Ian’s Blog on Open Source Marketing

There is a common phrase “a camel is a horse designed by a committee”. Well if that is the case an ECM camel is a suite built through acquisition. The problem is that you get an extra hump you don’t need or worse still two humps that do the same thing and one hump has to go.

On a more serious note the last decade has shown us that when ECM companies expand their suite, new products either take a long time to get integrated or never do. Overlapping products become orphan children starved of resource and left to wither.

When companies pay large amounts for an acquisition they need to get a return on their investment and it is the customer (existing or new) that pays. The customers typically suffers either through:

• Higher license prices
• Higher maintenance costs
• Higher integration costs
• Lower customer service as key people leave
• or paying for support and maintenance on a product that is on life support with little investment

This is in contrast to an ECM industry that is going through:

• Commoditization - Driven primarily by Open Source in the ECM space
• Standardization - Driven by new standards such as CMIS
• Consumerization - Driven by simple mass market social computing interfaces
• Dramatic Cost Reduction - Publicly verifiable figures show this to be in the range of 89% to 96%

As I have previously written,  the open source model operates at a dramatically lower cost and thrives in blue oceans where vendors such as Interwoven have been too complex and expensive. Websites don’t live forever. Many of our customers are existing Interwoven and Vignette customers who have chosen to build new sites on Alfresco and gradually move away from the legacy proprietary vendor. The new world is a heterogeneous one where users choose what is most appropriate for each project.

In acquisition situations such as this customers are taking a big risk staying with an ECM Camel. What products will exist in 6 to 12 months time. Which will be on life-support. Which ones will be in the process of being integrated. Even those that are being integrated come at a cost. A focus in integration means a long wait and a new version with no new functionality that is often less stable than the old version.

Interwoven was a good product in its day and to keep using the analogy a racehorse. Customers need to think about if they want a camel or to move to a modern racehorse that is very different to the one of the 1990’s.

Autonomy adding Interwoven for Governance and Risk Compliance makes sense when adding the WorkSite product which is strong in the legal sector. But what about the Digital Asset Management and Web Content Management humps? Also, what about the two humps of WorkSite and Meridio.

The Credit Crunch and acquisitions such as this make people stand back and think as opposed to just doing business as usual.

The blue ocean just got bigger and the flood gates are opening.

Welcome to a world of:

• Choice
• No Tie-In
• Standards
• Simplicity
• Dramatically Lower Cost

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The End of it
Scrooge changes his life and reverts to the generous, kind-hearted soul he was in his youth before the death of Fan. He anonymously sends the Cratchits the biggest turkey in the butcher shop, meets the charity workers to pledge an unspecified but impressive amount of money, and spends Christmas Day with Fred and his wife.

The next day Scrooge catches his clerk arriving late and pretends to be his old miserly self, before revealing his new person to an astonished Cratchit. He assists Bob and his family, becomes an adopted uncle to Tiny Tim, and gains a reputation as a kind and generous man who embodies the spirit of Christmas in his life.

I believe that this time next year when we look back at 2009 we will see it as a positive year. Times like this turn us all into what my friend Nancy Garrity calls “Econnoisseurs”. The Urban Dictionary defines econnoisseur as “One who insists on the highest quality at the lowest price.”

After the tech bubble burst every company needed to find a way to do more with less. Lee Thompson of E*Trade discussed in Business Week how by using open source software, running on less expensive hardware, he saved $13m per year going from 2002 to 2003. Open Source with commercial Service Level Agreements in a typical enterprise configuration saves between 89% to 96% for Enterprise Content Management.

In times of recession companies can’t just do business as usual. They need to look at what they do, look at what is really necessary, innovate, simplify and cut out un-necessary costs. This creates great software companies and enterprises that are great users of software. Out of the bubble came great companies such as Google, Amazon and eBay that benefit people every day of the week. Out of this recession Open Source and Cloud-Based Web 2.0 companies will emerge as similar powerhouses that benefit people every day of the week.

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The Year of the Compliance – I can’t afford not to be compliant but how can I afford to be compliant

With every new year comes a look back at last year. The current monetary crisis will reignite regulation, governance and compliance concerns. What this crisis has taught us is that markets are global and local regulations cannot protect global markets. New global regulations will come into place and need to be enforced globally. From a content management perspective this means:

• Audit everything and everybody in everything they do in every region
• Audit not just documents but also email, instant messages and also social networking when it relates to business
• Audit not just additions or changes but also access
• Enable rapid searching and eDiscovery across not one but all repositories of all types that a person may have accessed
• Make it simple to show the process and rules you have been using and the change control in your systems including your websites

This will require open standards and architectures to support these new requirements and avoid costly highly damaging eDiscovery requests. This “mass” compliance will require systems that are:

• Low cost
• Simple for all users to use
• Simple to rollout on a large scale
• Based on open standards for integration

Then you can address the question in a rational way:

“Can I afford not to be compliant and also how can I afford to be compliant

Prediction for 2009: 2009 will see a resurgence of compliance and an audit everything approach from a content management perspective. This will further drive open standards adoption to enable cross repository access and analysis offering commoditization driving down the cost of content compliance.

The Year of the Consumerization of Buying Enterprise Software – Discover, Try, Buy - with the Wisdom of Crowds

In the 1990’s there was a lack of freely available product information and the only way to access and try an enterprise product was through the sales division of that company. The world has changed and the internet has made:

• Information on a product freely available
• A product download freely available
• Advice on that product freely available
• The opinions of masses of users freely available

The credit crunch is forcing companies to look for value – not just in the cost of software but in the way they evaluate software. Today, to discover a product you go to Google. To get opinion and information you rely on the wisdom of crowds. People are turning away from “the complexity machine” and rewarding simplicity, value and transparency. Tools such as Google trends show in real-time market trends. Masses of blogs offer up-to-date information. Ranking and access allows good information to rise to the top. This is what has driven the success of Wikipedia vs. Encyclopedia Britannica.

Prediction for 2009: Enterprise software acquisition will be consumerized. Companies will “Search” the web, trusted blogs and forums, “Try” the software via download or in the cloud, and ‘Buy” if they like it, typically through a subscription model.

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5. The Year of Choice is Important Again – CMIS becomes the SQL for Content Management

“Choice” has always been a nice word. The headline grabbing price rises of Oracle and SAP and the new lock-in of SharePoint have made customers realize they don’t want to put themselves in a situation where they have no choice in the future. Choice is core to lower prices today and lower prices tomorrow. Geoffrey Moore, a great visionary, a number of years ago predicted the “Stack Wars”. Stack wars tie a customer not just to one product but a whole stack. To reduce the cost of software today you need not just lower cost for the software you are buying but also choice of the lowest cost software stack to run it. This allows you to in the future, if your vendor increases its prices, to switch another vendor. You could for example go from BEA to JBoss, Oracle to MySQL, Windows to Linux or vice versa.

Prediction for 2009: Support for an open stack at the operating system, database and application server levels will be demanded. Content Management Interoperability Services (CMIS) will become the SQL for the content management industry and the catalyst for choice, developing applications once that run on any compliant system with painless switching.

6. The Year of New Enterprise Software Pricing Models

Traditionally enterprise software has been bought with a large upfront payment, followed by a large, typically 20%, annual maintenance renewal. This was driven as a capital expense (cap ex). Discounts for enterprise deals have tempted companies into buying more than they need, creating shelf-ware and rich software companies. This purchasing process is changing, driven by Open Source and Software-as-a-Service pricing models. Customers are now demanding:

• No large upfront fee
• A subscription model
• The ability to budget out of operating expense (Op ex) as opposed to capital expense
• This purchasing process is changing, driven by Open Source and Software-as-a-Service pricing models

Customers are also demanding fair pricing for fair usage highlighting the flaws of traditional pricing:

• Per user pricing – often called Client Access Licenses (CALs)
• No difference in pricing for someone who uses the software for 1 hour a year and someone who uses it 24 hours per day
• A single user paying multiple times to use different software just to access or edit different content formats e.g. Word and CAD files

Prediction for 2009: A move to a subscription model driven out of operating expenditure and a move to fair usage based pricing not CALs.

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The Ghost of Christmas Present
The “Ghost of Christmas Present”, a great genial man in a green coat lined with fur, takes scrooge through the bustling streets of London on the current Christmas morning, sprinkling the essence of Christmas onto the happy populace. They observe the meager but happy Christmas celebrations of the Cratchit family and the sweet nature of their “forgotten” son Tiny Tim, and when the Spirit foretells an early death for the child if things remain unchanged.

2. The Death of Long Term ROI Studies and “I’ve started so I’ll finish”

The traditional way to sell enterprise software was to find a “killer application” and do “Value-Based Selling”. The number of times I have heard phrases such as, “Our software will reduce costs in your supply chain by 1% over 5 years therefore it is perfectly reasonable to pay a mere $1m for the software”.  Long-term ROI is dead. Customers care about the cost now and the benefit over the next quarter.

As in “A Christmas Carol”, the “Ghost of Christmas Present” reflects what I have heard more and more recently, about enterprise content management projects that are very late, and more importantly in the current economic climate, very over-budget – if things remain unchanged the projects will have an early death or be replaced by a lower cost alternative that is simple to use and easy to rollout.

Prediction for 2009: Long-term ROI studies are dead. Customers care about the cost now and the benefit over the next quarter. Companies will review current “in-flight” projects and realize it is cheaper to scrap them and move to a more cost effective alternative than to blindly carry on.

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