Executive Summary... 4 Key Findings...4 The Market Research Results...5 Success Stories...6 The Challenge...7

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1 CAP Dynamic Content Software Strategies Consulting Service January 8, 2004 The Multi-Channel Communication Challenge Table of Contents Executive Summary... 4 Key Findings...4 The Market Research Results...5 Success Stories...6 The Challenge...7 CAP Ventures' Trends & Research Findings... 8 Methodology and Demographics...8 Total Respondents by Company Size...8 Total Respondents by Functional Role Total Respondents by Industry Representation CAPV Trend #1: Most Pressing Multi-Channel Need: Customer Communications CAPV Trend #2: Growth is the Strongest Driver Behind Multi-Channel Communications CAPV Trend #3: Multi-Channel Communications has an Enterprise Focus CAPV Trend #4: Funds are Available to Improve Multi-Channel Communications CAPV Trend #5: Print Remains the Most Often Used Channel, but Workflow Shifting to Electronic as Primary Channel CAPV Trend #6: Best-of-Breed Technologies Preferred, but Uncertainty Exists 30 Technologies for Managing Content and Workflow Processes Technologies to Create, Edit, and Prepare Content Technologies for Marketing, e-commerce, or e-business Technologies for Publishing or Delivering Content Technology Purchasing Preferences CAPV Trend #7: Platform Vendors Lead, but Do Not Own the Market CAPV Trend #8: PDF and XML are Key to Multi-Channel Communications, but No Verdict has been Reached on Using a Content Component Model CAPV Trend #9: Organizations are Developing Content Strategies CAPV Trend #10: Skills and Roles Focused on Content are Essential Summary and Recommendations Recommendations for the User Community Recommendations for the Vendor Community CAP Ventures is a strategic consulting firm for providers and users of business communication technologies and services. We deliver key research, analysis, forecasting, benchmarking, and strategy recommendations to make a competitive difference in our clients businesses. Additional information about CAP Ventures is available on the Web at Headquarters CAP Ventures, Inc. 600 Cordwainer Drive Norwell, MA Phone: (781) Fax: (781) info@capv.com Europe CAP Ventures, Ltd. 3 rd Floor, Sceptre House 7-9 Castle Street Luton, Bedfordshire, United Kingdom LU1 3AJ Phone: Fax: euro.info@capv.com Japan G.S.M. Corporation Hiroo Office Building Hiroo Shibuya-ku Tokyo Japan Phone: Fax: yoshida@gsm.to This material is prepared specifically for clients of CAP Ventures. The opinions expressed represent our interpretation and analysis of information generally available to the public or released by responsible individuals in the subject companies. We believe that the sources of information on which our material is based are reliable and we have applied our best professional judgment to the data obtained. CAP Ventures, Inc.

2 Research Dynamic Content Software Strategies Consulting Service Appendix: Multi-Channel Communication Case Studies Multi-Channel Personalization: The View from Cancer Treatment Centers of America...56 Global Multi-Channel Catalog Publishing: The View from Premier Farnell Integrated Multi-Channel Marketing: The View from T3 (The Think Tank) List of Figures Figure 1: Respondents by Number of Employees in Company...9 Figure 2: Respondents by Role...10 Figure 3: Scope of Comfort Level...11 Figure 4: Business Functions with Critical Multi-Channel Communication Needs...13 Figure 5: Business Functions with Critical Multi-Channel Communication Needs...15 Figure 6: Business Goals of Multi-Channel Communication Improvements...16 Figure 7: Technology Initiatives with a Multi-Channel Communication Component...18 Figure 8: Multi-Channel Communication Challenge Corporate Visibility...19 Figure 9: Fund Allocation for Multi-Channel Communications...22 Figure 10: Simplified View of Funding Allocation...23 Figure 11: Funding Levels Currently Allocated for Multi-Channel Communications...23 Figure 12: 2004 Requested Funding Levels for Multi-Channel Communications...24 Figure 13: ROI Factors for Multi-Channel Communication Investments...25 Figure 14: Percentage of Multi-Channel Content Delivered Through Each Channel...26 Figure 15: Average Amount of Content Delivered Through Each Channel...27 Figure 16: Percentage of Content Shifted to Electronic First Priority...28 Figure 17: Use of the Word Publishing...30 Figure 18: Use of the Word Publishing by Respondent Role...30 Figure 19: Two Most Critical Technology Classes...31 Figure 20: Technology Classes Correlated with Funding Responses...32 Figure 21: Critical Technologies for Managing Content and Workflow Processes...33 Figure 22: Critical Technologies for Creating, Editing, and Preparing Content...34 Figure 23: Critical Technologies for Marketing, e-commerce, or e-business...36 Figure 24: Critical Technologies for Publishing or Delivering Content...37 Figure 25: Preferred Technology Purchasing Method...38 Figure 26: Preferred Technology Purchasing Method by Respondent Role...39 Figure 27: Providers of Professional Services for Multi-Channel Communication...43 Figure 28: System Integrators Used for Multi-Channel Communications...44 Figure 29: Standards Used for Multi-Channel Communications...45 Figure 30: Top Standards Based on Company Size...46 Figure 31: Percentage of Multi-Channel Content Managed in XML...46 Figure 32: Content Component Model Approach for Multi-Channel Communications...47 Figure 33: Development of a Content Strategy...49 Figure 34: Skills Necessary for Multi-Channel Communications...51 List of Tables Table 1: Respondents by Company Annual Revenue...9 Table 2: Respondents by Role Used for Analysis...10 Page 2 CAP Ventures, January 8, 2004

3 Dynamic Content Software Strategies Consulting Service Research Table 3: Respondents by Industry...12 Table 4: Corporate IT Involvement with Multi-Channel Communications...20 Table 5: Perception of the Multi-Channel Communication Challenge...20 Table 6: Percentage of Content Produced Using Workflow Processes...27 Table 7: Leading Vendors in the Multi-Channel Communication Industry...40 Table 8: Vendors Installed, Planned, or Considered for Installation...41 Table 9: Challenges to Supporting Multi-Channel Communications...48 Table 10: Challenges Based on Respondents' Roles...48 Table 11: Roles Required to Support Multi-Channel Communication...52 CAP Ventures, January 8, Page 3

4 Research Dynamic Content Software Strategies Consulting Service Executive Summary Communication is the lifeblood of an organization. Organizations communicate to educate, market and sell, record thoughts and transactions, inform, and engage. Historically, much of that communication has taken the form of printed documents such as brochures, contracts, documentation, and invoices. Today, the methods of communication have grown rapidly. Print and mail have been augmented with the many channels that are currently available for communication, including , the Internet, pagers, and cell phones. Not surprisingly, customers are the focal point of improved communications. An organization that communicates with its existing customers has a better chance of keeping them. An organization that finds ways to communicate with potential customers has a better chance of growing its business. Grabbing the attention of customers, new and old, has never been easy, and it continues to become more complex. Of course, the number of channels and the need to capture attention has made effective communication more complex than it was in the past. As the number of interaction or touchpoints grows, it challenges an organization's ability to manage information and processes to communicate effectively and consistently. As we learned through CAP Ventures CRM research last year, the highest ranking goals of organizations are focused squarely on customers, including increasing customer loyalty and retention and improving customer satisfaction. Organizations that are interested in keeping their customers and attracting new ones will need to tackle these challenges to compete. In fact, those corporations that do meet these challenges will find themselves with a strong advantage over their competitors. Companies that are able to coordinate touchpoints, or information and communication flows, will be in a much better position to attract and retain customers. In addition to gaining and keeping customers, internal efficiencies can result from multi-channel communications improvement projects. These include the ability to: Cost-effectively create information that can be consumed irrespective of the final delivery vehicle. Manage information to enable efficient creation, updating, approval, and publishing processes across workgroups and participants. Improve information accuracy and timeliness. Deliver information consistently across channels, providing a seamless interface to the organization. Going forward, organizations must be ready to communicate efficiently in the ways that customers want to interact. Those that do will be rewarded with improved client interaction. Those that are do not will run the risk of being left behind. Key Findings CAP Ventures' perspective is validated through primary research, conducted in association with Transform Magazine. The goals of this research were to understand the extent and scope of multichannel communication efforts, outline some of the required changes as detailed in comprehensive case studies, and provide insight into which applications are leading the charge and how organizations are planning to meet the challenge. The 267 responses, obtained from a range of company sizes and industries through CAP Ventures' research pool and Transform Magazine readers, shed light on several critical aspects of the multi-channel communications challenge: The most critical need for multi-channel communications lies in customer-facing areas such as marketing and customer service and support. The main goals for multi-channel communication efforts focus towards customers (i.e. increasing sales and improving customer satisfaction). Page 4 CAP Ventures, January 8, 2004

5 Dynamic Content Software Strategies Consulting Service Research The multi-channel communication challenge has enterprise implications and focus, in addition to executive-level visibility. Approximately 6 out of 10 organizations in our survey indicated that funds were either available now, could be obtained, or were being sought for multi-channel communications needs, with an average budget of $337,321 for software and services. Although print remains the most often used channel, nearly 40% of content has moved to an electronic delivery of content first (e.g. Web, ), with other formats such as print to follow workflow. Organizations generally prefer best-of-breed technologies over packaged software suites for multichannel needs. Adobe, Microsoft, and IBM are perceived as multi-channel communication industry leaders, but numerous vendors are recognized, installed, or planned for installation. PDF and XML are, by far, the leading standards in multi-channel communications efforts. The idea of a content strategy has taken hold, with over 80% of organizations already having one in place or in the process of developing one. Critical roles and skills to succeed with multi-channel communications efforts center upon content and business process expertise. The Market Research Results The primary market research for the project focused on four primary areas: business goals, problem ownership and funding, technology investments, and process and role changes. Quality data was obtained in each area and led to some interesting findings. Through our research, we hoped to gain a better understanding of the specific business goals for multichannel communications projects. The responses we received largely pointed to one conclusion: the business goals of most multi-channel communications projects were, in large part, centered on the customer. Some interesting results in this area include: Over 60% of respondents indicated that customer service and support and marketing had critical needs for multi-channel communications. Over 50% of the respondents cited increasing sales or improving customer satisfaction as the single biggest driver behind multi-channel communications efforts. Identifying an issue as critical, however, does not necessarily result in action. What really indicates an issue s importance to an organization is how much funding is committed towards the effort. On the subject of problem ownership and funding, there were some very encouraging findings: The mean value of funding available for software and services to improve multi-channel communication was a robust $337,321, with large companies reporting an average budget of $603,563. Budgets requested for 2004 rose by approximately $60,000 over Approximately 50% of respondents indicated that the multi-channel issue has executive-level visibility. As to which specific technologies will be used to solve the multi-channel communication challenge, respondents have differing views. Standards clearly play a role, however, especially with a best-of-breed purchasing preference. CAP Ventures, January 8, Page 5

6 Research Dynamic Content Software Strategies Consulting Service 70% of respondents who have funding available or were seeking funds for multi-channel communications indicated that technologies for managing content and workflow processes were critical. PDF and XML were dominant as the standards being used by organizations for multi-channel communications. The mean percentage of multi-channel content in an XML format is 23.3%. Of course, certain skills are required to implement and successfully manage any multi-channel communications project. We looked to identify these specific skills, as well as new roles that may be created due to the effort. The results were quite interesting: XML skills topped the list, with over 44% of respondents indicating that they were critical. Showing that multi-channel communications is not a merely technical issue, over 42% of respondents felt that content experts would be critical to successful projects. Defining a content strategy was the role that was most likely to be added to support multi-channel efforts. Executives in particular viewed this role as a critical one, with nearly 60% identifying it at such. Success Stories This report augments our Web-based survey results with comprehensive case studies of leading firms from multiple industries. These profiles demonstrate how innovative organizations have undertaken successful multi-channel communications initiatives. In the healthcare industry, how and when information is provided is as important as what information is provided. For Cancer Treatment Centers of America (CTCA), fostering patient relationships must begin with the first interaction experience regardless of the communication channel utilized. This case study illustrates an example of a healthcare provider executing multi-channel, personalized marketing campaigns to foster interactive information discovery for prospective patients. Cancer Treatment Centers of America (CTCA) implemented solutions from Banta to enable it to repeatedly utilize an array of communication techniques and media to establish and maintain appeal. Creation, management, and distribution of information for a worldwide distributor with an inventory of 400,000+ different products was the challenge facing Premier Farnell. The company chose Stibo Catalog to enable it to provide consistent information across printed and CD-ROM catalogs, multiple Web sites, and an e-procurement system. This case study illustrates an example of a large, diverse company finding ways to market and distribute products to a global audience across a range of communication channels. In the world of advertising and marketing, electronic media has proved to be a critical element of brand management programs for companies of all sizes. T3 (The Think Tank), one of the largest independent advertising agencies in the country, has been a pioneer in the interactive marketing and digital advertising industries since It implemented content creation and management tools from Quark to help integrate more traditional marketing with new fields such as digital advertising. This case study illustrates an example of a company transforming the way it creates, manages, and delivers integrated marketing solutions for an impressive roster of clients. Broadband Internet access, digital compression and wireless technologies, satellite transmissions, and video on-demand are just a few examples of what "multi-channel" represents in the broadcasting industry. For the Hallmark Channel, multi-channel communications are critical to expanding brand presence to consumers and strengthening affiliate and advertiser relationships. The company chose solutions from FatWire help it to achieve both goals. Page 6 CAP Ventures, January 8, 2004

7 Dynamic Content Software Strategies Consulting Service Research The Challenge It is obvious that the multi-channel communications issue hits home across a range of industries, size of companies, and individual responsibilities. It is not an accident that we refer to this issue as the multichannel communications challenge. Creating, managing, and publishing content, documents, digital assets, and the like to be delivered through print, Web sites, wireless, and other channels can be a daunting undertaking. It requires technology, process, and cultural changes. It also requires skills that run the gamut from technical to business process in nature. All businesses customers will continue to adopt and utilize new information channels. As usage increases, those customers will demand information to come through the channel that they prefer, in a format that is conducive to their needs, and when they want the information. Organizations that tackle this challenge and are able to efficiently communicate through these channels will be a step ahead of competitors. CAP Ventures believes that multi-channel communications will continue to grow in importance in the coming years. CAP Ventures, January 8, Page 7