Small is Beautiful, When Selling CMS
The software industry has never been kind to its pioneers. Who remembers Seattle Computer Products, WordPerfect, AmiPro or NeXT?
They all developed world-beating products that fell by the wayside through a combination of bad business deals and rapidly dating technology.
iSeattle Computer Products disappeared shortly after selling their disk operating system to Bill Gates' fledgling company. WordPerfect are still selling their word processor and office suite, but are now part of Corel. AmiPro is still available from Lotus, but NeXT's innovative windows-based GUI has, as far as I know, completely disappeared.
It seems that the web content management industry is also losing its pioneers.
Expectations of billion dollar revenues are forcing the founders of the CMS industry to abandon their web roots and reposition themselves in the Enterprise Content Management market against the likes of FileNET, Documentum and IBM.
This may bring higher order values, but they are now losing out in the very sector that they created. A growing number of small companies are starting to sell content management systems that cost a fraction of the price and in many cases, perform better than their predecessors.
Consultancies doing it for themselves
With the market becoming more competitive, everyone is looking to cut their costs, and many consultancies are doing this by dispensing with the commercial CMS and bundling their own product in with implementation services.
The UK's Ocula are taking this approach with their Adeptive product. They focus on providing a combination of the CMS, implementation services, and hosting. This means that although the CMS price is low, the value of the other services more than covers their costs.
With clients including Johnson & Johnson MSD and Alterian this seems to be paying off for Ocula, who have found that as well as the cost advantage, they are also able to more closely tailor the solution to individual clients than if they were using a mainstream product. "When you build the CMS yourself," says Managing Director Andrew Bailey, "you can develop bespoke application modules to meet exactly what the customer wants."
Who needs to pay for software?
Other consultancies are going a step further and implementing freely available open source content management systems for their clients. As well as eliminating the license cost, the open source approach overcomes the need for an internal R&D team to develop the product.
Paris based consultancy Smile were developing their own in-house CMS until they discovered open source product Cofax.
In explaining the decision, Smile's Managing Director Patrice Bertrand says, "Our home-made way of dealing with content was archaic and we were starting to lose customers." There was no formal training available for the system, but they found that within two weeks their Java developers were able to start work on customer facing projects.
They have subsequently won significant new business with key clients including Les Editions La Cigale, and France's CEA.
When arguing against open source software, commercial vendors often point to problems in supporting or enhancing open source software, but Smile have worked this to their advantage,
developing new functions for the CMS as part of their client work.
This has made them more responsive to their clients needs, and when they incorporated the enhancements back into product, their reputation as a developer of Cofax sites was greatly enhanced.
Blogging it
But even without the license fees, implementing a content management system is still expensive. The consultancy fees can easily exceed the budget of a small company and some companies are now looking to smaller-scale products to meet their content management needs.
The growing trend in writing web logs, or "blogging", is one area where simple software has now reached a level where is can compete with many CMSs. John Hiler, CEO of American software provider WebCrimons argues that his clients are interested in some of the features available in mainstream content management systems, but that they simply "cannot justify that sort of outlay when blogware hits most of the specs."
For many companies there is still too much risk associated with using a blogger for a mainstream corporate web site, but once an organisation has gone through the pain of a failed CMS implementation they are much more open to alternative approaches. Hiler argues that blogware is a disruptive technology that will lead to the demise of the CMS market in the same way that the PC took over from the mainframe.
Natural selection
Given that Vignette and Interwoven between them have more than half a billion dollars in cash, it is unlikely that they are too worried about the threat from blogware, but with most of the big web CMS vendors trading at less than their book values investor sentiment is clearly not on their side.
Few companies will consider spending millions of dollars on a web CMS when they can get a comparable product for significantly less, and it seems that many vendors have priced themselves out of the market.
It is ironic that many of the smaller consultancies are already profitable while the best funded businesses are struggling to reduce massive marketing and R&D expenditure before they can even begin to return a profit, let alone the level of profit demanded by the investors who have put hundreds of millions into the business.
In his 1973 book "Small is Beautiful", E.F. Schumacher argued that a sustainable economy would not come from large multinationals companies, but from a network of smaller businesses working closely with each individual customer. In the post-dot-com CMS market, his advice seems more astute than ever.
Tom Weiss is a consultant for
www.clarkweiss.com
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