For the past several decades, publishing has grappled with its share of automation and new systems. Scars are evident and war stories abound. "Publishing is not an industry where technology is done for technology's sake," observes Andrew Weber, senior v-p, operations and technology at Random House, echoing an opinion both self-evident and widely shared. Yet as we move beyond the dot-com moment, if anything, the interaction of software and business processes across the publishing value chain is increasing. In a recent benchmark survey called "2002 Technology in Publishing" (carried out by IDL, on behalf of Taylor Made Systems [TMS], the developer of Bookmaster; BookMaster NA; and IBM), virtually all of the 90 respondents (96%)—representing trade, education, professional and scholarly, university presses, distributors and wholesalers—agreed that "increasing their operational efficiency is either important or critical to their financial success." Close behind, at 89%, was the desire for "supply-chain optimization."
Operational efficiency? Supply-chain optimization? These are not expressions one might expect in a discussion about publishing. Why is this? And what is the role of software?
Size Matters
With the explosive arrival of the World Wide Web in the mid '90s, the publishing value chain reacted no differently than other industries in being dazzled by Internet technology, reaching a fever pitch at the turn of the millennium. Even today, the Internet is rightly seen as the single most significant innovation for publishing.
The mere arrival on the scene of a new technology, however, does not guarantee immediate response. Innovation is a complex, meandering process. The full flowering of any innovation can take several decades until conditions are right. In the case of publishing, had the corporate structure of publishing not changed so radically over the past quarter-century, the issue of operational efficiency would be much less urgent. However, publishing today is the product of several decades of mergers and acquisitions. The increasing scale of a publishing company creates a huge difference as to its functioning. "As long as a company is small, you can still do things manually or with simple legacy systems," notes consultant Ken Brooks, president of Publishing Dimensions. "With a really large company, it becomes impossible. Cost control is critical." Given the size and scope of publishing companies and the complexity of the value chain, there is only one route to efficiency and optimization: Web-based software systems—software for the back office, for order processing, operations, sales and production information, customer relations, even for the "mystery" of creation.
"Once an acquisition is complete, you have to consummate the marriage and consolidate and integrate the systems—for operations and order processing as well as information about customers, products and sales," declares Warren Fristensky, senior v-p/CIO at John Wiley & Sons. "The key is to standardize and integrate, with common platforms and databases worldwide." Fristensky adds, "When I came to Wiley from the banking industry 10 years ago, 'publishing' and 'technology' were not used in the same sentence. Publishers would launch new products without so much as testing them." And, while it hasn't been easy decade, the last 10 years have seen some impressive changes throughout publishing.
In this vein, Pearson has spent some $50 million to assemble what is widely regarded as a state-of-the-art technology infrastructure. Covering more that 10,000 square feet in the basement of its office in Old Tappan, N.Y., this high-security facility runs 24/7, 364 days —a year (not Christmas) from a monitor-lined control room reminiscent of Star Trek. Humming in the hushed temperature- and dust-controlled air are row upon row of softly —lit, shoulder-high computers and servers, including the most recent IBM mainframes and Sun "boxes," which handle back-office, Internet and customer-related functions for the operations of Pearson's publishing businesses, from the Financial Times to Prentice Hall Education to Penguin Putnam, seamlessly linking the company's offices in Singapore, Tokyo, New York and London.
With support of the parent company, Bertelsmann, Random House chairman Peter Olson has made infrastructure and technology a multiyear, multimillion-dollar priority, on a par with the development of the multilayered publishing program itself. According to Weber, "The process really began in 1994—1995 at the former Bantam Doubleday Dell, with the decision to implement an SAP system. Peter Olson and Eric Engstrom realized that the mish-mash of legacy systems were getting in the way of moving the company forward. Of course, the fact that SAP had been adopted by the parent company was in the picture, but they had a purposeful way to move forward." The first phase, in 1996, was the implementation of the financial system; then, with that in place, early in 1997 came everything else, including order processing, customer service, production and inventory management. Weber notes that except for servers for e-mail and local data, all the company's technology infrastructure—valued in the tens of millions of dollars—has been moved to its distribution center in Westminster, Md.
A Rainbow of Processes
Infrastructure—whether hardware or software—is only that, a bridging structure, a support system. The key questions are: What processes are being supported? Who uses them? What is their business function? Is the software being considered effective? Is the company ready for it? Although it may seem surprising, if not altogether contradictory, perhaps the most important consideration in choosing and implementing new systems is that it's not about the technology, it's about the people. Or as Susan Driscoll, former COO of Bedford, Freeman Worth put it, "It's not about software, it's about business processes."
This is especially true as the tasks that software touches encompass more and more of what publishing is all about. To be more precise, software systems now support finance and other back-office functions, as well as sales and distribution, materials management, warehousing, fulfillment, royalties, supply chain, customer-relations management (CRM) and digital asset management (DAM). Software is also increasingly playing a role in creating the intellectual property itself: product planning, project systems, content and work-flow management, contributor management, digital rights management (DRM), even publicity management. The foregoing, of course, represent a very rich menu, and no single publisher is anywhere near having integrated systems with all these capabilities. At Random House, Weber notes, "The original mantra in 1994 was, 'We're building a Taurus, not a Cadillac.' It's not going to be everything for everyone, just the basics, and we'll build from there."
The achievement of a totally integrated system with comprehensive functionality that is fully sensitive to the needs of each aspect of publishing is, at best, an evolutionary process. Software providers, however, are doing their part by continuing to improve their systems in both the range of what they do, and their flexibility.
The original offerings of Vista Computer Services, for example, adopted by a number of leading publishers over the past decade for financial and back-office functions, are morphing into a new system, the very name of which describes a grand vision to meet the full of range of publisher and publishing value chain needs: "author2reader." Even a quick look at its structure gives a sense of how many different publishing functions author2reader is intended to support. This includes: a single common "authentic" database for all customer and product fulfillment, production, title information, marketing and warehouse management; centralized Web access by means of a common portal that allows everyone in the publishing company to click through all the data and applications relevant to his or her function; consulting services that permit a publisher to analyze current operations, as well as services to guide the implementation of the Vista product itself.
Moreover, whether the company is Vista, Adobe, the DRM provider SealedMedia or Siebel Systems, a developer of customer relations management tools, another key product strategy is "modularity." Starting from a core set of solutions, these providers allow customers to build additional functionality into their systems, functionality that can work (interoperate) with what is already there. As George Lossius, CEO of North American Operations for Vista Computer Services, notes, "Fifteen years ago, there was much less demand for systems to talk to each other." Again using author2reader as an example, as business needs dictate, publishers are offered the option to add:
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a comprehensive rights & royalties solution;
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warehouse and Distribution through a fully automated warehouse management system;
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tools for managing and distributing product information compliant with ONIX, the new metadata standard that allows publishers, distributors and bookstores to exchange bibliographic and marketing information via computer using a common language;
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prepress, editorial and production management; and, harking back to Vista's original software product,
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an integrated financial system.
As Usual: Caveat Emptor
Unfortunately, no matter how reasonable the idea, seductive the sales pitch or marvelous the vision of a smoothly operating company whose problems have magically vanished, the devil is in the details—human and technological. Long before the work of implementation, it must be recognized that every publishing company—from author to printer to distributor, retailer, final customer—is different. Each company has its own unique technology foot- print composed of legacy systems, "spot" applications and enterprise-wide systems. These large company-spanning systems (known as ERP, or enterprise resource planning systems), like SAP or BookMaster, are being implemented in stages across a wide range of functions in companies like Random House and Pearson; the latest Oracle ERP is in the process of being brought up at McGraw-Hill. Newer "spot" software solutions would include a system for royalty management such as Alliant from REAL Software Systems, recently installed at Houghton Mifflin. Legacy systems may be home-grown or acquired through mergers. Added to this mix are software systems whose companies have gone out of business.
As PW highlighted in its New Year's forecast (Jan. 7), publishers are learning a lot about the business fragility of new technology companies. John Wiley & Sons was a little ahead of the curve. A couple of years ago, the New York—based publisher found itself holding the bag after Mitsubishi (the owner) pulled the plug on a technology vendor to whom Wiley had just outsourced the task of putting its first major Web product, Wiley Interscience, online. Wiley stepped up to the challenge of bringing the whole operation in-house. As one executive put it, "Now that was a learning experience." Although based on Wiley's STM journals, InterScience is actually just the first step in a larger publishing strategy through which Wiley's online customers will be largely indifferent (product agnostic) as to whether the content they are acquiring comes from a journal, a trade book or a textbook. In fact, according to a recent study commissioned by Infotrieve, a commercial document delivery company, the "article economy" (individual journal articles, book chapters or conference presentations, delivered electronically to customers on a pay-per-view basis) already represents a marketplace of $1.6 billion.
Learning the Hard Way
The larger issue, however, is that as a result of the unique situation at each company, a publisher must examine very carefully the fit between potential providers and its own needs. Certain providers who have claimed for a number of years that their systems can, or shortly will, handle all publishing functions have yet to make good on their promises. (Despite its worldwide reputation and many Fortune 100 clients, SAP is frequently mentioned by publishers in this regard.) In this long interim, publishers have attempted, with the help of expensive consultants, to "customize" these products to fit their particular processes. "I have often spoken to SAP about our specific needs," Wiley's Fristensky observes, "And on topic after topic, there wasn't much there. Of course, when a company is desperate, they go for a big-bang solution—install an ERP covering a lot of functions, throw the switch and hope they get it right all at once." As Ken Brooks points out, however, "Big bangs leave big holes." Rather than a real solution, major companies have found themselves with cost overruns, unhappy employees, system breakdowns and angry customers.
Yet there is another way to see the process. "The problems we encountered at the beginning are typical of any large-scale implementation, not specific to SAP," explains Weber. "We adopted a philosophy of a 'sacred' start date. In our view, maintaining the old systems as a functioning back-up only delays the inevitable—that everyone has to use the new system." This philosophy is not universally shared throughout publishing, but given its size, Random House has unique issues. "In our case," Weber continues, "You are talking about replacing the basic systems built up over 25 years by every business unit" in what was then a much smaller company. Admitting that the implementation process on occasion was "painful," even "ugly," Weber notes that the company managed to survive this "cold turkey" approach and is seeing the benefits of a single system. Weber says, "The support from Olson was great. He completely understood that although the systems were in place and the switch was thrown on February 1, there would inevitably be problems beyond that date. And he provided both the financial support and the leadership that allowed us to resolve them."
Vast as the range of possibilities are, the key to software selection rests on accurately answering a few key questions. What is mission-critical to the success of our company? What changes will bring significant ROI? Does the software do for us what it says it will? The reality of software selection and adoption is a kind of calculus in which publishers have to balance needs vs. cost, the function (or dysfunction) of their current systems vs. the pain of implementing new ones. This is a difficult, ad-hoc process, and every publisher is different. The best way to understand the state of the industry is to examine a range of specific cases.
Customers to the Fore
One of the "hot" Internet-based software solutions in publishing—and the corporate world generally—is CRM, customer relations management. At the high end, such as Siebel eMedia 7 from Siebel Systems, CRM offers a more centralized, efficient and consistent way to manage all the data about customers, products and marketing. And as publishing houses grow in size and scope, CRM also provides a tool for the sales force, which can be overwhelmed by the exploding number of products and customers. "CRM provides a tool for a sales force with large portfolios, allowing them to understand both the product and the customer better, and to more easily create bundles that are of particular value to a given customer," explains Margaret Molloy, segment lead, eMedia at Siebel. "By automating many of the processes, CRM also allows the reps to spend more time with the customer and less time on administration and report writing," she adds.
"The idea of installing a new CRM system had been in the works for quite some time," notes Reid Sherline, v-p of electronic media and publishing at college publisher Bedford Freeman Worth." As a smaller publisher, we have a smaller infrastructure, so the idea of replacing an older sales force contact-management system with true CRM seemed to make sense." Sherline says, "We launched about a year ago, and immediately ran into the textbook problems: trying to do too much, moving too fast, without buy-in from the salespeople. As a result, we have slowed way down, and are doing much better." From a full-scale implementation, BFW has ratcheted back to a few controlled pilots in the areas where people have expressed readiness. The first three or four of these have been successful, and the number of pilots should double over the next year. Sherline estimates that once the system is stable and the ROI has been demonstrated, "hard-core CRM should be introduced in about 18 to 24 months."
Unlike CRM, which is based on needs faced by all businesses, DRM, the imperfectly named "digital rights management," is publisher specific. Promising both protection of digital content online and a range of flexible business rules, a couple of years ago DRM attracted the attention of publishers of all stripes, who were terrified by the open-ended perils of the Internet. A field that has seen a number of fairly prominent companies, such as Reciprocal, flame out altogether, DRM is good example of the importance of understanding both users and the underlying publishing processes, not just the promises of technology. In this case, publishers' hesitation was eminently reasonable. This hesitation, along with a deplorable lack of standards that has made the user experience miserable, has resulted mostly in an endless stream of articles in the press about how "e-books are dead."
E-book Success
In fact, professional and scholarly publishers are actually doing increasingly brisk business on the Internet. Nonetheless, there are still many kinks to be ironed out with DRM, especially for trade publishing.
Although, in the late 1990s, publishers were pleased with the vision of sending protected digital content onto the Web with flexible business models in terms of price or usage terms (e.g., print-enabled, no-printing, view for one day only, download for $20, etc.), there were real obstacles. Vendors offered only proprietary, end-to-end solutions in which publishers had to make a bet in a difficult environment without any standards, and in which they would have to get into bed with someone who might control the essential pipeline for getting their content to market. It quickly turned out that customers were anything but pleased at having to download complex software and then go through all the steps involved in securing and opening their articles or e-books. And, on the vendors' side, in a triumph of sales over marketing, the strategy was to drive toward comprehensive and exclusive contracts with content owners well before the marketplace was ready. "The public was interested in obtaining content online," explains SealedMedia's co-founder and current CTO, Martin Lambert. "But only if the process was simple, as in the case of downloading public-domain content."
While they take different paths, both SealedMedia and ContentGuard are guided by an understanding of the need to make the technology fit the processes of publishing and make the experience good for the user.
ContentGuard has pulled back from being a solutions provider altogether. The company is now focused on satisfying what CEO Michael Miron calls "an acute need for standards," in a online environment where "the threats are real." ContentGuard is driven by a vision that DRM should be used easily for all formats and all media. Thus the company's strategy is to make its proprietary rights language, XrML, openly available as a standard. To that end, early in April, ContentGuard announced that it is "delivering on its promise to turn XrML over to a global standards body." Miron explains, "We are convinced that OASIS, an international standards consortium focused on developing interoperable specifications built on public standards such as XML, is in the best position to oversee XrML's development." The initial reaction from publishers and vendors and other media and standards groups, such as W3C and MPEG-21, is positive. SealedMedia's Lambert remarks, "We are interested, as long as it is truly an open standard, and there are no penalties or fees for future use, like [the Internet protocols] TCP/IP or SMTP." According to Miron, ContentGuard will profit by working with content owners to create business models and market approaches.
SealedMedia offers specific DRM solutions. It has designed software that separates rights information from the content itself, and that works with a wide range of content formats, including PDF, Word, HTML, JPEG, MP3 and Quicktime. In addition, the software offers three key features: roaming, recovery and revocation. Users can "roam" and still access the content they have acquired from wherever they are and whatever device they are using; they can recover their content if a server or machine goes down; and content owners can revoke the ability to use the content. Moreover, SealedMedia has developed its product so that it works with the leading content management software from companies such as Documentum and Vignette.
Focusing on "Beyond"
Important as they are at the moment, "operational efficiency" and "supply-chain optimization" are hardly values that will set publishing hearts aflutter for very long. New technology brings with it a double benefit: helping you do what you do better and allowing you to do things in new ways. In directing products toward the publishing industry, a number of forward-looking software companies—including Adobe, IBM and Siebel—are also focusing on this larger vision of innovation.
Adobe is aggressively expanding the capabilities of its nearly universally used PDF format. "The truth is, people don't know where the publishing business is headed," says Gary Knowlton, product manager for Adobe Acrobat. "Is it still traditional print, or print on demand, the Web, cell phones, beyond? Ultimately, the marketplace will choose what it likes," he adds. "But whatever it may be, we want PDF to become the universal format." This is something of a jump for a file format whose original purpose was to preserve exactly the look and feel of a designed page, one of whose principal values was its immutability.
As Knowlton observes, however: "You don't use something like XML or PDF for itself, you use it to do something. Our new products will extend and open the uses of PDF and allow it to become the basis of an integrated workflow, used for the creation, management and delivery of multimedia-rich content from publishers." Curiously, it turns out that a PDF file is a special form of relational database, so that reviewing, editing, tagging and searching PDF-based content files is already in the technological cards. "Moreover," says Knowlton, "we don't want to create happiness for one part of publishing at the expense of another. Our vision is a product that adds value across all the processes." Some of the changes will include expanded multimedia support within the PDF format, and also supporting direct-to-plate technology in the prepress industry.
Coming from a more corporate direction, IBM's new Content Management offerings include products that permit enterprise-wide document management, as well as the management of unstructured data such as Web content and computer-generated output, which, according to Brett MacIntyre, v-p, content and information integration, "is being digitized by people around the world at an amazing pace."
To round out its offerings, last month IBM announced a new version of its DRM software, re-positioned as a key component of what IBM calls its Digital Media solutions architecture. The goal of this suite of tools is to provide customers from diverse industries—from health care and finance to media and entertainment—with an information infrastructure that enables them to access, capture, integrate, manage, analyze and securely distribute all forms of digitized content. Obviously, these describe the basic processes of publishing, particularly e-publishing.
Over the past year, IBM has previewed its DRM offering, Electronic Media Management software (EMMS), at several publishing meetings. Since it was primarily oriented to audio files, it met with a less-than-clamorous response. The recently released EMMS version 2 supports a broad range of media types, including text, image, video and audio files. In addition, the new version allows for the delivery of secure content to a broader range of devices, including PCs, PDAs, CDs and mobile communicators. The capabilities of EMMS have already found customers in the e-book marketplace. Thierry Erethes, president and CEO of the French e-book company Mobipocket, says, "IBM's approach to common standards allows us to integrate new EMMS security functions with our OeB reader technologies, extending EMMS secured content to a wide range of PCs and mobile devices, including PDAs and smart phones." Similarly, Jill Thomas, CEO of ION Systems, notes that her company has installed "the entire EMMS software solution to both sell secure e-book formats from our GalaxyLibrary.com Web site and to offer EMMS mastering, hosting, retail and clearing services to content owners."
A New Tool
Stimulating as it is to consider all these new software systems, publishers are only too well aware of the cost—both financial and human—of integrating new tools into the ongoing day-to-day processes of publishing. "After all," Siebel's Margaret Molloy observes, "The end game is to make money." Even for the largest and most financially able companies, huge new systems represent a tremendously difficult project. Supposing there were, however, a tool that could effectively integrate a variety of diverse systems, old and new, into a relatively smooth-operating whole?
At the beginning of April, Siebel Systems announced the launch of what it claims is just such a tool, "the first standards-based, vendor-independent" solution for integrating a company's diverse software application programs: the Universal Application Network (UAN). According to the company's chairman and CEO, Tom Siebel, "Rather than build a proprietary solution, we responded by partnering with industry leaders to create the universal/collective/widespread standards-based business process integration solution... that enables customers to choose the (software) applications that best meet their business needs." While it may be a mouthful to say or even think about, the new product has met with some positive initial response. One of the benefits is that customers are no longer locked into a single vendor's proprietary product and integration architecture. Commenting on this point, Eric Austvold at AMR Research observes: "Siebel Systems is leading the way and SAP, Oracle and PeopleSoft would be wise to address their clients' integration concerns as well."
Stepping back one more time, one asks: Why must publishing bother with all this? What will the ultimate benefits be? Over the past few years, and not necessarily to their delight, publishers have been hearing that while content may still be "king," the traditional physical manifestations of content—books and journals—are no longer exactly what the business of publishing is about. Customers will always want content, but in a context, increasingly with added value, such as user-customized products, Web links, multiple format delivery, early advisories about new products and the like.
With all that software systems are allowing publishers to do in order to hone their businesses, improve their efficiency, and optimize relations along the value chain, the real benefit may be this: the long, slow, painful but essential process of moving the publishing industry from a product to a service modality. This change is the software revolution.
