Tag Archives: sitecore

Sitecore annual report: a very successful software company

It somehow slipped my radar that WCM-vendor Sitecore released their annual report back in November. Once again they managed to post record numbers with increasing revenue, profit and capital base. Revenue is now at DKK 131 million (up from DKK 79 million) with net earnings at DKK 38 million (up from DKK 18 million). The reported headcount has also gone up to more than 125 employees worldwide from 92 employees. For the whole Sitecore Group, revenue amounted to DKK 217 million, and total headcount was 200.

With growth in all markets and recent office openings in Germany and Japan, Sitecore has come along way from their start in Denmark. Apart from the purely geographical spread, it seems like Sitecore now wants to spread its wings further and grow their implementation revenue and extend their success beyond the web content management marketplace.

I spoke to Sitecore Chief Operating Officer Kim Elsass, about the annual report and recent developments. According to Kim, North America has become the largest market for Sitecore, while the traditional Danish home market is continuing to grow.

Those online professionals really interested in the numbers, will notice that in the UK and US, Sitecore is operating using partially owned subsidiaries. These send part of their profit back to Copenhagen and somewhat complicate the picture when reading the annual report. According to Kim, Sitecore is working on simplifying the ownership structure. From a buyer's perspective, we don't see this having any significant impact on day-to-day business.

Kim also confirmed that based on requests from enterprise buyers who wants Sitecore to assume more implementation responsibility, Sitecore is planning to offer more implementation services. Sitecore is still planning to keep their 700+ partners happy by not offering to do implementations without a partner, but by playing a larger role in the implementation going forward, e.g. by offering architectural reviews or performance tuning  Most competing WCM vendors, e.g. Ektron, already have strong professional service divisions.

In the past we've seen examples of substantial discounts offered on Sitecore licenses, but evidently this has not hurt Sitecore financially. Perhaps to the contrary, Sitecore is using attractive license offers to keep their eco-system of agencies and implementation partners busy and happy.

Finally, the annual report and the conversation with Kim, confirmed that Sitecore is taking a quite broad view of web content management to also include online marketing, e-mail campaigns and intranet portals. More product launches are planned for the coming months.

Will Sitecore be able to continue the success and beat their own numbers once again? Feel free to share your thoughts below.

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Selecting a Web CMS: Case study from Oticon

Selecting a new Web CMS can be a daunting process, in particular at a large, complex and global company. Danish hearing aid manufacturer Oticon (3,000+ employees, customers in 100+ countries) went through the selection process using industry best practices in a 4-step process, which took a total of 7 months.

The website was a corner stone in the recent launch of the new corporate Oticon brand. A new Web CMS was needed that would better meet requirements and business objectives.

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Why pay for Sitecore when you can get Umbraco for free?

After a recent briefing with a Danish system integrator, I started speculating on whether Umbraco CMS might be on track to steal market share from Sitecore in the marketplace for .NET-based content management systems. Others have mentioned the possible trend to me in the past, but is it really happening?

Comparing open source Umbraco and proprietary Sitecore has been the norm for a couple of years in Denmark, the home market for both vendors, but we are increasingly seeing the two vendors on the same shortlists far beyond Denmark.

The question is, whether the "friendly CMS" really will be able to win business from Sitecore?

Umbraco

Here's why Umbraco will beat Sitecore in the long run:

  • Open source: This evergreen mega-trend is a big plus for Umbraco in terms of attracting developers, press and customers.
  • Partners: Umbraco is very popular with system integrators. Nearly 60 people signed up for the LBi-hosted Umbraco 2009 UK Meetup in London. Since then we've heard of several consultancies that used to be faithful to Sitecore, but are now winning their bids with Umbraco. Without license costs there is more budget left for the partners.
  • Price: You can download Umbraco and get started free of charge. You can buy a year of support starting at €3k. To compare, the cheapest Sitecore license starts around €10k and quickly goes up from there (and then you still need to buy support).
  • Community: Umbraco has a strong, happy, positive, enthusiastic and growing community of developers.
  • Simplicity: Many customers don't require online marketing, all the different interfaces and bells-and-whistles offered by Sitecore. Several partners claim that Umbraco is simpler and hence also easier and cheaper to implement.

SitecoreHere are a few good reasons why Sitecore will continue to do well, even though Umbraco might continue to gain in popularity:

  • Analysts: Umbraco is not covered by any traditional industry analysts. Sitecore is covered by all the main players and Gartner even crowned them as "very innovative" in most recent Gartner Magic Quadrant for WCM (Aug 2009).
  • Partners: Building a network of experienced integrators is not easy and Sitecore has been at it for many years. With well-developed skills and a traditional kick-back the partners have good reason to stay with Sitecore.
  • References: In both North America and Europe, you can easily find an existing Sitecore customer. This is very helpful to further increase adoption as it means that new customers have some experience they can tap into. In addition, Sitecore has many government references where Umbraco has almost none.
  • Finance: A quick look at the recent Sitecore annual reports shows they are doing extremely well. Sitecore has demonstrated that they are capable of earning money in a competitive market and posted record-numbers again back in December 2009.
  • Global footprint: Sitecore is an established global player; much more so than Umbraco. Sitecore is in particular strong in the important and highly competitive US and UK markets.
  • Complexity: Many customers have started to realize that they do indeed have complex requirements. Sitecore has targeted the higher end of the market for quite a few years now, which has made the product more complex and capable towards the demanding, global enterprises.

My take: If you do a proper CMS vendor evaluation, you will probably find that the license cost is only a fraction of the overall project costs. Your criteria should really be to look at which system will meet your requirements most efficiently.

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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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Sitecore posts record numbers again

SitecoreEarlier this month Danish CMS vendor Sitecore released their annual report showing record profits and revenue. Compared to last year (see our comment), revenue went up from DKK 56 million to DKK 79 million and profit increased  from DKK 20 million to 25 million. Sitecore has also grown from 120 to 160 employees worldwide.

For some reason, the Sitecore press release is currently only available in Danish and the annual report is nowhere to be found on the English version of the Sitecore site. Apart from the numbers, Sitecore uses the press release to make some other statements:

  1. Sitecore is among the global CMS top 3
  2. Analyst firm Gartner has crowned Sitecore as the most visionary vendor in the world
  3. CMS consolidation will continue in 2010

I'll simply say that I suspect the lack of translation is not to hide the annual report from competitors, but rather to avoid global ridicule with these hard-to-believe claims.

I have taken some time to study the annual report and the numbers contained in order to explore what is in store for Sitecore customers. Here my comments:

  • License sales is almost DKK 76 million out of the DKK 79 million revenue, with the majority of the remaining revenue being training courses.
  • Sitecore is far from the only vendor doing well in the current financial climate. US direct competitor Ektron is also doing very well and so are Java-based alternatives Day Software and FatWire
  • According to the annual report, Sitecore has used the past year to set up shop in The Netherlands and in Sweden. With strong local competition (Tridion and EPiServer respectively), the new office in Sweden lost DKK 500.000 while the Dutch subsidiary was profitable
  • In the coming fiscal year, Sitecore is planning to continue the quest for world domination and establish themselves in Japan

Sitecore have also just announced their very first live customer on their much promoted Online Marketing Suite. To my surprise this was a government customer - National Consumer Agency of Denmark - and I can only imagine how relieved Sitecore is to finally have a real OMS reference. OMS was a topic in a recent J. Boye group meeting and for our take on OMS, see Peter Sejersens critical analysis: New Sitecore version – why bother?

Throughout 2009 Sitecore have also worked hard on addressing shortcomings when it comes to cross-browser support. According to Sitecore, the desktop interface, which has previously only worked in IE, will soon be released in an updated version with support for the Chrome and Firefox browsers.

Finally, I suspect Sitecore will have  a more difficult year ahead in 2010. The Danish home market is seeing increasing Umbraco adoption, an open-source .NET alternative, and I suspect many loyal Sitecore partners will be tempted to offer Umbraco and get a bigger chunk of the budget for implementation. Outside Denmark every major competitor already has OMS-like offerings, so unless Sitecore can come up with a real differentiator, I would recommend that buyers look at the price. At the moment Sitecore is substantially more expensive than competing vendors such as Ektron, EPiServer and Kentico and I'm wondering if this will continue throughout 2010?

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Sitecore winners of Web Idol at Aarhus 2009

SitecoreCongratulations to the Sitecore team who defended the prestigious Web Idol competition in Aarhus at the J. Boye Conference last week and once again took home the enormous trophy.

Sitecore beat competing CMS vendors e-Spirit, Microsoft and Terminalfour as well as data migration vendor Kapow and video start-up 23.

Just like in 2008, it was a refreshing, funny and well-prepared demo, even though the Sitecore rep managed to say "CMS system" at least once. The demo focused on a  non-sexy sign-up form with a complex captcha and finished up with an example of behavioural targeting.

Sitecore entered the Web Idol competiton for the first time in 2006, but were beaten by Norwegian open source vendor eZ Systems. However, they returned in 2008 to claim victory for the first time. Sitecore decided not to defend their title at our Philadelphia conference earlier this year, where eZ Systems won again.Perhaps the 2 winners will manage to meet at Web Idol 2010 for the ultimate showdown?

You can watch the full 7 minute winning demo, including the comments from the 3 judges:

Among the comments from the judges (fast forward to end of video), note the comment from Jon Marks, Head of Development at LBi, who liked the fact that the Sitecore representative showed some of the new stuff from Sitecore Online Marketing Suite. My colleague has previously questioned whether the upgrade is worth it, something which was certainly not answered in the 7 minutes.

If you watch the other Web Idol videos you'll see examples of what vendors like to demonstrate in late 2009, including a Microsoft representative who showed SharePoint using Firefox.

In my view, the Sitecore demo was certainly the most humorous. The audience voted and decided it was also the best demo, and while it might have been better than the other contestants, I did not see much which couldn't have been shown by most vendors in 1999!  This might be a sign that requirements in general have not evolved much, or perhaps that vendors are not all that good at doing sales demonstrations? Either way, I don't expect vendors to improve much, until buyers become more critical and start asking for more demonstrations and less slides.

Let us know if you have ideas for future Web Idol competitions; which contestants would you like to see? Do you have ideas for improving the format?

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Who should be on your CMS shortlist?

Selecting the right CMS is not an easy task with; there is in excess of 1,000 vendors in the very dynamic CMS marketplace. Unfortunately industry analysts tend to evaluate too many vendors for the needs of most buyers. Consider CMS Watch which has 42 systems in their Web CMS Report and Gartner with 18 vendors in their recently updated Magic Quadrant. How do you narrow it down even further, so you can get to a shortlist of vendors you should examine closer and potentially send your RFP to?

Based on our extensive experience with CMS selection, we have created the below Top 10 list with vendors you should always consider. This is geared towards buyers from large and complex organisations with significant web demands.

Web CMS Shortlist 2009

What it requires to be on the list:

  • Significant dedication to CMS. It does not have to be everything the vendor does, but to mitigate your risk, CMS has to be very important to them. This includes a history of relatively smooth upgrades combined with on-going technology investments in improving the system.
  • Global footprint. You can either find direct vendor representation or experienced partners in almost all parts of the world to help you with the implementation. There are also successful references around the world for you to learn from.
  • The vendor has something very significant to offer. This easily turns into yet another unhelpful long list, so we kept the list short and predict that the list will change in 2010. A vendor can only get on the list if we can remove another one. This means that many vendors, even though they might have interesting references, are not on this list.

You can reduce the list further by considering licensing and technology. Some on the list might also not have local partners in your region. If you feel troubled by suddenly having too few vendors, remember that you also need to find a good implementation partner to support you. To find the right one, you should send to more than one implementation partner for each vendor; this way you will easily end up with 10 - 12 qualified companies on your list.

Here a few comments about some of those missing from the list:

  • Microsoft is not on the list as neither SharePoint nor Oxite are good fits for Web CMS. Despite tremendous adoption, SharePoint is often chosen for the wrong reasons. Also, as mentioned on this blog, content management does not seem important to Microsoft. For additional details, you can consult our research on Best Practices for Using SharePoint for Public Websites.
  • Several other large vendors are absent, eg. Autonomy, IBM, Oracle, as they are often simply overkill for Web CMS. Not only are their products very expensive, but they are also very complex to implement and use. We challenge buyers who insist on adding them, that they carry additional risk due to the CMS being acquired from smaller vendors and their diminutive focus on WCM in the overall picture.
  • Many significant, but still regional vendors, eg. CoreMedia, e-Spirit and Terminalfour are left out as they do not yet have a global footprint. There are regional differences in the market, which we will cover in separate forthcoming blogs.
  • Alfresco has very good marketing, in particular for an open source vendor. The actual product is quite complex with weak usability and many on-going architectural changes.
  • Joomla lacks a few important features such as workflow, custom roles and custom content types. This combined with security concerns means that we do not always recommend Joomla.
  • WordPress is a very popular blogging platform, which might slowly be morphing into a CMS, but is still lacking in many enterprise features, including security. In too many regions it is also quite difficult to find any significant SI that offers WordPress implementation support.

Most CMS vendors are having a great time, c.f. recent earnings from Day Software, FatWire and Sitecore, but I'm hoping this list will help you save some time and confusion while navigating a still very crowded marketplace.

I welcome your feedback and stay tuned for regional shortlists soon!

Thanks to James Hoskins (@jameshoskins), John Goode (@johngoode), Jon Marks (@McBoof) and Mark Morell (@markmorrell) for valuable input.

UPDATE:  Aug 18 - In response to popular demand, I've released a wrap-up with additional background on the shortlist

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New Sitecore version – why bother?

SitecoreIn June this year CMS vendor Sitecore proudly announced the release of version 6.1 branded using the enjoyable acronym OMS (Online Marketing Suite). The press release describes OMS as

(...) a breakthrough for organizations now able  to unify Web content management capabilities, Web analytics and marketing automation for greater customer engagement and personalization.

Informed buyers will find that the term "breakthrough" is quite an exaggeration; competitors like Autonomy Interwoven, FatWire and SDL Tridion, have had similar capabilities in their solutions for quite some time. Nonetheless, the actual idea of integrating web analytics with the CMS can be seen as a good thing, since many organisations are still not effectively using web analytics. As I argued earlier, a website without statistics is just a hobby. On the other hand, an integrated web analytics tool will in itself not be able to improve the organisation. It is easy to become fascinated with a new tool, but the data gathered by the tool will still need to be processed, considered and acted upon.

In addition, if you are an existing Sitecore customer and are interested in web analytics, you may have already made an investment in tools like SiteCatalyst, WebTrends or Google Analytics. If that is indeed the case, it becomes even harder to argue why you should spend time and money on this upgrade.

It should also be considered whether having the web analytics tool integrated in the CMS is a good thing entirely. What happens if you decide to change CMS, something which roughly happens every third year? This might be just yet another attempt from a vendor to try and differentiate themselves while forgetting what reality looks like for CMS buyers. Think: Vendor lock-in.

The actual usability of OMS is another thing to keep in mind. Does it come ready out of the box, or will Sitecore continue to keep their partners busy and happy? I would love to share more thoughts here. However, when Sitecore invited me to an analyst brief, I was shown a dull but sometimes unintentionally funny slide deck and no actual product demo. I have still not received a copy of the slides, but eager to learn more, I went to their site and was pleased to find an "Instant demo" link. To my great disappointment "an instant demo" in Sitecore lingo translates to "fill out our long registration form and we'll be in touch".


If you have seen OMS, please share your thoughts. Is it worth upgrading?

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Don’t buy licenses from your system integrator

ContractThis week I've talked to several members in our community of practice who were all of the impression that CMS licenses can only be bought from system integrators. This is undoubtedly in the interest of your system integrator, but for the vendors I cover, you can buy the software directly from the vendor as well. In most cases this will be to your advantage.

Most recently a customer of Danish CMS vendor Sitecore told me that they had fired their system integrator and were now dealing directly with Sitecore. For a small additional sum the customer now had direct access to engineering and support. Interestingly Sitecore pride themselves on working exclusively through partners. To quote the Sitecore website:

Sitecore is completely dedicated to the Partner channel and has developed a program to maximize profitability for Partners with Sitecore solutions

In another case, Swedish CMS vendor EPiServer teamed up with their system integrator to try and convince a prospective customer that the system integrator was responsible for delivery and should therefore also be responsible for license delivery.

Apart from my usual concerns about corruption, here's why you should buy your software licenses directly from the vendor:

  • it will be easier to divorce your system integrator
  • closer relationship with the vendor, potentially with better support and direct engineering contacts
  • increased likelihood of getting a better price as you take out the intermediary

The only disadvantage is that this might take some escalation and negotiation. Also, your system integrator might be left unhappy, but remember that the customer is always right. Right?

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Smart practitioners have harmless URLs

I'm not that technical, but I'm frustrated that the problem with harmful URLs doesn't seem to want to go away. Microsoft's very own Jon Udell started 2008 with a very well written comment on .aspx considered harmful, but .aspx is still the standard default used in most SharePoint 2007-driven public websites. Over at CMS Watch, I did follow up on Udells comment with a posting on Location matters: URLs should be short, meaningful and permanent.

Today, many Web CMS vendors are actively promoting what they call friendly URLs, short URLs, nice URLs or whatever. Here are 2 quick examples:

The problem with the above examples is that they are technology and vendor-specific. They are highly unlikely to work in late 2010 as technology and vendors change. Sitecore might natively deliver URLs that Google likes, but bear in mind that the .aspx will not be state-of-the-art forever (just like it predecessor .asp) and once a new technology comes along, you will either end up with many broken links or you will need to spend time carefully managing redirects.

I'm sure you've experienced the dreaded Page Not Found 404 error. It happened to me earlier this evening on a large shopping site. When an enterprise presents a customer with a "404" the consequence is typically:

  • less sales as customer cannot find what he/she is looking for
  • user frustration due to expectations not being fulfilled
  • low rankings in Google search results
  • a browser bookmark or e-mail does not work, forcing the user to spend time finding the content (again)

Here are some good examples of harmless URLs from 3 different Danish organisations:

Try to take a closer look at the URLs on their sites for inspiration on how to get it right.

Note: Some vendors are worse than my 2 examples. However, to be fair, some vendors get it, e.g. EPiServer and eZ.

Do you know any other vendors that have got it right? Have you got any examples of vendors that still provide really nasty and harmful URLs? Likewise, let me know if you disagree and think this is not an important issue.

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