The library technology industry increasingly functions globally, with many organizations involved in diverse countries and regions. I find it quite interesting to study the international dynamics at play among the organizations that provide technology products and services to libraries. Many of those familiar here in the United States are also active in other countries. Other companies, well known in parts of the world, would not be recognized here. As I cover the library technologies for Smart Libraries Newsletter, I try to provide exposure to some of companies and products that may not yet have a presence in the United States. They offer a different approach that might expand our thinking about a given area of library technology. Even if the particular products may not be currently available, some understanding of the international scene seems beneficial.
First, a word about domestic companies. Although large global corporations tend to dominate industry conversations, small companies operating within a single country abound, often within a specialized niche. The small, regionally-focused companies fulfill the technology needs of libraries that the larger players don't find worthwhile to address. Keystone Library Systems, for example, has developed its KLAS product primarily for US libraries that provide materials for the visually disabled. It has operated steadily for more than 25 years. Many other small companies cater to the needs of other library types and likewise serve a well-defined sector of libraries. Yet, the opportunities for growth can be limited in these confined spaces. Resources for research and development may also be sparse, leaving companies vulnerable should organizations with deeper pockets take an interest in invading their niche.
Companies intent on growth continually explore new opportunities, usually by working to market their products outside the parameters of their current base. A company generally oriented to creating products for public libraries, for example, might work to attract academic or school libraries. Polaris seems be following this strategy, as seen its sales to college libraries. The key challenge in this strategy lies in the tension between specialized functionality for a primary target audience and offering a general set of features well suited for all library types. I observe a trend for each of the library types to diverge increasingly in their strategic missions and operational objectives, making it ever more difficult for library technology products to satisfy a mixed customer base.
Other companies seek growth through venturing into new geographic areas. The potential for any given product in a country or region may be limited due to saturation, where most of the target libraries have implemented a product and new sales opportunities are limited. Companies often seek opportunities for growth through expansion of their products and services into other countries where the functionality of their systems has not been available to libraries. A growth strategy through geographic expansion can be extremely challenging when dealing with other languages and different expectations for functionality. The large global library automation companies are able to reach into new countries through investing in adequate business infrastructure to market and support their products in the local languages. The products of the global companies are also built with native multilanguage capabilities.
I see the new genre of library services platforms as well positioned for international deployment because they tend to have flexible workflows that can adapt to established practices and can accommodate metadata variants and cataloging practices of a country. The development capacity of the global organizations usually far exceeds that of domestic companies. New-generation systems require significant investment of development resources. Each new cycle of technologies can provide opportunities for the global companies that have developed new-generation products, at the expense of the local companies without adequate resources to make the technological leap.
Global organizations are also able to gain strategic resources through geographic expansion. Mergers and acquisitions can jumpstart a company into new geographic regions. While acquiring a company may bring new kinds of customers into the fold, it can also expand development capacity. One of the most important assets in a business acquisition can be access to its talent and expertise. We can see a taste of this strategy in OCLC's sequence of mergers and acquisition covered in this issue of Smart Libraries Newsletter. Many of the key individuals with OCLC today came into the organization through its acquisition of technology companies. Much of the development of OCLC's flagship WorldShare Platform has been executed in the facilities and by the development teams formed at least partially from acquired companies.
Companies can also leverage their geographic presence to gain operational efficiencies. As a company expands into new areas, it must deploy the business infrastructure needed for service and support. In some cases a company may want to establish its own office in each of the major geographic areas it serves. This approach requires an up-front investment in facilities and personnel. Alternatively, it may partner with distributors to market and support its products in specific regions. This arrangement provides the company with a cut of the revenue made by the distributor without the need for up-front investment. Ex Libris Group follows both approaches, operating some regional offices directly and working with distributors in others. A company can also use the lower costs available in some geographic areas to gain operational efficiencies. In many IT sectors, off-shore outsourcing of selected development tasks has proven to be an effective component of product development strategies. Our coverage of Innovative's launch of its new office in India reflects an interesting strategy of partial reliance on off-shore development, the ability to provide support to its customers in that broader region, and a partnership with an established global services firm.