In a year when a difficult economy presented fewer opportunities for immediate gains, the major industry players have defined their business strategies with fundamentally different concepts of library automation. This is no longer an industry where companies compete on the basis of the best or the most features in similar products but one where companies distinguish themselves through products and services that define different futures for their library customers.
New models of automation are beginning to take shape, challenging the traditional integrated library system (ILS) in an industry that has long favored incremental evolution. Some new products and projects remain poised to break free from traditional models, particularly discovery products that can deliver immediate improvement to library users.
The ILS remains at the core
This year we estimate the size of the library automation marketplace at around $630 million, accurate to within $30 million. This figure exceeds the $570 million estimate for 2008, not necessarily owing to real increases in revenue but to the inclusion of additional players. Our estimate of the market includes the worldwide revenues for each of the companies with a presence in North America. This year's total, for example, reflects the revenue of OCLC associated with its Management Systems unit that includes Amlib, Sisis Sunrise, OLIB, and LBS, all non-U.S. automation products, and WorldCat Local.
Although ILS sales no longer completely define the library automation market, new sales and ongoing support of these flagship products continue as the largest and most reliable revenue stream. Overall, the current shape of the library automation economy defies naming simple winners in market performance.
For firms selling to academic and public libraries, except Biblionix, Equinox, and Ex Libris, all reporting companies revealed fewer contracts signed in 2009 than 2008; in most cases, 2009 represented the fewest contracts in recent history.
Biblionix, a relative newcomer on the scene, achieved the largest number of new sales in terms of signed contracts with its 55 concluded in 2009. These, however, went to very small libraries, with a cumulative value smaller than even a single larger institution contract. The 49 ILS contracts made by Ex Libris for combined Aleph and Voyager, mostly to very large multibranch organizations, represent record ILS revenues for Ex Libris in a single year. Ex Libris further extended its reach through its non-ILS products. While Innovative signed fewer contracts for Millennium in 2009 than in previous years, it saw higher revenues owing to larger installations and strong sales of Encore, which attracted 109 contracts.
SirsiDynix, one of the largest companies in the industry, elected not to provide data for this year's survey. While comprehensive sales statistics were not available, public information and narrative provided by the company indicate a focus on its flagship Symphony ILS, Horizon support, and increased attention to web services.
The low volume of ILS contracts overall was offset by some very large deals. In Saskatchewan, a new consortium consolidating the province's ten library systems signed with Innovative for the largest Millennium implementation worldwide, supporting 320 facilities. Ex Libris will supply an Aleph ILS to the University of Oxford, the largest university library system in the UK. Hong Kong Public Library, with annual loans exceeding 61 million items, selected VTLS to provide its next automation platform. Polaris's gains included the Miami Dade Public Library, FL, and Baltimore County Public Library.
Once a company has succeeded in placing its ILS into a library, it gains substantial opportunities for the sale of additional products and services. Incumbents have an advantage given the library automation industry's enduring relationships between libraries and firms. Alternatively, some companies, such as Ex Libris, leverage sales of supplemental products like its SFX link server or its Primo discovery interface to gain an initial entry into a library, which often turns into additional openings. The Bodleian Library at Oxford University, for example, initially purchased Primo, then moved to Aleph to replace its aging Advance ILS.
Migrations from legacy products define the vast majority of chances for new ILS sales. The number of libraries needing to move away from an ILS no longer developed represents a major market driver. This year, however, the global economic crisis produced tight budgets that constrained ILS sales. The availability of new discovery interfaces to help a library meet the need to provide better service and the promise of more innovative alternatives ahead led many libraries to defer new ILS procurements, despite the pressure to replace an aging system.
Several legacy ILS products remain in play. A modest number of libraries continue to run Dynix Classic, some of which are just now ready to begin formal procurement considerations toward replacement, especially on the international front. The high levels of satisfaction with Dynix Classic, in terms of the stability and rich functionality, have caused libraries to hang on to this system as long as possible. Given the large number of worldwide installations, Horizon continues to receive some new development from SirsiDynix. Meanwhile, SirsiDynix urges these libraries either to shift to its flagship Symphony ILS or at least remain on Horizon for a few more years; competitors aggressively target them as new sales challenges. Despite the incumbent advantage, a number of Horizon libraries have drifted out of the SirsiDynix fold. For example, of the 33 contracts made by Polaris in 2009, 25 involved migrations from one of SirsiDynix's products.
The former Geac systems PLUS and Advance are also winding down. This year saw only a few procurements moving from these legacy systems, most of which went to a current product from Infor, Geac's corporate successor. On the small library front, the vast number of remaining Athena, Winnebago Spectrum, InfoCentre, and Circulation Plus installations provide great opportunity for vendors with current systems able to offer affordable automation products to these libraries of limited means. Biblionix attracted many of these institutions in the public library sector.
Two systems continue to receive ongoing development and support but not as the a primary flagship product. Voyager from Ex Libris and Horizon from SirsiDynix both came into their respective companies through business acquisitions. In both cases, each firm focuses marketing for new sales on Aleph and Symphony, respectively. Ex Libris plans to maintain both Aleph and Voyager to the same extent while it develops URM (Unified Resource Management) as a successor.
A new phase of discovery
Last year we noted the remarkable trend of automation companies generally expanding their capacity for development and support despite the pressures of the economic downturn. These investments have begun to bear fruit in the form of some new alternatives for libraries as they make decisions for their automation strategies.
In a year where libraries deferred investments in entirely new automation systems, sales for discovery products spiked. This genre of software has been a growing part of the industry for several years. Previous editions of this report have documented the rise of products including AquaBrowser developed by Medialab Solutions, now part of the portfolio of R.R. Bowker and Serials Solutions; Encore from Innovative Interfaces; SirsiDynix Enterprise; LS2 PAC from The Library Corporation; Ex Libris's Primo; and VTLS Visualizer.
Up to now, new versions of each product have incrementally added features. This year saw a major transition in this software genre, incorporating powerful new ways to deliver access to a broader representation of library collections, especially to individual articles. Academic libraries in particular make large investments in subscriptions to resources that aggregate thousands of scholarly e-journals and periodicals. An earlier phase of discovery products transformed the traditional web-based online catalog to a modern interface that offered relevancy-ranked results, a single search box, faceted navigation, and enriched content beyond the basic MARC records. These new web-scale discovery products vie to address the full scope of vetted library content in the same way that search engines such as Google aim to provide comprehensive access to the content of the web. Earlier discovery interfaces handled access to articles databases through federated search add-ins, but this approach generally performed slowly, yielded shallow results, and often required the user to launch a secondary search to explore article content. The new web-scale discovery products include article content in the primary search, with almost instantaneous, relevancy-ranked results. The proportion of article-level content addressed still falls short of comprehensive, though coverage continues to improve.
Most of the web-scale discovery products operate by harvesting content from the various publishers and providers of e-journal content and creating a massive central index. These indexes may include full text as well as citation data. Access to the content to populate these indexes becomes possible through agreements made between the publishers and the creators of each discovery product.
Serials Solutions broke first ground in this new genre of discovery products with its Summon service, announced in January 2009 and opened for general release in July 2009. EBSCO followed suit with its own Discovery Service, announced in April 2009 though not released until January 2010. Ex Libris described in July 2009 a centralized index of article content, called Primo Central, to add this capability to its strategic discovery product; Primo central saw a beta release in January 2010.
OCLC has similar ambitions for its WorldCat Local discovery service. In addition to the traditional content of WorldCat.org involving books and journals, OCLC plans to add increasing quantities of article-level content as it works toward the same goal of comprehensive end-user searching capabilities.
Innovative Interfaces likewise intends for its Encore discovery product to address all aspects of library collections, including article-level content. In January 2010, the company announced Encore with Article Integration, which follows a model of XML streams based on web services from each content provider rather than harvesting and indexing of the content ahead of time.
Differing strategic paths
Several other companies have leveraged this demand for next-generation discovery interfaces as the starting point for new technology platforms and broader product lines. The implementation of a new platform for the discovery interface affords the opportunity to introduce modern service-oriented architectures that not only improve the end user experience but also provide better access to the core ILS through web services and other application programming interfaces (APIs).
Examples of this approach include Chamo from VTLS, Encore from Innovative, Enterprise from SirsiDynix, Iluminar from Auto-Graphics, and LS2 PAC from The Library Corporation.
Encore, introduced in 2006 as a next-generation discovery interface, also serves as a framework for providing access to data in Millennium through web services. In January 2010, for example, Innovative released Encore Reporter as a tool for extracting, viewing, and analyzing data. Similarly, the latest version of SirsiDynix's Enterprise catalog front-end, released in September 2009, integrates Google Analytics for tracking usage.
This year Auto-Graphics introduced Iluminar as the basis for a new interface for its suite of AGent products, based on the open source Adobe Flex framework. Auto-Graphics indicates that the new end user interface is just the first phase of a broader project to completely rebuild the AGent product suite on this platform. The next phase will deploy the framework for staff interfaces, eventually culminating in a full migration encompassing all aspects of the AGent resource sharing and ILS products.
The Library Corporation began a similar strategy with the launch of its LS2 PAC, the initial module of a new ILS that will be developed over time as a successor to the company's current Library.Solution and Carl.X products.
This year VTLS introduced Chamo, a discovery interface that follows a completely new architecture from its existing Virtua ILS, avoiding the overhead of a central server, interacting directly with the underlying data stores. According to the company, this new architecture is the core of its new development strategy, representing the initial phase of a broader transition of its core automation systems to the Chamo platform.
Evolution vs. revolution
Some companies have chosen an evolutionary process that leads to improved automation products with minimal disruption to existing implementations, while others conceive of more revolutionary—if unproven—strategies.
SirsiDynix continues to develop its flagship Symphony ILS through a stable and evolutionary approach. One of the key differentiators in the current ILS competition involves ways to deliver more openness in the way that libraries access the data and functionality of the system, primarily through web services and APIs. Symphony offers one of the most complete APIs available with an ILS. This year, in addition to the proprietary APIs already in place, SirsiDynix has begun to infuse Symphony with a new layer of web services, providing a more standard flavor of interoperability. BookMyne, the iPhone app that SirsiDynix launched in January 2010, provides one of the first opportunities to exercise the new web services component of Symphony.
In addition to these strategies, several alternatives are emerging that aim to create entirely new conceptual models for library automation. This year saw the launch of three such projects: URM from Ex Libris, the Kuali Open Library Environment (OLE) project, and OCLC WorldCat Management System. However, these models exist so far only in concept and have yet to be tested in the marketplace.
Ex Libris has begun to articulate its vision for a new type of library automation platform that will enable libraries to manage all kinds of materials. Such a system would address the functionality now spread among several different products, including the ILS, electronic resource management systems, repository platforms, and others. Development partners for URM include Boston College, Princeton University, and Katholieke Universiteit Leuven in Belgium; Purdue University will help refine the concept and component functionality.
The OLE project likewise aims to create a new technology platform for research libraries that will be developed as open source software with funding from the Andrew W. Mellon Foundation. Following the completion of a one-year planning phase to refine the conceptual model and outline an initial blueprint for the system, a two-year project to build the software has commenced, to be completed in 2011. The Mellon Foundation has provided $2.38 million for the build phase, matched by the eight major development partners, including Indiana University as the lead institution; a consortium of libraries in Florida; Lehigh University, Bethlehem, PA; University of Michigan; University of Maryland; Research Triangle Libraries Network, NC; University of Pennsylvania; and University of Chicago. The project has joined the Kuali Foundation and is now known as Kuali OLE.
OCLC has announced a strategy to expand into library automation further through the addition of functionality into WorldCat that will displace the need for local automation products. Already well established as a cataloging utility, OCLC has recently positioned WorldCat Local among the alternatives for discovery products. By adding features such as circulation, acquisitions, and license management, OCLC has articulated a vision of a WorldCat Management System that can offer libraries a full library automation solution without the need to operate a local ILS. The development of this new library automation platform is under way, including the deployment of a new global technology platform that will scale in performance and reliability to handle the load to support the operations of the thousands of libraries that it hopes will ultimately adopt this approach.
A group of libraries have begun to partner with OCLC to pilot the WorldCat Management System, including Pepperdine University Libraries, CA; the Orbis Cascade Alliance of Oregon and Washington; Linfield College Libraries, OR; selected libraries associated with the Idaho Commission for Libraries; and the CPC Regional Libraries in North Carolina. The product is expected to be available to other OCLC members by around midyear 2012.
In previous years we have noted the entry of OCLC into the library automation industry through its acquisition of for-profit enterprises involved in a variety of products and technologies. The acquisition of a number of European ILS vendors placed OCLC as a key competitor in the library automation industry. The impact of these acquisitions seemed less immediate since the companies involved did not have significant presence in North America. As a nonprofit in control of these for-profit business units, OCLC has become involved in a library automation industry that has long been dominated by for-profit companies.
OCLC sees the creation of library automation services as consistent with its mission to help libraries operate collaboratively to gain efficiencies and lower costs than they could individually and independently. OCLC can expect vigorous competition as it steps into the thick of the library automation industry.
Federated search products continue to have a presence in the library automation economy but increasingly as an add-in to a broader discovery platform rather than as a discrete product. Ex Libris uses MetaLib as a component of Primo; Innovative uses Research Pro with Encore.
Serials Solutions, while championing the consolidated index approach of Summon, continues to support and market 360 Search, its major federated search platform. In 2008, ProQuest acquired WebFeat, folding it into Serials Solutions. In December 2009, Serials Solutions completed the consolidation of its features and technologies into 360 Search, transitioning all its federated search clients into the single merged platform.
On the mergers and acquisitions front, 2009 turned out to be a fairly quiet year. The digestive processes of the previous rounds of acquisitions continue as the consolidated companies complete the integration of their global business units, internal processes, and personnel.
Polaris solidified the ownership status of the company through a management buyout by Bill Schickling, Polaris president, and other senior execs. Though it has experienced other transitions, up to now the company has remained under the ownership of the Croydon Company since 1974, when it was founded as the automation division of Gaylord Bros., whose library-related business activities included furniture and supplies. Croydon sold Gaylord Bros. to rival Demco in May 2003, retaining the library automation unit, initially renamed GIS Information Systems and then Polaris in May 2005. An additional partner, Jim Carrick, came into the company as one of the owners and as a strategic business advisor. Though from outside the library industry, Carrick comes to Polaris with previous IT executive experience as the former owner and president of Strategic Computer Solutions.
LibLime, once the largest of the firms involved in the open source ILS arena, announced in December 2009 that it would be acquired by Progressive Technology Federal Systems, Inc. (PTFS), which operates mostly in the governmental and defense markets. The transaction was called off in February owing to a disagreement over financial terms but seemed to be on track as of mid-March. This event demonstrates that adoption of an open source ILS does not necessarily exempt a library from the impact of marketplace shifts.
LibLime has been successful in marketing the concept of open source software and its services related to Koha, culminating in 108 contracts representing over 500 library facilities, but it also stirred considerable controversy among open source advocates through its recent launch of LibLime Enterprise Koha (LLEK). Though legally consistent with the GPL open source license, the move caused other companies and individuals outside of LibLime to cry foul, insisting that LLEK took advantage of a cooperatively developed resource without the reciprocity of immediately contributing back the features it developed. LibLime saw several key personnel exit the company, shifting from a development operation that relied on employees to externally contracted programming.
Open source ILS
In the United States and Canada, interest in open source library automation continues, with Evergreen, Koha, and OPALS standing as the key offerings. Each of these open source products targets different types of libraries with involvement from various commercial support and development firms. In terms of overall industry, the aggregated revenues of the open source support firms represent just over one percent. The number of libraries involved represents a larger proportion, in the two percent to five percent range. Current use of open source ILS among academic libraries remains negligible.
Equinox Software continues to exhibit steady growth as it attracts contracts to bring the open source Evergreen ILS to new consortia. The company issued a steady stream of announcements throughout the year as individual libraries went live with Evergreen. Consortia that elected to implement Evergreen through services provided by Equinox in 2009 include Bibliomation, the North Texas Regional Library System, and SC Lends in South Carolina. Equinox also entered into migration and support arrangements with individual libraries such as Washington County in Kentucky and Kirtland Community College in Michigan. While Evergreen continues to be adopted primarily by public library consortia, it began to see some use by academics. Project Conifer, for example, a group of academic libraries in Canada, shifted to Evergreen in August 2009.
Koha continues to find adoption by public and smaller academic libraries. Multiple companies provide support for Koha internationally. Prior to this year, LibLime stood as the primary Koha support provider in the United States. In 2009, ByWater Solutions and PTFS began offering Koha support services in this country. In February 2010, Equinox announced its expansion to Koha support and hosting services.
OPALS provides an open source alternative for school libraries and has seen adoption by other types of small libraries including those for churches and synagogues. OPALS was developed and supported by Media Flex, the original developers of the Mandarin library automation system.
Open source library automation received a boost from the Institute of Museum and Library Services through the award of a $998,556 grant to a project spearheaded by the King County Library System, WA, to develop nontechnical infrastructure for public libraries interested in adopting an open source ILS. King County, which has one of the highest volumes of circulation transactions of public libraries in the country, has plans to implement the open source Evergreen ILS.
A number of factors indicate that open source library automation will be a growth sector for the industry, although the adoption thus far has moved upward gradually, not climbed dramatically. Any impact of the Kuali OLE project will not be seen until 2012. Generally, while open source library automation continues as a trend worth noting, proprietary software currently dominates.
On the horizon
Pressing forward into next year, we expect little relief in the ILS sales slump; increased spending will continue on discovery products until options emerge and economic pressures relent. On the three-year horizon, critical projects anticipated will reach the point where they can impact the industry. Open source ILS, now simmering at a low level, could reach a boil given the right convergence of factors, including new automation models, though a faltering among the businesses involved could stifle interest. OCLC's potential to disrupt the market cannot be underestimated. Both Kuali OLE and Ex Libris URM set high expectations with new conceptual approaches but will not reach major market impact for at least the next five years. The ramp-up period for products, especially those that invoke new conceptual approaches, can be long. Meanwhile, the evolutionary branch of the industry will see continued growth, establishing ever deeper roots to contrast with divergent alternatives.