Blogs as Disruptive Tech
How weblogs are flying under the radar of the Content Management Giants
by John Hiler
Going to the New York Internet World conference last December felt like visiting a morgue. As a New York based software CEO, I felt obliged to show up. My company WebCrimson makes blogging software, so I stopped by to see if the competition was doing anything interesting. There weren‘t any other blogging vendors at the conference but there were a good number of Content Management Software (CMS) vendors there, selling software for anywhere between $10k - $500k a pop!The convention center was practically empty - after the go-go years of the Internet bubble, it seemed crazy to see so much convention floor space go unfilled. I stopped by one of the CMS booths to pick up some brochures and see their demo. The sales guys instantly descended on me, anxious to make a pitch. I was at the conference with a client of mine, so I pointed them in his direction: after all, if he could get a better deal with someone else‘s software, I was more than happy to give him my blessing. The head Sales Guy started grilling my client: how many pages did the site have (in the thousands!), how many users updated it (almost ten!). You could hear the Sales Guy‘s mental cash register ringing up dollars signs as he went straight for the close: "And what are your editors using to update all those pages: Dreamweaver or Frontpage? Or maybe you built your own homegrown CMS?" My faithful client didn‘t miss a beat. "Actually, have you heard of weblogs?" he asked the Sales Guy. You shoulda seen this guy‘s face fall - it was like he‘d been hit by a truck. "Yeah," he admitted, "So you use blogging software?" "Yeah pretty much," came the answer. "It pretty does most of what I need. There are a couple things you described that I could use, but I can‘t justify that sort of outlay when blogware hits most of my specs." That was really my eureka moment: my first realization that content management was screwed.In more technical terms, I realized that Content Management was starting to wrestle with what Clayton Christensen calls The Innovator‘s Dilemma: the inability of successful companies to adapt to a new, disruptive technology. WEBLOG SOFTWARE: THE LATEST DISRUPTIVE TECHNOLOGY Watching the Content Management Sales Guy on the convention floor, it was pretty clear that he‘d faced this situation before: a potential client who was unwilling to pay full price for a mid-range CMS solution. So he did what most traditional companies do: he walked away from the revenue opportunity. He was doing exactly what he‘d been trained to do... which is exactly what convinced me that Weblog Software was a disruptive technology that would eventually end up putting his company out of business. As a provider of weblog software, that‘s a self-serving prediction... but after reading Clayton Christensen‘s book, I‘m more convinced than ever that we‘re onto something here. I‘ll map out my proof - but first, let‘s take a look at an industry where Disruptive Technologies have already run Big Companies out of business, and see if we can‘t draw some parallels to Weblogs and Content Management. THE INNOVATOR‘S DILEMMA: PC‘S VERSUS MAINFRAMES Ok, imagine you‘re the VP of Sales for IBM in the mid 70‘s. Your sales force is raking it in selling Mainframes to the Fortune 500. Then you start hearing rumors about a new type of computer that runs on an Intel microprocessor. These computers sell for a few hundred bucks each in the form of kits that the user has to assemble by themselves at home.Are you worried? With perfect hindsight, it‘s easy to answer that question. But at the time, of course, IBM wasn‘t hugely concerned about these personal computers - they didn‘t end up launching a PC until six years later, in 1981. Clayton Christensen points out why: Rational managers can rarely build a cogent case for entering small, poorly defined low-end markets that offer only lower profitability.
It really hits home if you think of yourself as working in Sales. If you can choose between a 10% commission on a million dollar Mainframe, or the same percentage on a $10,000 order for PC‘s... which product do you think you‘ll push to your customers? Or suppose you run IBM‘s R&D department. You hear about this new computer technology that‘s different from mainframes. You have a rough intuition that it‘s something interesting, but when your boss asks you why you can‘t articulate it. Clayton Christensen is all too familiar with that issue as well: "Markets that do not exist cannot be analyzed: Suppliers and customers must discover them together." DISRUPTIVE TECH: NOT USEFUL TO YOUR CURRENT CUSTOMERS Lower sales commission isn‘t the only reason you won‘t be pushing PC‘s to your customers. Your biggest customers are banks and corporations: not the sort of hobbyists who were clamoring for PCs in the mid 70‘s. If IBM listened to the needs of its bank customers, for example, it‘d never come up with the idea for the PC. Clayton maps that out in the first chapter of his book: When the best firms succeeded, they did so because they listened responsively to their customers and invested aggressively in the technology, products, and manufacturing capabilities that satisfied their customers‘ next-generation needs. But, paradoxically, when the best firms subsequently failed, it was for the same reasons--they listened responsively to their customers and invested aggressively in the technology, products, and manufacturing capabilities that satisfied their customers‘ next-generation needs.
That‘s actually where the title Innovator‘s Dilemma comes from: This is one of the innovator‘s dilemmas: Blindly following the maxim that good managers should keep close to their customers can sometimes be a fatal mistake.
I‘m pretty convinced by Clayton‘s logic, but there‘s one more reason why IBM might be reluctant to enter the PC market. WHY ITS HARD TO CUT PRICES TO MATCH DISRUPTIVE TECH If you‘re IBM, selling to the Fortune 500 means certain things. First, you need to schmooze with your clients while they decide which computers to buy. Given how expensive computers are, that probably means you‘ll be wining and dining your customers for months and months: that‘s what sales guys mean when they refer to a "long sales cycle". And even though IBM picks up the bill for dinner, the client ends up paying for the dinner and the sales team‘s salary down the road. There‘s another problem with selling mainframes: they require an army of consultants and engineers to customize and configure. That means even more overhead and salary to cover. Any time you have a long sales cycle and extensive consulting requirements, that pretty much demands that you‘re going to have to charge a lot. Pretty soon, you‘ve built a huge business infrastructure that demands high prices just to pay the bills. Once you‘ve got that infrastructure as overhead, it becomes difficult to lower your price. THE INNOVATOR‘S DILEMMA: PC‘S VERSUS MAINFRAMES Most Mainframe and Minicomputer companies walked away from PC‘s... with the obvious results. IBM actually managed both business models for a while, before competition came in and crushed their PC business. But the destructive power of the disruptive technology was undeniable: in less than a decade, PCs went from being cheap toys for hobbyists to being powerful tools that started to cannibalize mainframe sales. Content Management may be in for a similar journey. Let‘s take a look at how Content Management works. THE TRADITIONAL INDUSTRY: CONTENT MANAGEMENT First a quick and dirty definition of web-based Content Management: software that lets you create, edit, and update a website. Actually, Lighthouse on the Web has a more detailed definition that I find pretty useful: You might need systems for creating the content (authoring), describing it (metadata tagging), changing and updating it (editing), letting several people edit it together (collaboration), letting the right people do the right things to it (workflow), stopping the wrong people from manipulating it (security), keeping track of how it has changed (versioning), deciding when to display it (scheduling), displaying it in the right standard format (templating), allowing it to be displayed by others (syndication), allowing it be displayed differently to different visitors (personalisation) and more.
Every website has different needs - especially big, complicated websites. As a result, most CMS software vendors fall into the same business models as the Mainframe vendors selling to corporations: long sales cycles and extensive consulting requirements. CONSULTING: BREAKING IT DOWN I find it helpful to break apart Consulting into two separate pieces: customization and configuration. Customization requires programmers: the software doesn‘t do what the client wants, so they have to pay you to add a new software module. If you‘re lucky, you can get your client to eat most of these development costs and incorporate the new code into your software. Lots of software companies fund their development this way. Configuration is much simpler: the software does exactly what the client wants, and you just have to set some toggles and flip some switches so the software knows what to do. Configuration is much cheaper than Customization, although it‘s usually done by the same high-priced programmers that do the Customization.
You can see the split in consulting types in the various business models of CMS vendors. Content Management software can usually be sorted into three major tranches: - High-End Solutions: expensive Software + extensive consulting for Customization and Configuration
- Mid-Range Solutions: semi-expensive Software + extensive consulting, mostly for Configuration
- Low-End Solutions: cheap solutions + limited consulting, mostly for limited Configuration of cookie-cutter sites
If you need a CMS to jump through hoops in a very particular way, then you‘ll probably have to spend the $200-500k it costs for a software license to a high-end solution. The typical rule of thumb when pricing high end solutions: you‘ll pay at least as much in consulting as you did for the software license. The mid-range solutions are in the $20-100k range, with consulting in that range as well. If the software doesn‘t do what you want, it‘s difficult to get a mid-range CMS to Customize your solution. The low-end solutions tend to be cheap, but generally limited to cookie-cutter sites. After all, the only way to keep the total cost of website down is to minimize both the length of the sales cycle and the amount of consulting required. As a result, the growth of the CMS sector has been constrained. Just as mainframes are limited in how far down-market they can go, so too are most Content Management Solutions limited in their market reach. DISRUPTIVE TECH: WEBLOGS That‘s all changing with the new disruptive technology: the humble weblog. Since most blogging tools are both free and addictive, it‘s no surprise that the sales cycle has been eliminated. Better yet, point and click blog designs mean that there‘s minimal consulting - either customization or configuration - required to set up your blog. The result? Weblogs are spreading like wildfire - by some accounts, the market is growing as high as 25% a month. Weblogs are infecting the low end of the content management space with their incredible viral growth. By itself, this doesn‘t make for a disruptive technology. But two developments are turning blogging software (aka blogware) into a contender for the CMS crown: - A Growing Army of Consultants
- The Increasing Power of Blogware
A GROWING ARMY OF CONSULTANTS Blogging is creating a growing army of consultants that can configure blogware for websites. Up until now, it‘s been very difficult for the average HTML designer to configure a Content Management system. But now, most designers can start a weblog with just a few clicks - and configure them to detailed specifications inside of half an hour. This is a Big Deal, as there are many more designers than programmers. Consultant configuration that used to be done by expensive (and rare) programmers can now be done by cheap (and much more common) designers. I can attest to this firsthand: my programming skills are non-existent, while my design skills are passable... giving me just enough knowledge of HTML to configure blogware to my specifications. I‘ve used that knowledge to configure countless websites over the past several years for my consulting clients. But there‘s a second reason that Weblogs are a disruptive technology to Content Management systems: THE INCREASING POWER OF BLOGWARE Blogware has grown from its simple origins to an increasingly powerful content management solution. As first, weblogs just supported basic features: time stamps for each weblog post, automatic archiving of old posts, automated header dates for the posts on a given day, permalinks that automatically gave its entry its own unique URL. But in the past two years, there have been incredible advances in blogware functionality. Now many blogware packages support advanced features like: - Multiple databases
- Multiple templates
- Multiple users
- Draft status, and future posting
- Category support
- Data syndication
and much, much more. Increasingly, there‘s only a thin layer of functionality separating blogware from low-end Content Management solutions. Features like: - Basic Workflow, so administrators can approve content and templates
- Permission Levels, so you can easily separate content editors from template designers
- Update Histories, so you can track whose updating what (and when)
- Multiple Types of Data, so you can do more than just post blogs (e.g. post Press Releases or Job Listings)
A blogging software company that adds those functionalities to basic blogware could start to eat away at Content Management market share on the low-end. It‘s already starting to happen with corporate weblogs: knowledge management blogs, corporate communications blog, and marketing blogs are all making a splash in the marketplace without much participation from the low to mid-end content management systems. WEBLOGS V. CONTENT MANAGEMENT Much like the computing world, there will continue to be a role for the truly big Content Management systems: after all, IBM is doing well selling consulting services for its existing Mainframes and other Big Iron hardware. The Weblogs versus CMS dilemma will probably unravel much like the PC versus Mainframes dilemma: at first it seemed like PC‘s didn‘t have significant market or revenue potential. By the time the Mainframes caught on, PCs were a full-blown revolution and were beginning to match the price/performance of the powerful Mainframes. But much like Personal Computers, weblogs are riding a whole new price/performance curve that threatens to move upscale into higher end solutions. In other words, weblogs are a violently disruptive force in the content management sector! WEBCRIMSON: TAPPING THE DISRUPTIVE TECH OF WEBLOGS It‘s that disruptive force we hope to tap here at WebCrimson. We‘ve been consulting to clients for over three years, building browser-based software to enable our clients to update their sites. Unlike most blogware solutions, we haven‘t had the luxury of building a bare-bones blogging solution and adding on to it: from the very beginning, we‘ve had to bake in both basic blogware and CMS functionality. WebCrimson supports all the features listed above: Basic Workflow, Permissions Levels, Update Histories, and Multiple Types of Data. Up until recently, the configuration consulting has required someone who knows how to work WebCrimson... but with the launch of CrimsonBlog.com, anyone can set up a blog in under a minute. I‘m not kidding myself: our Crimsonblog.com product is not new to the marketplace - there are other sites that let you create a free static blog and even host it for you. But we‘re really excited about another site we‘re launching along with CrimsonBlog: CrimsonZine.com, a free hosting site that lets you easily post essays to the web. Crimsonzine is really exciting for us, because it does represent something new: it‘s our first website builder that draws on the underlying WebCrimson engine to extend blogware beyond the blogging sector. We‘ve got many more similar website builders in the works: - Book Reviews so you can easily review your favorite books
- Music Reviews will do the same for CDs and MP3s
- Press Centers will let you easily post Press Releases and links to Media Mentions
- Frequently Asked Questions will let you manage lists of FAQs
- Calendars will let users easily create calendars of past and future events
That‘s just the beginning! Blogging is the first and truest killer app of Personal Publishing: these other Crimson sites will extend that power into more flexible and powerful personal and business websites. And because we‘ll be offering them through a browser interface, they‘ll tap the viral nature of weblogs - letting users set up sites in seconds rather than minutes (or hours!). By tapping the violently disruptive force of weblogs, we hope to help bring the power of blogware to the masses and push blogware to the next level. To the Content Management Giants, a word of warning: watch out for weblogs! John Hiler is the CEO of WebCrimson, personal publishing software which lets you easily build blogs or webzines. He is also the editor of Microcontent News, an online magazine about weblogs, webzines, and personal publishing. | 
