I might catch a lot of readers with that title, but of course I don’t really know for sure what will and won’t be in the next version of SharePoint.  Microsoft is still mum on the topic and I suspect will remain so until the SharePoint Conference slated for October.  This event was held in March last year; it seems logical it has been delayed this year to time the event with Office 14 announcements specific to SharePoint.

I read Guy Creese’s post last week on what he thinks will be in the next version of SharePoint and like Guy, I get a lot of questions in this vein.  I agree with Guy that SharePoint.next will have search improvements (we already know that one) and more sophisticated administration (we all hope). I’ll be surprised to see dramatic improvements in the transition between hosted and on-premise SharePoint in this version, I think the marketing is likely to lead the reality in this area for sometime to come, but perhaps I’ll be surprised.

I often get questions more specifically (from vendors) around what Microsoft isn’t going to do and reading Guy’s post, I thought it would be interesting to comment on what’s left out.

On the social software front…

There’s been some debate of late about whether or not SharePoint is an “Enterprise 2.0” tool at all (or what, in fact, that even means, if anything). But anyone who saw Lawrence Liu pitch SharePoint versus IBM Lotus Connections to a packed room at Enterprise 2.0 last year, would certainly assume Microsoft has ambitions in this area.  It’s worth noting however that Liu left Microsoft not long after that for Telligent Systems, which sells community software as an adjunct to SharePoint.  Liu presumably knows more about the SharePoint roadmap than we do, so looking at Telligent’s roadmap (limited version here) is probably a good indication of where Microsoft won’t go in social software in this next release (think community analytics, bridging internal and external communities, and feed aggregation).

It’s not about WCM.

Making SharePoint ubiquitous for content-based collaboration is Microsoft’s number one goal and this means improved admin, search and social software, to my mind.   So what will get left out?   I don’t think we’ll see any major changes on the WCM front.  Microsoft marketed the WCM capabilities in MOSS 2007 when it first came out, as it stopped development on its stand-alone WCM product, Microsoft CMS (which came from its 2001 acquisition of nCompass) in favor of Sharepoint.  But this seems to have died down and vendors like Sitecore are doing well selling more sophisticated WCM with SharePoint integrations, apparently with cooperation from Microsoft.  WCM for large, customer-facing sites, is really not where SharePoint strengths lie and Microsoft will likely let this one stand much as it is as it invests in other areas (Sitecore even sells a bundle for intranets, showing some market opportunity for WCM even in SharePoint’s sweet spot).

What about records management and archiving?

There’s some records management today in SharePoint, but it’s limited to SharePoint environments.  Improved admin across server farms could help here but it doesn’t seem likely Microsoft is going to go far beyond this and this doesn’t address the archiving issue at all.  Vendors like Open Text, Symantec and EMC are banking on their products’ abilities to manage and archive content (including email) from multiple repositories including SharePoint.  And this seems like a market that will be relatively immune to changes in SharePoint.next — indeed, changes that make SharePoint more popular are likely only good news to these vendors, at least in the short term.

I’m sure there are other gaps vendors are filling where they may be some continued opportunity after SharePoint.next, but those are the big ones that jump to my  mind.

We have more year-end financials available this week so we can continue our look at the  health of the WCM market.

Day Software, which is traded on the SIX Swiss Exchange and OTC in the US, released its year-end results today, with total 2008 revenues of CHF 27.8M ($23.9m USD), an increase of 11% from 2007. License revenue grew 8%.  Day continued with a net loss on a GAAP basis, though it had a number of restructuring charges and claimed a return to non-GAAP profitability, when these charges are excluded.  Day released a major upgrade to its flagship CQ5 in Q4, which I would have expected to delay Q4 sales as customers wait for the new version.  So that fact combined with the overall business climate make modest growth from Day unsurprising.

We also get a bit of data from SDL on its acquired Tridion business.  SDL’s year-end results include the note that it had “Tridion revenue growth of 16%.”  Based on data we’ve tracked since SDL acquired Tridion in 2007, we had Tridion bringing in $42m in 2007 revenue, so 16% growth puts 2008 at $48.7m  Growth has definitely slowed for Tridion, which reported 58% growth in 2007 over 2006, but we already knew that since SDL noted Tridion’s first-half 2008 sales grew only 11%.

To me this all seems to point to relatively stable growth in WCM overall.  If we average in the outliers (FatWire/Sitecore and Vignette on the high and low ends respectively), we probably get to low double-digit growth in the 10-20% range, which is pretty much what the sector has been seeing for awhile now.

What about 2009?  Growth may well slow some, but I still don’t see the WCM sector getting hitting particularly hard, as there is still a lot of work to be done on a lot of sites in nearly all verticals and geos.  There may be more opportunities for open source and SaaS players to make some hay with potential cost savings, along with some projects getting delayed, downsized or chunked up, but I see organizations still buying WCM overall.

A related note:  Our recent report on M&A prospects in WCM is available via the New York Times DealBook today.

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?

In the craziness of this week, I missed a good post from Jeremiah Owyang over at Forrester about the coming collision between social software vendors and CMS vendors.  This is something I have written about several times before.

As is evident particularly in some of the comments on this post, there’s still a lot of confusion out there about all these terms we use — CMS, content management, social networking, social software etc.  Jeremiah gets it, as he covers “white-label” social software vendors that sell software or software-as-a-service for external, community sites.  So he’s not talking about social software for internal deployments or collaboration at all, or at least not as a primary function (some communities cross boundaries so things aren’t always so clear).

In this context, we’re talking about a particular set of “CMS” vendors, what I would generally refer to as Web content management (WCM) vendors.  Poster children here are the likes of Interwoven, Vignette, FatWire Software, Percussion Software, Clickability, Day Software and SDL Tridion, along with open source efforts like Drupal and Alfresco.   These vendors primarily sell software to develop, publish and maintain high-end, customer-facing web sites.  Again, this generally isn’t about internal collaboration or document management or enterprise content management (ECM) at all.

So there are vendors focused on building customer community sites and vendors focused on building customer Web sites — seems like a natural meeting point, doesn’t it?  The WCM vendors that I track (those listed above) are well aware of this and some are further along in developing these technologies I think than Jeremiah’s giving them credit for in this post.

But the social software vendors seem much less aware of what the WCM vendors are doing.  This is something I ask about regularly when I meet with social software providers and few seem to think of (or at least admit to) WCM vendors as potential competitors or to be aware of what they’re up to.  It’s not surprising really as these are smaller vendors doing their best in a competitive segment that is still just emerging.

More partnerships are definitely imminent and are a good idea, though I think most WCM vendors will get to a point of proficiency pretty quickly, through both organic and inorganic means, making partnerships less necessary.  I think we’ll see WCM vendors with fairly complete offerings that can cover company-generated, controlled and targeted content alongside user-generated, community-managed content.  There will still be room for a few best-of-breed, SaaS providers and no need in this day and age for every customer to purchase all its content infrastructure from the same vendor.

But for many customers that simply want to make their existing sites a bit more interactive, gather some customer feedback, enable customers to communicate with each other for particular needs like product support, there may be fewer and fewer reasons to stray from a WCM incumbent already running the rest of a site, provided that encumbent has social software capabilities that make sense for the environment.

Jeremiah asks a question towards the end of his post that I wonder about often when speaking with social software vendors:  “How will these commodity social features be monetized, with everyone having them, how will you differentiate?”

I started this post more than a week ago and I want to get it out before this week is over otherwise I never will. And my weeks end on Thursdays as I’m lucky enough to be home with my two daughters on Fridays — when “social” software means trying to get them to take turns playing Peep games on the family computer.

But back to topic. I wanted to revisit Vignette’s analyst day from a couple of weeks ago and specifically, a topic that came up on the one of the customer panels. Jon Sallade, Director of Web and Internet Services at Harvard Business School, was one of the panel participants.

My question for Jon was around the use of social software on the HBS sites and how this is evolving. I asked if HBS, which only recently has decided to use Vignette for the HBS Executive Education site (they were about two weeks from launch that day so must be getting close now), has various point tools up and running for blogs and community sites and if so, what is the future for these.

His answers? Yes, and they’re still figuring that out. He noted the importance, for example, of insuring a blog as popular the one by Andrew McAfee, which is part of is purview, work well, be stable, meet the author’s needs, but still function as part of HBS as a whole. He wasn’t sure yet if that would mean supporting a bunch of best-of-breed tools or trying to consolidate on a single platform, most likely with some customizations.

Perhaps more telling, another Vignette customer, Jeff Misenti from Fox News Digital, also noted having a WordPress site up currently and plans to convert this to run as part of the company’s larger Vignette implementation. He noted their desire to simplify their environment and eliminate the number of services that just “stick more javascript tags on our pages.”

It’s too early to say if this will be the predominant trend or if web services will finally make integration of multiple tools easier and eliminate the requirement to mush everything eventually into some kind of platform or “suite.”

But it does seem likely to me that as more WCM and collaboration vendors add social software capabilities to their products, more mainstream adopters (i.e., not early) will be less inclined to bring in additional tools. Unless of course features from the vendors they already work with don’t meet requirements.

Mediasurface announced there was an acquisition in the works, we just didn’t know who the acquirer would be. But word came on Friday that it is fellow UK-based Alterian, a provider of email, database and operational marketing tools.

So it’s another step in the direction of WCM becoming a key component of online marketing. Though, as Tony Byrne rightly points out, not all WCM deployments are for marketing purposes. And I would say Mediasurface in particular has not been as focused on marketing as some competitors.

It will be interesting to watch as this one shakes out. Alterian is a more profitable company than Mediasurface, particularly as Mediasurface has struggled with losses of late. It also has a stronger presence in North American, something Mediasurface has failed to attain.

Alterian doesn’t have a direct sales force though and is sold almost entirely via its channel partners. These partners could help bring Mediasurface to more geos, but at the high-end where the flagship Morello product from Mediasurface plays, WCM sales can be long and not typically entirely channel based. Mediasurface also has not one but three WCM products in its portfolio and Alterian will have to determine where best to focus its efforts if it’s looking at an ‘integrated suite.’

Vignette’s industry analyst day was last Thursday and, as Guy Creese notes, these are often interesting because “Vignette personnel vanish and new people turn up to take their place with nary a word, so it’s always fun to figure out who’s missing in action based on last year’s agenda.”

Guy’s having some fun at Vignette’s expense of course, but it’s no secret Vignette has had a lot of executive turnover over the last couple of years and it hasn’t stopped. Execs on last year’s analyst day agenda gone this year include Cathie Frazzini, who led Vignette’s partner efforts for a little more than a year and long-time head of products Leo Brunnick. Dave Dutch, most recently of Level 3 Communications, has just replaced Brunnick to run product management and marketing. And Rob Amor, long-time head of Vignette’s EMEA services org, has taken on the corporate BD role from the UK.

Like Guy, this wasn’t my first Vignette analyst day and he’s also right in noting “Vignette’s Analyst Day is typically heavy with customer testimonials.” And this year was no exception. Four of the six customers that presented (including HBS and Vertrue) were fairly new to Vignette, interesting since Vignette has struggled with new license revenue in recent quarters.

Overall Vignette presented a more upbeat outlook than one might expect given the company’s recent financial results. The company has introduced several new products already this year (yes, some are OEMs and some are just enhancements, but it’s still better than what we’ve seen from Vignette in awhile) and has a few more planned before year end. It also acquired video management play Vidavee, which it claims will be integrated before the end of this quarter.

It will likely be a couple more quarters before Vignette’s largely-revamped field organization can make some hay with these new products. If it’s able to do so, the license numbers might start to turn around. We’ll certainly be watching to see.

Tony Byrne picked up on this statement from Mediasurface that “notes the recent share price and announces that it has received a preliminary approach, which may or may not lead to an offer for the Company.”

The statement goes on to say that “The approach has been received from a UK company that does not compete directly with Mediasurface and the Directors expect that regardless of the outcome of these discussions, the services that Mediasurface provides to existing and future customers will be unaffected.”

What UK company that does not compete directly with Mediasurface might be interested in acquiring it? SDL already took Tridion, a decision it is no doubt happy with given Tridion’s 2007 financial results. Autonomy is the only other company that comes to mind, as a substantial UK-based player in the information management realm, without WCM we might add. WCM doesn’t seem a logical fit for Autonomy’s current portfolio though, which has certainly grown with its 2007 acquisitions of Zantaz and Meridio. These are pretty clear cut compliance / e-discovery related buys without explicit ties to WCM.

So maybe it is an SI or design agency looking to own the delivery technology itself. Mediasurface has checked boxes at the low, mid-market, and high end in WCM, in part by acquiring fellow UK-based WCM play Immediacy in June of last year and Silverbullet out of Holland back in 2005.

Mediasurface may not be the most attractive candidate at the moment, as it had a difficult fiscal 2007 reporting an EBITDA loss of £1.3m on revenues of £11.6m. Losses were blamed on the low-end Pepperio service and market difficulty for the high-end product Morello in the financial services industry and in accounts using Microsoft SharePoint. The company’s stock tumbled on that news to 4p per share, but has been up in April based on acquisition rumors.

Growth in WCM remains strong overall though (451 clients can read analysis of sector growth rates across vendors here) and there are still too many independent players with revenues in the $20m-ish range. More consolidation certainly seems likely.

Interwoven and Vignette both released Q1 numbers in the last two days and their numbers highlight the different paths these long-time competitors are now on.

Vignette announced disappointing results. Vignette’s total revenue for the quarter was $44.8 million, a 6% decrease from Q1 2007, with a net loss of $0.8 million, compared with a $4.8m profit a year ago. Particularly disappointing for Vignette was license revenue which declined 36% to $9.7m. Vignette warned three weeks its results would be weaker than expected so the news wasn’t a surprise but the mood of the call was still somber.

Interwoven, on the other hand, announced a 17% increase in revenue to $61.5m with a 12% increase in license revenue and net income of $6.1m. Interwoven has always been a fairly conservative company but even so, one of the execs on the call said something along the lines of “we’re not claiming our earnings are recession proof but…” They were downright cheerful — and with good reason.

I’ve noted before that I sort of wear two hats at The 451 Group, covering both content management and collaborative technologies. They’re related surely and perhaps more so every day, but traditionally have been rather separate. In any event, I have the benefit of looking at most things through (at least) two sets of lenses and am not so far in the weeds in one market that I miss related implications.

For example, Infovark has an interesting post about emergent systems and as I was looking specifically at their table, it struck me how much their definition of “explicit” (rules-based, top down, centralized, push) defines what most WCM vendors are trying to do today with targeted content delivery. But “emergent” technologies are the opposite (outcome-based, bottom up, decentralized, pull).

In short, it’s the difference between content targeting and user-generated content. There seems to me to be a real gap between those vendors doing the former and those supporting the latter.

We’ve been spending a lot of time with vendors in the customer community realm of late, while still keeping a close eye on WCM marketplace. The relationship between these two seems quite obvious to me, though we’re only starting to see bits of it in the market. There is some partnering going on and at least one OEM I know of though have been asked not to publicize yet. I suspect we’ll see more of this in the coming months.