I have often used this column to highlight the relationship between libraries and the organizations from which they acquire technology-related products and services. Let's call them vendors. As you may already know, I consider it extremely important for this relationship--that could be thought of as a mere business transaction--to be a partnership.
Those that develop technology products must be attentive and responsive to libraries, which invest considerable time and resources into product implementation. Libraries need to help shape the ongoing development of products, rather than merely assume a passive role. I believe there should be a vigorous engagement between libraries and technology vendors to ensure positive progress going forward.
The term "vendor" is not meant to have any negative connotation. Vendors constitute a diverse community of organizations that cater to libraries, encompassing for-profit companies and nonprofit organizations, as well as those offering proprietary software and content and those providing services surrounding open source software and open access (OA) content. Many libraries work on their own with open source software or other local development projects that may take place without specific vendor involvement. But let's focus on vendors.
As libraries continually acquire new products or renew commitments to existing ones, the priority has to be the functional capabilities offered by a vendor's products and services. Another important aspect to consider is the working relationship with a vendor. This month's column explores some of the qualities that are important to look for in establishing a good library/vendor relationship. While not definitive measures, I hope they provide a good starting point for selecting vendors that will make good long-term partners.
Although some interactions with vendors may be for one-time transactions, most require longer-term relationships. In the library community, one of the biggest fears is the possibility that a key vendor--one a library entirely depends on for strategic products or services--will experience some sort of business failure. It can be extremely disruptive to a library when any part of its technical infrastructure or content services needs to be replaced within a shorter time frame than expected. Mergers and acquisitions (M&A) have taken a steady toll on products and services over the decades. In some cases, new owners preserved products through the time period that they would have continued otherwise, while other products have met an early demise.
Libraries have a vested interest in working with organizations that will endure, continuing to develop and support products and services currently in use--and hopefully develop new ones that will provide continuity during the long haul. Organizational stability tends to be one of the top issues in the consideration of new technology products or services. There have been very few examples of companies that have gone out of business through bankruptcy. The more common way that companies exit the industry is via M&A, usually involving a direct competitor interested in enlarging its size or by one in an adjacent industry seeking to expand its scope of products.
It isn't possible, however, to accurately spot the organizations that will survive in the library-technology industry. Overall, most of the companies today are well-established. This isn't an industry of startups--the entry of an entirely new company is quite rare. Exceptions might include those involved in more specialized niches, in which new players may come on the scene to bring new consumer technologies into the library arena, such as new mobile apps, 3D printing, or near field communications (NFC).
The strongest companies are not always the ones that survive various rounds of acquisition. A company with strong products and services makes for an attractive acquisition target. Another company with weaker offerings--but with more capital or better access to investors--may seek to strengthen its position through the acquisition of a competitor with solid and forward-looking products. Regardless of whether the original brand holds the dominant position following a merger, exceptional and widely adopted products are the most likely to endure.
Given all the possible scenarios and complexities, it is impossible to predict which vendors should be considered as stable and long-term survivors. However, a variety of factors can be seen as indicators to long-term stability. Medium-to-large organizations with a steadily expanding customer base are usually the safe bets. Those that don't make new sales or see considerable attrition of libraries using their products may warrant closer scrutiny. Even the best companies lose customers occasionally, but continual attrition isn't a good sign.
Especially when procuring big-ticket technology products or services, libraries typically request financial statements to assess a company's viability. In an industry of mostly private companies, limited financial data will typically be disclosed. Companies may instead provide credit reports or business ratings from third-party auditing agencies. Companies owned by private equity firms can also usually be considered stable and profitable, since these investments are made only following a stringent process of due diligence.
Most private equity investments are made in mature and stable companies that have prospects for long-term growth and profitability. This strategy contrasts with venture capital firms that work with companies much earlier in their business cycle, expecting higher returns--with a higher level of risk. A review of the investment profile of a company's owners can provide some indirect evidence of stability and growth potential in the absence of detailed financial information.
Potential for Innovation
While assessing stability may help avoid negative disruption, it may be even more important for libraries to seek vendors able to deliver innovation in ways that might actually disrupt traditional processes. Maintaining the status quo may not always be the best strategy with technology products and services. Libraries have seen enormous change in their surrounding environment in recent years. Content has shifted from print to electronic, digital distribution is quickly moving away from physical media to streaming services, and library users' expectations are changing rapidly. Facebook now stands as a fairly conservative and stodgy approach to social media with new services increasingly attracting attention.
In the context of such rapid and unpredictable change, there may be times when libraries want to worry less about safety and stability and seek out vendors able to provide technologies that break away from traditional offerings. Ideally, established providers should be expected to deliver new and creative products, resulting in both stability and innovation. But there may also be times when libraries have to cast their net beyond the established players when exploring areas of service that need to be in tune with expectations set in consumer technologies.
A few factors may point toward a vendor's capacity for innovation. The number of personnel allocated to research and development can provide a general indicator of the company's overall capability to enhance current products and create new ones. I also find it helpful when a vendor provides a road map of its future developments, including the ones still in the planning stages. Many organizations may have a CTO or similar position that defines and articulates its technology strategy. What this technologist says and writes serves as a good source for understanding the organization's interest and capacity for innovation. But it's also important to look beyond messaging and hype and assess whether the organization's current offerings and trajectory of development hold promise for new and creative products.
The CEO or president of a company may not wield absolute control, but for most organizations, this position plays a dominant role in establishing strategic priorities and ensuring that plans are carried out. The qualities of the CEO can make a major difference in the perceptions and performance of the organization. The members of an organization's executive team each have their own portfolios and areas of responsibility. It's important not to judge an organization on the basis of one personality. Assessing a company's leadership may also mean considering the effectiveness and combined impact of the executive team.
I have been fortunate to have had the opportunity to interact with the CEOs of most of the major organizations in the library-technology industry. Consistently, I've been impressed with their depth of understanding of the issues that concern libraries and in their development of strategies to maximize business opportunities in that context. It is naturally the job of a CEO to maximize the financial position of the organization in the short term. However, libraries have an interest in business strategies focused on long-term value and high-quality products and services that will endure. A CEO who understands the values and economic realities of libraries will be more effective in shaping strategies that make good business sense to libraries and will, therefore, be well-received by the library community.
The library-technology arena differs, in many critical respects, from other B2B or consumer industries. Most libraries are nonprofit organizations, with long planning cycles, limited budgets, and community-oriented values. While libraries appreciate technology that helps them operate efficiently and provide high-quality services, economic factors may not dominate technology procurement in the same way they do in a purely commercial sector. Libraries tend to be midcycle adopters of new technology trends and need some assurance that new products will provide tangible benefits to their communities. Another fundamental difference lies in libraries' interest in cooperation with their peers rather than the competition that characterizes the customers of other B2B technologies.
In the library community, a company's CEO tends to be its chief spokesperson to the broader library community. Sales personnel and midlevel managers deal with libraries on specific issues, but the CEO usually articulates the view of the company in situations that involve new developments or strategies, business transitions, or controversies. How--and how fast--a CEO responds to a highly visible problem can make a big difference in how well the organization is able to weather a controversy. Libraries show some degree of distrust toward vendors, even though they are slow to disengage with a vendor in favor of a competitor. Strong and responsive leadership resonates well in the library-technology arena. Leadership that seems tone-deaf to library realities will have a more difficult time cultivating loyalty.
Assessing the leadership of an organization can be based on several different factors. Glassdoor.com, among other websites, provides a venue for employees of an organization to voice their perceptions of a company and its CEO in particular. Glassdoor rankings tend to be quite revealing with regard to the internal dynamics of a company. They are disproportionately negative during any period of transition.
But it's the live interactions that provide the most insight into the executives in key leadership positions. Conference presentations or panels, webinars, and similar events can be the most revealing and helpful for shaping impressions of leadership. Quotes in press releases, sales literature, or scripted presentations may carry the CEO's name but not be especially helpful in understanding the more subtle clues regarding direction of strategy or effectiveness in leadership.
Depth of Expertise
What libraries do and how they carry out their work may seem simple to those unfamiliar with the profession, but most aspects of library work are quite complex. The technology systems must deal with quirky data structures and workflows; they must also handle library-specific and general industry standards. The tasks and workflows involved in describing and managing library materials can be complex, especially in light of all the different media and formats involved and all their corresponding procurement processes, access scenarios, and other details.
Given these complexities of the library domain, it is essential that any vendor offering library products and services develops expertise in the appropriate areas. Librarians find nothing more frustrating than dealing with a vendor that does not speak their language or understand their issues and priorities. Vendors need to understand their products and the nuances of library operations, as well as have solid technical expertise.
The expertise that a vendor brings to the field will quickly become apparent. Those with high personnel turnover may have a difficult time maintaining teams that have deep expertise in their own products and the library domain. While having a knowledgebase and documentation helps, nothing matches the expertise of a seasoned veteran who has been working with the product for a decade or more. Statistics on the length of service of a vendor's personnel can help in assessing a company or its products. It can also be helpful to know how many of an organization's personnel hold credentials as librarians.
Relative to these general qualities or others that might apply, libraries will want to do as much as they can to get to know their vendors organizationally as well as the individuals it employs--both in the ranks for those in sales and support and those in leadership positions. I have long held an interest in studying the organizations comprising the library-technology vendor community and provide a number of related resources on Library Technology Guides. I maintain a profile page for each of the major vendors, which aggregates many types of information (including a chronology of its business history, press releases issued, rosters of current executives and members of its board of directors, counts and links to the libraries using its major products, and selected articles written about that organization).
I also conduct the annual "Library Automation Perceptions" survey, which provides a variety of statistical tables on how libraries rate the performance of their vendors. While these resources are meant to provide an easy way to gather some relevant information, it's the personal interactions that often count the most in shaping impressions and developing working relationships.