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Feature
posted 21 Feb 2005 in Volume 1 Issue 7
Mid-market ECM
When deploying an enterprise-content-management system, mid-size companies would do well to avoid ‘vendor envy’. By Jessica Twentyman.
When it comes to choosing an enterprise-content-management (ECM) system, Meta Group analyst Andrew Warzecha has a simple piece of advice for mid-size companies: Bigger is not necessarily better.
Too often, he says, these kinds of organisations – which he defines as those with between 500 and 5,000 employees – suffer from a condition he calls ‘vendor envy’; that is to say, they long to deploy the kind of end-to-end, enterprise-class ECM packages from companies such as Documentum, FileNet, Interwoven and Vignette that are typically implemented by far larger organisations.
What these companies don’t recognise, says Warzecha, is that that kind of overbuying will significantly increase overheads in installation, integration, administration and support. The result? Total cost of ownership (TCO) will be unacceptably high, even when the vendor discounts licensing fees heavily.
“If there is a need for more robust architectures, integration functions and features, there is no substitute [for high-end packages]; but if any of these are not true requirements, they become pure overhead borne over the life of the product, and also increase project risk,” he says.
His advice: mid-size companies should buy packages that extend just beyond their business needs – but no further – and examine closely the anticipated TCO for any option. They need to look for easier deployment, administration and usability, as well as lower TCO, such as lower service-to-licence ratios, without sacrificing support for multiple types of content or scalability.
Needs assessment
According to Liz Maloney,
In addition, these companies are typically seeking to deploy ECM that compliments the technologies they already have in place. “Mid-market buyers tend to have heterogeneous environments – in large part because they do not make platform decisions. Many have learnt the hard way that interoperability is important, which tends to drive them toward standards-based solutions, or solutions that promise interoperability in other ways,” says Warzecha.
Mid-market web-content-management (WCM) supplier Ektron, for example, aims its products squarely at Microsoft-centric organisations. “Our products leverage the Microsoft Windows operating system, the .NET Framework, Microsoft databases, application servers and developer tools – all the technologies that the IT department of most mid-market organisations are really familiar and comfortable with,” says Bill Rogers, CEO of Ektron. “These companies don’t want to invest in new resources or recruit new skills for content management.”
Nevertheless, a number of the high-end ECM suppliers are increasingly targeting mid-market customers as the market for large, enterprise-wide accounts in larger organisations becomes saturated.
According to Maloney, many of these efforts have so far been extremely naive: “The sales cycle for mid-market companies can be a lot longer, and more costly to the supplier because it involves an education process. Too many high-end suppliers are extremely naive about that and are looking to make fast wins because they imagine smaller companies mean an easier sale.”
Not only that, but their products are frequently unsuitable for the mid-market, says Steve Williams, a senior consultant at mid-market WCM vendor RedDot Solutions. “Their solutions are frequently too heavy, too expensive and too complex for mid-size customers to implement easily. This is a market perception that no matter what they do to try and rectify is going to be hard to shake off,” he says.
Warzecha of the Meta Group echoes this view: “It is not sufficient to simply price products differently for this market. The requirements to succeed are also different in terms of packaging and product capabilities, and we believe their success will remain limited.”
Moving downstream
Perhaps in recognition of that fact, EMC Documentum is trying a different approach. Instead of marketing a cut-down version of its ECM platform Documentum 5 to mid-market customers, it has introduced a product, ApplicationXtender, based on technology acquired with EMC’s July 2003 purchase of storage software management company, Legato. That product came under control of EMC’s Documentum unit in January 2004.
“Documentum 5 is an all-encompassing, robust and scalable ECM platform for companies willing to make the investments that the product demands. What we are doing with ApplicationXtender, by contrast, is to package a limited set of functions that fit the attributes of mid-market companies,” says David Gingell, EMC Documentum’s vice-president of marketing for Europe, the Middle East and
Essentially, Documentum ApplicationXtender is an electronic file cabinet optimised for Windows/.NET environments and designed so that mid-market organisations can manage fixed content images, electronic files, reports and other business-related content. “The boundaries in function are clear, but it is quick to install, easy to use and we offer a number of add-on options such as COLD (computer output to laser disk) report management and a web-access client,” says Gingell.
ApplicationXtender is priced on the number of concurrent users: a 20-user system, says Gingell, would cost around $20,000 - about quarter the price of an equivalent Documentum 5 purchase.
Hosted option
Another option worth considering for mid-market companies is a hosted ECM system, where a third-party runs and supports the software on their own systems, and customers pay a monthly charge, typically based on the number of users. That frees them from the burden of making a single, upfront software licence payment and ongoing maintenance costs.
One company exploring this route is UK-based mid-market WCM company MediaSurface. “Content management is a technology that can offer the mid-market tremendous advantages and benefits, but it has always been perceived as an expensive technology route. We have seen some new business deals slip because of the high price and their lack of IT infrastructure,” says Nick Smee, sales director at Mediasurface.
The company is currently recruiting new resellers in order to deliver hosted options suitable for companies where five to ten employees are responsible for website management. Beyond that, says Smee, companies may find that the economics dictate that they would be better off deploying software in-house. “It’s a question of deciding whether a monthly fee or an upfront software licence delivers the best return on investment over a three to five year period,” he adds.
That may be a smart move, says Warzecha. “The hosted model appears to be gaining some traction in the mid-market. It’s attractive to business managers who cannot wait for IT or an IT organisation that does not have the expertise or cannot afford the initial costs of a packaged solution,” he says.
But whether a mid-market company decides to deploy in-house or use a hosted option, the good news is that there are plenty of vendors with good reputations in the mid-tier ECM market, says Warzecha (see box, Mid-market ECM options). Choosing from one of these will be the best idea for many companies, he adds: “Purchasing from the right size of vendor cannot only can save licence money, but often represents an easier-to-deploy and use option,” he says.
In other words, mid-tier organisations should resist ‘vendor envy’ until ECM options specifically targeted at the mid-market have been thoroughly investigated.
(Box out) Decisions, decisions…
According to Warzecha, mid-tier organisations currently have the following options to meet their ECM requirements:
- Make strategic purchases aimed at meeting all content types and organisational requirements;
- Make a combination of tactical purchases aimed at meeting specific departmental needs;
- Use basic content management tools bundled with other offerings
- (for example, portal products) that might be good enough to meet requirements;
- Use a third-party hosted or outsourced content-management service, where the infrastructure becomes someone else’s responsibility;
- Continue with current systems and hold out for prices to fall.
Source: Meta Group
(Box out) Mid-market ECM vendors
Ektron
Known for its OEM editor, Ektron’s various Windows-based offerings have increasingly added functionality and evolved into a true WCM offering that is beginning to appear in the mid-tier.
Hummingbird
Strong document management roots and customer base, now supporting two product lines (Windows and Java-based). Ease of use remains a hallmark. Similar to Hyland, Hummingbird has built out an overall ECM platform, but partners with RedDot (see below) for WCM.
Hyland Software
Hyland is a traditional imaging and workflow vendor that has extended successfully into an overall Windows-based ECM platform. The only missing component for a complete ECM platform is dynamic WCM, and with its pending IPO, we expect it to acquire for this.
Macromedia
With 200,000-plus individual users of the standalone version of Contribute already sold, Macromedia has opted to link the product with server-based administration capabilities in the form of its 3.0 release. Although still lacking a complete graphical workflow engine and multi-site management, 3.0 is one of the easiest to use and least costly WCM options available.
Microsoft
With Microsoft offering a Standard Edition of CMS and dropping the price of the Enterprise Edition, the company has enjoyed increased adoption in the mid-market. While still predominantly aimed at the technical-user, the product is expected to improve as integration with Windows SharePoint Services and SharePoint portal evolves through the Longhorn release cycle (2008+). However, implementation costs remain higher than most other mid-tier-focused solutions.
Percussion Software
Since its 5 release, Percussion has extended its original WCM offering to address other forms of content, including documents. What remains unique and highly attractive to mid-tier clients is the low TCO and a pricing model that enables clients to scale the number of users and sites without additional costs, unless a separate set of Percussion servers is brought up to support additional unrelated sites.
RedDot
This German-based vendor has a strong following for WCM on the Windows platform. For users who find Microsoft’s CMS too technical, this is a good starting point for alternatives. RedDot’s ECM suite for the mid-market also adds document management, workflow, and collaboration capabilities. The potential risk with RedDot is that it is on numerous other vendors’ shortlists for acquisition.
Serena
Merant’s Collage WCM offering is back as Serena Collage, and Serena is pumping R&D funds back into this product. It has strong penetration in non-profit and educational institutes. For users seeking an option that links code and content changes for sites, Serena is a good choice.
Stellent
Of the mid-tier vendors, Stellent provides the broadest set of functionality with ease of use, new and impressive multi-site management capabilities, and a low TCO. However, Stellent’s recent Optika acquisition will force it to spend additional R&D cycles to integrate its Windows-based imaging, workflow and output management capabilities.
Xerox
Xerox’s DocuShare offering continues to move up market with added functionality. Its per-server-based pricing and ease of use have allowed it to be an effective vendor in the mid-market. Its J2EE architecture has been a plus. However, it lacks a true WCM capability, but has strong web publishing. The 4.0 release will extend functionality even further.
Source: Meta Group
