Controlled or Valuable? That is the question

I got the following feedback on an article I'm writing for KMWorld (which arose out of my The Long Tail Of Enterprise Content Posts) and thought it was interesting enough to share the feedback and my response to it:



Comment:

Ok, there is something bothering me about the word “Value” all content within an organization is valuable, that is the point of SharePoint, our connectors and search working together. Is the left axis really value or “Controlled”.



My Response:

I agree that organizations have typically “Controlled” ( the 80/20 rule I mentioned) content in the enterprise to varying degrees, the question is how what is controlled is determined. It is in answering the question of what to control and how the long tail theory applies to content in the enterprise that I’ve used the content’s value which can be determined through computation e.g. risk analysis. We are also in agreement that all content within an organization is valuable, however I believe the relative value of content differs ( i.e. some more valuable than others) hence the tail of the curve, although it tends to zero it never touches the zero value line (i.e. the x-axis).

Content to control, in my opinion, is determined by the value of that content to the enterprise e.g. if regulation requires that the content be placed under control and there is a penalty for non compliance, then the relative value of the content is higher than content not subject to the regulation. Other factors as I indicated in the article can also be used to determine the value of a piece of content and hence if it should be controlled or not.

If, as you are suggesting, you graph the decision made after the content’s value is determined i.e. what goes into the Advanced ECM systems (typically the controlled content in the enterprise) versus what does not (typically the less controlled content in SharePoint and other non Advanced ECM repositories), you will not have curve let alone a long tail. You will end up with a bar graph or pie chart of categories of controlled content which does not lend itself to analyzing The Long Tail theory and it’s applicability to enterprise content.

What will Microsoft do next? Future of ECM Software Industry

The nature of competition in the ECM industry is changing, the disruption of the industry by SharePoint is well under way. Microsoft Office SharePoint Server (MOSS) 2007 is really the first version of the SharePoint technology that you can even begin to consider as an ECM product/solution/platform and I expect Microsoft will use the same evolution strategy it has used to successfully compete in other areas to compete in the ECM software market by offering a controlled migration up the ECM software technology trajectory.

Advanced Functionalities
I expect Microsoft will continue to improve SharePoint and move it up the ECM software technology trajectories. It expected to offer improved Business Process Management (BPM) and Compliance features will provide potential beachheads it will use to advance upstream. In addition, it will continue to provide Application Programming Interface (API) support so third-parties can develop/integrate off-the- shelf and custom workflow packages for specific industry verticals. With respect to compliance functionalities, it is expected to provide deeper integration between its records management features (which still needs improvement) and Microsoft Office Outlook application/Microsoft Exchange Server. Most knowledge workers spend a significant amount of time working in Microsoft Office Outlook compared to any other desktop product, this integration will put Microsoft right at the hub of the content transaction flow, a critical point to enforcing retention policies.


Visual Studio Integration, Training and Certification
With its unsurpassed experience with Developer tools, it is expected to provide deeper integration into Visual Studio and .NET platform for developers. This integration will include tools and platform technologies to support authoring on its ECM platform, which will, amongst other things, lower the skills required to create complex work flows. In addition, it will offer training and certification programs for developers and administrators which has the net effect of reducing the total cost of ownership of SharePoint technologies.


Microsoft Office SharePoint Server versions
As Microsoft moves SharePoint technologies up the technology trajectories with Advance functionalities, it is expected to maintain its low-end products to prevent low-end market disruption by another vendor. It already offers a free version that ships with the Windows Operating System - Windows SharePoint Services (WSS) - and will probably offer a Professional version for Departments and an Enterprise version for Corporations. SharePoint in the future which will allow organizations to integrate and manage all of its SharePoint deployments. These versions will not only satisfy the needs at the different levels of the organizations, it will also include functionalities for corporations to deploy enterprise-wide policies that can be applied to all MOSS deployments such as the central content repository for all content regardless of which sharepoint version is used to store the content.

Will incumbents pull pushes? It is hard to tell, if the way they have responded to the threat of SharePoint todate is anything to go by, the following lessons learned from the effects of networks and positive feedback in railroad gauges summarize what I expect:

"Those left with the less popular technology will find a way to cut their losses, either by employing adapters or by writing off existing assets and joining the bandwagon"

I don't expect EMC, to put up a strong challenge as MOSS becomes dominant in the Enterprise. At the core of its business is really information storage and regardless who wins, as long as the content is stored on EMC devices, EMC will be a happy camper. IBM will certain give a good fight but again, IBM has demonstrated that it will sell anything the customer wants as long as it can make service dollars from such deals. I expect both to continue to invest in sustaining technologies such as Adapter to MOSS or move their products to serve niche markets. Their value network and cost structure will make it extremely difficult for them to launch any meaningful defense against a competitor such as Microsoft. But then, this is the technology industry afterall and there is nothing to say that these companies won't happen on their own disruptive technology or some yet to be named startup won't disrupt the industry.

100 Million SharePoint Users

In this post, I continue my rant on the disruptive nature of SharePoint. Well before Microsoft’s entrance into the ECM software market, the incumbents (market leaders: Documentum and FileNet ) had abandoned customers in the low-end tiers of the market, who did not need all the bells and whistles provided by the Advanced ECM capabilities in their solution offering. Their strategy focused on moving up the technology trajectory by developing features that will sustain their position and protect their market share in the ECM software market. By targeting these non-consumers of Advanced ECM solutions, Microsoft was able to established a beach head in the ECM software market with the launch of SharePoint in 2001. I doubt that the incumbents initially perceived SharePoint as a threat to their businesses, especially because SharePoint 2001 was positioned as a Collabotion/Portal solution and it's ECM capabilities where rarely touted/non-existing.

Borrowing from the principles of the disruptive innovation, I will speculate on the factors that may have also contributed to the incumbent's initial/continued reaction to Microsoft's entrance:

• SharePoint was simpler, cheaper and lower performing product and therefore did not threaten the revenues from the customers served by the incumbents;
• A lower price point/margin product such as SharePoint was not going to provide the next growth opportunities required to justify their stock price to Wall Street;
• The most influential/profitable customers wanted an Advanced ECM functionality.

Simpler, Cheaper and Lower Performance
The first versions of the SharePoint Technologies: SharePoint Portal Server (SPS) 2001 and SharePoint Team Services (STS) provided very basic document management functionality. STS was a free version of the SharePoint technology which shipped with Windows 2000 server. An administrator could easily enable it (SPS or STS) for a team’s use without additional software or cost. SPS was targeted at departmental use, the document library feature it provided was limited in functionality and the workflow support had to be removed in the next version. It sold for about $50/cal and less than $5000.00 per server license. It lacked support for enterprise deployment and management features. Its main customers were departments or small businesses who needed a simple system for collaboration and document storage. It had a simple interface and was easy to install. It was more widely deployed as an Enterprise Portal solution and an Enterprise Search solution than an ECM solution.

SPS 2003 was only marginally better than the first release of the product. It addressed some of the issues and bugs that prevented the deployment of SPS 2001, but provided no new major functionality. It still lacked critical features to support enterprise wide deployment and use. However, SPS 2003 and Windows SharePoint Services, the successor to STS 2001, were widely deployed at the departmental levels largely because they were more stable and provided the basic feature set needed for a departmental collaboration and document management. Microsoft Office SharePoint Server (2007) can be considered Microsoft’s ECM version 1.0, again its simpler, easy to use feature set made it appealing to the masses. It now has support for server farm and significant improvements were made to support enterprise wide deployment, management and scalability.

Despite these improvements in functionalities, SharePoint does not directly threaten the core businesses of the incumbents. Incumbents see the rapid growth in the adoption of SharePoint as an opportunity to integrate its department level document management capability with their Advanced ECM capabilities. Their strategy is to position their platform as the central repository for all content in the enterprise even when the content begins life in SharePoint. This is a win-win scenario for them with SharePoint occupying the departmental tier and their Advanced ECM platform occupying the enterprise tier of the ECM market.

Lower Price/Margin Product
Customers at the lower-tier of the ECM software market are price sensitive, therefore they are willing to accept a good enough feature set at a reasonable price. The incumbent's value network of distributors, solution providers and sales associate will find it hard to justify any investment in a low-end product. Profit at the lower-end, lower price point tier will have to come from volume sell which the incumbent’s value network and cost structure is not equipped to do. It is also doubtful that the internal process, used by incumbents to justify investment and select projects would have approved the developing of a product with such low margins compared to the high margins enjoyed by their current product offerings.

On the contrary, Microsoft’s resource allocation framework, project approval process and value network can support a product at the price point that MOSS 2007 is offered. Microsoft's Sales Professionals and Solution Providers have developed a good process for making profit at the price points through volume sale and services. In addition, it appears that Microsoft’s internal process supports funding for disruption technologies as long as they show growth and profit potential.

Customer Demand
Business Process Management (BPM), Records Management and Compliance issues dominated the ECM industry for years. The customers targeted by the incumbents already had an ECM system with advanced capabilities and therefore the performance attributes they desire from their ECM software shifted to these areas. It is only natural and logical that the market leaders spend their R & D dollars to satisfy these needs, thus investing in sustaining technologies to maintain their market positions. The market size for these sustaining technologies can be readily determined and computing a rate of return above the company’s hurdle rate is a much easier exercise. Additionally, the customers – a key holder of resources (money) needed – are not asking for a simpler and lower performing product, for which they have no use. These customers now demand that SharePoint work with their Advanced ECM systems and naturally the market leaders are investing in sustaining technologies by building adaptors to integrate SharePoint with their platforms.

100 million users can't be wrong, ok 100 million user licenses can't be wrong, SharePoint has certainly crossed the chasm. A search for "Microsoft + SharePoint" returns almost 4 million hits, a similar search for "EMC + Documentum" and "IBM + FileNet" returns 352,000 and 544,000 hits respectively. Microsoft now has a SharePoint Only Conference which is well attended and the incumbents are not left out of the frenzy, they now have SharePoint sessions at their respective conferences which are sold out. Amazon.com has over 1200 titles on SharePoint. Disruptive innovations create opportunities in their value chain and SharePoint has certainly created it's share of opportunities for Microsoft Solution Providers and ISV partners. Vorsite Corporation, my employer, is a beneficial of the opportunity created by SharePoint's rapid adoption.

Is SharePoint a Disruptive Technology?

First, a brief history/overview/introduction, with the release of Microsoft Office SharePoint Server (MOSS) 2007, Microsoft (MSFT) delivered a product which provides some of the enterprise content management features already available through the leading Enterprise Content Management (ECM) vendors, but at a fraction of the price. SharePoint was first released in 2001 as SharePoint Portal Server and targeted at the Enterprise Portal and Collaborative software market. MOSS 2007 however, positions Microsoft to directly compete with the leading providers of ECM software.

AIIM, the Enterprise Content Management Industry Association, defines ECM as the technologies used to capture, manage, store, preserve, and deliver content and documents related to organizational processes. ECM tools and strategies allow for the management of an organization's unstructured information, wherever that information exists. An ECM software system typically has the following components: (1) Document Management, (2) Digital Asset Management, (3) Document Imaging, (4) Business Process Management/Workflow, (5) Record Management and (6) Collaboration.

The ECM software market is currently estimated at about $14b with revenues expect to reach $67b by the year 2010. The leading providers of software in the industry are FileNet (an IBM company) and EMC Corporation (EMC), with market shares of 22% and 13% respectively. Both became major ECM vendors through acquisitions. EMC, the leader in information storage, acquired Documentum, the leader in enterprise content management software, in October of 2003, in a move designed to strengthen its Information Lifecycle Management strategy, for $1.7b. The acquisition gave EMC access to technology which manages enterprise content that can be stored on EMC’s storage devices. In a similar move three years later, IBM acquired FileNet to advance its On Demand strategy. The acquisition of FileNet according to IBM will make it the clear industry leader in the growing Enterprise Content Management and Business Process Management. On July 26, 2007 MSFT reported that its Office SharePoint Server business unit generated almost $1b in revenue for the fiscal year. This announcement, which is an unprecedented move by Microsoft as it does not generally comment on revenues for individual products, is a clear indication that SharePoint has crossed the chasm to the mainstream of ECM software. It is no longer a technology for the innovator and early adopter types, but is now a stable mainstream ECM software product for the early majority to consider.

The Disruptive Innovation Theory by Clayton M. Christensen, points to situations in which new organizations can use relatively simple, convenient, low-cost innovations to create growth and triump over powerful incumbents. The theory holds that existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations. But establised companies almost always lose to attackers armed with disruptive innovations. SharePoint is a relatively simple, convenient, low-cost ECM platform that has brought 100million non-consumers into the ECM world. ECM purist will argue that SharePoint is not a "real" ECM platform/solution or that it is not an "Enterprise" Content Management solution. This is certainly true especially when SharePoint functionalities today are lined up against the ECM definition provided by AIIM. However this is the nature of a disruptive technology.

Enterprise Content Management & The LT Challenge

LT forces in enterprise content, (1) Democratization of Content Creation (2) Democratization of Content Distribution (3) Connecting Supply and Demand, gave rise to the vast amount of content and digital assets created in the course of doing business. In essence, these forces drove content creation towards the tail of the content-value curve.



The x-axis of the graph is the amount of content and the y-axis indicates the value of the content as defined by the organization, this value will vary across the organizations and between organizations, examples of value to consider include (1) Risk Factor; or (2) Regulation factor.

The Head of the curve is where you will find content that an organization considers high value, access to this content is typically restricted, a retention policy is applied to the content and it tends to participates in one or more business processes. Organizations have managed thise content by deploying advanced enterprise content management (ECM) systems such as IBM FileNet and EMC Documentum.

The Long Tail of the graph, which I believe contains the vast majority of content created in the enterprise, is the domain of several other applications most notably of which is SharePoint/MOSS 2007. This tail is the result of a combination of (1) the availability of content authoring tools especially Microsoft Office; (2) the lowered cost of distributing the content created and; (3) search technologies which allows all content stored to be indexed and searched. The deployment of these applications was largely limited to the departmental levels in organization and the central IT groups did not pay much attention. The deployments of these applications became so widespread that several niches developed and most of the valuable content that IT investments in Advanced ECM systems was deployed to cater to was no longer finding its ways to the advanced ECM systems.

The growth of the tail presents several challenges to the organization. For central IT groups, it is an infrastructure/support challenge, largely because the applications that enabled the tail where not central managed. Central IT is reigning in the uncontrolled deployments of these applications by incorporating them into the organization’s IT infrastructure and planning its deployment across the organization.

The LT is also a risk management and compliance nightmare for organizations. Organizations continue to struggle with what to do about the content in the tail as the value of content increases i.e. moving the content in the tail to the head. Companies would like to leverage the capabilities of their advanced ECM platforms and years of investment in developing business process, retention policies and compliance initiatives for these platforms. CIOs want to mitigate the risk and address compliance concerns while allowing employees to continue to collaborate in the knowledge creating activities which drives innovation and business results.

The challenge for organizations can be summarized as follows (1) moving content from the tail to the head as value increases (2) making all content readily available within the constraints of the access rights established for the particular content and regardless of the system in which the content is stored and (3) helping employees find content to promote sharing of best practices and reuse.

The Long Tail Forces in Enterprise Content

In my previous post I introduced the idea of The Long Tail (LT) of Enterprise Content, in this post I'll discuss the tree LT forces in enterprise content.

- Democratize Production
- Democratize Distribution
- Connect Supply and Demand

Democratization of Content Production
The democratization of content production in organizations started with the release of word processing software for the PC. As the use of PCs as a productivity tool increased with deployments across the enterprise, employees began to do their own word processing tasks. Further advancement in the PC hardware and software industry: (1) inclusion of hard disks in PCs (2) networked computers (3) Windows OS (4) Computer Server significantly lowered the cost of producing and storing content which led to more content that ever been created.

Democratization of Content Distribution
With the release of Portal/Collaboration software such as SharePoint Portal Server and Plumtree, employees began to collaborate in ways they were not able to in the past. Granted, employees had been able to share content through e-mail or by putting them on file servers, the content on these file servers were however not indexed therefore finding anything was a nightmare. Portal/Collaboration software however democratized the distribution of content, employees can now share and collaborate on content in ways they are not been able to do before. For example with SharePoint Portal Server (SPS) any employee can create a document library ( a repository for content), invite others to collaborate on the content and the content in the document library is available to anyone using a web browser.

Connecting Supply and Demand
Another effect of Portal/Collaboration software was that is connected previously un-findable content to the demand for the content through the enterprise search solution that was a common component of the portal software. For example with SPS, employees could now search for content stored on either file servers, SPS Document libraries, Exchange Servers, Lotus Notes and several other repositories by simply entering a search term in SPS search UI. The search component of portal software helped to connect the supply of content with the demand for it.

The Long Tail Of Enterprise Content

Organizations have applied the 80/20 rule in addressing the challenges posed by the vast amount of content and other digital assets created in the course of doing business. CIO's have generally focused their enterprise content management efforts on content considered to be highly valuable ("the hits") to the organization. A content's value was largely determined by one of the following factors; (1) an organizations need to mitigate risk; (2) expert opinions (3) regulations governing the organization's industry and (4) participation in business process automation applications.

The "modest sellers" of enterprise content, content deemed not so valuable, as defined by the organization, was largely left unmanaged; at best some organizations provided a file server where employees could store this content. In recent years however, organization have come to realize that the combined value of these modest sellers was equal to the value of the highly valued content. This is the Long Tail (LT) of enterprise content and managing the volume of content produced by employees is a huge, enterprise content management, challenge for organization.


Chris Anderson coined the term “The Long Tail” to describe how the internet has made possible a world in which the combined value of modest sellers (in the world of movies, books and music) equals the sales of the top hits. The long tail has been applied to other industries and I will explore its applicability to enterprise content and in defining an enterprise content management strategy.