The Gilbane Report: Volume 9, Number 6

Why Content & XML Integration Technologies Are Fundamental

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We can't imagine anyone disagreeing with our title with any conviction these days. But many may agree with what it says mostly because of glowing research reports, breathless press releases, or enthusiastic reporting in the trade press. The Internet company meltdown should have made us all a little more critical. This month we explain why we believe content technologies and XML-based integration technologies are even more fundamental than you may think by looking at some long-term trends in computing, the effect of commerce, and what companies are doing in the current economic climate.

Why Content & XML Integration Technologies are Fundamental

Significant changes in the economy provide a useful opportunity to gain perspective on information technology trends. When the economy is plodding along it is hard to identify what companies consider critical IT investments because there is not much incentive to rock the boat, either by taking risks with new technology or ideas, or by squeezing normal discretionary spending. In times of rapid growth imaginations are fired up and companies invest in new ideas. These investments provide insight into what businesses would like to do and what technology they think will allow them to do it. Idealism is rampant. When times are tough as they are now it becomes more clear what businesses believe they need to do and what technology they see as indispensable. Realism is the order of the day.

It seems reasonable to assume that technologies that companies are investing in today have some degree of staying power. There is plenty of evidence, including early 2nd quarter results being reported as we publish this issue, that content technologies, especially content management, and XML-based integration technologies have this kind of staying power. (This does not mean that all content management vendors are doing well!) We'll leave it to others to attempt to measure software spending by category. We see such efforts as only partly useful given competing definitions of categories, and the insidiously unhelpful practice of considering broad concepts as measurable categories - 'collaborative commerce' is a recent favorite. We've always favored tough-to-fudge logic over numbers. In any case, Our view is not inconsistent with market research findings.

We are convinced that what we would broadly call content technologies and XML-based integration technologies, are the two most important categories of software technology today. We think that, aside from any hype associated with individual products, buzzwords, or market research growth predictions associated with these, that they are fundamental software segments that need to be at the core of all enterprise IT strategies. This month we discuss why these are so fundamental and explore how they are connected, and will continued to be propelled by commerce.

Content & the Enterprise

Why are technologies associated with content holding their own? Why do we argue they are so fundamental? Because:

• Communicating is replacing data crunching as the predominant job of computing
• Content computing is replacing data computing
• Content is increasing in value
• Commerce demands inter- and intra-enterprise content integration

We look at each below.

Computing and communicating

A simple, obvious when you think about it, and fundamental premise of our position, is that one of the most basic trends underlying the last 30 years of computing is that we have ineluctably progressed to the point where we are using computing more for communicating than for number crunching. This trend will only become more prevalent as computing devices become more mobile and attach themselves to cars, houses, people, etc.

Communicating with computing technology cannot be much more costly or complex than other means of communication such as print or video. Once certain thresholds are reached big things happen. The simple combination of HTTP and HTML added a whole new dimension to communicating with computers. More available broadband and better mobile interfaces will also significantly enhance our communication capability, increase demand for content distribution, and further add to the importance of content and integration technologies. When is a good question, but there is no if.

One consequence of this trend is that the kind of content we need computing to manage has changed. Content that has communication value becomes more important than content that merely has computing value. The demand for rich media content such as video increases, as does even plain text content that is rich with supporting metadata for e.g., personalization.

Content value

Not all content has equal value. If your business is based on selling content, that content is your most valuable (non-human) asset. Different businesses have different kinds of 'mission critical' content that is substantially more valuable than other corporate content. All content increases in relative value as its utility grows and as dependence on it increases. For example, product data and brand related promotional content increase in value with every additional channel they are communicated through. Educational content increases in value as your employees grow in numbers and geography. Technical support content increases in value as the number of customers and suppliers that depend on it multiply, and so on.

Some of your corporate content will increasingly be considered an asset, perhaps even with some fuzzy accounting guidelines for attaching financial value. In the meantime simple market demand will determine content value as it has historically with the more obvious corporate content (e.g., customer lists and research). In fact, businesses should start thinking about the value of all their content - this is strategic information. For example, if you are looking to buy another business you would be crazy not to understand how well they manage content associated with research and development, or marketing their products across multiple channels. You will be willing to pay more for well-managed content because it will cost you less to manage and allow you to leverage it.

Enterprise Content Management

What is "enterprise content management"? Certainly the phrase is appealing from a marketing point of view if you are a vendor or integrator. The use of "enterprise" legitimizes large complex offerings, or at least sends the message that the kind of content management you are talking about is serious stuff. "Enterprise" in software markets has always been a relative value judgment rather than fact. While there are organizations that have enterprise networks, we challenge anyone to provide an example of an enterprise data or content management application in the way the term implies. Even the largest and most comprehensive of the ERP implementations are isolated from a number of front office and other back office applications. In spite of our historical enthusiasm for the integration of structured and unstructured data in ways that allow flexible sharing and processing, we don't believe there will ever be single central enterprise repositories of data and content that support all the requirements in a company. They are not impossible to build, just wildly impractical. This is not about to change. What will happen eventually is that all content will become more accessible across and between enterprises and applications.

We don't intend to be cynical here. Buzzwords and buzzterms serve a useful purpose and have a life cycle. Rather than criticize their use, you should understand their use. And in fact, "enterprise content management" is useful as a way to refer to the requirement that businesses have to integrate applications that manage their valuable content across their business. We see the term as describing a target, a strategic goal, a philosophy. As virtually all enterprise applications need to deal with multiple types of content today, it is rare that content management applications can exist in isolation. Our working definition is:

"Enterprise content management goes beyond web
content management to manage all enterprise data for all enterprise applications."

As we just said, no one actually does this, but it is the thought process that counts. All companies should be, and most are, looking at managing content, not for all, but for multiple, enterprise applications. Enterprise content integration is just as critical and can be considered part of enterprise application integration. The main driver for both is, of course, commerce.

Content & Commerce

The initial focus of e-commerce on transactions was inevitable because it was the perceived path of least resistance. Why? Because managing transactions is easy compared to managing content. Unfortunately, price transparency was not enough to support content-poor commerce - it does little for the seller and provides partial and temporary value to the buyer. In spite of this vast industry-wide mistake, commerce is still the main driver for IT spending, as it should be, and is why there is such a close connection between content and integration technologies and XML.

There are two general drivers for IT spending on commerce applications:

• Increased efficiencies for better profit margins and competitive survival, and
• New channels to increase reach, and make it easier for customers to buy.

Projects that can address either of these goals still have an easier job getting funding than others. And, both of these require enterprise-level application and content integration.

Commerce & Catalogs

In commerce there are three types of sales interfaces:

Human. The salesperson.
Product. The "touch and feel".
Information. Typically, a catalog1.

There will never be a complete substitute for the first two interfaces. They work because they are direct - there is nothing in between you and the sales plea form another human or the physical contact of a product. All other interfaces are indirect - they need to convince you to buy based on information and its presentation. Historically, paper catalogs have had a monopoly on the indirect interface category, and have presented information to everyone as if they were the same, something a good salesperson would never do.

The new opportunities in commerce are almost exclusively related to the third type of interface. And taking advantage of them is dependent on information technology. There are two areas of opportunity:

Personalization. The industry will be fumbling with this for a long time before we get it right, but eventually merchandisers will learn how to make it a mostly positive experience.

Multi-channel promotion. This is where we can have more confidence there will be a near term payback as we are simply benefiting by extending reach.

Catalogs as Metaphor

Today, it makes more sense to think of a catalog as an abstract idea that is instantiated in a number of different forms, including: web, kiosk, mobile, print, and no doubt others. What these forms all have in common is the integration product data and pricing and promotional and descriptive content for presentation in a transactional context.

Catalogs are at the center of commerce, and their success is dependent on their content. This means integrating many types of content from a wide variety of sources. As we said last year (GR Volume 8 Number 5), catalogs are where "SKU data meets photographs, demographic data meets pricing rules, personalization information meets promotional rules, and configuration rules meet presentation... Catalogs are also where commerce meets complexity." This brings us neatly to...

XML & Integration

Most companies became interested in XML because they saw it as a path to application integration. And what is the most important driver for application integration? Commerce, of course, which means e-catalogs. E-catalogs done right are possibly the most complex undertaking your IT organization has ever faced.

The ideal e-catalog will be integrated with every system in your company that has any control over any kind of product and pricing data, customer service data, marketing data, inventory and shipping data, etc. The ideal catalog in B2B environments will also be able to communicate with supplier systems. We have just described half the problem. Besides integrating in content from a wide variety of systems, catalogs also need to process and deliver content via a growing number of delivery channels. The "e" in e-catalog should not mean web only and it should not mean electronic only. You don't all need to build the perfect e-catalog, but you will all need to integrate some subset of applications. XML can, and is, being used for many applications in many different ways, but more than anything else, it is at the center of the catalog integration challenge. The more XML is used, the simpler cross application and cross platform communications (and computing) will be. There is, in fact, a network effect here.

XML is of course not the solution to all catalog or application integration problems. Partly because of all the XML hype, there remain XML detractors who criticize XML for not solving all our information management problems. But, having a common syntax that developers all over the world understand provides immeasurable value. The lack of universal semantics is not a deficiency because it is an impossibility.

Certainly the honeymoon with XML is largely over as people realize that XML is not magic or even easy. It is just an indispensable and inevitable enhancement to computing. Without XML (or something else that did the same thing) we wouldn't be looking forward to eventual B2B integration. XML simply is the way companies will communicate across firewalls for all types of B2B integration and web services. This does not replace the need to parse and process and feed the data to appropriate software applications - there is still a lot of development necessary, especially with legacy applications.

IT Infrastructures & the Economy

There is no lack of interest or demand for enterprise content management as we have defined it. Indeed, even in the current challenging economic environment content management providers, as a group, are faring better than other types of enterprise software application vendors. This is in spite of the high price of content management applications, the unbelievably crowded market, the competition from in-house developed and open source solutions, and, last but not least, the confusion between the relationships between content management, corporate portal applications, application servers, et al. Content management vendors are having trouble closing large sales just like everyone else, but they have plenty of sales leads and most companies are continuing to learn about and investigate content management technology so they will know what to implement once spending policies loosen up again.

While spending on virtually all types of enterprise software applications has slowed, work on building, or re-building, infrastructures to support e-business is continuing. All those in-house developers (who don't have newly purchased applications to integrate) are busy deciding which architectures to focus on, and are laying the groundwork and doing the wiring and piping and making sure raw content materials can get from A to B and won't clog the filters or overpower the valves. One thing they all seem to have in common is the incorporation of an XML strategy for enterprise application integration and enterprise content integration.

Content management of the enterprise kind, and XML, both need to be core parts of IT infrastructures. This is not the same thing. XML is at least as important, and far more popular, for application integration than for content management. There is certainly a critical connection. But the reason XML is so important is that it greases many wheels and gears throughout infrastructures.

Recommendations

Now is a good time to make your own judgments about strategic IT initiatives and which technologies are critical for investment and which would be "nice to have" but are not critical. There are other important technologies besides those that we have focused on, but it is clear that whatever else you need to invest in, content and XML integration technologies must be included.

• Consider a content audit that will determine relative content value and which content could be considered a measurable corporate asset. This will help prioritize your content management needs.
  
• Most of you will benefit by basing at least part of your strategic IT planning around the idea of a catalog - this is the catalog as a metaphor approach. It will help you focus your IT strategy around your core business, i.e., selling and supporting your products or services. This approach works equally well for content management strategies and XML-based integration strategies.
• Make sure vendor solutions are compatible with the fundamentals of your IT infrastructure. Your strategy has to take into account continued vendor consolidation. Because content technologies and XML integration are so important, all enterprise software suppliers will incorporate some level of support for them. The resulting overlap means it won't always be easy to allocate which piece of software should perform a specific function.
  
• Be sure to include XML support in infrastructure architectures. XML point solutions are fine as long as the larger enterprise requirements are not ignored.

Many companies seen to be doing what they should, i.e., instead of sitting still, they are focusing development resources on IT fundamentals, in particular content technologies and XML-based integration - they are just moving a little more cautiously. When the economy does start to pick up again they will be ready to out-communicate their competition. We hope our readers are among them.

-- Frank Gilbane

1 We consider traditional TV, radio etc. as advertising vehicles not sales channels. TV shopping channels are another example of what we would call a catalog.