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Smarter Libraries through Technology: The Consolidation Continues

Smart Libraries Newsletter [May 2014]

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Recent months have seen a new wave of consolidation in the library technology industry. SirsiDynix acquired EOS International in December 2013, and Innovative Interfaces has now acquired Polaris Library Systems. Both SirsiDynix and Innovative were already among the largest companies in the industry. Continuing a trend of consolidation that has been underway for more than a decade, these acquisitions ratchet each company upward a notch in size, in the number of library customers that rely upon them, and in potential impact.

Earlier in the industry, a much larger number of companies competed with each other to develop and sell automation systems to libraries. But the limits of the library technology economy have been unable to sustain such a large number of competitors. The number of players had diminished through a seemingly relentless series of business acquisitions. Most of these cases involve direct competitors, which in either the short or long term, reduces the number of choices available within a given sector. In earlier rounds Ex Libris expanded through the acquisition of Endeavor Information Systems.Recent months have seen a new wave of consolidation in the library technology industry. SirsiDynix acquired EOS International in December 2013, and Innovative Interfaces has now acquired Polaris Library Systems. Both SirsiDynix and Innovative were already among the largest companies in the industry. Continuing a trend of consolidation that has been underway for more than a decade, these acquisitions ratchet each company upward a notch in size, in the number of library customers that rely upon them, and in potential impact.

Earlier in the industry, a much larger number of companies competed with each other to develop and sell automation systems to libraries. But the limits of the library technology economy have been unable to sustain such a large number of competitors. The number of players had diminished through a seemingly relentless series of business acquisitions. Most of these cases involve direct competitors, which in either the short or long term, reduces the number of choices available within a given sector. In earlier rounds Ex Libris expanded through the acquisition of Endeavor Information Systems.Recent months have seen a new wave of consolidation in the library technology industry. SirsiDynix acquired EOS International in December 2013, and Innovative Interfaces has now acquired Polaris Library Systems. Both SirsiDynix and Innovative were already among the largest companies in the industry. Continuing a trend of consolidation that has been underway for more than a decade, these acquisitions ratchet each company upward a notch in size, in the number of library customers that rely upon them, and in potential impact.

Earlier in the industry, a much larger number of companies competed with each other to develop and sell automation systems to libraries. But the limits of the library technology economy have been unable to sustain such a large number of competitors. The number of players had diminished through a seemingly relentless series of business acquisitions. Most of these cases involve direct competitors, which in either the short or long term, reduces the number of choices available within a given sector. In earlier rounds Ex Libris expanded through the acquisition of Endeavor Information Systems.Recent months have seen a new wave of consolidation in the library technology industry. SirsiDynix acquired EOS International in December 2013, and Innovative Interfaces has now acquired Polaris Library Systems. Both SirsiDynix and Innovative were already among the largest companies in the industry. Continuing a trend of consolidation that has been underway for more than a decade, these acquisitions ratchet each company upward a notch in size, in the number of library customers that rely upon them, and in potential impact.

Earlier in the industry, a much larger number of companies competed with each other to develop and sell automation systems to libraries. But the limits of the library technology economy have been unable to sustain such a large number of competitors. The number of players had diminished through a seemingly relentless series of business acquisitions. Most of these cases involve direct competitors, which in either the short or long term, reduces the number of choices available within a given sector. In earlier rounds Ex Libris expanded through the acquisition of Endeavor Information Systems.

Earlier in the industry, a much larger number of companies competed with each other to develop and sell automation systems to libraries. But the limits of the library technology economy have been unable to sustain such a large number of competitors. The number of players had diminished through a seemingly relentless series of business acquisitions. Most of these cases involve direct competitors, which in either the short or long term, reduces the number of choices available within a given sector. In earlier rounds Ex Libris expanded through the acquisition of Endeavor Information Systems.

SirsiDynix had previously acquired Data Research Associates and Dynix Systems; only after Dynix had acquired NOTIS Systems, and Data Research, INLEX and MultiLIS. Follett has acquired many of its competitors in the K-12 school library sector, including Sagebrush Technologies, which previously had acquired Winnebago Software and Nichols Advanced Technologies with its Athena ILS. The Library Corporation acquired Carl Systems. In the special library sector, Lucidea was formed out of SydneyPLUS, Cuadra Associates, and Inmagic. I maintain a graphic on Library Technology Guides that illustrates this history of mergers and acquisitions (http://www.librarytechnology. org/automationhistory.pl).

These business transitions have dramatically reconstituted the character of the library technology industry. While the number of companies has decreased sharply, the impact on the products available to libraries has been much more gradual. Libraries have long planning cycles and less-than-abundant resources for acquiring and implementing new automation systems. Providing a new-generation system consistent with that in place when the library is ready to consider new options disrupts libraries less than forcing them into an abrupt change.

This approach preserves continuity for libraries, at least in the medium term, while progressing toward a more sustainable one-platform strategy for the company. In the shorter term, maintaining incumbent systems may incur higher costs for the company, but can also help retain library customers that may have gone to competing systems if presented with a more abrupt product discontinuation. Many of the products related to the companies that merged during the era of consolidation will live on until new-generations systems gradually replace them in the phase of product re-development currently underway.

Any newly merged company that imposes disruption or uncertainty will face challenges in retaining its library customers. We can observe several different product and business strategies executed in the library technology industry over the years that illustrate their impact.

Ex Libris has maintained its Aleph product as well as the the Voyager ILS that it acquired from Endeavor Information Systems. Rather than abruptly discontinue any of the two incumbent systems, Ex Libris is following a much longer term strategy of initiating a new development effort to create a new next-generation product to eventually succeed both incumbent products. The company has seen some net growth in its traditional ILS products, even while developing and promoting Alma, intended as the successor of Voyager, Aleph, and competing systems in academic libraries. Much of the company's growth can also be attributed by offering linking, discovery, and other products able to work with any ILS. While the Ex Libris product roadmap leads to a single destination, Primo and Alma, it follows a timeline that doesn't impose deadlines.

SirsiDynix likewise supports two flagship products of the two incumbent companies, Symphony and Horizon, but has seen a rockier path. Following the initial merger of the two companies and acquisition by new ownership, announcements were made of an abrupt product change. The development of a new-generation system was called off. Plans were put in motion to transition libraries running Horizon to what is now known as Symphony. This strategy was not well received. Many libraries moved to other products, energizing the open source ILS movement. SirsiDynix eventually relented on its plans to discontinue Horizon and seems well committed to its long term support. The company has developed a suite of Web-based products, called BLUEcloud, that provide new layers of functionality for both Symphony and Horizon. The recommitment to both incumbent ILS products and new forward development for the benefit of both has helped retain its library customers and attract new ones.

As many incumbent library automation companies fell under the ownership of Follett, the products of those companies continue to be used for as much as 15 years after being actively developed. Follett has been able to attract many libraries to its own products, showing that patience pays off, especially in a sector of the market where the financial resources to change systems is scarce. Though a small fraction of the school libraries using is legacy products have gone other ways, the overwhelming majority of those running its own Circulation Plus, as well as the acquired products Athena and Winnebago Spectrum are now running its flagship Destiny ILS.

This quick overview of the mergers and acquisitions of the library technology industry suggests that a phased product roadmap that leads libraries voluntarily toward new generation products leads to better outcomes for the companies than strategies that attempt to short-circuit library planning cycles by disrupting incumbent products.

Many libraries using the products of Polaris and EOS International naturally have some questions and concerns as their automation providers have been acquired by competitors. Those questions and uncertainties can only be answered by the acquiring companies, Innovative and SirsiDynix. Initial responses will take the form of the product strategies that they articulate in the short term, but especially in any product and support changes executed over the next months and years. I think that the history of the industry well documents that it is in neither the company's or the library's interests to disrupt the development and support of the products on which libraries depend for their critical operations, some of which may have been quite recently implemented.

Mergers of competitors naturally bring some negative consequences. Business relationships established between vendors and their customers are disrupted. Some libraries, for example, may have selected Polaris from a field of competitors that included Innovative. Those libraries now face the prospect of working with a vendor that they explicitly rejected during their procurement process. Innovative will certainly have to work hard to deliver the more personalized level of support that these libraries expected as they chose to work with the smaller company Polaris. But Polaris itself faced the need to scale up its support processes as its customer base was seeing such rapid expansion in recent years.

Mergers and acquisitions narrow the choices available to libraries as they seek new technology products. They definitely feel the consequences when they find that only one or two viable products within their niche. While companies may develop and support multiple legacy products, they will usually only market one to new clients. With every round of consolidation, the number products available for new procurements shrink.

Even the number of open source products is limited. While I don't perceive or anticipate that the library technology industry tends toward a monopoly, I hear many libraries complain that too few choices remain. One can only hope that in today's phase of limited options the remaining products are capable and compelling. Despite the larger field of the past, the choices often were mediocre.

A positive way forward involves the creation of products with new capabilities that would not have otherwise been possible. Even for successful companies like Innovative and Polaris, the trajectory of innovation can plateau. It takes tremendous resources to create world-class technology products able to handle all the complexities involved in managing and providing access to library resources. When two companies combine, they gain increased development capacity, but more importantly the combined experience, expertise, and vision of their technologists, may be able to develop a new-generation product beyond what either incumbent team may have been able to accomplish individually.

It will be interesting to observe events in the library technology industry in the coming months and years. Innovative, Polaris, SirsiDynix, and EOS International and the libraries using their products will face challenges as new corporate owners integrate the acquired companies. It would also be unrealistic to think that this is the final round. The churn of business transitions will continue; some simply lateral changes in ownership, and possibly others involving further consolidation.

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Publication Year:2014
Type of Material:Article
Language English
Published in: Smart Libraries Newsletter
Publication Info:Volume 34 Number 05
Issue:May 2014
Page(s):1-3
Publisher:ALA TechSource
Series: Smarter Libraries through Technology
Place of Publication:Chicago, IL
ISSN:1541-8820
Record Number:19408
Last Update:2022-12-05 15:25:26
Date Created:2014-06-05 14:18:39
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