Automation System Marketplace 2004: Migration Down Innovation Up

Consortia purchasing on the rise, more school libraries buy through districts Public funding declined while returns on private endowments slipped--two major factors that limited the growth of the library automation industry in 2003. Libraries itching to migrate from legacy systems or acquire new automation products continue to defer. Despite the economic climate, or maybe owing to it, the top two companies, Innovative Interfaces and Dynix, strengthened their position as market leaders. Last year saw contraction in several areas. There was a net decrease of 3% in employees in the automation companies. Estimated revenues were down about 5% from 2002, to $500 million, plus or minus $30 million. This figure represents the total revenues of all the companies that participate in the North American library automation market, including domestic and international sales. There were also fewer contracts in 2003. For companies that sell to midsize to large libraries, contracts were down 15% from 2002, 36% from 2001. Decline in this number also reflects the trend toward fewer but larger contracts as more librarians purchased their integrated library systems (ILS) through consortia. It is useful to keep in mind that counting contracts is an important measure although a crude one--contract values vary widely. For example, The Library Corporation tends to sell to smaller library systems at an average of $72,000 per contract while Ex Libris sells to large research libraries and consortia with average contract values of over $300,000. Companies like Endeavor land in between at $165,000. In 2003, companies derived an average of 41% of their revenues from maintenance fees, 38% from new ILS sales, 7% from non-ILS software, 5% from hardware sales, and the remaining 9% from other sources. While new sales can indicate who will be successful in the long term, maintenance income provides ILS companies with the most revenue.

Can't wait forever

Prospects for growth remain, although not at the levels predicted last year. It is difficult to say when spending might increase, but many libraries have automation needs that cannot be placed on hold much longer. Librarians are more willing to spend on technologies when it allows them to make savings in other areas. These include creating resource sharing environments to help compensate for reduced collection budgets; supporting RFID products to reduce labor costs and improve the efficiency of circulation operations; and sharing consortial systems and hosted ASP services to save on administrative costs. Other major factors that will contribute to growth include the very high number of legacy migrations that remain to be captured in the next three to four years; school districts implementing centralized automation systems; and the rising demand for add-on products related to managing electronic collections. Other than the inevitable need to replace legacy systems that are no longer being developed, few administrators or boards will invest in automation software to achieve only incremental improvements. Successful funding of automation projects must be tied to real deliverables such as increased resource sharing or access to electronic information.

Strong competition

The library automation market remains fragmented, with a large number of companies competing for a limited amount of potential business. Market share is drifting toward a few top companies, but the revenues are still distributed among more than 30 companies. No one company is the overall market leader, although several led in key areas in 2003. Innovative Interfaces beat out the competition in sales to new customers with 96 contracts and ranked second in contracts overall with 144. A higher percentage of new contracts at full price, as opposed to migration pricing, implies a significantly higher level of income from sales. Dynix led in overall sales with 168 contracts during the year and placed second in new name accounts with 77. Sirsi was the largest company in the industry when measured by personnel, with 445 employees reported, a net increase of 3% over 2002. Ex Libris led in the reference linking and metasearch product categories, with 85 contracts for SFX (linking) and 62 for MetaLib (metasearch). GIS Information Systems continued to maintain the best ratio of customer support staff relative to installed base, with one FTE for 6.9 sites. Most companies reported the percentage of earnings derived from ILS sales and the number of contracts. But only a subset of the companies makes earnings public. Of the companies that reported revenue, Innovate Interfaces led with earnings of $60-$70 million; Ex Libris followed with $30-$35 million; Endeavor reported $25-$30 million; The Library Coporation, TLC/ CARL came in at $20-$25 million; BiblioMondo totaled $10-$15 million; while Auto-Graphics, Softlink, and VTLS all sat in the $5-$10 million range.

Major restructures

Gaylord Information Systems became GIS Information Systems as a result of changes in its business structure when the holding company for Gaylord sold the furniture and supplies division of the company--along with the name--to competitor Demco. The automation division, renamed GIS Information Systems, became the sole division of the company. Under Gaylord, revenues from the rest of the company subsidized the ILS division. The restructuring resulted in a significant downsizing, with a net 38% decrease in staff relative to 2002. Katherine Blauer, president of Gaylord, was replaced by William Schickling, former VP for research and development. Anita Wagner, former VP of business development, now serves as chief operating officer, and Jim Mieczkowski is chief information officer. Mandarin Library Automation also saw major change. The Mandarin automation system became part of SIRS Publishing in 1995, with EGEG Holdings Corporation the parent company. In a 2001 internal reorganization, Mandarin separated from SIRS, although it remained part of the same holding company. In June 2003, EGEG sold the SIRS side of the company to ProQuest Information and Learning, leaving Mandarin a standalone firm. The company will continue to operate under the same board of directors and executive management from the same Boca Raton, FL, headquarters.

Insignia & Amlib sold

Corporate Networks acquired Insignia Software, a small Canadian company that sells the Insignia library automation system, in late 2003. Corporate Networks is a Canadian company that specializes in end-to-end information technology solutions for K-12 school libraries and the medium- to small-sized business sector. The company provides complete networking and other enterprise infrastructure. With the acquisition of Insignia, the company extends its interests to library automation and student information software. Brodart exited the ILS business at the end of 2003. The Automation Division of Brodart sold the Amlib library automation system, targeted to K-12 school and small to medium-sized public libraries and developed by the Australian-based InfoVision Technology. InfoVision has established a U.S. office for sales and support of Amlib with two former Brodart employees. The Brodart Automation Division's key strengths and business interests have long been in bibliographic services and software. The company will continue to offer its cataloging utility, DartClix, and the Media Minder media reservation system.

Changes at the top

This was a year for management changes at Ex Libris, both at the worldwide offices and the U.S. subsidiary. Last year we noted the appointment of Sami Kamhi as CEO of Ex Libris, Ltd., the worldwide company. His tenure was short. In May 2003, Matti Shem Tov was appointed as president and CEO. Carl Grant, the president of the U.S. subsidiary of Ex Libris, resigned in May 2003 to move to VTLS as COO of global operations. Ex Libris appointed Bob Walton, former president of CLSI and VP at Innovative, as chair of the board of Ex Libris (USA). Walton's role is primarily advisory as he remains CFO of the College of Wooster, OH. In March 2004, Dan Trajman was named president of Ex Libris (USA). Trajman was previously president of Sapiens Americas, a technology company in the insurance industry. With Grant now at VTLS, Vinod Chachra will continue as chair and CEO. Other Ex Libris execs who followed Grant to VTLS include Martha Gettys, now VP of sales, and Ron Passmore, director of marketing. Endeavor began the year with a new president and CEO, Elsevier exec Roland Dietz. Former OCLC VP Donald J. Muccino joined the company as VP of customer service in June 2003 and was named COO in January 2004. Mark Wilson, formerly director of technical resources, is now CIO. In February 2004, Sara Randall was named director of strategic products. At Sirsi, management changes occurred as Don McCall became the COO; Marty Keeley, formerly of Gaylord, joined the company as VP for strategic initiatives; and Andrew Morrice made a shift to VP of Asia-Pacific operations. Dynix's Jack Blount enters his second year as president and CEO. In 2003, Julian Critchfield, the company's CTO since 2000, was named COO, making way for Henry 'Ric' Rodriguez to assume the role of CTO and senior VP of engineering. Rodriguez was with Raindance Communications, where Blount was previously COO. Jim Wilson, one of the original cofounders of the company, was brought out of retirement to serve as senior library advisor.

Migrations keep constant

The pace of migrations from legacy systems (see Table 5) remains steady. The base of legacy systems continues to dwindle, though significant numbers remain. Dynix Classic has the largest installed base by far (62%). The product launched in 1983, with an apex of almost 3000 sites in 1997. It wasn't until 2000 that the base began to decrease. If we project the migration from Dynix Classic to near zero in the next five years, migrations will be significantly higher than we have seen in recent years. Table 3 shows the remaining major legacy systems that are licensed through the end of 2003, over 3400 sites. The legacy systems under the ownership of Sirsi--DRA Classic, MultiLIS, INLEX/3000--appear to be closer to the end of their product cycle. Taking a composite of the Sirsi legacy systems, the peak installed base occurred just prior to 2000 at over 1500 library sites. Of this only about 300 remain. Of the major companies with both legacy and current systems, only Sirsi has more current systems than legacy. Dynix, VTLS, GIS, and Geac all support more legacy systems than current systems.

The consortia factor

One broad trend is the increase in the number of libraries participating in consortia for the purpose of a shared ILS. The large-scale implementation of a system across multiple libraries results in greater efficiency. Libraries have long banded together in consortia to lower automation costs and gain access to a larger collection of materials. While few new consortia were formed in 2003, a number of libraries have switched from running their own independent system to a shared system. Also, multiple consortia have merged to share a single system. The move from a standalone implementation to a shared consortial system usually means switching ILS. In some cases, the move is a lateral one: migrating from one viable and current system to another. These moves cannot be taken as signs of dissatisfaction--in most cases the driving force is the need to operate more efficiently through a consortium. 'Our change from Voyager to Millennium had nothing to do with our level of satisfaction or dissatisfaction,' explains Colleen O'Connor of the Saint Francis Seminary Library, WI. 'Instead, our decision was driven by our desire to join a local consortium.... As a small academic institution, we did not have the personnel or financial resources to do many of the technological and collection development initiatives we felt were necessary.'

Schools get district contracts

The school market is increasingly impacted by the transition from discrete library sales to districtwide contracts. Until recently, the school library automation market was measured mostly through library-by-library sales. Over the last three years, the numbers of PC-based systems have dropped dramatically. This year Follett announced its all-new Destiny product, a completely web-based automation system designed for districtwide automation. Sales of the company's PC-based system, Circulation Plus/Catalog Plus, plunged to 3040 (from 6,275 in 2001). This marks a significant sea change away from PC-based systems. The PC-based Winnebago Spectrum and Athena systems from rival Sagebrush Corporation saw an aggregate decline of 13%. In 2001, Sagebrush introduced its Accent product for centralized automation. The introduction of Destiny makes Follett more competitive in this category. Library companies that have not traditionally specialized in the K-12 market are eager to tap it. The Library Corporation, for example, sold its Library.Solution for Schools product to nine major school districts in 2003. Follett Software Company and Sagebrush Corporation continue to dominate. Follett has traditionally led, but this year Sagebrush advanced to the top, at least when counting contracts. In addition to the sales of Circulation Plus/Catalog Plus, Follett made 25 sales of Destiny. Sagebrush sold a combined total of 3,937 licenses for Winnebago Spectrum and Athena and closed five contracts for Accent. Districtwide contracts are significantly more valuable than each PC-based sale. The 25 Destiny systems, for example, represent 508 individual school libraries.

Public libraries seek efficiency

Public libraries have distinct automation needs and are the most constrained by budget limitations. They are not yet consumers of add-on products such as reference linking, electronic resource management, and metasearch applications. Some larger municipal libraries and library districts have made investments in metasearch environments, but most don't perceive the same need as academic libraries to manage electronic content (see 'Academics: SOS on E-Management,' page 49). Public libraries focus primarily on access to their physical collections and seek automation products that help them work more efficiently and at lower costs. Participation in consortia and cooperatives climbs steadily, reflecting a trend to gain automation through a shared system. Many high-volume public libraries see RFID technology as improving efficiency, especially through automated check-in and sorting systems, patron self-check, inventory control, and more. Automatic patron notification systems and debt collection services also spark interest. There is also a higher rate of adoption of ASP (application service providers) by public libraries, where the library relies on the vendor to host the ILS server. The ASP option is most attractive to smaller libraries that may lack technical staff, but some relatively large libraries, like Cobb County Public Library, GA, have chosen this approach.
Marshall Breeding (marshall.breeding@vanderbilt.edu) is Library Technology Officer, Jean & Alexander Heard Library, Vanderbilt University, Nashville

Academic Librarians: SOS on E-Resources

Academic librarians need to manage their extensive collections of electronic content better. This demand is creating a new market for ILS vendors. Libraries spend enormous amounts on their 'electric bill' but struggle to lure users away from the open web and to this high-quality, proprietary content. Search engines like Google set high expectations for ease of use and breadth of content, and librarians need technologies to help make the online library experience similarly effortless. Library automation companies, and others, are eager to create and market new products that help libraries meet these needs (see Table 6). Two products have emerged: reference linking and metasearch software. Reference linking applications use the OpenURL syntax to allow users to link and navigate among licensed electronic resources with the same ease they have when browsing through the free web (for more on reference linking, see 'The Lure of Linking,' p. 32). All the major ILS vendors now have an OpenURL-based reference linking product and the mid-sized to large academic libraries that haven't already acquired this functionality will do so in the next few years. Reference linking is not a 'wait-and-see' technology--it has already proven itself.

Metasearching in development

Metasearching does need to prove itself. Librarians seek simpler ways for clients to search among the many individual products in their electronic collections. Searching each resource individually is laborious and counterintuitive for those now influenced by Google. Metasearch environments, such as Endeavor's ENCompass for Electronic Resources and Ex Libris's MetaLib, have begun to take hold. Nonetheless, uncertainties remain in how effective metasearch tools are, and many librarians will monitor this genre of software before making investments.

Management headaches

Librarians also need to manage the business details related to their electronic collections. The traditional ILS evolved to manage print. The acquisitions and serials modules of ILS have significant gaps when it comes to managing licenses and subscriptions to electronic content. In the last year or so new software has evolved, generally termed electronic resource management (ERM), to meet this need. Innovative Interfaces is the first to offer a commercial product in this category. This company's leadership role in ERM was solidly reinforced by its selection by the Library of Congress. Expect significant activity in this product category in the next year or two. The large academic market is reaching saturation with sales of ILS. Companies struggle to market additional products and mine existing customers to enhance revenues through new products and services. Companies are increasingly marketing add-ons to the libraries of their competitors. Ex Libris has demonstrated this the best through the sales of SFX and MetaLib to non-ALEPH libraries. These supplemental products also add to the value of an ILS contract, which will increasingly include a suite of products beyond the core ILS.
Company System Name NEW 2003 TOTAL 2003 U.S. sales 2003
Systems for Public and Academic Libraries
Innovative Interfaces Millennium 96 144 104
Dynix Horizon 77 168 109
The Library Corporation Library.Solution 64 73 71
InfoVision Technology Amlib Library Management System 58 58 6
Sirsi Corp. Unicorn Library Management System 46 124 71
Endeavor Information Voyager 35 35 24
Ex Libris ALEPH 500 42 51 7
VTLS Virtua 34 67 8
Civica Spydus 21 21 0
Geac V Smart 17 54 0
BiblioMondo PortFolio 14 14 2
Fretwell-Downing OLIB7 12 46 0
GIS Information Systems Polaris Integrated Library System 9 20 20
Auto-Graphics Impact/VERSO 4 6 55
BiblioMondo Concerto 5 5 0
Keystone Systems KLAS 4 6 6
Systems for Centralized School Districts
Follett Software Co. Destiny 10 25 25
Sagebrush Corp. Sagebrush Accent 5 5 5
Systems for School and Special Libraries
Follett Software Co. Follett Circulation Plus and Catalog Plus 1,354 3,040 2,877
Sagebrush Corp. Winnebago Spectrum 1290 2150 2021
Sagebrush Corp. Sagebrush Athena 1072 1787 1680
Book Systems Concourse 713 954 951
COMPanion Corp. Alexandria 682 1,538
New Generation LIBRARYSOFT 580 796 655
Softlink America Softlink Alice 398 398 63
Mandarin Mandarin M3 231 231 162
Corporate Networks Insignia Library System 197 197
CASPR LibraryCom 167 167 150
Softlink America Inc. Softlink Liberty3 103 129 24
CASPR LibraryWorld 72 203 66
CASPR LibraryNet 28 30 30
Softlink America Softlink Oliver 20 20 0
Softlink America Softlink Liberty3 ASP 6 6 6
Systems for Corporate Libraries
Inmagic DB/Text for Libraries 254 1712 1034
Softlink America Softlink Library Corporate 132 132 21
EOS International GLAS 82 209 179
EOS International Q Series 32 54 46
CyberTools CyberTools for Libraries 27 27 27
EOS International EOS.Web 15 18 18
Open Text, BASIS Div. Techlib 4 15 10
Academic Public School Special Consortia
Company Percent of systems sold
Auto-Graphics 7 36 9 44 4
BiblioMondo 0 74 0 0 26
Book Systems 0 19 38 43 0
Civica 0 67 0 9 24
COMPanion 1 3 94 2 0
Dynix 15 49 10 17 9
Endeavor 74 0 0 26 0
EOS International 0 0 0 100 0
Ex Libris 69 0 0 15 16
Fretwell-Downing 41 2 0 55 2
Geac 6 80 2 12 0
GIS Information Systems 5 75 0 5 15
InfoVision Technology 3 30 60 7 0
Innovative Interfaces 72 19 6 1 2
The Library Corporation 12 59 16 13 0
Mandarin 3 9 69 10 9
Open Text, BASIS Div. 0 0 0 100 0
Sagebrush Corporation 3 4 88 5 0
Sirsi Corporation 26 36 2 19 17
Softlink America 3 6 52 36 3
VTLS 47 15 0 37 1
*Numbers are calculated as overall percentage of number of systems sold in 2003.
Company System Name Installed 2003 Installed 2002 Gain/loss
Systems for Public and Academic Libraries
Sirsi Corporation Unicorn Library Management System 1,343 1,252 +91
Dynix Horizon 1,240 975 +265
Endeavor Voyager 1,272 1,159 +113
Innovative Interfaces Millennium 1,103 1,015 +88
Ex Libris ALEPH 500 871 900 -29
The Library Corporation Library.Solution 556 489 +67
InfoVision Technology Amlib Library Management System 454 394 +60
CASPR LibraryCom 401 n/a n/a
BiblioMondo PortFolio 144 130 +14
Civica Spydus 196 n/a n/a
Fretwell-Downing OLIB7 179 n/a n/a
VTLS Virtua ILS 171 115 +56
Geac Vubis Smart 103 34 +69
Keystone Systems KLAS 55 51 +4
Auto-Graphics AGent (formerly Impact/VERSO) 55 74 -19
GIS Information Systems Polaris Integrated Library System 73 48 +25
BiblioMondo Concerto 41 38 +3
The Library Corporation CARL.Solution 19 25 -6
Legacy Systems in Use by Public and Academic Libraries
Dynix Dynix 2,092 2,323 -231
VTLS VTLS Unix (Classic) 247 280 -33
Geac ADVANCE 191 205 -14
Geac Vubis Original 169 218 -49
Sirsi Corporation DRA Classic 147 243 -96
Sirsi Corporation MultiLIS 143 205 -62
GIS Information Systems GALAXY 134 165 -31
Geac Vubis 4 Windows 112 136 -24
Geac PLUS 83 90 -7
Ex Libris Aleph 300 n/a 124 n/a
Geac BookPLUS 35 55 -20
VTLS VTLS MPE 31 31 0
Sirsi Corporation INLEX 10 36 -26
Dynix NOTIS 6 40 -34
Sirsi Corporation Taos 1 3 -2
Company System Name Installed2003 Installed 2002 Gain /loss
Systems for School and Special Libraries
Follett Software Co. Follett Circulation Plus and Catalog Plus 37,273 37,303 -30
Sagebrush Corporation Winnebago Spectrum 18,735 17,098 +1637
Sagebrush Corporation Sagebrush Athena 13,278 11,846 +1432
Softlink America Softlink Alice 10,113 9,000 +1113
COMPanion Alexandria 9,037 8,381 +656
Book Systems Concourse 7,857 6,903 +954
Mandarin Mandarin M3 3,259 3060 +199
New Generation LIBRARYSOFT 2,300 n/a n/a
CASPR LibraryWorld 2,270 n/a n/a
Kelowana Software Ltd. Library 4 Universal 1,600 n/a n/a
CASPR LibraryCom 401 n/a n/a
Insignia Software Insignia Library System 389 n/a n/a
CASPR LibraryNet 303 n/a n/a
Softlink America Liberty3 237 60 +177
CASPR Columbia Library System 30 n/a n/a
Softlink America Softlink Oliver 20 n/a n/a
CASPR LibraryWorks 17 n/a n/a
Softlink America Liberty3 ASP 6 n/a n/a
Systems for Centralized School Districts
Sagebrush Corporation Accent 80 75 +5
Follett Software Co. Destiny 25 n/a n/a
Systems for Corporate Libraries
Inmagic DB/Text for Libraries 7,900 7,944 -44
EOS International GLAS 2,181 n/a n/a
Softlink America Softlink America Corporate 412 45 +367
EOS International Q Series 231 n/a n/a
Open Text BASIS Div. Techlib 221 221 0
Inmagic BiblioTech PRO 84 87 -3
CyberTools CyberTools for Libraries 69 48 +21
EOS International EOS.Web 18 n/a n/a
Inmagic Library Module on Content Server 5 n/a n/a
Legacy system: Innovative's Millennium Dynix's Horizon Sirsi's Unicorn GIS's Polaris VTLS's Virtua Endeavor's Voyager Ex Libris's Aleph 500 TLC/CARL's Lib.Solution Civica's Spydus Geac's VubisSmart Totals
Sirsi's DRA Classic 13 7 42 2 4 3 2 3 76
Sirsi's INLEX/3000 2 9 1 12
Sirsi's Taos 2 6 1 9
Sirsi's MultiLIS 1 4 22 1 28
Dynix 10 91 7 2 2 4 1 15 5 137
VTLS Classic or MPE 7 26 1 34
GIS's Galaxy 4 2 1 13 1 2 23
Dynix's NOTIS 1 1
ELiAS's DOBIS 2 2 1 1 6
Geac's PLUS 3 1 3 7
Geac's Advance 2 2 3 1 8
The Library Corporation's Carl 3 2 2 7
Innovative's Innopac 48 0 1 49
Ex Libris's Aleph 300 1 1
PALS 2 1 3
Geac's BookPLUS 4 4 8
Geac's Vubis Original 1 28 29
Geac's Vubis 4 Windows 2 2
Homegrown 2 1 7 1 1 12
Total 96 119 99 19 29 17 8 20 12 33 452
This chart shows the system chosen by libraries that migrated from legacy systems.
Company Product Category 2002 sales
BiblioMondo Zones Digital Library System 6
Dynix Horizon Digal Library Digital Library System 6
Endeavor ENCompass Digital Library System 40
Sirsi Sirsi Hyperion Digital Media Archive Digital Library System 21
Auto-Graphics AGent Virtual Content Enhancement Enhanced Content OPAC 3
Dynix Horizon Enriched Content Enhanced Content OPAC 154
Endeavor WebVoyage (w/ Enriched Content) Enhanced Content OPAC 35
Library Corporation YouSeeMore Enhanced Content OPAC 26
Sirsi iBistro Enhanced Content OPAC 150
Dynix Horizon Link Resolver Link Resolver 0
Endeavor LinkFinderPlus Link Resolver 25
Ex Libris SFX Link Resolver 84
Fretwell-Downing OL2 Link Resolver 2
Innovative WebBridge Link Resolver 67
Sirsi Sirsi Resolver Link Resolver 25
BiblioMondo ZonePro MetaSearch Interface 4
Dynix Webfeat MetaSearch Interface 34
Endeavor ENCompass for Resource Access MetaSearch Interface 36
Ex Libris MetaLib MetaSearch Interface 62
Fretwell-Downing ZPORTAL / CPORTAL MetaSearch Interface 10
Innovative MetaFind MetaSearch Interface 45
Innovative Electronic Resource Management Electronic Resource Management 24
Sirsi Sirsi Rooms Context Management 23
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