In its second-largest acquisition, Amazon buys the company for $970 million.
Content management is indispensable to a web site—but still must show ROI.
As Internet retailing has evolved, the amount of content retailers serve up on their web sites has exploded. Early versions of retail sites with static text and images have become complex, highly interactive displays built on various page elements, streaming media, coding, digital assets and more. As a web site grows, managing it efficiently and cost-effectively becomes an increasing challenge for retailers and a driver of the growing marketplace for content management solutions. Web site operators spent an estimated $8 billion on content management software and services last year in an effort to streamline workflow, better leverage assets and deliver more site functionality.
Content management solutions seek to provide value by freeing up high-priced technical personnel from having to support the productivity of non-technical content workers. In practice, poorly conceived solutions have actually raised costs for some companies that overbought. According to Jupiter Research, some companies have spent as much as $25,000 per non-technical employee per year to manage simple content on web sites. In some cases, integration costs and deployment costs have run as high as six times the licensing fees for software to manage content, not only on customer facing applications, but for back-end purposes such as sharing data with suppliers and across the enterprise.
Focusing on ROI
“The majority of first-tier content management platforms are only cost-effective at a very high scale,” says Matthew Berk, Jupiter research analyst. “Businesses need to be vigilant about matching their content management requirements to the appropriate solution and cost.” Some of the earlier, expensive investment in do-it-all technology has left companies with content management capacity they haven’t even figured out how to use yet. “A lot of CFOs are telling their IT departments that they’ve bought technology they haven’t even integrated yet,” says one vendor.
Today, companies are still spending on content management solutions. Jupiter says 53% of companies it recently surveyed say they will have implemented various new content management systems by the end of this year. The difference is that now retailers and others are being more selective about deriving value from new investment in content management. And vendors are responding with content management solutions more clearly focused on ROI metrics.
Sundance Catalog Co.’s web site, for example, recently implemented Equilibrium Inc.’s Media Rich Image server to improve workflow and automate image processing but only after it was satisfied that it would realize ROI of at least twice its original investment within the first year. Furniture manufacturer Herman Miller made a significant investment in software for digital asset management system from Artesia Technologies Inc. to store and manage content ranging from images to power point presentations after analysis showed that the breakeven point would be in about six months.
In addition to providing stronger proof on projected ROI, some suppliers of content management solutions are repositioning themselves to aim for a different tier of the market in the realization that the retailer audience for enterprise-scaled, enterprise-priced, soup-to-nuts management systems is limited in the current climate.
TrueSpectra Inc., for example, a provider of server-based imaging solutions, counts among its customers such retail heavyweights as Nordstrom and Macy’s. Now, TrueSpectra is broadening its target audience to include companies that are small in scale yet larger in number: smaller merchants and web developers who serve them. TrueSpectra recently released a Developer edition of its Image Server software. That lets sites of smaller scale integrate image-server-based technology into their web applications at lower cost. It’s also changed its pricing model to factor in the volume of page views and images served, allowing customers to buy capacity in smaller increments.
Such modular content management solutions that don’t require large initial investments and that integrate easily with existing architecture are one response to what vendors say the retailer marketplace is telling them. “It’s become clear that the value we provide to larger corporations is just as relevant to a wider variety of customers,” says V. David Watkins, TrueSpectra CEO. “Nearly every site can benefit from reduced development time, decreased production and maintenance cost and improved user experience.”