Library Technology Guides

The library technology industry has been transformed over the decades through relentless rounds of consolidation. Mergers and acquisitions have eliminated some major competitors and left the industry dominated by a smaller number of large organizations. In working with the personnel statistics accumulated through the annual Library Systems Report for American Libraries, I was interested to see whether consolidation has resulted in an overall reduction in the workforce of the companies producing and supporting strategic technology products. For each year since 2002, the report's vendor survey has included statistics on the total number of personnel employed and how they are allocated according to categories such as development, support, sales, and administration.

Contrary to expectations, the size of the workforce in the industry's companies has seen only moderate reductions during the past dozen years. Though business consolidation has produced some episodes of personnel reductions, some companies have steadily added capacity. When considering the major companies active since 2002, the overall personnel resources industrywide have declined from 4,279 to 3,935 or about 8 percent. When considering individual consolidation scenarios, the net loss of personnel varies. Companies increasing their workforce have offset the personnel lost through mergers.

One of the key factors in business mergers lies in savings that can be achieved through reduction in personnel. When a company acquires another, both can be served through the same administrative personnel and processes. In most cases, the initial efficiencies are gained through combining executive administration, accounting personnel and systems, and business infrastructure. The next steps of savings might come through a unified sales force representing all the products of the newly combined companies. Product support may be combined, though usually staffed by experts from the antecedent companies.

Table 1. Innovative and its acquired companies

Table 2. Impact of consolidation of Endeavor Information Systems into Ex Libris

Table 3. impact of 2005 consolidation of Sirsi Corporation and Dynix

Table 4. Impact of EOS International Consolidation into SirsiDynix

The elimination or consolidation of product lines will generally come at a much later stage of business integration, with development of major products from the acquired continuing for many years. In examples,where products have been eliminated soon after a merger, it has not been well received or financially successful. Few products have been eliminated through consolidation during this period. Symphony, Horizon, Voyager, and Aleph have all survived a previous round of mergers involving Ex Libris and SirsiDynix. The most prominent casualty was the Corinthian product under development by Dynix that was halted in the early days of ownership by Vista. Both SirsiDynix and Ex Libris plan to phase out aging products through very long-term strategies based on enticing libraries to their new platforms, Alma and BLUEcloud respectively. Given the persistence of products in the last phase of consolidation, prospects do not seem dire for libraries running Polaris, Virtua, and EOS.Web, products subject to acquisitions by Innovative and SirsiDynix.

Table 5. Industry-wide employment trends

To get a sense of the impact of specific mergers on personnel, I constructed tables that compare personnel statistics of companies before and after a merger. The basic idea is to compare the combined workforce of the separate companies with that of the merged organization.

Innovative has taken a relatively aggressive approach to the integration of its acquired companies. Apart from business acquisitions, the company has steadily increased the size of its workforce, generally adding capacity each year to support its growing customer base and development strategies. Innovative grew from 268 personnel employed in 2002 to 341 in 2012 when the company made its transition in ownership. VTLS, acquired last year, had seen some substantial cuts in personnel from a high of 110 in 2011 to 77 reported in 2013 prior to its sale to Innovative. This reduction aligns with the smaller number of sales seen for Virtua. Polaris has seen steady growth of its workforce since 2004, adding needed resources to support a growing customer base of ever larger and more demanding libraries. The cumulative personnel assets of the three companies totaled 584 in 2013, prior to consolidation. By the end of 2014, Innovative reported a workforce of 416, inclusive of the acquired businesses, representing a total loss of 168 positions, or a 28% decrease in personnel resources relative to what would have been in place among the three companies had they not consolidated. (See Table 1.)

When Ex Libris and Endeavor Information Systems consolidated in 2006, there was a net loss of 24 out of a combined pre-merger workforce of 417, or 5% net reduction. Personnel statistics since 2002 also reflect that the company has steadily increased its workforce each year, which also contributes to the better-than-expected personnel numbers for the industry as a whole given the extent of mergers during this period. (See Table 2.)

SirsiDynix has gone through two sets of mergers since 2002. The initial SirsiDynix consolidation of Sirsi Corporation and Dynix in 2005, while under the ownership of Seaport Capital, resulted in a reduction of combined personnel resources from 756 to 679: a mild 10 percent reduction. Following its acquisition by Vista Equity Partners in 2006, SirsiDynix experienced a harsher reduction from 629 down to 491, an additional 22 percent, or a net 32 percent reduction from pre-merger. SirsiDynix trimmed personnel each year through 2012. The following year the company increased its personnel to 385 (Table 3). SirsiDynix reported an increase of 36 personnel since last year. Considering the 50 positions represented in EOS International, the combined companies showed a net loss of 14 positions or 3 percent (Table 4).

Globally, OCLC acqusitions have consolidated many companies, including Sisis Informationssysteme, Fretwell-Downing, BOND, Amlib from EnvisionWare, and HKA. Data are not readily available to assess the impact of these acquisitions.

This mini-study takes into account only a portion of the overall industry since it does not consider many of the small and medium-sized companies around the world. More extensive research might identify other trends and patterns. Yet for the companies and merger scenarios considered, the data suggests that personnel resources have become concentrated in a smaller number of companies, that the impact of consolidation has been uneven, and that all the surviving companies have increased in capacity over this period. (See Table 5.)