17 companies reporting revenue, Innovative Interfaces again had the largest revenue with $75 million. Another vendor, which requested that its identity not be disclosed, reported revenue in the range of $70–$80 million, as did another which reported revenue of $60 million. Another reported revenue in the $40–$45 million range. The remainder of the companies reported revenue under $30 million: one in the $25–$30 million range, one in the $20–$25 million range, one in the $15–$20 million range, three in the $10–$15 million range, five in the $5–$10 million range, and two in the $1–$2.5 million range.

Revenue coming from the reselling of hardware averaged 7%, which continues the decline in this area. Software accounted for 48% of revenue, similar to last year's 47%. Of the 13 companies reporting revenue breakdown, software ranged from 16% to 85%. Maintenance and service fees averaged 29%, the same as last year. The actual percentage is likely higher, since at least one vendor in both years reported maintenance fees only from new sales. Ten of the 13 vendors providing this information reported that maintenance fees accounted for more than 20% of revenue in 2000. An average of 16% of vendor revenue came from "other" products and services—training, consulting, database conversion, library products not related to automation—and ranged from 5% to 42%.

Last year's automated systems marketplace article called for vendors to develop ways to integrate additional content, such as book reviews and personalization features, into OPAC searches. Sirsi, the first vendor to deliver on that challenge, introduced a new technological and business model for library automation with the release of iBistro. While iBistro is billed as an Internet access portal for library users, the distinguishing feature is its capacity to integrate related content into a unified display through simultaneous, broadcast searching. For example, searching the catalog displays not only holdings information but also—taking a cue from Amazon.com—reviews, tables of contents, synopses, and images of the book's cover jacket.

The technology behind iBistro represents a groundbreaking development in library automation. The additional content is maintained on centralized servers at Sirsi's site rather than on each individual library's server. User searches redirect to the Sirsi server for the enhanced content. The results are combined with the holdings information from the local catalog into a unified display.

These developments also represent a new revenue stream for the vendor, as libraries pay an annual subscription for access to the enhanced content. SIRSI has licensed the enhanced bibliographic data from Syndetic Solutions, plus book reviews from Library Journal, School Library Journal, and Publishers Weekly. Thus, each library is relieved from negotiating these arrangements and gains from economies of scale.

Not to be outdone by what may quickly be seen as a must-have feature, other vendors are implementing similar offerings. TLC has "YouSeeMore," which also offers book reviews from the above-mentioned three publications. Innovative is readying its Millennium Access Plus (MAP) solution, and epixtech is developing iLibrary as its personalized portal.

As the management of digital assets becomes a huge worldwide market, library automation firms are beginning to position themselves for a piece of this pie. BiblioMondo's CEO and President Todd Joron thinks that "libraries will become the world's digital points of presence" by providing a variety of online content. Standalone products like ExLibris's DigiTool and Endeavor's Encompass, distinct from the vendor's integrated systems, can help academic and special libraries record, maintain, and provide access to digital content of events, seminars, and presentations on campus.

A major development that affects library automation is the increasing support for OpenURL as a vendor-neutral standard for linking among online resources. In a series of articles published in D-Lib magazine (www.dlib.org) during 1999, Herbert Van de Sampel of the Central Library, University of Ghent, Belgium, outlined how he developed SFX as a mechanism for implementing such linkages. The OpenURL concept grew out of Van de Sampel's research. While his work received much attention from the technical community, it didn't get widespread notice until Ex Libris announced in February 2000 that it had acquired the sole rights from the University of Ghent to the SFX Reference Linking Software Solution.

Ex Libris now promotes SFX as a new server-based product that allows users to search a database and click on a resulting citation to search it automatically in other databases. Notably, use of the SFX software from Ex Libris is totally independent of any OPAC. Indeed, Ex Libris aims to get the SFX server software into libraries not currently using the company's ALEPH system as a way to allow potential customers to become familiar with the company.

Ex Libris's backing of SFX quickly brought credibility to the OpenURL concept; now the National Information Standards Organization (NISO) is considering adopting it as a standard. Other vendors such as Endeavor are developing efforts based on OpenURL. Aspects of Innovative's Millennium Access Plus product also are based on the use of OpenURLs.

This year's survey asked vendors about the impact of electronic books on libraries in the next five years. "Confusion!" was the response from Carol Knoblauch, product manager for Open Text, BASIS Division. She added, "There are so many legal, technical, and procedural issues to be resolved in the next few months/years that the most likely result will be more options than most libraries are prepared to consider."

Other respondents echoed near-future caution; however, most expressed optimism in the long run. Cindy Miller, director of product strategy for Endeavor, sees two elements as essential for the widespread adoption of e-books in libraries: rights management solutions and cooperative development between system vendors and e-book suppliers. "For electronic books to flourish, integration of and access to e-items through the OPAC is essential," said Miller. Carl Grant, president of Ex Libris (USA), added that "libraries will need applications designed specifically to interconnect with other systems that serve as the distribution centers for e-books, and they must be able to enforce copyright and distribution control."

Oddly, despite statements of support for such systems, only Sagebrush, among vendors surveyed, has joined the Open E-Book Forum (www.openebook.org), a leading international organization attempting to establish common specifications for e-book systems.

According to several vendors in the school library market, the brightest future for e-books in the near-term is with textbooks. Sagebrush's Darrel VanderZee, VP of business development, states that "e-books will play a substantial role in schools and school libraries within five years." E-books offer several unique advantages, including full-text searching, integrated multimedia presentations, and the ability to highlight and make annotations.

Tom Schenck, president of Follett Software, also sees the initial impact of e-books in schools on the reference collection. He states that reference materials "will then be available online and may possibly be downloaded to an e-book reader." However, Schenck doesn't expect e-books to gain serious momentum for five to ten years.

Katherine Blauer, president of Gay-lord Information Systems, suggests that digital audiobooks, MP3, and related formats may streamline services to the homebound, the blind, and the physically handicapped.

Most responses noted that e-books are simply one component of the library's increasingly complex array of information resources. DRA CEO Michael Mellinger said, "We see e-books as part of a larger trend of virtualization in today's library…. Ultimately, the push of virtualization serves patron services by taking resource sharing to an entirely new level of immediacy."

Since special libraries have long pioneered in handling electronic resources, a perspective from Phil Green, president and CEO of Inmagic, which specializes in this market segment, might clarify the long-term context: "Within five years we believe that the majority of special library resources will be electronic/virtual…. [B]rowser-based access to library materials is now a standard, and…the vast majority of library usage will be virtual (via a browser) rather than face-to-face…. In many ways these trends will move the corporate librarian into the role of the intranet content manager."

The librarian still must select, acquire, and organize quality information resources. The integration of e-books and other digital material into a library collection is being enabled by an emerging set of technologies. The tools that librarians use "to perform these tasks will need to be thoroughly transformed to work in a world of electronic materials and virtual library access," according to Green of Inmagic.

System vendors are attempting to fill this transformative role through their products. Today's systems are being designed to supply the distributed infrastructure for new synergies among libraries and content providers, resulting in expanded access to materials. Is the promise of client/server computing fulfilled? That depends upon how successfully librarians manage technology-enhanced services. The technologies are changing how librarians work, but they do not change the essence of library work.

* Formerly Best-Seller.

Total global sales for Sirsi include 16 sales of the Hyperion Digital Media Archive system to existing customers. These 16 sales are not reflected in the breakdown or total sales figures in Table 3.

*Total sales figure provided by vendor do not include consortia sales.

COMPanion did not provide sales figures.

Follett breakdown is for U.S.-based accounts only. Total sales figures are global, one multitype consortium.

*Number of "legally independent" libraries (not including branches). Total reflects the number of signed contracts to consortia in 2000 and may include sales to existing accounts.

Innovative breakdown by library type does not include consortium sale to Access PA, representing over 3000 libraries.