Tag Archives: ibm

Big Web CMS vendors in 2007 and 2012

What a difference 5 years can make! Much has happened in the crowded and still young CMS marketplace since 2007, but contrary to what most analysts expected, the number of CMS vendors has not gone down. New vendors have emerged, local vendors have successfully gone international and on top of that, many of the large software companies that were largely uninterested in CMS back in 2007 are now investing heavily in the market.

As a buyer it can be confusing and difficult to stay updated on the rapid market developments, so I made a slide showing who the big vendors were in 2007 and what the picture looks like today for a recent J. Boye group meeting.

Large, global and complex organisations tend to gravitate towards the big vendors. As one of our members put it:

Elephants buy from elephants

The elephants: The big CMS vendors in 2007 and 2012. Click for a larger version

The elephants: The big CMS vendors in 2007 and 2012. Click for a larger version

Consolidation has only happened to the extent that vendors have bought other vendors. With just a few exceptions all the products have been kept alive, so today several of the above have more than one Web CMS as a part of their offering.

Finally, a look at the big vendor websites won't get you far in terms of figuring out more about their CMS offerings. They may be big vendors, but they also offer many other solutions and CMS is apparently not on top of their list. Here's the CMS products from each:

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Why the finances of software vendors matter

color_graphI've regularly covered annual reports, earnings announcements and other financial news about software vendors. These commentaries tend to stir debate and I am frequently asked why I bother to look behind the numbers. Is it really important?

Many vendors, in particular privately-held US-based ones, don't publicly release audited numbers. Instead they carefully select a few positive numbers to share via a press release. An example of this is seemingly successful CMS-vendor Ektron, which claims to be open and transparent, but will tell you only that their sales grew 38%. If you are willing to sign a non-disclosure agreement, they'll share more details on profitability, but can a vendor really claim to be transparent when you need to sign a contract to get some fundamental numbers about the financial health of the vendor?

In my view financial numbers and annual reports are a great way to gain insights about a vendor. These are the numbers you should indeed care about:

  • Services revenue. A good example of this is FatWire, where your local key account manager might have told you that they are very committed to their partners, when in fact services bring in about 30% of the company's total revenue.
  • New license sales. If this is down, it will tell you that the vendor is having difficulty signing up new customers. This can be a sign that an acquisition is lurking around the corner, which is what happened to Vignette as they got acquired by Open Text.
  • Maintenance and support revenue. If this makes up a large part of revenue, it means that the vendor has many customers who keep using the product. If you can get hold of a renewal percentage or average customer lifetime, it will tell you something about how long the customers stay with the product.
  • A break-down of revenue by product will tell you which products are really strategic to the vendor. IBM and Google are examples of big vendors, to who far from all products are equally important. This might reveal which products are likely to become discontinued. This happened with Microsoft CMS
  • Cash is king. Look at the cashflow to find out whether the vendor might be facing survival problems or is sitting on a pile of cash.

After looking at a few vendors, you'll discover that the accounting models tend to differ hugely. Some will list licence sales straight away, while others will break it down and only list it partially over a given period. Some might also divide their revenue between a corporate entity and different geographic regions, e.g. CMS vendor Sitecore. Details like this obviously make it difficult to compare the numbers.

Finally, I would say that the past decade has showed that positive financial numbers by no means guarantee that your favourite vendor will not be acquired or that your favourite product will not be discontinued. 2009 saw quite a few acquisitions, most notably Adobe's acquisition of  Omniture and Opentext which bought Vignette. I'm sure we will see more in 2010. These might not impact customers in the short-term, but down the road, they always also have significant impact, e.g. with closed regional offices, a new partner strategy or a cut in engineering spending.

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Are you paying competitive hourly rates?

Money Hourly consulting rates for online projects vary dramatically. As a customer it can be quite difficult to figure out whether you are paying a reasonable rate as each project has its unique characteristics and consultancies may be more or less hungry for work.

There are many factors which influence what you'll end up paying. You'll notice the wide span in the below ranges for hourly rates collected during the last 6 months (February - July 2009):

  • Creuna, a Scandinavian digital agency: €130 - €150
  • IBM Global Services: €190 - €300
  • LBi, a large full service digital marketing agency: €100 - €130
  • Pentia, a Danish Sitecore partner: €150 - €175
  • Reading Room, a UK-based system integrator: €100 - €120

Some vendors will offer differentiated pricing based on staff seniority, so that you pay more for experienced consultants. In addition to the hourly rate, it is not unusual to also charge for travelling time, typically at 50 % discount. So, if it takes 4 hours to get to and from your office, travel time alone could easily cost you €200. This is added to the actual travel cost (train, flight, hotel).

Not surprisingly, most vendors are big fans of volume discounts. You should be able to get a substantial discount if you buy a large number of hours. Some will also offer discounted rated for government agencies and charities.

You might prefer to get a fixed price for your project, but still much consulting is done based on an hourly rate. If you manage to get a fixed price, you can expect to pay an hourly rate for change requests, which in some projects tend to accumulate.

In general, implementation partners don't like to talk about money until they have heard your thoughts and plans for the project. They certainly don't advertise their rates on their websites and very few will try to base their pitch to you on their attractive rates. Instead they will try to convince you to use other selection criteria, such as their experience, references and project methodology. For a perspective from the other side of the table, see Darren Fergussons interesting posting on My day rate is my rate, not your rate.

I'm not saying that hourly rates should be your main selection criteria, but since they tend have such a tremendous impact on total project cost, even a few €'s difference will easily add up. Also, remember that once you've started the project it is both expensive and cumbersome to change partner.

What hourly rate are you paying?

Full disclosure: While J. Boye does not do any implementation work, our hourly consulting rates are between €175 - €200.

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IBM #1 in web portal software?

IBM logoIT analyst firm Gartner recently released research on market share numbers (Market Share: Application Infrastructure and Middleware Software, Worldwide, 2008 35-page document; USD 9,995), in which they crown IBM as the leader in web portals. IBM immediately issued a press release, IBM Ranked #1 in Web Portal Software Market Share, where you can find a few more details. This is far from the reality that I see, so let me take a deeper look at this, as sales people tend to use market share numbers quite frequently in front of customers.

The ranking was based on total worldwide software revenue for 2008, so the many open source portal projects were not included. Among the most significant projects here are Liferay, Plone and uPortal. These have all been quite innovative in the recent year, while IBM has done very little to improve the WebSphere Portal offering.

Microsoft is known to give away SharePoint like candy, so SharePoint might indeed have less revenue. A substantial portion of SharePoint licenses remain unused, but still adoption of SharePoint is much higher than IBM. Here's some supporting indicators:

  • European intranet and portal expert Jane McConnell found 55 percent of the 226 participating enterprises in her Global Intranet Strategies Survey were currently implementing or planning to implement SharePoint. The survey was conducted during 2008, just like the Gartner research, so unless a large number of organisations have bought both IBM WebSphere and Microsoft SharePoint licenses one of them is wrong.
  • Less than 10 organisations among our community of practice members use IBM WebSphere Portal, while we have more than 50 organisations using SharePoint and 3 dedicated SharePoint groups.

Oracle is another significant vendor in the space. They have several different portal products and claimed portal market leadership last year. Oracle WebCenter Suite has seen very little adoption, even though it is the strategic portal platform for Oracle. I suspect that if you combine all of their 5 enterprise portals, they still generate less revenue than IBM WebSphere Portal.

As you can see, market share numbers can easily be very misleading. I don't recommend automatically buying from the "leader", as it will easily become a very expensive exercise, in particular if WebSphere Portal is a bad fit for your requirements. Also, WebSphere is known to be comparatively expensive to implement. IBM is a significant vendor with good numbers globally, but remember that the portal revenue represents only a small fraction of IBM's overall revenue. If you are curious, take a look at my detailed analysis on IBM's recent annual report.

Do you agree with Gartner that IBM is #1? Does it matter?

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Annual Report: IBM – where do you want to go today?

IBM logoIBM recently released their annual report for 2008 achieving record revenue, record pre-tax earnings, record earnings per share and record free cash flow. IBM has grown tremendously and now does USD 103 billion in annual revenue (up 5 % from last year) with almost 400,000 employees around the world. Despite the record-breaking  numbers Big Blue seems a bit lost when it comes to enterprise portals, web content management and enterprise search.

I'll leave it to other industry analysts and observers to speculate about the potential impact of IBM's rumoured upcoming acquisition of Sun. Rather, I want to share my findings from simply looking at the numbers and talking to curious customers who -just like myself- are wondering where IBM might be taking their many web products in the future.

IBM do not detail specific product line revenue, but they do share many interesting details in the 128 page annual report:

  • Revenue for the very large WebSphere family of products grew 6.2 % from last year.
  • Roughly 21 % of over-all revenue comes from software and more than half of this is  from the middleware division where WebSphere belongs.
  • IBM have several and overlapping answers to web content management, including WebSphere Portal, FileNet and Lotus Web Content Management. The acquisition of FileNet in August 2006 is briefly mentioned in the report
  • Global Services, the IBM division which primarily does consulting and outsourcing, contributed with USD 58 billion revenue. In other words Global Services is a very significant part of IBM.

Interestingly, IBM are very optimistic about the future. To quote a chapter called "We Will Emerge Stronger" in the annual report: "...we will not simply ride out the storm. Rather, we will take a long-term view, and go on offence."

Perhaps the good numbers and the bright take on the future, means that IBM are not feeling any pressure from Microsoft SharePoint? So far, the biggest single piece of news in 2009 with IBM WebSphere Portal and Lotus Web Content Management has been the February announcement of a new "pay-as-you-go" model via cloud computing with Amazon Web Services. I have still not found any customers that have gone in this direction, so to me this is still left in the marketing folder.

Customers of IBM's portal, web content management and enterprise search solutions might want to take note of the fact that these are barely mentioned in this year's annual report. For me this is a useful reminder that IBM is a vast company and these solutions represent but a fraction of overall revenue. This is very similar to Google and their tiny Enterprise business.

While there is no indication that IBM is planning to discontinue any of these solutions, I recommend that existing and prospective customers have a conversation with their usual IBM executives to get details on local adoption by other organisations and product roadmap plans. If you are concerned about taking unnecessary risks, make sure to also talk to several system integrators that are able to support your projects and have experience with the same IBM product that you are using.

"Where do you want to go today?" was the title of Microsoft's famous advertising campaign back in 1994. My concern is that IBM, on the face of it, has very overlapping web products that do not seem strategic to IBM. Unfortunately they do not openly communicate where they are going and that's usually a sign of bad news to come, at least for existing for customers.

UPDATE - March 25, 2009: The Wall Street Journal reports IBM Set to Cut More U.S. Jobs

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