Microsoft's move into the enterprise content management space, and in particular their decision to include free SharePoint client licences with Microsoft Enterprise Agreements, poses a huge threat to Enterprise Content Management (ECM) system vendors.
The ECM vendors have responded by working to ensure that their products integrate with SharePoint 2007. However just being able to plug into SharePoint won't be enough to save them, particularly in the collaboration, document and records management space. These vendors are also going to have to radically revise their pricing strategy to avoid pricing themselves above their customers expectations.
The question I am most often asked by records managers is 'do we need to plug a DoD 5015.2/MoReq2 compliant ECM at the back of SharePoint?' The problem for the ECM vendors is that even if the records manager does conclude that they need such a system, their organisations may not be willing to pay the fees that ECM vendors want.
In the pre-SharePoint 2007 era ECM vendors were accustomed to their products being used for large-scale corporate implementations by big organisations with big budgets. Nowadays such organisations are more likely to put their budgets and attention into a big SharePoint roll-out, and are not expecting to shell out nearly so much money on a records management system that they see as merely filling holes in their SharePoint platform.
The chess game played by the big technology companies
Tim O'Reilly recently said
''In the chess game of the internet operating system, each player tries to give away that which is important to someone else''.
In the chess game that O'Reilly refers to we have four big players. Each of the four companies has a powerbase: an area of computing in which they have a monopoly.
Google monopolises search. This has enabled them to monopolise online advertising, thanks to data and algorithms which allow it to predict which adverts are likely to be of most interest to searchers for any particular word or term. Google's advertising market is now under threat from Facebook, who can offer advertising targeted on the profile details (age, sex, location, likes, interests etc.) of Facebook users.
Microsoft dominates computing in the enterprise. Windows is the enterprise operating system. Enterprises have long been locked into Windows because their IT staff are experts in it, and their business applications run in it. In the medium term cloud computing is a threat to Microsoft. Software-as-a-Service providers can run their applications in the cloud, on whatever operating system they choose: the operating system is invisible to the customer organisation. Software running on an open source operating system such as Linux could be provided as a service to organisations who previously only ran applications on Windows. However in the short term the massive market share achieved by SharePoint means that Microsoft are still in a very strong position in the enterprise space.
Apple has long been the only tech company that both makes devices and has its own operating system. Sony, HP, Samsung and IBM make computers and other devices but do not have an operating system of their own. Microsoft makes the Windows operating system but apart from the X-box, does not make devices. This gives Apple a monopoly on innovative consumer computer devices. None of its competitors can innovate to the same extent as Apple because they always have to synchronise their road map with other companies. Apple is threatened by the move of Google into the consumer computing device space. Google has its Android operating system, and is developing a Chrome operating system for net books. It is already making phones and will shortly be making netbooks.
Facebook has a monopoly of social networking, which it is now trying to extend to become a monopoly of people's identity on the web. It has recently launched the ability for any web site to allow people to log on with their Facebook ID. The advantage for web site owners is that it makes their sites more social. If it catches on the world wide web would become a mere feature of Facebook. Facebook is up against remarkably little opposition at this point in time. Google was forced to hastily bring out a social networking platform of its own earlier this year (Buzz), but it has had very little traction.
The technology world is converging. Consumer devices are converging with enterprise devices. Mobile devices are converging with desktop PCs. Web and consumer applications are converging with business applications. This convergence brings the big four into head to head competition on many different fronts.
The power of platform owners
The goal of these companies is to become a 'platform'. They want developers around the globe to create applications that extend and enhance the attributes of their platform. They want the ecosystem around their platform to be rich and diverse enough to lock their customers in (customers can not leave the platform without foregoing all the applications that run in the platform's ecosystem).
You could design a phone that is better than the iPhone, or an operating system that is better than Windows, or a social network platform that is better than Facebook. But you wouldn't have the ecosystem of applications written for your product that Apple, Microsoft and Facebook have around theirs. That is what defines a monopoly: a market position so strong that you can not compete with it even with a better product.
The problem for the records management community is that all of the systems that currently meet the records management community's standards (DoD 5015.2/MoReq2/TNA 2002) are not plarforms, instead they are part of an ecosystem around the Microsoft platform.
The platform provider is always more powerful than a vendor that provides a product for the ecosystem. Vendors that provide for the ecosystem are vulnerable to moves by the platform provider to extend the platform by filling gaps that used to be filled by the ecosystem. This is similar to the threat posed to people who live on fault lines by the movement's of the earth's tectonic plates.
The key battles come when the platform providers make a move to expand: either at the expense of their ecosystem, or at the expense of a rival platform provider.
Apple has recently decided not to allow into its app store applications developed in Flash. This is an example of a platform owner flexing its muscles to change the rules that its ecosystem operates by (at the expense of Adobe, who own Flash). Twitter are starting to produce their own Twitter clients for key mobile platforms, at the expense of organisations that have previously developed such clients.
The reason why having DoD 5015.2 compliant records management systems didn't protect ECM vendors from the rise of SharePoint
Records management system standards such as US DoD 5015.2 and their eqivalents world wide were written to fill holes in the Microsoft Windows/Exchange/Office/Shared drive platforms that dominated organisations in the early years of the 21st century. Systems meeting those standards provided the things that shared drives lack, such as the ability to:
define custom metadata for documents and folders
apply version control to documents
lock down documents as records
share documents across team boundaries
hold a fileplan
hold retention and access rules
apply retention and access rules to records via a fileplan
The problems for these systems, and for the records management specifications that lay behind them, came when the platform owner, Microsoft, started to move to expand its platform, and to fill in some (but not all) of these holes itself.
Micrososoft's move into the ECM space may have been prompted by rival Google's attempt to move into the enterprise space. Google started giving away the word processing functionality (Google Docs) and number crunching functionality (Google spreadsheets) that Microsoft charges for with its Office suite.
Microsoft responded by moving into the enterprise content management space with SharePoint. Microsoft effectively 'gives away' SharePoint client licences by including them in the Enterprise agreements it has with customers who already buy Windows, Exchange and Office from them.
For the enterprise content management vendors who provide DoD 5015.2 compliant records management systems this is a major problem.
We can expect that organisations are going to devote more resources (time and money) to their platform (SharePoint and the Microsoft stack) than to things they regard as plug-ins and add-ons (like a DoD 5015.2 compliant ECM).
The first response of ECM vendors to the rise of SharePoint was to integrate their products with it so that customers could use the ECM to hold a fileplan and retention rules and apply them to content in SharePoint and elsewhere. However it is not just their products that ECM vendors need to adapt to the new market reality, it is their pricing models.
ECM vendors are used to selling their products in modular form. You might have already bought the vendor's collaboration software, but if you want the records management functionality you pay extra for a different module. If you want an application to manage your intranet content you have to go back to the vendor again to buy yet another module. This may be a good way of maximising revenue from each client, but it is lousy for customer retention. At each stage they are opening the door to a rival vendor to come in and take that business.
Microsoft adopted a different strategy for SharePoint. They give you the whole product. This is a great customer retention strategy. If an organisation buys SharePoint for their intranet, and then at a later point feels the need for a document management system, they can use the SharePoint licences that they already have. Any rival vendor has an uphill battle pursuading the organisation to shell out money to buy a solution from them. It is very hard to compete with 'free'.
One records manager I know works for an organisation who are about to implement SharePoint for collaboration. They also happen to be an existing customer of one of the big ECM vendors, whose system they use for document management. He asked the vendor much it would cost for licences to the records management module of their ECM suite. The figure quoted was several hundred thousand UK pounds. It wasn't worth him going to the trouble of putting together a business case. He is resigned to making do with SharePoint.
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