-->

The Elephant in the Corner
The Subject Might Be Content, But the Conversation is Larger

Any frank discussion of business investment in this climate HAS to acknowledge the elephant in the corner: the economic crisis in the US and abroad. I knew that going in.

And sure enough, this month’s discussion topic—enterprise content management (ECM)—took just that turn. In fact, it was front and center in all the conversations I had, including the ones with Theresa Kollath, senior director of product management for ASG Software Solutions; Lubor Ptacek, VP product marketing for Open Text; and John Gonzalez, senior product line manager at Xerox Docushare.

Even though there is plenty of reluctance among this group to make any firm predictions, this particular group feels pretty comfortable—for now.

"People are naturally cautious, especially in the financial segments," reports Theresa Kollath. "But having said that, there are aspects of content management that make it a good time to invest. You can clearly identify ROI, just through certain efficiencies such as ‘edelivery’—avoiding printing and direct mail costs, for instance," she says.

"Plus," she adds, "there is a lot of focus on green initiatives, especially with the new administration coming in (I’m writing this during inauguration week). If you convert paper archives to online content, you recoup the costs associated with paper facilities; reduce the overall office space you use; and enjoy the associated benefits of reducing energy consumption."

Lubor Ptacek also recognizes the unique place ECM holds in the overall business-automation marketplace. "We’ve seen these kinds of conditions before—perhaps without the degree of severity," he points out. "For instance, after the dot.com bubble and the Enron disaster. And we have evidence that enterprise content management is a fairly recession-proof industry," Lubor insists. "Of course, when businesses stop investing altogether, or go Chapter 11, we get impacted just like anybody else. But because of the compliance requirements and litigation preparedness that can be accomplished with ECM, we are one of the few areas in high-tech not as badly affected."

That’s a common belief among this group. "As you’d expect with any major purchase, there’s a lot of examination about the business benefits," says John Gonzalez. "I don’t know of any deals that have been cancelled. Maybe slowed down a little bit, but they end up closing. People see the value in bringing content under management. In fact, they see the need to improve their profitability overall, and see tools like these as a good means to make that happen," says John.

They better. Because—as in the case of regulatory compliance—they don’t have any other choice. "Measuring ROI is one thing, but ROI for compliance is kind of tricky," says Lubor. "You might have situations where there is no ROI...you just have to do it. That’s a tough conversation to have with a customer."

And depending on the customers’ vertical markets, there may be pockets of business that are more protected than others. "It depends on the vertical market," says Theresa. "For instance, healthcare is hiring! They can’t get enough nurses; some are getting huge signing bonuses. So there’s a disconnect between what healthcare is seeing, for example, versus financial services. In healthcare, especially, there are some things that are already realities," she explains. "There is the Stark initiative (Rep. Pete Stark, D-CA) that would require all health records to be in electronic, digitized format by 2013. There is some real teeth with this initiative," she says. "Unlike HIPAA, where the deadline kept slipping, this one seems to have some real penalties associated with it. And it seems to have the full force of the Obama administration behind it. So in healthcare, for certain, there will be a requirement to take action."

The financial service market is less clear, but you don't have to be Warren Buffett to imagine some fierce legislation to come out of the still-new administration. "With the meltdown in recent months, there may well also be oversight regulations that demands electronic records, as opposed to having paper documents in a dusty filing cabinet someplace," Theresa says. (She’s seen my office, apparently.) "And there may be an acceleration of other new regulations under this administration. But I say ‘may,’ because it tends to take time...or at least it has in the past. But there’s already a two-thirds full Cabinet, and that’s unprecedented at this point. So I would not be surprised to see some new regulations expedited. The financial services segment is ripe for new legislation; I hope it’s not so onerous that it stifles any ‘kick starts’ that may be implemented," she says. "It’s a time of flux and turmoil, and many customers are in wait-and-see mode. Will it be a far-reaching government mandate that affects everyone? Or will it be more targeted? We just don’t know yet."

Making the Business Case
So without the hammer of legislation or the threat of legal action, how ELSE are ECM buyers "making the case" for their purchases, and justifying the costs...especially in this economic environment?

"The content market is bifurcated," says John Gonzalez. "On one side there’s ‘communication’ content—content that’s used to communicate ideas and exchange information. Then there’s ‘transactional’ content that records or communicates the results of a transaction. Historically, ECM has spanned both, but vendors are becoming more specialized in one or the other.

John continues: "People are trying to improve business processes that already exist, and reduce the time and labor needed to accomplish the organizational mission. Sure, there’s interest in the ‘collaboration/authoring’ piece of the business, but more and more the interest is tilting toward the actual transactional or content distribution side. We are talking mainly to people who have paper-centric processes they want to do in a more electronic manner. The traditional definition of ‘strategic’ is 18 to 36 months out. I think more people are more concerned about the next three to six months! In that case, solutions that can show a relatively immediate ROI are going to be able to find backing."

Are we talking about headcount reduction? "What people do with increased efficiency brought on by automation depends on their business imperatives. Our goal is to allow processes to be more efficient and to allow companies to reduce the amount of human labor involved. The customers’ goal is to help their employees do their best and highest work," he says.

"Reduced headcount is an ugly term, but it’s certainly part of the consideration," agrees Lubor. "But think about how cost-cutting occurs: The first thing a CFO does is restrict travel. But people still need to communicate and collaborate and share information. ECM does that. The second step is a hiring freeze, or worst-case, layoffs. But if you don’t have the resources you were counting on, you still have to get the job done, so you need to look at tools that change the modus operandi, and become effective enough to complete the task." So, Lubor reasons, productivity advances you get from process automation are a very valid part of an economic response to hard times.

"Content grows; it’s relentless," Lubor points out. "Crisis or not, your content will grow by 60% every year. So where do you store it? Storage optimization, de-duplication become very critical. These sound like IT concerns, and they are, but it’s also true that IT and line-of-business are getting the same ‘marching orders.’ We have a better experience in cost-saving for IT, but nevertheless a lot of LOB managers understand that the right technology can help them accomplish their common goals."

He continues: "It is ultimately an IT decision. Line-of-business couldn’t care less, but IT sees all the duplications, redundancies and efficiency traps that LOB doesn’t care about. Here’s how it works: you start with a departmental business problem, then you look around for another similar one, and along the way you bring IT onboard and convince them that you have an underlying infrastructure that can address all those applications at the same time," explains Lubor. "But don’t underestimate the level of sophistication of customers. This space has matured quite a bit. There’s a lot of word-of-mouth education, where people in similar industries or with similar problems meet at a seminar and exchange information."

KMWorld Covers
Free
for qualified subscribers
Subscribe Now Current Issue Past Issues