Analysts' Insights: Trends & Challenges 2002

by Penny Lunt

"Que sera, sera" may be a fine philosophy of life for some, but when you're trying to plan technology strategies and investment for the coming year, concrete advice and predictions are more helpful. We asked some of the leading analysts of content and collaboration technologies to share their vision of what's in store for 2002.

Given the recent weakness in the economy in general and in the technology sector in particular, what they told us was surprisingly optimistic. Content and collaboration technologies will be in big demand in the coming year, they tell us, particularly two sleeper categories: report output management and electronic bill presentment.

Users Add 'Enterprise' to Content Management Needs

An expanded definition of content management was advanced in the market in 2001, and it is beginning to gain support according to Nick Wilkoff, analyst at Forrester TechRankings.

"The main trend we're seeing is traction around the idea of 'enterprise content management,'" Wilkoff explains. "We're seeing more demand from user companies and a number of vendors picking up on it."

While many still think of Web sites when they hear "content management," AIIM International, the Silver Spring, MD-based trade association, came up with enterprise content management (ECM) as an umbrella term for all systems that manage enterprise information.

Cambridge, MA-based Forrester defines ECM as an integrated approach to document management and Web content management. Such systems can support reuse of content among multiple repositories and are equally adept at managing legal and marketing documents and publishing them online through a portal.

Geoff Bock of the Boston-based Patricia Seybold Group shares Wilkoff's take on ECM. "Companies are looking not just at their Web sites, but at the way they're managing all the content they produce," he says. "We've known for a long time that you want to have a single interface to all of your customer's touchpoints. The content that you deliver to customers over the Web should be consistent with the content you deliver to customers through the call center, the information salespeople give customers face to face, as well as what's in the catalog. This is hardly a revolutionary concept, but we're starting to see environments that can distribute content to multiple customer touchpoints from a single, virtual repository."

Bock adds that the repository itself might be distributed within the organization or across multiple divisions of an organization, but it will have a common and consistent metadata structure. Such centralized repositories earn a return on investment through efficiencies and information sharing.

"Many companies are running parallel systems, and you have to ask the question, why?" Bock says. "Sometimes there are good business reasons and sometimes it's just a question of turf. It's up to executives responsible for the bottom line to determine what is a legitimate business reason and what is simply a legacy of the previous imperial dynasty."

In a dissenting view, Connie Moore, vice president of research at Giga Information Group, Cambridge, MA, sees ECM as more of a dream than a reality at this point.

"I think vendors and analysts are ahead of what buyers are thinking," she says. "Over time, you'll see a lot of different technologies either become available on a single server or exist separately on optimized servers brought together with federated searching. We're educating companies on enterprise content management and getting them to think more broadly, but what they're looking for now is more specific solutions."

Upgrades Drive Web Content Management

The Web content management market grew at a 20 percent clip in 2001, and growth will continue at this rate in 2002, according to Moore at Giga.

Why the strong growth when the economy is what she calls "a wild card?"

"Companies know they have to manage content," she says. "To provide the sophisticated Web site capabilities customers have come to expect, they need more than a custom-built, home-grown system; they need to buy content management software. If you look around, you'll see that the majority of Web sites are custom-built legacy sites. There's a big, built-in demand to switch over to more commercial products."

Analysts at Gartner, Stamford, CT, predict that by the end of 2002, 80 percent of Global 2000 enterprises will have automated Web content management.

"Managing content is a requirement for effective Web operation and for conducting e-business on a large scale," says Gartner's Lou Latham. The IT consulting firm estimates the Web content management market generated $4 billion in revenue in 2001 and will produce $6 billion in 2003.

Specialization & Integration Bolster Document Management

Demand continues for enterprise document management, says Karen Shegda, research director at Gartner Datapro, but she adds that vendors are going to be under pressure to lower their prices, differentiate and provide value-added capabilities.

"Basic library services are a commodity," Shegda points out. "Document management vendors need to provide the integration with legacy applications or a vertical market focus in order to give that value-add."

Garth Landers, another analyst at Gartner, observes that many document management vendors have evolved and broadened their capabilities. "OpenText took a knowledge management/collaborative approach, Documentum and Stellent took on Web content management, and FileNet became more of an EAI vendor," he says. "Document management is no longer a standalone application, other than at the platform level."

Even though features such as document check in/check out and enterprisewide access have been commoditized by products such as Microsoft SharePoint, Alan Pelz-Sharpe, principal analyst at London-based Ovum, says the September 11th terrorist attacks may lead to a resurgence for integrated imaging, workflow and document management.

"There is an increasing realization that we have to sort out information management at a base level and get back to real priorities, those things that are business critical," says Pelz-Sharpe. "The World Trade Center disaster has highlighted for people that content, data, documents and information are of real value and that they need to build proper structure and storage for them."

Convergence: Content Management Meets Portals

A number of Web content management vendors forged alliances with portal vendors in 2001, and Moore of Giga sees this trend continuing.

"The market has been undergoing a tremendous amount of convergence," she says. "In particular there's synergy between portals and Web content management. It's likely that some portal companies will be bought by Web content management vendors."

Bock at Patricia Seybold says the convergence of Web content management and portals will create a new form of collaboration. "Where these two technologies come together, they're going to assist business processes," he says. "After all, content management is a way of getting information into a repository and portals are a way of getting information out."

Bock says the combination will help address questions such as, "How can I respond quickly and effectively to a request for proposal?" or "How can I create a package of documents that will easily describe a $2 billion petrochemical plant I propose to sell to a new client?"

"Such processes today have thousands of steps and many people participating, and they can be quite disorganized," Bock asserts. With content management and portals, "we're finally going to become more organized and streamlined. As a result we're going to draw cost out of the equation, and that's going to fall to the bottom line."

Collaboration Crosses Corporate Boundaries

In 2002 we will see more "virtual" collaboration outside the firewall, says Eric Woods, research director at Ovum.

"Companies are having to form much closer working relationships with people outside the company, such as supply chain members and partners, as well as employees working at home or on the road," he explains. "They're looking at new ways to set up collaborative environments without the hassle that's been associated with doing that in the past. What's happened in the last few months has spurred even greater interest in trying to find new ways of working and virtually meeting."

Bock adds that we're going to see many more systems that integrate content around business processes, so that ad-hoc teams working in different companies can readily share project schedules, plans and engineering design specs.

"We've been trying to build these types of collaborative environments for a long time," he says. "A lot of groupware is designed around that, but we'll do better now that we have XML-based capabilities for metatagging and integration.

Portals Proliferate While Vendors Consolidate

Analysts say portals will continue to bring real benefits to the bottom line, so their popularity will continue to grow. Gartner, for one, forecasts 30 percent growth per year for the next five years.

"That's a significant jump in adoption," says Ray Valdes, research director at Gartner. "Portals are solving genuine problems of information access and complexity in enterprise IT infrastructure. Managers are obtaining cost reductions, head count improvements, increased ability to respond, new sources of revenue and new customers through better communication."

Chris Harris-Jones, principal consultant at Ovum, is less optimistic, predicting that many portal initiatives will be "shelved in this down economy." Still, he says, companies that have a business need to pull together multiple databases will carry on. Financial services, banks, insurance companies, engineering firms and others dealing with lots of paper will be prime candidates.

"The portal can provide an integration point, and multinational corporations are particularly interested in that lately," he says.

Of course, large and growing markets attract many vendors, but analysts see too many suppliers in the portal market. "We've been predicting consolidation for the last two years," says Valdes at Gartner. "Some portal companies have gone out of business, but they've been replaced by new entrants coming at it from related segments — vendors of knowledge management, business intelligence, application servers, Web content management and enterprise resource management."

Workflow Enjoys a Renaissance

Analysts foresee intense demand for workflow technology, mostly for its use in application integration and business process automation. Workflow will help companies squeeze more value out of existing investments, says Landers of Gartner.

"Workflow is becoming more of a hot topic because of the economy," he says. "Companies are looking to reengineer business processes — not just digitize them, but improve them with workflow. They're leveraging the applications they have, getting greater ROIs and squeezing everything they can out of them."

Bill Chambers of Chicago-based Doculabs adds that, "Fortune 500 companies want an enterprise workflow platform so they can build multiple applications across that platform. One requirement is that enterprise workflow needs to support enterprise application integration."

Document Imaging Adds Distribution and Color

Some of the biggest stories in the pages of Transform Magazine in recent months have underscored the value of document imaging. Last month we brought you the story of several companies at ground zero in the World Trade Center attacks that were able to get back to business as usual thanks to imaging. There were also firms that did not have this technology in place, and when they lost their offices, they lost countless contracts, proposals, memos, purchase orders, designs and legally significant signatures.

"Before September 11th, imaging was considered so unfashionable it couldn't be brought up in polite conversation," says Pelz-Sharpe of Ovum. "Since then, we've seen a renewed interest. And in a recession, people get right back to fundamentals."

One of latest wrinkles in imaging is distributed capture, and this, too, garnered high-profile recognition in 2001 when FedEx implemented the world's largest distributed imaging system. The company is using the technology to deliver images of more than one million hand-written airbills per day to its Memphis, TN, headquarters. Processing then takes place within eight hours, beating the company's own delivery service, ensuring more complete customer information and offering faster billing and time to revenue.

"Companies are seeing cost savings from distributed imaging applications — by reducing faxes, overnight mail and regular mail as well as through productivity gains," says Susan Moyse of Boston, MA-based InfoTrends. "They're making documents available online for easier access. This facilitates letting workers work at home and sending keying jobs to low-wage countries, which has been a big expense reduction for a lot of companies."

Moyse also expects color imaging to gain ground in 2002, in part because more and more scanners are supporting color.

"People are buying color because they're thinking they might use it in the future," says Moyse. "Products aren't being considered if they don't have color technology." Work still needs to be done to make color scanning as user-friendly as scanning in the binary world is, she adds.

Report Management Drives Service, Bill Presentment

Gartner foresees 30-percent growth in report management and output management system sales, mainly because it is a crucial technology for customer service and customer self-service initiatives. These products take print-viewable data from mainframe and ERP reporting systems and put it in a Web-viewable format such as PDF, HTML or XML.

"Instead of printing out reams of paper, you're able to take an online report and make it viewable within an archive," explains Garth Landers of Gartner. "The report/output management system collates and distributes those pieces based on user preference. For example, an accounting manager doesn't have to get the entire accounts payable report, he might get just the accounts payable report for the Northeast region."

These systems have long delivered customer records to call centers, but similar technology has also been leveraged for electronic bill presentment and payment (EBPP). While EBPP started in the consumer market, business-to-business uses will take precedence in 2002 according to Penny Gillespie, senior industry analyst at Giga Information Group.

"Consumer adoption rates haven't been what people hoped for," Gillespie notes. "Billers have been asking consumers to change their behavior, but not providing the incentive or marketing impetus to stimulate that change." Consumers are gradually starting to accept electronic bills, especially in the wake of the anthrax scare, she says, but they're also asking, what's in it for me?

"In the B2B market, the buyer benefits as well as the biller," Gillespie says. "When a company gets an electronic formatted invoice that they can download to their ERP or accounts payable application, that's valuable to them. And for companies that lack a sophisticated AP or ERP system, EBPP enables them to more easily pay their bills electronically. Both of those benefits provide cost savings to the buyer as well as to the seller."

Giga forecasts corporate adoption of EBPP will be at 23.5 percent by 2005, while consumer use will reach only 7.3 percent. "The industry that seems to be doing the best is the credit card industry," Gillespie says. "It already has adoption rates [as high as] 18 percent."

Telecommunications companies have also done a good job, she says, by adding value to the electronic bills presented. For example, customers can find out more about each call on their electronic bill by clicking on that entry.

Digital Assets Join the Content Mainstream

Large, global companies are starting to recognize the need to manage digital asset such as graphics, videos and audio. Perhaps it's not surprising that content management vendors will latch on to this trend.

"You'll see some vendors move more aggressively into digital asset management this year," says Connie Moore at Giga. "Vendors in document management and content management will either temporarily partner with digital asset management vendors, or they will develop or acquire digital asset management capability to add to their own products." Partnerships already began forming in 2001, such as the one forged between Artesia and Vignette.

Bock at Patricia Seybold Group believes digital asset management will eventually become a subspecialty within enterprise content management, particularly for technology vendors that serve advertising, entertainment and media giants as well as media-oriented divisions within corporations such as Ford and Proctor & Gamble.

"What makes digital asset management technology unique is an understanding of the business processes associated with managing digital assets and digital rights," says Bock. "The way those rights are managed has little to do with logic and everything to do with [intellectual property] laws and regulations."

Search and Taxonomy Taps the Information Economy

Content classification, search and retrieval technologies enjoyed 90 percent growth in 2001, according to Sue Feldman, director of content and retrieval software research at IDC, Framingham, MA, but she expects that to cool to 20 percent growth in 2002. While the latter figure is not as robust, "it's way above the rate most software is going to grow," she says.

Why are taxonomy and search tools in such strong demand? "We really have moved into the Information Age," Feldman says. "Most enterprises are heavily dependent on their content. We absolutely have to get at the stuff and we have to know where we put it. The coin of the realm has changed from goods to information."

There is growing awareness that effective search starts with accurate classification.

"Taxonomies become critical in achieving efficiencies," says Scott Wildemuth of Andersen Consulting, Chicago, IL. "Corporations have much more information. For content applications to reach the level of being mission-critical, the ability to query and get accurate returns is absolutely essential."

Eric Woods at Ovum observes that leading vendors in this market are continuing to innovate. "Verity is moving into social networks, where it's gaining more understanding of users," he says. "Autonomy is extending search into areas like voice and images. Convera is heavily moving into searching digital assets as well as text. We're seeing a greater understanding of user requirements and user profiling in search engines, as well as analysis of human expertise — along the lines of what Tacit Dimensions, Orbital and Lotus are doing."

Conclusions

The recurring theme here has been that while the economic downturn is affecting many technology markets, content and collaboration technologies are holding up well because they promise solid return on investment. Expenditures are easier to justify if cost savings, efficiencies, service improvements and new sources of revenue are within sight.

Competition also favors these technologies, as new vendors crowd the market and force the leaders to differentiate themselves through value and innovation. Enterprise content management and portal vendors are addressing the complete spectrum of content. Web content management tools are taking on rich media while coming down in price. Report and output management tools are easing access to employees and customers alike. Imaging and workflow are integrating and speeding conventional business processes across distributed enterprises.

As the technologies improve, so does their return on innovation.