Enterprise content management (ECM) is a hot market in IT, because corporate executives are pushing hard for new ways to draw on customer and market data to increase revenue and strengthen customer loyalty. In addition, many companies are utilizing ECM systems to help document internal controls to comply with regulatory requirements such as those included in the Sarbanes-Oxley Act of 2002. It's little surprise that Vignette has continued to amass consistent earnings and revenue growth in recent quarters. But there are other factors at play behind the way the Austin-based ECM software provider has repositioned itself, according to Vignette President and CEO Thomas E. Hogan. Hogan met with Computerworld to discuss the company's business strategy and trends he sees in the market.
How is Vignette's business performing right now? What are the key areas of strength?
There's been a fairly steady evolution over the last 18 months. Enterprise content management has gone from a category of interest to a state today where I'd describe it as a strategic priority. It's being driven by two fundamental business catalysts -- "What do I need to do to render greater value, either in terms of greater revenues, stronger loyalty, etc." The second driver that's not part of the profit-expense dynamic is the compliance-driven need to understand information flow within the enterprise. It's not just Sarbanes; it transcends the industry. An easy example to cite is HIPAA in the health care industry.
If I were to handicap its full maturation, [ECM is] about halfway from where it was two years ago to where we expect it to be in two years.
What are some steps that Vignette has taken to reposition itself in the market?
I took the job as CEO in the summer of 2002, so almost exactly three years ago. At the time, we were predominantly a Web content management company, a good place to be five years before, during the dot-com boom. But we recognized that that phase would quickly pass and there would be a greater focus on how you would leverage information to drive your business.
You've got to be able to manage all forms of content, including structured content in a classical relational database. And you need to be able to contemplate and manage the world of unstructured content, like audio, video, HTML, text, etc. You've got to be able to address all of that content. That fueled our acquisition of Tower Technology about 18 months ago.
Having the knowledge and control of the information is important. If your employees, business partners or customers can't access the information at a time or place that's convenient to them and if you don't have a filtering mechanism so they can either shop, purchase or perform their duties as an employee, then who cares? We can't just deliver information, we have to make it contextual.
How does Vignette help customers address regulatory compliance issues?
There's this concept of sustainable compliance. If you back up the hands of time a few years, Enron hits, everyone gets into mass panic. So what happened is a cottage industry was formed and boutique firms were formed to build front-end compliance solutions that external auditors or compliance officers thought were pretty sexy. Fifteen or so firms experienced hypergrowth. A bunch of big companies like Vignette had to certify compliance with [Sarbanes-Oxley] Section 404 by the end of '04.
My belief is that [companies] got certified, made it through the year and took a deep breath. As they look to '06 and beyond, people are asking questions like, "How can I automate that workflow to ensure the accuracy of what's been reported?" This is starting now and will occur in a wave of spending in '06. It may peak in '07, but it's certainly not happening in '05.
How is Vignette helping customers address compliance-related risk management issues?
Vignette's imaging system shows outstanding invoices, patient records and combines all sorts of health care information together. It also provides secure electronic repositories instead of having UPS driving around town with all of your records blowing around the streets.
About five months ago, a truck driving through Cleveland stocked with [medical] patient records spilled a bunch of boxes out on the interstate. It's absurd that in the year 2005, health care information management systems are as antiquated as they are. Do you walk into a Bank of America branch and see a wall full of folders that a branch manager reaches for with customer information? No.