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Thoughts on the Ex Libris and Endeavor Merger 2006 November 22

I’ve been asked by a few people, both inside of TCNJ and outside of TCNJ about what this merger between Ex Libris and Endeavor means. Although I’m on the Endeavor User Group Board, I don’t really have any more information then anyone else at this point. That said, I have been following the ILS industry and Endeavor rather closely even before being elected to the Endeavor User Group Board approximately one year ago, so I might have a slightly more informed perspective then some people that don’t follow the ILS market-place. I should point out that these views are only my speculation based on publicly available information and does not necessarily reflect the views of the Endeavor User Group Board or anyone else for that matter.

I really don’t know much about Ex Libris as a company or what their corporate culture is. However, since Ex Libris was bought less then a month ago by Francisco Partners (the sale finalized on 1 November 2006) even if I did, I’m not sure how relevant it would be with all of the changes going on.

For the immediate future, I don’t expect to see any major impact on the core ILS products (Aleph from Ex Libris or Voyager from Endeavor). In fact the press release (pdf) confirms that the upcoming new releases of both systems in 2007 is going to go forward as planned. While the two systems will continue to go forward, I think the combined resources has a strong potential to make both products better and I assume we will see some of the same features and functionalities appearing in both systems. Will this eventual lead to one ILS product? It is possible, but I wouldn’t bet the farm on it — and if it does happen it won’t be anytime soon. Migrating so many customers at once (including large national libraries and consortia) is just not all that practical. It also would make it an ideal time for libraries to investigate other ILS vendor and erode the combined market-share of Aleph/Voyager. As features and functionality come closer in line, it will probably become more feasible and it may happen at that point, but as a Voyager SysAdmin I’m not going to start reading Aleph documentation anytime soon.

What will happen to the other “add-on” product lines is another issue. According the press release FAQ (pdf) the current mangement teams of Endeavor and Ex Libris will “work closely in the coming weeks to complete the product road map for our combined product portfolio…” I think this makes it clear that some products will be phased out and/or combined. I won’t speculate on which ones, because I don’t know enough details about the internal contracts and other deals that the two companies have with customers or technology partners. I think, however, there will be some pretty obvious candidates to head to take to the chopping block where there is product duplication.

Since I am on the Endeavor User Group Board I have been asked what I think the future of the Endeavor Users Group is. I just don’t know. It is too early to speculate. The various Ex Libris user groups are organized in a different way then the Endeavor User Group. Time will tell what happens in the long term, but in the shorter term, the upcoming user group conferences are still going to happen. I imagine we will see some new faces at them though!

One common question I’ve been asked is “Was I surprised?” The answer is not at all. I was a little surprised I didn’t hear more rumors or speculation in the days before the merger was announced, but I think the writing was on the wall that Elsevier wanted to find a new home for Endeavor. There are many reasons for people to have been speculating about this. One that was obvious to me is that when Elsevier purchased Endeavor the talk was about how they wanted to leverage Endeavor’s digital library-related products. Once Endeavor stopped developing some of these on their own and partnered with other companies (TDnet for example), it seemed that one main reason for Elsevier to own Endeavor was gone. Also, the way the ILS market currently is, some shake-up was bound to happen (and I wouldn’t be surprised to see more shake-ups soon). ILS vendors have to fight over smaller pieces of the pine with more and more investment. The total return on investment is just not that great and since, as the press release FAQ says “from an Elseiver standpoint, it was decided that Endeavor and its customers would be best servers by an owner who is focused on the technology sector.” Elsiever (as a whole) is not focused on that sector, thus with the way the ILS market is, Elseiver selling off Endeavor makes sense. Even though I wasn’t surprised, I still owe Andrew Pace a cold beverage since he predicted while we were at LITA that Endeavor would be sold off soon.

Will this be a good thing? I don’t know. With a private equity company such as Francisco Partners taking over, the long term future of the corporate structure is uncertain (not that it wouldn’t be with any other company taking over, but I think it is more so with a private equity company.) The Strategyst Blog says that “Private Equity companies have a 4-5 year timeline to recoup their investment. At that time, there will be some exit event – another sale, an IPO, etc. This means that code base will change hands again, which could mean another change in strategic direction.” If this is correct, I’ll probably be making another post about a sale in 2010 or 2011. However, I do think for Voyager customers this will be a good thing. I think we will see more investment and enhancements in the core ILS product – thus making it better. I think the same is probably true of Aleph. For sites that have purchased the other ad-on products, until that shakes out, it is hard to say. It may very will be that products some sites are currently using will be phased out. If you like such a product and have spent a lot of time and energy customizing it, you probably won’t be too happy when this happens. On the other hand, if the combined company takes the best products and features and because of scale can invest more money into them, we may end up getting better products because of the merger. Just because a company is larger or can invest more money, however, doesn’t mean the product will really be better, but customers of Endeavor or Ex Libris products can hope.

I don’t think I really clarified anything, but so many things are still up in the air. The combined company is supposed to make announcements about product lines and road maps at ALA mid-winter, so I think we will have a better picture of the future at that time.