Thoughts on WCM spending

I commented in late January that there seem to be two schools of thought at the moment on spending in ECM — in that post, I was talking about downturns in ECM spending overall versus serious investment in information governance-related technologies, like archiving, records management and eDiscovery.

The same dichotomy seems to exist in specifically WCM at the moment as well, though for different reasons.

On one side of the WCM coin, we have Vignette, which turned in an ugly Q4, with revenue down 29.4% year over year and license revenue totalling just $7.3m or 19.5% of revenue.   And we have the Autonomy acquisition of Interwoven, which was not primarily driven by Autonomy’s desire to be in the WCM business (here’s Nick’s take on Autonomy’s drivers).  We’re not saying Autonomy won’t invest in WCM, it’s too early to make any kind of judgement on that.  But nobody is pretending Autonomy would have bought Interwoven if it didn’t have the WorkSite and Discovery Mining businesses and expertise in the legal industry.

On the other side of the coin, we have FatWire, which yesterday announced 40% year-over-year revenue growth in 2008 taking it to $44m.  This is the first time FatWire has publicly announced a revenue number, clearly it thought it had something worth bragging about (I was pegging FatWire’s 2008 revenue at about $40m, so it beat my not-entirely-informed estimate).

Obviously FatWire is a good deal smaller than Interwoven and Vignette and is growing from a smaller base.  Still, it reports an overall strength in the market domestically and internationally that is intriguing.  And it’s not alone in noting strength in the sector — Sitecore made a similar announcement back in November.

Is WCM a strategic investment you have to make when IT budgets are tight?   More and more business is certainly done on the Web, customers spend more time researching buying decisions on the web, a lot of Web sites are in need of update, it’s a less expensive marketing channel, and so many companies can’t afford not to invest.

The counter argument to this was articulated, ironically, by Open Text CEO John Shackleton on the quarterly earnings call when he was asked about the Interwoven transaction.  He said:

…one of the concern areas would be in the web content management where like most managers if someone came to me and said our website is looking a little old. We need to spend $1 million to clean it up. I wouldn’t see that as a must-have. So what we’re seeing is it’s not critical, people are putting off those decisions to upgrade their websites. I would see that Interwoven like our web content products is seeing some softness in the market.

That from a vendor with WCM in its portfolio, though it’s hardly the company’s focus.

So what do you think?  Is FatWire simply absorbing some of the business that would have gone to Vignette and that’s enough to support the growth it needs as a smaller company?  Or does WCM have some legs in a tough 2009?

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#1 More WCM financials: Day and SDL Tridion — Too much information on 02.25.09 at 11:38 am

[…] have more year-end financials available this week so we can continue our look at the  health of the WCM […]

#2 cms dude on 03.09.09 at 1:10 pm

I am not sure how Fatwire could have done so well.. I wonder how much of it is new customer installs vs existing customer revenue.
They do charge almost $40k per cpu and also charge for development servers at the same rate as production.
Even oracle gives you a break on development licenses.

Enterprise CMS is still way too expensive .. people should consider open source alternatives like alfresco, drupal, joomla etc.. which look promising.

#3 Steve Odart on 03.30.09 at 6:47 pm

Interesting comment. We supply and integrate Alfresco, and yet we still signed as a FatWire certified partner recently as a number of larger institutions asked us whether we would consider implementing FatWire. I think the old saying “different horses for different courses” holds true … but generally we are seeing spend on WCM related projects, even in the current economic climate. I shared some views on open source v COTS here