The competitive struggle. (integrated library system vendors; includes company directory)(Automated System Marketplace 98)(Cover Story)(Industry Overview)

The themes in 1997: integration, testing, and marketing a new generation of systems

SYSTEMS INTEGRATION, combining in-house systems with external systems offering information resources from outside the library, took on a frantic tone in 1997. Integration with the growing "web" of information has been the implicit theme of these reports for several years. Vendors are now attempting to "integrate" in new ways, including the integration of additional markets, integration of new systems while maintaining current offerings and development efforts (e.g., Java, Dublin Core, graphical user interfaces [GUIs]), and integration of resources to respond to growing customer support demands.

Those firms that survive this drive for integration in the broadest sense (i.e., integrated offerings to integrated markets from a highly integrated and efficient enterprise) will certainly find strong rewards. The rewards, however, will not be for all, and for the customer, picking the right vendor will require an integrated approach as well. Far more than the apparent features of a system will determine which vendor can meet the sustained requirements of this dynamic environment.

The big prize in the library systems marketplace of the 1990s is winning the contracts to replace the old mainframe NOTIS system in the academic libraries that have it. In 1997 Endeavor Information Systems, led by old NOTIS hand Jane Burke, pulled out in front. It became the company to beat.

New third-generation systems were introduced and struggled to gain acceptance, so 1997 was a transition year for many vendors. It was a year of struggle for all, and while some firms succeeded, others had only nominal success introducing new systems, and a few seemed to be edging toward collapse. Every year some industry veterans in executive positions move from company to company, but this year many did, and sales management teams reshuffled, as firms tried to put together the right combination for success. One well-known executive found himself working at three separate, leading vendors during the year.

The 1997 revenues

Estimated library systems revenues for 1997 are $470 million. Of the 29 vendors surveyed here, only five--Ameritech, Brodart, EOSi, The Library Corporation, and Sirsi--did not disclose revenue figures. Several companies provided revenue figures but asked that we not publish the actual amounts. Of the 24 firms reporting library-related revenue, Innovative Interfaces was the largest, with reported revenues of $60 million. A second company also reported revenue over $50 million. DRA was the third largest, with revenue over $35 million in 1997. Of the remaining vendors, one was in the $30-$35 million range, two were in the $20-$25 million range, two in the $10-$15 million range, five in the $5-$10 million range, four in the $2.5-$5 million range, three in the $1-$2.5 million range, and four reported revenues under $1 million. To determine an overall market figure, revenues for nonreporting companies were estimated based on sales.

The figures show that most vendors in this market are relatively small. To gauge how these vendors made their money, the survey asked the companies that responded to divide revenue into four categories. While they attribute an average of 12% to hardware, 42% to software, 26% to maintenance, and 20% to "other" products/services (defined as training, documentation, consulting, database conversion, and additional library products not related to automation), there also was wide variation in individual answers. For example, Endeavor attributed 70% of revenue to software.

As the installed base of a company rises, the amount coming from maintenance agreements is likely to increase as well. This source of funding helps keep companies afloat during transition years, as older systems lose sales while new systems try to find a market. Overall, libraries paid more than $100 million for maintenance agreements to automated systems vendors. At that price, librarians should not hesitate to demand excellent customer service and support.

Server or micro

The more descriptive term "server" refers to systems that used to be driven by what were called "minicomputers." In 1997, 32 different server-based automated systems and 15 microcomputer-based systems were on the market. Of the systems available, 19 supported Windows NT. The proprietary minicomputer platform that was most popular ten years ago (IBM's AS/400) is all but history except for a few new installations. While UNIX remains the most common choice for large server-based systems, Windows NT has made tremendous inroads among mid-sized systems, and it is likely to become the predominant server platform for all but the largest installations in a few years.

Academic libraries

Sales to academic libraries declined in 1997. The one company that really shined here was Endeavor, now clearly the hottest integrated systems vendor in academic libraries. Innovative was the system to beat in this segment and still gets uniformly high praise for the functionality of its system, but the California-based company has faced tougher competition and growing resistance to its prices. DRA seems poised to give Endeavor and Innovative a serious challenge once it gets the kinks out of its new TAOS system. If DRA can convert its large installed base of Classic DRA sites to the new system, then TAOS should get some serious consideration from libraries looking for a new system.

The academic library microcomputer market remains small, with Nichols, Winnebago, and EOSi having the largest share of this segment. One generally thinks of Nichols as a K-12 school library system; however, its new Athena 97 product appealed to a number of small academic sites. The microcomputer academic market should decline as low-end Windows NT server-based systems become more affordable.

Public libraries

The public library server-based market is again dominated by Ameritech, although Geac has a strong showing. Ameritech has controlled this market for a number of years with its popular Dynix system. In the past Gaylord has done well in this segment, but its 1997 sales were poor as the company goes through the transition to its new Polaris system. EOSi had a respectable showing among public libraries.

The public library microcomputer segment is larger than the corresponding academic market. Vendors providing the most microcomputer systems to public libraries are Winnebago, Nichols, Follett, and EOSi.

School and special libraries

School libraries primarily use microcomputer-based systems. This is one of the most competitive markets in the industry, with Follett and Winnebago in the lead with their low-cost products. Nichols also had a very good year stemming from its new system. CASPR has increased its presence among school libraries with its acquisition of the Columbia Library System.

The special library market is equally competitive with Ameritech also dominating the server-based segment for special libraries. Inmagic's system is very popular, and EOSi has a range of products to suit this market. The special library market is so diverse that the popularity of one system in this segment doesn't necessarily mean that it's suitable for all special libraries. Unlike academic, school, and public libraries, the system requirements in this segment are going to vary widely from one type of organization to another.

The integrated librarian

Integrated library systems form the core of library automation. A quality system blends into the library's operations from both the user's and the librarian's perspective. In today's libraries, the concept of an "integrated system" takes on a much broader meaning as librarians attempt to offer better services and access to resources. Electronic databases, web sites, network infrastructures, desktop software, and locally developed web-based applications may receive more attention from a library's technology staff. The traditional "integrated system" needs to be self-supporting and transparent, with a vendor in the background ready to provide necessary trouble-shooting and enhancement as needed.

The role of the systems librarian has moved from being the librarian just responsible for the integrated system to the librarian responsible for everything technological. With these increasing demands (and a growing but still limited supply of technically qualified librarians), investing in a turnkey system can still be a good idea. For software-only third-generation systems, which have become more complex to administer, libraries may also find that they are spreading their systems staff too thin in attempting to maintain, not to mention develop, other technology-based library applications. Whether one buys a turnkey system or a software-only approach, the long-term costs will likely be equal given the growing support requirements provided in-house or at a cost …