Consolidation has been a prevailing trend among organizations that provide products and services to libraries—including both commercial and non-profits—since about the late-1990s. This newsletter and its predecessor Library Systems Newsletter have chronicled a constant succession of events that have transformed the industry from a large array of smaller organizations to a more consolidated landscape. These business acquisitions, often positioned under the more neutral sounding label of “merger,” have formed some dominant powerhouse companies as well as some mid-sized organizations.
A variety of factors drive industry consolidation. An important element involves financial efficiency. Separate companies replicate considerable administrative and operational overhead. Combining enables these companies to function under a single executive management structure as well as marketing, sales, support, and product development. Such consolidation does not necessarily mean that the products of the acquired company will be eliminated. Quite the contrary, the short-term elimination of products in business consolidation in the library technology has been rare. Instead, consolidated companies usually work toward a new next-generation product that eventually will replace both internally developed and acquired systems. Consolidation to gain financial efficiency is often implemented as a business strategy of external investors.
The need to fill gaps in a company's product portfolio can also lead to business acquisitions. Many of the larger companies work toward creating a portfolio of products able to serve the diverse needs of its current or potential customers. The need to address any given area of interest can be met either through internal development or by acquiring a company or product. In some cases, the company will build; in other cases, it will buy. These events provide an opportunity for startups and other small companies that have created an interesting product but may not have the resources to market it to a broad audience or to take on future rounds of development.
Companies also make acquisitions to gain more control. Large companies often work through distributors to represent their interests in some geographic regions. These distributors have connections and expertise in the local language and business environment and often operate independently from the company whose products they represent. The primary vendor may eventually opt to operate directly in that area rather than through a distributor, leveraging its own product expertise and sales force. The relative income associated with commissions or licensing fees associated with the distribution model versus the expense and investment involved with operating a local office may also come into play. Examples of these type of business transition include the regional distributors that Ex Libris has acquired in Italy, Scandinavia, and Latin America. In each of these cases, Ex Libris opened its own office in the region and hired many of the employees formerly affiliated with the distributor. An example from an early phase of the industry can be seen in OCLC's strategy to centralize its billing and support for its products and services rather than continue to work through its affiliate networks. Another example can be seen in the acquisition of Stacks by EBSCO Information Services described in this issue of Smart Libraries Newsletter. Stacks had previously been a close partner in the development of a product of interest to EBSCO. By acquiring Stacks, EBSCO gains more control of a product it considers strategically important and can direct its sales force to give it its full attention.
Almost all the organizations involved in the library technology industry today have come into their current form following the absorption of antecedent companies, including
- SirsiDynix: Sirsi Corporation, Dynix Systems, EOS International, DRA, MultiLIS, NOTIS Systems, IME, INLEX, and others.
- Innovative Interfaces: Polaris Library systems and VTLS. • OCLC: PICA, Fretwell-Downing Informatics, SISIS Information Systems, Amlib, BOND GmbH, HKA, and, Relais International.
- ProQuest: Ex Libris, Endeavor Information Systems, Dabis, Serials Solutions, MediaLab Solutions, and SIPX.
- Follett: Sagebrush, Winnebago Software Company, Nichols Advanced Technologies, and X2 Development Corporation (Aspen student information system).
- Infor Library Systems: Geac, CLSI, Stowe Computing, and ODIS NV.
- The Library Corporation: Carl Corporation.
- Auto-Graphics: Maxcess Library Systems and LIBerator Information Services.
- Lucidea: SydneyPLUS, Cuadra Associates, and Inmagic.
- Axiell: BTJ Systems, CSC Consulting Group, ADLIB Information Systems, DS Limited, Bibits, and others.
Non-profits are not exempt from the pressure to consolidate. Some of the technology-related acquisitions of OCLC are listed above. OCLC has also absorbed non-profit service organizations, such as WLN and the Research Libraries Group. LYRASIS was formed through the consolidation of many of the former OCLC network affiliates, including SOLINET, NELINET, and PALINET.
This issue of Smart Libraries Newsletter features three new events reflecting this trend of consolidation. Axiell continues its expansion through its recent acquisition of Bibits, with a large presence in Norway and other Scandinavian countries. EBSCO Information Services has acquired Stacks, a small company with which it partnered to create a library website portal product. On the non-profit side, NFAIS will be merged into NISO, the standards organization most relevant to libraries and their technology vendors.
- See https://librarytechnology.org/mergers/ for a visual representation of the consolidation of the library technology industry.