Reality Bites

How the Enterprise Content Management Market is Coping with its Growing Pains

Martyn Christian is talking about contradictions:

“The biggest trend in Enterprise Content Management is its expansion from production-oriented solutions, toward a more personalized, customized, personal approach. This has allowed ECM to be applied in sales and marketing environments, for example, where automation tools have been slow to appear. This is why we can call it truly ‘enterprise’ in scope.”

He takes a pause. “However...” (here it comes) “... reality bites. The economy has put a huge spotlight on ROI and payback. The justification has to come from adding up all the savings in efficiencies from line-of-business applications.”

Martyn is Senior Vice President, Corporate Marketing, FileNET Corp. He’s describing the tension now being felt throughout an industry that is learning to adjust to its own evolution. It’s an adolescent’s lament, like when Britney whines that she’s “not a girl, but not quite a woman.” Make enough phone calls, and you’ll hear people call Enterprise Content Management anything from a new label for old wine, to the ultimate expression of enterprise integration.

Depending on how you choose to read it, they’re both right.

Those Who Feel the Pain

“To be frank,” says Ramana Venkata, CTO and co-founder of Stratify, Inc., “our ability to communicate (the value of ECM) to a customer is directly dependent on whether they’ve already felt the pain. If they haven’t noticed any pain, it is a difficult message to push through.”

The “pain” in question is the frustration of being near the content necessary to solve today’s urgent business problem—the sales proposal that’s due today, the marketing report that will determine your product roll-out timetable—and not being quite able to reach it. It’s a frustration that comes from experience. Very few start-ups, for instance, have enough of an experience-base to sense the potential of “what if.” What if my CRM system could send alarms to my marketing team before an emerging small problem becomes a PR disaster? (“Had Ford been able to connect the dots sooner,” says Venkata, “if someone had seen the pattern emerging, they may have been able to avoid the PR disaster they suffered.”) Or what if our field sales teams could deliver real-time information to everyone in the organization?

This is why ECM is reaching first into the large, geographically dispersed and, frankly, better managed organizations that have a greater stake and a longer view. “Think about Coca-Cola,” says Brett McIntyre, Vice President, Content and Information Integration, IBM Corp. “Coca- Cola has millions of dollars invested over the years in creating TV ads and print media. They could be just sitting there in an archive. But they knew they had to use this asset more effectively. So, naturally, the marketing community was the first to use this archive, to pull together images and so forth. And that’s fine. From an operational standpoint, access to the archive made it easier to create new ad campaigns.

“But it didn’t stop there,” McIntyre observes. “Now a sales person can go into that same archive and pull an image into a sales proposal. And the legal department can investigate a copyright issue. It’s the availability of this (mostly) unstructured data through its entire life cycle to multiple people that brings the value to the organization from that asset.”

It takes a pretty savvy, mature management to figure that out. Perceiving value, leveraging assets, imagining the what if...—this is grown-up territory. And there are many, many ways to screw up along the way. Call it growing pains, call it being burned, but there is an underlying sense among the leaders in the content management space that the best customer is the slightly skeptical, experienced one who has, and Ramana Venkata described it, “felt the pain.”

Reality Still Bites

If it were that simple, everyone would be enjoying double-digit growth and a worry-free existence. But there’s that nagging reality thing...

“From the research I’ve done, that number is a downturn.” Mike Schofield is referring to an Ovum projection that I mentioned, predicting a $7 billion ECM market by 2006. Mike is Product Strategy Analysis Director for IPD, a content management solutions provider for the insurance industry. “I heard $10 billion by 2004,” he says.

“Spending has been down, the third and fourth quarters, especially. Between the dot.com burnout and 9/11, it’s tough out there. But we’re optimistic. Why? Because we’re business-process focused. People are saying ‘I’ve got all this content ... how do I apply it to a process?’ Content by itself is kind of useless. But the ability to merge the functionality of content management and business process to solve a problem...” Mike drifts off. The dream of ECM hangs heavy in the air. Nobody has to finish that sentence.I think this is where the great conflict of the day rests. This is the contradiction that Martyn Christian pointed out, the one that permeates the ECM market like a bad smell. On one hand, everybody gets the value of ECM on a strictly intellectual level. OF COURSE it’s important to provide access to unstructured data to everyone. OF COURSE there’s value in leveraging this great sunk asset to solve business problems. OF COURSE you can improve business processes by creating free and easy interchange among all the silos in your organization.

Now, just prove it.

“Two years ago, when people were flush with cash, they bought everything that walked through the door,” says Stratify’s Ramana Venkata. “Now they’re looking around and discovering their life isn’t any better ... they just have a bigger IT department. No question about it—making the business case is a lot stricter now.” Most agree: “We’re not seeing anyone buy with less than a two-year payback,” says FileNET’s Christian. “At least,” adds IPD’s Schofield.

So what’s the process for helping customers create these ROIs? Martyn Christian says there is an entirely new deployment cycle at work, and it’s one which technology vendors ignore at their peril.

“Three years ago,” Martyn explains, “there would have been three line-of-business departments that went in as one engagement.” The professional services guys—the consulting practices—would basically move in and take up housekeeping. “And that would have been considered Phase One.”

Now, it’s still a phased deployment, but the phases are more defined and conservative. “Now they go into claims or credentialing, for instance, and bite off one part. They prioritize where they need to get something done first. Thus, the first bill is small, and targeted where it will get the most benefit. That trend started Q2 last year,” says Christian.

“I think there’s a shift away from point solutions, but we’re just at the start of the shift,” points out IBM’s McIntyre. “The good news is that these people who are doing point solutions are doing so with one eye toward enterprise content management. It’s a continuum. Everybody can now see the need for structured data, text and document management ... now what other business problems do I have? Do I need quality checks from my customer service efforts? Do I need rich media for training? People gain experience from point solutions ... I did it once, I did it twice, I get the linkage now...”Is this where most of the action is? “We see the most growth in implementations that have this enterprise view,” answers McIntyre. “But don’t forget, it’s starting from a smaller base. So, yes, people continue to spend on things that have a provable return on investment—there are still point sales—but now they have a broader view toward what they ne