Taking the Temperature - How Publishing Technology Firms View the Future after COVID

I spent the last several weeks interviewing companies for the next edition of my third annual Publishing Technology report and it was interesting to hear similar themes on their business outlook, staffing challenges and the impact of COVID-19.

My report won’t be published until late summer, but here’s a sampling of what technologists and CEOs are telling me about their products and the market...

The Band Played On: I interviewed more than 25 companies and virtually all of them had the same story: As we entered the shutdown in March 2020, business slowed down for a quarter but then began to pick up to almost normal levels by the end of the summer. Technology projects already underway were slowed or delayed as companies established work from home, but then resumed quickly. RFP processes and project kick-offs were also put off but companies did not see many outright project cancellations. As we near the middle of 2021, the companies I spoke to are experiencing strong sales and project activity, and companies said 2020 was one of their best years ever. The belief that COVID-19 would negatively impact 2021 seems to be exaggerated.

More and More Content: As companies rushed to launch online customer experiences they also - either by design or necessity – created new content. At first many businesses created this content as a stop gap organized to maintain contact with customers but, over time, most are recognizing that podcasts, webinars, interviews and educational materials are valuable new initiatives to be maintained. In many instances these new ‘publishing’ activities will continue as COVID recedes, adding to the toolkit publishers use to engage their customers. My interviewees saw this trend reflected in the requests they received from customers to make this new content readily available to consumers on their platforms. 

Of particular note were associations, which in the past had relied on in-person meetings, seminars and conferences for educational and accreditation purposes, now realizing the long-lasting value of materials created to bridge the gap created by COVID.

A Bigger Audience: Most of the membership organizations supported by the technology companies I spoke to also noted that the replacement of in-person annual conferences with fully on-line versions broadened their market. Many online association conferences saw participation outside the US explode. We expect this change to stick and, in the future, more content and programming may be created specifically for non-US markets.

Everyone is Doing More: Across the board, the tech firms I spoke with were amazed at the performance of their staffs last year - not only in stepping up and adapting, but also in the sheer amount of work completed. Staff productivity increases were common across this group and some companies even mentioned that managers needed to step in and encourage staff to have good work/life balance. Few companies mentioned a need to downsize during the past 18 months and were bullish on staffing needs as we go ‘back to normal.’

Going Back Will be Hard and Easy: Surprisingly though, there is no consistency among these companies on an approach once offices open up fully. In Germany, all staff will be back in the office. In the UK, no one is sure what will happen. In the US, companies predict a slow ramp up but will also allow staff to remain in their work-from-home state as long as they like. Clearly, more formal policies will be enacted as time goes on and it is more than likely that more flexible arrangements for both employee and employer will emerge with a new ‘employee compacts’ created over time. Many of the software businesses in the publishing technology segment are small with low capitalization; employees are their biggest expense so if they can create new employment models for employees while saving on office space – all while maintaining productivity – then they will likely do so. 

COVID has produced a new trust model between employee and employer to the benefit of both. In software development in particular, this flexible work-from-home/work-in-the-office model will become commonplace. Employees will be required to come in to the office occasionally for collaboration and team building but new on-line facilitation tools will also emerge over time to minimize this. Most managers were unconcerned about how staffing would work as COVID receded.

Finally, some companies noted they now had new hiring options post COVID. Where once they forbade work from home (thereby segmenting their hiring pool) or imposed geographic restrictions (often due to tax reasons), COVID quickly forced the elimination of many restrictions and opened up hiring practices for many.

My report, A Market Survey of ERP and CMS Software Solutions for Publishing Companies, is now in its third edition and will be published in late summer. The second edition is available here and, if you purchase the 2020 version now, I will provide the 2021 version free of charge.

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Are you considering an investment in new technology?  Check out my report on software and services providers.  (PubTech Report)

PND: Digital Transformation: A Seminar for Management

PND: Blockchain for Publishers

PND: Technology News

PND: The Price is Right for Cengage  

PND: The Opportunity in 200MM Students

PND: Mediaweek Reports 

Michael Cairns is a business strategy consultant and executive.  He can be reached at michael.cairns@infomediapartners.com or (908) 938 4889 for project work or executive roles.

Adobe Summit - Evangelists For Publishing

There were some interesting take-always from Monday's Adobe Summit. 

The Adobe $1.5B acquisition of Workfront was one of largest Adobe has made and in doing so, the company was placing a bet on simplified, structured collaboration on the one hand and content and marketing complexity on the other.  Adobe has recognized that managing and recording the content creation process is increasingly important within all organizations as much as achieving effective marketing. Managing artifacts, content items and other similar materials are, and will, continue to consume increasing amounts of staff time as content is deployed everywhere and where measurement of the impact and use of this content is critical.

Workfront is now the workflow solution within Adobe Experience Manager: Using this framework marketing managers connect strategy to execution and can ensure the business is driving to the desired outcomes as it deploys content and creates uniquely personalized experiences for consumers. As user experience is enhanced with more and more personalized content and a widening of the access points to content, the amount of activities and transactions around this messaging will massively increase as these experiences are pushed (or pulled) to consumers. Managing all this activity requires robust workflow and tools which is where Workfront inside Adobe Experience Manager realizes its strength.

Within Workfront, staff map out their marketing campaigns and assign responsibilities which may be completed in any of the Adobe applications. These tasks have approval processes and 'jobs' are routed for review, approval and publishing and each activity is logged in Workfront. As campaigns are executed, managers can review how the entire campaign came together and what the results were. Adobe is calling this the "marketing system of record - a unified solution for sharing ideas, managing content creation and automating complex processes".

While Adobe saw the value of Workfront as supporting marketing and creative functions, within Book publishing the Workfront solution has also been used by publishers to replace spreadsheets and other tools within the editorial and production processes. Even as a 'generic' workflow product,  WorkFront is a strong competitor to the software solutions provided by industry players. National Geographic and Royal Society of Chemistry are two publishers using Workfront. Since Adobe products are embedded in publishing we will likely see an increase in the number of Workfront deployments and this should worry the incumbent software players in our space.

The other interesting news item concerned data privacy. Here Adobe is betting that third-party cookies which store our activities on the internet as we visit websites will disappear (or at least will not be used to identify our traffic). A new concept named the 'consumer data platform' whereby product companies and marketeers build a closer relationship with consumers by better utilizing the first-party data they already own to establish a coherent brand experience. This is explained in a good post here

Where it gets interesting is the Adobe spin. At the event, Adobe suggested a capability to leverage information the customer has chosen to share so that personalized experiences can be created and delivered to the consumer. Adobe has enabled "Segment Match" capabilities which will allow brands with similar interests to share data and to build collaborative engagement and expand their reach with consumers who have cross-over interests. A good example of this would be a travel publisher and an airline. This is in early days and we will see how this develops but for publishers with a broad array of content the opportunities to build partnerships based on real data could be an opportunity too important to miss out on. Just another reason why Adobe, already embedded in publisher workflows could see more expansion within publishing.

For more information check out the Adobe Summit Video.

 

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Michael Cairns is a publishing and media executive with over 25 years experience in business strategy, operations and technology implementation.  He has served on several boards and advisory groups including the Association of American Publishers, Book Industry Study Group and the International ISBN organization.   Additionally, he has public and private company board experience.   He can be reached at michael.cairns@infomediapartners.com

BISG Webinar: Technology Spending in the Publishing Industry

I did a webinar today for the BISG and below are the slides from that presentation.

Book Industry Study Group Webinar: Technology Spending in Book Publishing from Michael Cairns

PURCHASE THE REPORT BY CLICKING HERE

Make sure you use the discount code in the deck

Also, I did a q/a recently and this is an edited transcript of that conversation:

Q: Tell us a little bit about your report: What made you decide you wanted to do this and what was your objective?

A: Last year I completed a similar report (although the 2019 version is more detailed and comprehensive) and received more positive feedback than I expected.  As a result, I decided to expand it and devote more time to interviewing as many of the companies profiled as I could.   Initially, for the 2018 report, I was motivated partly by my experience raising capital as CEO of Ingenta.  I needed comparative data on market competitors but there was no market research to be found.  There is also no research available on levels of technology spending in publishing which was (and remains) a point of frustration for me.

My objective was partially personal and professional-- I want to be seen as an expert in this area.  A lot of money is being spent on technology by publishers and I felt, given my background, that I had something to offer companies looking to invest in new technology solutions.  I had also never undertaken a market research project on my own before and tried to sell it.  So that part was an experiment, and it turned out well.  As I said, more industry insiders reacted favorably than I expected.  As part of this report, I created a market map of all the software players and I think many were excited to see all these companies – over 100 – depicted graphically in my diagram.

Q: What do you think are the biggest issues currently facing the companies you have profiled?

A: Well, they’re probably different for each-- of course, every company has its own view. But I think there are universal challenges facing most—if not all—of the companies serving this market.

The first is that technology has been undergoing significant change over the last 5-10 years or so: Locally-installed software is giving way to hosted and subscription-based business models. Code is now built on the basis of open architecture so that applications can be woven together and data and services exchanged from machine to machine.   Publishing and media are generally conservative businesses and-- generally speaking--companies serving this segment are by no means leaders in addressing these changes.  So most, if not all, of the vendors in my report are going through some type of technology rearchitecting, and this can be perilous if not managed well.  The happy thing is that, because the pace of change in publishing is slow, these companies can be fairly methodical about their approach.  For example, I see companies like Fadel, Klopotek and Silverchair executing well through this transition.

In my report, I tried to depict this technology evolution in what II call my ‘velocity chart’--look at it and you will see most companies at an inflection point at the small end of a funnel.  As they invest in new architectures, they begin to quickly move out of this funnel and put greater distance between themselves and companies that have not invested.   Thus, companies investing in technology achieve a better competitive position against their rivals who do not invest.   Some of the laggards will get left behind, I believe.  (I’m not naming names here but I do in the report).

On the revenue side, the move to subscription models must be managed carefully since, historically, software companies would receive large cash payments upfront for perpetual licenses and this cash helped fund the software implementation process.  Those days are gone, replaced by smaller monthly subscription fees. In the short term this negatively impacts cash flow but, over time, can represent a significant revenue improvement.   The hosting model is also important here because customers are no longer obliged to manage their own local environments:  This will not only save money but deliver better technical and more flexible environments

The last issue is universal in this space and that is the relatively small size of the companies.  Most are less than $15MM in revenue, though there are one or two closer to $20MM    (CMS/hosting companies Atypon and Highwire are considered larger.)  These industry providers retain the benefits of delivering very tailored products to publishers which precisely fit their needs.  On this basis, the companies can compete very well against far larger software companies such as SAP.   Where size is a limitation as in the provision of ‘on-call’ expert resources and project teams for large-scale implementations, especially if the company has been lucky enough to win multiple contracts at the same time.  These smaller companies don’t have the financial strength of the medium- and larger- sized companies.  One other thing related to this point: Most of these players do not work with integrators (third parties which can implement their software) so the only implementation option for customers is the software developer.  In my opinion that is a problem that hampers business growth.

Q: Who are the buyers of your report?

A: It has been a mix.  I anticipated when I began the project that most buyers would be companies  anticipating an investment in new technology but I’d say those have been a small sub-set of buyers.  And that really surprised me because reading my report could save them a lot of upfront time in deciding which companies to speak to and consider in the evaluation process.  I’ve seen the vendors themselves and some investment companies buy the report--for them, it’s a good way to get to know more about the competitive market.  There’s a lot of information in the report (it's over 90 pages!) but 

I think prospective buyers get “sticker shock” at the $1,500 price tag--though I do offer some free consulting time with a report purchase.  I do have a discount code: THANKS2019 which is available now.

Q: Presumably you have clients who make use of the report and do want advice on the process of selecting a technology provider. What advice do you give them?

A: Naturally, all situations are different. But first off, it's important to understand the circumstances in which the company finds itself.  For example, what is driving the business to take the decision to replace their ERP or CMS?  One company which recently declared bankruptcy had, only a few years ago, replaced all of their financial systems with a very expensive Oracle solution.  Their motivation was that the older solution couldn’t support the new business models and strategy the company wanted to execute.  But, hindsight being 20/20, it was poor judgement to engage this costly project before there was any indication the new strategies would work.  Now, with the business in bankruptcy, the expensive system supports much less revenue than the resilient legacy solution would have had no problem supporting.   Proceed with caution: These projects are expensive, disruptive and rarely go smoothly. Your business has to be tough and well managed to execute effectively.  That is especially true if your business is less than $50MM in annual revenue.

Another thing I would point out is that it is not necessary to do a full RFI/RFP process.  Compiling a set of high-level requirements and bringing in three or four vendors can save time and money-- and you will learn a lot in the process.   Additionally, if you have someone like me to help navigate this process (generally without a vote on final selection) it will go a lot more smoothly.

The last thing I’d mention is that you should have a good idea of your current technical environment, architecture and costs.  These new systems will likely need to interface with other existing systems (some of which will also be replaced) and mapping out all these intersections in advance is an important requirement.  Data conversion and interface work is likely to be one of your project's biggest time and cost demands--starting early to understand the scope of these activities is time well spent.

Q: What else would you like publishers to know?

A: I think my bias is that I’d rather see publishers spend technology dollars on product development and ‘front office’ applications which directly support revenue generation or growth.  Minimize spending on supporting applications for accounting, quote/order to cash, rights and royalties and title management and editorial solutions. Matching cost effectiveness with process efficiencies should be a primary consideration when looking at these solutions.  If you have $100 to spend on technology, don’t spend $95 on business applications—give yourself the flexibility to spend more on supporting revenue growth, new products and customer development.

 

Predictions Coming True: Media Services Group Acquired by Newscycle

Among the trends noted in the predictions post this week, I touched on the expectation of some consolidation in the applications software market.  Earlier this week, Media Services Group (MSG) announced that they were being acquired by NewsCycle.

Media Services Group was established in 1972 and their application software (elan) is used by book publishers, magazines and newsletter publishers and events and conference providers.  By their count they have hundreds of customers located in North America and Europe.  These customers include AARP, Hearst Business Media, Penton and other similar companies.  Increasingly, their solutions are provided to their customers as cloud based services.  Their customer base has been large enough for them to hold a well attended annual user conference in Florida each year.

Press release here.

Newscycle was not one of the companies I covered in my technology report because they primarily serve the global newspaper marketplace.  With the acquisition of MSG that profile changes but most importantly the heft and scale of Newscycle will provide MGS with more capability to expand and compete.

In their words, Newscycle systems power more than 8,000 media sites and publications around world, including 92 of the top 100 U.S. newspaper publishers. More than 70 percent of the world’s largest news media companies use Newscycle software.  For Newscycle, the addition of MSG market knowledge and software capability will allow the company to broaden the marketplace in which they compete.

Trend implications:

In the mid-market segment of the publishing solutions market there exists 10-12 software providers which are all in the $10mm to $20 in revenue range.  At that level, it can be difficult to achieve business scale, maintain consistent software development and support even modest ROI.  This is why consolidation and/or recapitalization in this space is likely since that is more likely to enable a succeeding business to expand, take market share from others and (importantly) compete more aggressively to gain customers.  Additionally, the ability to accelerate development will widen the technology gap between themselves and others in the space and allow the software company to add features and solutions that will appeal to ancillary media markets (like newspapers for example) to broaden their competitive market.

This Newscycle acquisition may change the dynamic in the mid-market for publishing technology.

Publishing Software Market Map

How much publishers spend and where they spend it with respect to technology and services is a hard question to answer. If, like me, you've also been stumped by this set of questions you may have been looking to benchmark your technology expenses, estimate an addressable market size or to determine whether the way you manage your internal costs is best or worst in class - just to name a few. It's a conundrum that other industries seem to have solved with their regular bench marking studies and surveys regarding technology spending. With our industry facing significant transition with respect to the importance of the role of technology in our business success, I would expect senior management would be actively seeking more understanding of how effectively and efficiently they were addressing their technology spend.

I am attempting to determine if publishers are interested in learning more about technology spending in the industry and to understand whether publishers would be interested in participating in a benchmark study. If you are interested please email me: michael.cairns@outlook.com and we can set up time to discuss it. As a first step, I have created a draft of the software technology landscape and I am also interested in hearing about additions and corrections to this draft (via email)

Marketing wants to Market, Sales wants to Sell: Give them the Tools.

An historic lack of investment in the tools that allow your best customers to use your content may be frustrating those inside and outside your business.  It’s time to consider a strategic approach to identity and access management.

Over the past few years, many large software companies (including IBM, EMC, SAP and others) have invested in or acquired software which facilitates the relationship between a consumer and the owner of a digital item.  Typically, this ‘item’ is a content type such as an article, television show, movie or website.  But as more and more of our interactions occur on the web, the universe of ‘items’ available to us expands every day.  The category of software which facilitates these relationships is referred to as Identity and Access Management (IAM) and more and more, it is becoming an area of increased investment by both the providers of this type of software and the companies which provide the access rights.  Gartner defines Identity and Access Management (IAM) as “The security discipline that enables the right individuals to access the right resources at the right time for the right reasons”.

Most publishers with web content and web-delivered products will be familiar with the two main components of IAM: authentication and authorization.   Both have been critical in the distribution of electronic products into the library, academic and direct-to-consumer markets for our market for many years.   The software which manages these activities is frequently embedded in other applications – such as a content management or subscription system – or is derived from those systems.  Now, increasingly, we are seeing purpose-built IAM systems which sit between a database/repository of content and the user.  Companies like EMC, as well as new-to-the-market companies such as Zuora.com, are aggressively expanding this market as the ‘subscription’ and ‘membership’ model economy grows.  Publishers and content-centric companies – whether they know it or not – have represented many of the original business cases upon which these companies have based their investments.  The irony is that many publishers have under invested in their own IAM tools: As a result, they are likely to be leaving money on the table and suffering a comparative disadvantage versus others who are investing in the new tools and software.

Naturally, all content owners want to expand the usage of their content, be able to experiment with different business models and facilitate as many access modes as possible.  The consumer wants access to be universal across their devices (without disruption) and they increasingly expect some degree of personalization which provides them with additional relevant and timely content. 

Publishers are unable to deliver on these requirements due to their lack of investment in IAM solutions.  For example, they will provide access to journal articles for stated periods of time but don’t have the technical flexibility to work with collections of articles created by users and then price these collections dynamically.  Marketers and sales staff are left frustrated by lost sales - often to competitors - who are able to provide more creative and personalized options for their users. 

As publishers review their options and plan their technical architecture they will need to answer several new(ish) questions about the IAM software they are considering.  Licensing this software from the same content management (CMS) provider is likely to prove less and less optimal as companies like those noted above build out the functionality and capabilities of bespoke IAM solutions.  

Within the context of a strategic plan and a review of the company’s sales and market goals, you may consider the following important questions to answer and issues to discuss with vendors:

• How flexibly can we define customer types?  Can this definition happen dynamically as a user exhibits certain behaviors?   How easy is the admin interface that allows marketing and sales personnel to define customer types?
• Business models in the “old world” were very static; however, there may now be an almost unlimited number of business models to support a wide variety of customer types and access rules.  How well can this software manage a wide variety of models?  How are new models created and/or augmented and existing ones changed?  Importantly, is there an ‘archive’ capability so you can place any number of business models on hold and return to them in the future.  Is reporting easy – especially if you expect to adopt a multitude of models?
• As our own personal experience shows, we access content and online resources via a variety of devices ranging from our television to our watch.  The experience is naturally very different from device to device and these differences need to be mitigated so as to not diminish and/or devalue the user experience.  The IAM should be able to intervene as needed to maintain the best and most consistent, uninterrupted experience for the user.
• Lastly, IAM may be able help content owners expand the overall usage of their content.  To the extent that IAM enables some identification of the user this information can be used as a basis for delivering specific, personalized new content of which the user may be unaware.  Together with a strong analytics capability (a topic for next time), marketing can categorize users into like groups to deliver curated (and programmatic) content packages.  These type of activities are strategically important because they can support new revenue streams, renewal rates and price increases.  Tying an increase in utility to an annual price increase can be very effective in raising topline revenues.
• A second aspect of identity management is to confirm that your chosen technology can monetize the ‘non-registered’ or ‘over the transom’ traffic which comes to your site on a daily basis.  If you have a site which generates a lot of daily non-subscriber traffic you’ve probably asked a lot about how you can turn that traffic into real revenue.  Asking specific questions about how this can be achieved via an IAM is important because, here, you may find a true ROI.

Increasingly, IAM will be viewed as a business-critical solution supported by the marketing and sales team, rather than a ‘black-box’ software package managed by the corporate IT department.   Decision makers on the front line selling content, subscriptions and memberships should begin demanding more from the IAM.  The solutions are out there.

Michael Cairns has served as CEO and President of several technology and content-centric business supporting global media publishers, retailers and service provider.  He can be reached at michael.cairns@outlook.com and is interested in discussing new business opportunities for executive management and/or board and advisory positions.