Sagebrush Corporation has sold its library-automation division to longtime rival Follett Corporation, a move that consolidates the two largest K–12 library-automation software suppliers. This acquisition creates an organization that holds a stronger position than has ever existed in the library-automation arena. Now combined, the vendors provide automation software to up to 60 percent of K–12 libraries. The two companies closed the transaction on July 25, 2006; the terms of the sale were not made public.
Since the completion of the transaction, Follett has been assessing the operations and products of the former Sagebrush library-automation division, and as of this newsletter's press time, Follett company officials reported they would be engaging in discussions with key customers for a period of time after the acquisition. Many of the details of how Follett will deal with the products, personnel, and facilities of Sagebrush will be shaped by Follett's assessment.
The Name Game
According to Follett, the Sagebrush name will be retained, but only for a limited time period. The Sagebrush brand becomes the property of Follett as part of the transaction, and initially, Sagebrush's former library-automation products will be supported as a discrete division and described by the branding tag line, “Sagebrush, a subsidiary of Follett Software Company.” Full integration of the former Sagebrush Products will transpire over the next three years; after that period, the Sagebrush name will be retired from these products, and they will assume the Follett brand. Destiny will remain the flagship library-automation system for the combined company.
Over the course of this three-year transition period, the products and employees of the former Sagebrush library-automation division will be consolidated into the Follett Software Company facilities in McHenry, Illinois. Sagebrush carried out its software development operations in Edmonton, Alberta, Canada, and provided product support out of Caledonia, Minnesota; these operations will be phased out and their functions transferred to the McHenry-based location.
From Sagebrush's perspective, this transaction divides the company into two parts, one of which was sold, the other retained. In preparation for the sale of its automation division, Sagebrush spun off Sagebrush Books, Sagebrush Library Services, and Sagebrush Viewpoint, other operating divisions that will operate under the umbrella of a separate company. Sagebrush had recently acquired Turtleback Books from Demco, further strengthening its publishing division, which currently offers a catalog of more than 200,000 books. In addition, one of Sagebrush's main activities involves rebinding paperbacks with hardcover-library bindings (for sale to libraries). The company operates two binding plants in Topeka, Kansas. Company officials report further details regarding this new company, including its name, will be announced at a later date.
Following the company's ten-year development in library automation, the to-be-named company returns to a set of business activities very similar to its earlier years—but on a larger scale. Although Sagebrush's libraryautomation component represented a significant portion of the company, the remaining divisions will continue to comprise a major company with strong prospects.
On the Product Side
Both Follett and Sagebrush have been in the business of supplying library automation systems for more than two decades and have multiple product offerings. Follett's mainstay products, Circulation Plus and Catalog Plus, have been installed in more than 33,000 libraries and have steadily evolved since release in the mid-1980s. The original DOS versions migrated to Windows in 1998.
In 2003, Follett introduced Destiny, a completely Web-based system designed as a cost-efficient, centralized solution for school districts to meet the changing needs of the K–12 market. By spring of this year, Follett had sold Destiny to more than 600 school systems, representing more than 8,000 individual school libraries.
Sagebrush Corporation has also developed and invested in a number of library-automation products over the years. In 1998, the company acquired Nichols Advanced Technologies; Nichols had developed the DOS-based MOLLI library-automation system and Athena, one of the first Windows-based libraryautomation systems. Nichols was based in La Crosse, Wisconsin, and in Edmonton, Alberta, Canada, and was founded by Bruce and Janice Butler. The company relocated to Austin, Texas, in 1996. At the time Sagebrush acquired Nichols, its Athena software was used in more than 6,000 libraries. Then, in August of 1999, Sagebrush acquired Winnebago Software Company from its founder Jeb Griffith. At the time of its acquisition, Winnebago's software was installed in 23,000 libraries. Winnebago was headquartered in Caledonia, Wisconsin, and employed 270. At the time of the merger, the combined company had revenues of more than $75 million, which included the book and other library-services divisions of Sagebrush.
In 2001, Sagebrush partnered with Sirsi Corporation to produce Accent, a centralized library-automation system for school districts, based on Sirsi's Unicorn technology. InfoCentre, the company's next-generation system, was released in October 2005.
Although the original agreement with Sirsi has expired, under the terms of the current agreement, Sirsi will continue to provide support to Accent, and Follett Software Company can continue to sell the product. Though it was not stated, it does not seem likely that Follett will continue to sell Accent, which competes with Destiny, as a centralized library automation solution for school districts. SirsiDynix has also been more active in the K–12 arena, developing a specialized version of its Rooms portal, called SchoolRooms for this market.
Impact on K–12 Libraries
Follett is emphasizing the fact that it will continue to provide support for all the products it acquired from Sagebrush. It is certainly to Follett's advantage to keep the library customers of the former Sagebrush Company well satisfied, lest they switch to competing products. By all indications, Follett will focus its McHenry development group's efforts on its own Destiny family of products, while the development group in Edmonton will continue to focus on the Sagebrush product lines. The marketing activities will be integrated to support both these efforts, so while libraries running automation products provided by Sagebrush can be assured they will be well supported, they can also count on being courted by Follett to migrate to its products for the longer term.
The major trend in the K–12 library-automation arena involves a shift from systems installed in individual school library buildings to centralized systems that can be implemented and administered in a single location for the entire school district. Athena, Winnebago Spectrum, and Circulation Plus/Catalog Plus were each designed for distributed building-bybuilding use, but these systems have experienced steep sales declines since 2001. Sagebrush's Accent and Follett's Destiny were designed to meet the growing demand by districts for centralized library-automation systems. The consolidation of Sagebrush's automation division with Follett will also accelerate the trend of libraries moving toward newer technologies.
This transaction produces a major change in the dynamics of the K–12 library-automation arena. Although Follett has been a major player in this arena for many years, the market has been highly competitive, with Sagebrush running a not-so-distant second place. Other major competitors include COMPanion, BookSystems, The Library Corporation, and CASPR. In addition, Innovative Interfaces offers a version of Millennium, called Via, for this market.
By adding Sagebrush's library-automation business, Follett now stands as a much larger presence when compared to other competitors in the K–12 library automation market. Having gained a major boost in market share through acquisition, it will be a major challenge for Follett to maintain and grow its customer base over the long haul.
