Digital Asset Management Predictions For 2011: The DAM Industry
As 2011 approaches, in this special feature, we make some predictions about trends and forthcoming developments in the DAM market for the forthcoming year. In the first of two articles, we look at DAM industry predictions, the second will examine technology trends.
Key Themes for DAM In 2011
The key themes for 2011 are expected to be increased convergence, competition from other related solutions and the impact of the wider economic situation. While 2010 was the year that Digital Asset Management finally became a more mainstream technology and many providers enjoyed a bumper crop of new clients and increased revenue, this means there will be more vendors actively looking to gain a slice of the action.
The sector is already over-crowded with numerous competing solutions and limited differentiation between them. 2011 could signal a contraction in the number of pure play DAM vendors or any other provider who is half-hearted about their participation and unwilling (or unable) to invest to keep their platforms current. Another important factor will be the agility of vendors and their ability to rapidly adapt their products and marketing strategy as a result of industry trends and fast moving changes in both web and media delivery technology.
DAM Industry Convergence
At present, the DAM sector is characterised by three main camps: Enterprise (proprietary), SaaS and Open Source – some may argue about the definitions of each but like it or not, this is how many clients view the options. There has been some cross-over such as Enterprise vendors offering hosted services and/or Cloud based editions and Open Source vendors using SaaS models as a monetisation strategy. In 2011, we expect increasing convergence as each of those groups compete with each other by offering some or all of the benefits of the other. By 2012, the lines will become more blurred as a result.
It seems likely that Enterprise vendors are going to be under more pressure than anyone else and may lose revenue to SaaS and Open Source for either convenience and/or cost reasons. This may require them to re-align their business strategy as a result and either differentiate or actively participate in these competing arenas (in one form or another).
The progress of the Cloud to deliver software to end users will gather pace in 2011. As cost pressures on customers mount, the Cloud concept offers clear cost advantages and a feasible method for avoiding high levels of investment into Enterprise technologies and the infrastructure to support them.
What might limit the success of Cloud vendors is if some major catastrophe occurs such as data loss, security breach or lengthy outage. At the more risk averse end of the market, these possibilities might contain the market for Cloud based DAM or DAM SaaS but the convenience and flexibility as well as the press attention (both IT and mainstream) may convince increasing numbers of customers to worry less about the risks in 2011.
In the Open Source DAM space, we expect to see the more Enterprise friendly DAM or ECM vendors (especially Java and possibly .NET) being acquired to enable Enterprise players to offer an open source product without needing to open up their existing solutions.
Another trend noted below is the fiscal tightening occurring in the public sector (which is still a major DAM market). There are already moves in this sector to make greater use of open source technologies and this will be strengthened as a result of the perceived cost benefits of open source. While the actual costs argument may not always be as clear cut when measuring the true TCO (Total Cost of Ownership), open source does facilitate easier in-sourcing and for cash strapped IT departments looking to protect their budgets, it may present a compelling option. It is clear from some of the press and PR released by Enterprise vendors that they are concerned about this threat and some may choose acquisition as an expedient method of regaining control in this space and reducing the impact upon their existing markets. This trend would be confirmed by the other acquisitions larger vendors have made in previous years. It remains to be seen how many open source vendors will consent to being bought up, however, especially those that believe momentum is on their side.
Industry Consolidation and Niche Specialisation
The DAM sector is too highly fragmented to be sustainable and there are literally hundreds of products and vendors. Although the DAM market is growing, there are too many DAM solutions that are not remarkably different from each other to survive so it seems like that many will fail or abandon their own product in favour of an alternative platform. This trend may commence next year but will not be fully apparent until 2012.
Some smaller vendors may see the writing on the wall and decide to defend their position by focussing more on a specific niche areas such as video, print, publishing or audio. As the back-end becomes increasingly commoditised as a result of the Cloud, product APIs and industry standards like CMIS or dominant technologies like SharePoint, some vendors may also specialise on a specific element of DAM like transcoding or metadata instead of a complete product.
ECM & WCM Competition
There have been an increasing number of ECM vendors now offering DAM modules and product options. We expect this trend to continue and ECM platforms to be a viable platform for Digital Asset Management in 2011. This will place further pressure on pure play DAM vendors as end users seek to consolidate costs and the attractions of a single platform solution are more difficult to resist. Some of the media management facilities offered by WCM vendors now touch directly on points offered by DAM and there may be increasing convergence between these sectors through both partnerships and direct competition.
Although SharePoint is technically an ECM solution, it deserves a special mention because of the momentum it has in the corporate IT department market. We predict many prospective DAM solutions may be either usurped or passed over in favour of a SharePoint implementation – especially those vendors that have nailed their colours to the Microsoft mast by implementing .NET based solutions. As such, we see a trend for an increasing number of tools which can exploit SharePoint and enable it to do a better job of DAM as well as integration with it.
File Sharing & Cheap Alternatives To Full DAM Solutions
Coming up from the lower end of the market are solutions like Dropbox and Box.net which allow users to share files more easily. As well as this are free or low cost services like Google Docs. None of these are what might be called ‘serious’ DAM but often they provide the basic functionality users need. We see an increasing number of add-ons and enhanced functionality that will persuade some users that this is a good enough option that requires minimal outlay or implementation effort. Some vendors such as Box.net are also targeting the Enterprise market and they may have success as a commodity service alternative to any of the main existing DAM options.
Some macroeconomic factors cannot be ignored when considering the state of the DAM market. The current economic problems facing the United States and Europe will continue to have an effect. In the last two years, the Content Management sector has avoided the worst of these issues and could even be said to have prospered, but a question remains over whether companies will continue to invest in productivity enhancing technologies in 2011 and beyond. 2010 was a lucrative year for DAM and we expect 2011 to be similar, but at some stage in the year either the wider economy must improve or funds to continue to invest will cease to be available. The ROI case will be especially hard to prove for replacements to DAMs that have been developed in the last five years and we expect more emphasis to be placed on leveraging existing technologies and the appetite for wholesale upgrades to be much lower as a result.
Declining Public Sector Opportunities
In Europe there is widespread tightening of fiscal policy and reduction in public sector expenditure. While the situation is different in the United States which still has a stimulus programme, this trend cannot continue indefinitely and the funds may not necessarily be used for DAM systems but on more voter friendly projects such as infrastructure and core services. The public sector accounts for a significant proportion of the DAM market, especially within the preservation, heritage and culture sectors. There are likely to be less of these requirements in 2011 and more competition as the stakeholders are required to prove best value was obtained. If you are a vendor operating in this market, expect longer and more arduous RFPs and far greater scrutiny during the bidding process in 2011. This trend might also be extended to suppliers of goods and services to the public sector, for example, construction or outsourcing services.
Increasing Significance of International Markets
The economic downturn has hit the Northern Atlantic nations hardest and other regions such as China, India and South America have returned to solid growth. The implication for the DAM industry is that many new customers may now originate from outside what would have been core local markets. This may also have technology implications such as greater relevance for fully localised interfaces and metadata support. Some local vendors who have a presence in these emerging regions may also be able to exploit this advantage and this might be another method by which they differentiate themselves to survive.
Probably the greatest opportunity for DAM remains with companies that have yet to progress beyond shared folders and email (of which there are still many). Amongst many of the prospective end users we speak to, however, DAM is still perceived as predominantly a storage technology even though that is just one aspect of what makes DAM so essential in a digital media era. The DAM industry must address these challenges or other products may exploit this untapped market by offering an alternative to DAM that is simpler and more relevant to customer needs.
With all that said 2011 promises to be an exciting year for Digital Asset Management. As we have discussed, there are many challenges for existing companies operating in the DAM market but this is a sign that the industry is reaching widespread acceptance and becoming a mainstream technology that end users recognise they need to invest in.
By Naresh Sarwan, Senior Editor, Digital Asset Management News.