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
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:
I'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.
Earlier this month Canadian Enterprise Content Management-vendor Open Text announced their intention to acquire the ailing Texas-based Web CMS vendor Vignette. As one of the granddaddies of Web CMS, Vignette peaked during the .com years and did make a few acquisitions. Despite aggressive and creative marketing including a recent re-positioning as a Web Experience Management vendor (somewhat similar to the successful repositioning of FatWire), Vignette has failed to become profitable for years and have seen revenue shrink continuously. A pending acquisition has been rumoured for a while.
Here’s what the news means to customers:
- Even more overlapping offerings from Open Text. When Open Text acquired Hummingbird back in 2006 it also added good old German Web CMS-vendor RedDot to the Open Text family spaghetti. Now Open Text has two significant, but entirely overlapping, products in the Web CMS marketplace and prospective customers should take a thorough look at the updated product roadmap before signing a contract. Existing customers might see their Web CMS ride into the sunset and should prepare themselves accordingly. Open Text already has numerous other overlapping offerings in other markets from other acquisitions.
- Despite many different and overlapping offerings, Open Text does not have an enterprise portal. Customers of Vignette Portal might be a bit more relaxed, although the acquisition impact on the product future is still uncertain.
- A poor track record of integrating acquired technologies. Existing customers are expected not to cancel their maintenance contracts, so that the acquisition will make financial sense for Open Text and do not expect Open Text to invest heavily in future releases of the Vignette products. RedDot is .NET-based while Vignette is Java-based. Will Open Text really keep both?
- Still plenty of choice and no CMS consolidation. Even though this is the 3rd acquisition in the marketplace in 2009 (Oracle bought Sun and Autonomy bought Interwoven), the number of significant products remain very high and unchanged.
- It will become harder to obtain support. Expect Vignette system integrators to focus on other technologies and vendors until Open Text sorts out the mess and with its existing reputation for patchy support, Open Text has its hands full. Generally Open Text has fewer services firms as partners than most other vendors and has so far been less keen on building a partner channel. To make matters worse Open Text has been very poor at establishing a user community and Vignette has cancelled its popular annual customer conference.
A series of questions remain unanswered. Interestingly, as of today many customers have still not heard anything from Vignette or Open Text. Vignette recently distributed an e-mail announcing a that their planned Analyst Day was postponed until further notice. The e-mail ended like this:
Please feel free to contact me directly if you have any questions (that do not relate to the acquisition)
Seth Gottlieb, open source CMS expert, has my favourite quote about the acquisition:
Open Text: Where declining technology goes to die
If any strategic thinking was behind this acquisition, I suspect it was based around shareholder value. I can't find any value for customers. Can you?
Photo credit Jon Marks. See his analysis and detailed look at the depressing numbers in his posting on Will Vignette Give Open Text Food Poisoning?
If you are interested in other perspectives, here's more detailed coverage and speculation from several industry analysts: