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By Porter Anderson, Editor-in-Chief | @Porter_Anderson
Global: Likely More Than $6 Billion Yearly
In an extensive report out this month, Michael Cairns, managing director of New York-based Information Media Partners, throws light on an area of trade publishing today in which data is hard to come by—publishing software products.
Like the perennially frustrating lack of hard, comprehensive sales data on ebooks, Cairns’ report points to “minimal knowledge of spending levels” on publishing software across the industry, which can make it hard for executives “to compare their technology spending with their competitive peers” for guidance on their own best options.
The 30-page Publishing Software Market Survey Report 2018—set to be published January 15—draws on Cairns’ experience with clients including Klopotek AG, Reed Elsevier, Hewlett Packard, Simon & Schuster, Wolters Kluwer, Bowker, and more. Publishing Perspectives has been provided with an advance look at the report’s findings for this article.
“Generally, it’s possible to conclude that the market for technology, software, and services is at least US$3 billion per year across the global market,” according to the report’s leading summations.
“This assumes that the top 60 global publishers with annual revenues of approximately $70 billion spend 4.5 percent of their revenues on technology. Extrapolating this to include all global publishers suggests the amounts spent on technology in publishing likely exceeds $6 billion per year.”
And while that may seem to reveal an attractive opportunity, Cairns’ write-up quickly returns to the dearth of ready data on which both vendors and publishing competitors can base their moves. “There’s no breakdown of spending into component parts,” the report finds, making planning and sensible allocations tricky.
Easily as concerning is the report’s conclusion that not adopting new publishing software systems means companies may be sacrificing critical resources to keep old systems on life support.
“The publishing and media industry,” the report’s text asserts, “is slow to adopt new technology solutions, and other business segments report that IT spending dedicated to supporting legacy solutions represents between 60 and 75 percent of spending. It’s probable that legacy support costs represent at least 70 percent of IT budgets at most publishing and media companies.
“In a business environment of rapid change where technology should be positioned to help support digital transformation, this activity becomes difficult unless expenses can be freed from legacy support. Benchmarking current spending levels and understanding the impact of replacement technology and implementation models can help accelerate this process, but without shared knowledge it makes decision-making for executives very difficult.”
An excerpt from the Publishing Software Market Survey Rerport 2018’s market mapping of major vendors in enterprise software and offshore providers. Image: Information Media Partners
A Fragmented Market, Moving Fast
One of the key points Cairns’ work makes is that the publishing technology market “is fragmented with few of the market specific software companies [having] significant financial strength to aggressively expand into the space.”
Nevertheless, Cairns forecasts consolidation among publishing software providers in the coming two to three years, “with the acquiring companies positioned to own the publishing vertical.”
“Technology solutions are becoming integrated with product development and product delivery, creating opportunities and challenges on IT staff goals for budgeting, planning and revenue.”Michael Cairns, Publishing Software Market Survey Report 2018
And here’s one of the most interesting and potentially telling trend observations in Cairns’ analysis: “Technology solutions are becoming integrated with product development and product delivery, creating opportunities and challenges on IT staff goals for budgeting, planning and revenue.”
This is is both good and bad news. While the possibilities of such tech-product integration may be tantalizing, the downside is that recognizing and acting on those potentials may be an expensive hurdle—and yet missing such chances could be crippling down the road.
Not surprisingly, it’s medium- and smaller-sized companies that are hardest hit today. There are publishing-specific software systems being created. Publishing Perspectives readers are familiar, for example, with Copyright Clearance Center’s Ixxus based in the UK, a content-management developer, and with the ongoing build-out of Klopotek’s broad ERP (enterprise resource planning) systems’ modules. But total cost of ownership and implementation can run high.
Four of the major players from the report’s 30+ vendor profiles. Image: Information Media
All Providers, Great and Small
The largest international players can access big-package ERP approaches (enterprise resource planning), but only with “significant configuration and enhancement to support the requirements of the publishing model,” Cairns writes.
“For all but the largest global publishers, solutions like SAP and Oracle will not be a viable solution. Even where one of these large-scale solutions has been implemented, the publisher may also adopt a specific module provided by a smaller vendor to support certain functions such as royalties management.”
In trends among responses from developers, Cairns cites:
- More centricity of customer-focused development
- A drive toward “flexibility” in systems’ solutions, using modular design to make appropriate responses
- An increase in cloud-based and SaaS approaches
- Two-tiered ERP contexts that combine central systems with local apps and models
- A fast uptake in mobile ERP to distributed employees, vendors, partners, customers
With a list of more than 80 selected vendors working in parts of the space now—gauged by staff size and estimated revenues—the report also explicates the many “primary modules and process functionality” that can come into play in various ERP and CMS (content management system) developments. For example, under financial management, you’ll find demand planning; customer self-service; and warehouse fulfillment. Under intellectual property, here are rights inventory management; subsidiary and “non-standard” rights; and author portals and reports. Other divisions include management of customer relationships; content; product information; advertising; membership and association; and order to cash.
The report is aimed both at senior publishing managers who are making software acquisition decisions and at vendors who can benefit from clarity on where they stand in this market of many needs, many actors, many options, few benchmarks.
And where all this may be going for Cairns’ consultancy is toward the development of a project to obtain some of the information missing from the scene, a project “whereby participating companies,” he writes, “will be able to view the components of their spending against a cohort of like companies.” He’s looking for companies interested in participating.
Information on the report is here.