Copyright (c) 2000 Information Today
April 17, 2000 — Endeavor Information Systems, Inc. (http://www.endinfosys.com) announced on April 7 that it has formed a strategic alliance with Elsevier Science (http://www.elsevier.com) and expects to become its wholly owned subsidiary by the end of this month. This acquisition of one of the major library automation companies by an international publishing powerhouse represents a new level of convergence between content and delivery in the information industry. Through this union, Endeavor and Elsevier Science hope to cooperate to develop a seamless environment for the delivery of information to the library user.
To get an understanding of this merger from Endeavor's perspective, I talked to Verne Coppi, vice president for development of Endeavor Information Systems.
Following the completion of the acquisition, Endeavor will operate as a wholly owned subsidiary of Elsevier Science and will be treated as an independent business unit. Coppi is confident that Endeavor will continue unabated in its aggressive course toward producing high-quality library automation software for academic and research libraries. All the executive management of Endeavor will stay in place, it will continue to be headquartered in Des Plains, Illinois, and all the current workforce will remain in place. Jane Burke, the president and CEO of Endeavor, will serve on the Electronic Publishing Board of Elsevier Science.
Coppi cited as the primary reason for the alliance the need to aggressively pursue the convergence between library automation and the delivery of content. The need to provide a seamless integration of resources seems to be a major driving force. Aggressive, focused development will be required to create an information environment where the library's online catalog expands in its capabilities as a delivery mechanism for full-text electronic content. Endeavor envisions great opportunity through the creation of such an information environment at a very aggressive and rapid pace, and that it could be accomplished only through a solid partnership with outside forces. Coppi related that Endeavor was in fact already investigating other partners when it was approached by Elsevier Science. The basis of the sale of the company is that the benefits of combining resources outweighs the loss of the company's full independence. Coppi strongly asserted that the company did not need to be sold out of financial pressures, but rather out of a sense of urgency for rapid technological development.
What is most striking to me about this business acquisition involves Endeavor's willingness to relinquish its independence as a private, employee-owned company. From its inception Endeavor asserted with great pride its status as a business owned by its employees. The company emerged in 1994 when a group of former NOTIS employees banded together to form a new automation company. It received venture capital from Technology Funding, Inc. (TFI), a company closely tied to the former Carlyle and MARCorp library automation companies. Following great success in selling its Voyager system in the academic library market, in February 1999 Endeavor fulfilled its financial obligations to TFI, redeeming in full its initial capitalization. As part of that announcement, Jane Burke stated at the time: “As the only employee-owned company in the library automation industry, we will continue to use our ownership structure to further benefit our company and our customers.” Just over a year later, it seems remarkable that the employees of Endeavor would sell their company to Elsevier Science. The pressures to consolidate and converge are indeed intense.
Elsevier Science, based in Amsterdam, Netherlands, is part of a large and complex corporate structure that has up to now focused on publishing interests in the scientific, technical, and medical arena. Elsevier Science in the last few years has acquired other publishing companies including Engineering Information, Inc., Beilstein Informationssysteme, and MDL Information Systems. This is its first venture into the realm of library automation.
I spoke with John Tagler, director of international library communications for Elsevier Science, to learn what Elsevier Science expected from the acquisition of Endeavor.
Tagler emphasized that Elsevier Science hopes to gain the ability to build full-text services through a more seamless model. Having some sense of control of the local library automation system will give the company expertise with one more part of the overall information delivery chain, increasing the ability to deliver its information more easily to customers. Elsevier Science currently has no real experience in library automation technologies, and perceives Endeavor as the ideal partner to gain such expertise. The Voyager library automation system and the Encompass digital library integration product together begin to bind delivery with content, and they offer Elsevier Science great potential in creating this ideal seamless information delivery system.
One concern that arises through this merger is that technologies might emerge that will favor Elsevier Science's content and exclude others. But Coppi and Tagler strongly denied any such intention. They are interested in developing information delivery systems that would accommodate a wide variety of content providers. The market would not likely accept technologies that were strongly biased toward a single provider, they indicated, and they aim to develop standards-based open information delivery systems.
Elsevier Science represents the high-end scientific, technical, and medical publishing market, which has been troubled with concerns revolving around aggressive journal subscription price increases. Major controversies have abounded regarding this issue, and many efforts are underway to provide alternatives to the current publishing paradigm. The Scholarly Publishing & Academic Resources Coalition (SPARC) (http://www.arl.org/sparc) originally sponsored by the Association for Research Libraries is an example of the initiatives underway to provide scholarly publishing opportunities and alternatives to the traditional publishers such as Elsevier Science. Tagler indicated that in the last year Elsevier Science has taken decisive steps to mitigate its journal subscription price increases.
The market of large academic libraries—Endeavor's target customer base—may not necessarily perceive this alliance in an entirely positive light. Emily Mobley, dean of libraries at Purdue University, who has been active in the ongoing struggle with Elsevier Science regarding journal subscription price inflation, characterized her reaction to this merger by saying, “It reminds me of a movie title—‘Sleeping with the Enemy'.” If Mobley's reaction is typical, one of the major challenges that Endeavor faces is to demonstrate that its alliance will offer a net gain to its customers in affordably priced content as well as in technological innovation.
We have long seen a trend toward horizontal consolidation in both the library automation marketplace and the publishing business. The marketplace now seems to demand a smaller number of strong competitors that can achieve lower costs through economies of scale. Companies that can do so gain strength through acquiring the customer base and technologies of their competitors. But the acquisition of Endeavor by Elsevier Science leads the way toward vertical consolidation as well. From the library automation company's perspective, it may no longer be enough to provide a solid integrated library system. As library automation systems become mature, the points of differentiation will lie in the opportunities the companies can offer in the delivery of full-text content. This new level of consolidation and convergence will certainly alter the landscape. Given that libraries generally share the vision of an integrated information environment, such alliances will likely result in better tools and technologies toward meeting these goals. It will also likely result in creating some unlikely and uncomfortable bedfellows.
Marshall Breeding is the technology analyst at the Heard Library at Vanderbilt University, a columnist for Information Today, and a frequent writer and speaker on library technology issues. His e-mail address is firstname.lastname@example.org.
|Type of Material:||Article|
|Volume 17 Number 5|
|Article also appeared as an Information Today Newsbreak|
Endeavor Information Systems, Inc.|
Mergers and acquisitions|
|Last Update:||2012-12-29 14:06:47|
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