The integrated library system (ILS) is changing-not dramatically but steadily. Forces at work include an improving economy, pressures to innovate, new products that manage electronic content (see "Trojan Horse," p. 46), and, most of all, mandatory migrations.
Overall industry revenues, estimated at $525 million, grew by almost 5% relative to 2003. This figure represents total revenues of all companies that participate in the North American automation market. Most companies grew their gross earnings, and, in many cases, non-ILS products and sales to non-U.S. clients generated more income than ever before (see Table 3, p. 45).
It was an especially fertile year for migration (see Table 4, p. 46ff.). In 2003 many libraries deferred moving from obsolete systems, creating a pent-up demand that began to break loose in 2004, when migrations increased by 12%. This is an important trend to follow, since to succeed, companies must both attract new accounts and retain current customers. Just signing legacy sites to your flagship product does not increase market share.
Total contracts were down by 2%, though we estimate that far more libraries were represented this year than last, consistent with the trend toward increased numbers of libraries per system implementation. New-name contracts were down by 12%, indicating that more libraries stay with their current vendor as they migrate.
Dynix led in total sales with 193 contracts signed, a record unsurpassed in the last four years by any others-especially impressive since these contracts cover 1640 libraries. In the competition for new clients and market share gains, Innovative Interfaces tied for second with contracts to 76 new-name clients (568 libraries). Sirsi delivered strong sales performance, coming in second in total contracts and tying for second in new-name accounts. For individual libraries, Innovative brought into its fold more than twice that of Sirsi. Dynix leads by far in installed sites, with 3,599 running either Dynix Classic or Horizon.
As the domestic ILS market becomes more highly saturated, companies increasingly rely on international sales, with about 8% more non-U.S. sales in 2004 compared with 2003. International contracts, however, typically represent smaller projects.
Who's up, who's down
Defections from the current flagship system impact market share and reputation. While few libraries switch to competing systems, at least ten this year moved from Sirsi's flagship, Unicorn, to other systems. The demise of the Detroit Area Library Network was painful to Dynix, with both an Association of Research Libraries (ARL) member and a major metropolitan facility abandoning Horizon. These lateral moves continue to be anomalies but might be early indicators of dissatisfaction. When the current cycle of legacy migrations plays out, the next level of competition will be vulnerable accounts running flagship systems. Early battles may have already begun.
It takes multiple measures to assess the gains and losses among vendors. Counting contracts alone doesn't suffice, given variations in the numbers of libraries, differences in collection sizes, and complexity of automation needs. This year, we look deeper than the raw contract counts, factoring in the weight of each according to the number of libraries represented. Share can be understood by the formula: New-Name Sales minus Legacy Losses (plus Flagship Defections) equals Net Gain/Loss.
With the largest market share gain in 2004, Innovative Interfaces worked this formula to its advantage. Only six sites with INNOPAC selected competing systems, and two Millennium sites defected (single libraries in consortia moving to independent implementations). The 76 new accounts minus eight losses means a net gain of 68 accounts (534 libraries.) Innovative scored 13 Dynix accounts (173 libraries).
The Library Corporation (TLC) made net gains of 54 accounts (322 libraries), increasing its overall market share. GIS Information Systems saw a net gain of two accounts (77 libraries). Surprisingly, Dynix's superb sales performance yielded smaller gains in terms of building market share, with a net gain of 13 accounts. The size of some of the Dynix contracts that were lost, as well as Horizon defections, equals a net loss in individual libraries. Sirsi saw a net gain of 26 accounts but a loss in individual libraries-until you consider that 180 libraries joined existing consortia already using the company's products.
Eye on migrations
At least 814 institutions elected to migrate from their legacy system in 2004. The number of first-time automations in the public and academic sector was 58-all smaller libraries.
With 1880 legacy sites remaining, Dynix Classic will fuel the next two years' migration economy. In 2003, Dynix retained 66% of its legacy accounts; in 2004, it retained 77%. If the company sustains this, it is poised for strong sales in 2005. Dynix is betting that aggressive development of Horizon 8.0 will pay off in high retention.
Few other legacy systems remain: DRA Classic and Multi-LIS have dwindled down to about 100 sites each, INLEX/3000 is now three, VTLS Classic is 100, Galaxy numbers 84, Geac Advance is down to 175, and Geac PLUS is 65. Only three NOTIS sites remain. Although the total number of sites running a legacy system numbers about 3000, the number of remaining sales is much less given the lag between selecting a new system and decommissioning the old one.
For Sirsi, 2004 was a key year for migrations-all of its legacy systems are winding down. The choices these libraries make will be important in Sirsi's longer-term market share. Sirsi legacy migrations were mixed in 2004. Of the 63 DRA Classic accounts that inked a deal, 31 went to Unicorn. Two of the six libraries running INLEX/3000 chose Unicorn.
Room for the little guys
In an industry with 33 companies, the ten largest account for over 80% of revenues. Despite this, smaller companies continue to flourish.
Small companies can't compete for large libraries and consortia since they lack the resources for research and development. However, a lot of small libraries, with both modest collections and budgets, want a system in the $500-$5000 range. Some companies continue to thrive with this high volume of low-unit sales. The emphasis here is on simplicity and value. Demand for these low-cost systems will continue, as the larger companies would be hard-pressed to offer the scaled-down versions these libraries could afford.
There will also always be room for niche markets. A prime example is Keystone Systems, a small company with a strong reputation in providing software to libraries for the blind.
My place or yours?
Still, large companies do try to reach smaller libraries; one way is the Application Service Provider (ASP) model, where the vendor hosts the automaton system and provides all access through the Internet. It is an inexpensive plan to provide full-featured automation to smaller libraries, especially ones that cannot afford an independent implementation or can't automate through a consortium.
ASP options abound, with many companies offering an ASP solution and several that came to market in 2004. But ASP offerings extend beyond the basic library automaton system. Other product categories offered this way include link servers, metasearch environments, resource sharing systems, and collection management services. Some of the non-ILS products available through vender-hosted ASP offerings include Ex Libris's SFX link resolver and TLC's Online Selection and Acquisitions system. Resource sharing environments are well suited for the ASP arrangement: Auto-Graphics AGent, Fretwell-Downing's VDX, and Dynix's URSA each have ASP options.
Mergers and acquisitions
The most significant transition last year was when Canada's BiblioMondo, which offers the Concerto and Portfolio automation systems, was acquired by ISACSOFT. The latter was formed in 2003 through the acquisition of businesses with technologies relating to content-based information systems. While BiblioMondo was privately owned by venture capital firms, ISACSOFT is a public company.
The BiblioMondo purchase was interesting for two reasons. One, ISACSOFT saw BiblioMondo as a chance to expand its market of content-based learning systems. Two, it is significant that the venture capitalists divested their equity in the company for a lesser amount than the total value of their investments. Are other venture capital firms with large stakes in the industry also ready to sell off?
Sirsi expanded in early 2005 by acquiring Docutek, a small company specializing in virtual reference and e-reserves applications, with a customer base of about 550 libraries. Sirsi will operate Docutek as a wholly owned subsidiary.
Pressure to innovate
This past year will be remembered as the year that Google changed the world of information technologies. Following its $1.67 billion IPO in August, Google announced a series of projects with large implications for libraries: Google Scholar's encroachment into the library domain of scholarly information and the company's ambitious plan to digitize millions of books from some of the world's greatest libraries. Librarians are aware that they need innovative technology to keep pace with user expectations-especially when those expectations are being set by an external force with seemingly boundless resources.
One development integrates new visualization search technologies with the library's web OPAC (for more on visualization software, see "Visualize This," LJ 3/1/05, p. 34). At least three companies offer the ability to integrate the AquaBrowser Library search interface from Amsterdam-based MediaLab Solutions BV into their catalogs:TLC, BiblioMondo, and VTLS. AquaBrowser offers a completely new approach to searching, providing intelligent features through a graphic interface.
TLC also formed a partnership with Endeca Technologies, Inc. to integrate that company's Guided Navigation interface into its products. The Endeca interface provides related terms in the form of a dialog that guides the search process.
Another strategy for innovation is to bring the web services and the Service Oriented Architecture (SOA) into library automation. Widely adopted in other industries, web services will allow library information systems to communicate with components of companies in other industries. This could include dynamic exchange of data with book suppliers, support for external authentication authorities, and integration with courseware systems and corporate portals. SOA provides an XMLbased infrastructure for behind-the-scenes communications among software applications based on web services.
An industry consortium, called the Vendor Initiative for Enabling Web Services (VIEWS), was formed to focus on developing web services. Convened by Carl Grant of VTLS, the consortium currently includes Dynix, Endeavor, Fretwell-Downing, Index Data, MuseGlobal, OCLC, Sirsi, Talis, TLC, and VTLS. NISO participates in VIEWS as an observer. While everyone expresses interest, we've seen only limited deployment of products based on web services.
Dynix, an early adopter of SOA and web services, created the Vendor Integration Protocol, a set of web services that others can use with applications that interact with Horizon. Endeavor describes its new Meridian ERM as being formed entirely on the web services model. And Innovative, while not a participant in the VIEWS consortium, has independently developed a number of applications based on web services, such as Inventory Express, which transfers bibliographic, item, and order data from book suppliers into Millennium.
Support for management
Librarians want support in resource allocation and decision-making. In public libraries, especially, administrators feel enormous pressure to be ever more efficient-and to demonstrate those efficiencies. In response, new analytical tools have been created.
CIVIC Technologies, a Pasadena, CA-based company, developed LibraryDECISION, a web-based product to help librarians analyze services relative to geographic area. Library-DECISION uses Geographic Information Systems and demographic data, as well as facilities, services, and collections information from the library. LibraryDECISION then delivers a graphical mapping tool that helps librarians evaluate current facilities and services and plan new ones. CIVIC Technologies offers LibraryDECISION on an annual subscription model. TLC and GIS now offer LibraryDECISION.
Sirsi launched a similar service called the Normative Data Project (NDP). It works on a data-mining model based on an extensive database of transaction and bibliographic data extracted from ILS logs from a large array of libraries. In addition to the transaction data, NDP relies on data collected by the GeoLib research program of the Florida Resources and Environmental Analysis Center at Florida State University, which incorporates both data from the U.S. Census and branch-level statistics. Subscribers to the NDP would be able to identify service areas that are underserved as well as areas of overlapping coverage. The service is based on data-mining technologies from SwiftKnowledge, which also powers Sirsi's Director's Station. The Director's Station, which launched in January 2004, provides detailed reports on library use patterns.
In the K-12 arena, Sagebrush Corporation offers a data management and analysis tool called Analytics. Based on software licensed from SwiftKnowledge, it allows school administrators to access and analyze student data in a user-friendly graphical environment.
Dynix's Horizon Web Reporter employs the MicroStrategy Business Intelligence Platform to deliver an advanced, graphical reporting environment. The system works with SQL to generate reports against Horizon use data but does not require knowledge of SQL syntax. Horizon Web Reporter operates in real time, with no need for data to be extracted from Horizon to a separate platform.
Schools: no longer solo
Dramatic changes are afoot in K-12 school library automation. Historically, the numbers of units sold each year were extremely high. But beginning in about 2001, the pattern began to crumble, and this past year sales dropped precipitously. A look at the leading products shows 2004 sales levels averaging one-third to one-quarter of those in 2001.
Two factors underlie this sea change. First, the K-12 school library market is saturated. Most schools have an automation system. Second, school districts began to demand centralized IT services and all the efficiencies that go with them.
In response, companies that focused on K-12 libraries scrambled to develop districtwide centralized systems. First out was Sagebrush, offering Accent in 2001 through a partnership with Sirsi. Follett Software launched Destiny in 2003. This completely web-based system allows the server to be installed and maintained in the district's IT department, with schools having access through web browsers. In 2004, Surpass Software launched Centriva, an enhanced version of its Windows-based system for centralized deployment. Several all-web-based systems recently developed, including Oasis from Mandarin Library Automation, Atriuum from Book Systems, and Oliver from Softlink.
Corporates go enterprise
The special library world is difficult to assess. Companies in this market are reluctant to disclose information while their customers are in corporations that often demand nondisclosure.
Trends are similar to those seen in schools. Automation on the individual level is on its way out, making way for centralized, enterprisewide automation systems. Corporations, more than any other type of library, rely on e-content, both sensitive internal documents as well as external subscription-based material. In the corporate arena, the lines blur between library automation systems and knowledge management (KM).
Emergence of the new
Consistent with this trend, several new products emerged. Softlink, which has long offered a Windows-based system for small special libraries, recently developed an all-web-based system called Liberty 3. Inmagic introduced Genie, an all-web-based automation system based on Microsoft SQL Server and Microsoft .NET technologies. It's designed for enterprise-level deployment.
EOS International has shifted its focus away from its older products in favor of EOS. Web, geared more toward the enterprise. The company's EOS E-Library Service makes this technology accessible to smaller special libraries through an ASP arrangement.
Open Text, with its Livelink for Libraries, and SydneyPLUS have both specialized in enterprise-level automation systems for corporate libraries for some time.
Trojan Horse: The E-Content Solution
Librarians who want to strengthen their automation environment are more likely to invest in supplemental products than switch systems. These products almost always improve access or management of e-content. Link resolvers are now standard for academic libraries heavily invested in electronic resources. Interest in metasearch is high for both public and academic libraries. Now several companies are developing electronic resource management (ERM) modules.
From a competitive standpoint, these products allow companies to penetrate libraries committed to a competitor. But to market into competitors' accounts successfully, the product must be best of breed. Look at Ex Libris, which successfully markets its SFX link resolver and MetaLib metasearch environment to many libraries running systems other than ALEPH 500. Likewise, Innovative has sold its ERM system to major libraries outside the Millennium fold. VTLS aims to be the specialist in institutional repositories, providing installation, customization, integration, and support services for the open source FEDORA(TM) application.
ERM: Suddenly Everywhere
Typically acquired on the subscription model, e-resources are even more complex than journal subscriptions, with the need to track many license conditions such as restrictions in access and interlibrary loan. All the emerging products take into consideration the Digital Library Federation's Electronic Resources Management Initiative's definitive parameters and requirements.
Innovative delivered its ERM solution well ahead of its competitors. The company announced its product in 2003 and has sold 109 systems to date. Major clients include the Library of Congress, Yale University's Law Library, and Cornell University. Expanding on the software platform of SFX, Ex Libris is developing Verde, its ERM offering, with beta-test partners MIT and Harvard. General release is expected in early 2005.
Endeavor is building Meridian, its ERM, in partnership with Princeton, Columbia, and Pittsburgh. Dynix announced it will offer an ERM module and is working with Johns Hopkins and the University of Chicago. Dynix's ERM, which will be fully integrated into the ILS rather than a standalone system, is slated for release later in 2005. VTLS introduced the VERIFY ERM application, designed either to integrate into Virtua or operate as a standalone.