Wednesday, Nov 16, 2005

Librarians are not just fusty keepers of knowledge stored in dust-bound tomes. Along with systems analysts and programmers, they helped to create a software system for the management of books and digital content that has become a multi-million dollar enterprise.

The software, called Aleph, was born in 1980 at Jerusalem's Hebrew University. After it proved a hit throughout Israel, the university's commercial unit decided to market it worldwide and helped to found Ex Libris. Sales have climbed from Dollars 5m in 1997 to nearly Dollars 30m (Pounds 17m) last year.

The company, based in Jerusalem but with about half its staff of more than 200 people based in offices worldwide, has an impressive client list. "We service four of the top five libraries worldwide - the Library of Congress in Washington, the British Library, the Russian State Library and the National Library of China," says Matti Shem Tov, president and chief executive.

Mr Shem Tov, whose background combines computer science and an MBA, has found the operating environment of Ex Libris different from the cut and thrust of the commercial world. "The library information business is a unique industry because we are dealing with institutions that don't compete with each other, but rather co-operate with each other."

Aleph dealt with all aspects of managing a print library collection; cataloguing the book, acquiring the book, lending the book,handling fines and searching the catalogue. But Ex Libris has shifted its strategy as more publishers produce electronic books and articles.

In 2000, it released SFX, which offers linking services to electronic resources. A year later, it launched MetaLib, which allows users to access electronic collections locally or remotely. DigiTool, released in 2002, allows libraries, archives and museums to share collections while protecting content and copyright. The most recent product, Verde, was produced with Harvard University and the Massachusetts Institute of Technology and builds on SFX to create an electronic resource management system.

Mr Shem Tov says that for each product, the company works with three or four existing customers. "Institutions want to be partners in spite of the fact that they don't get any rights."

He stresses that Ex Libris is focused on products and is not a service company or a software integration house. The main revenue generator is the licensing of software and contracts to support it. The company uses the same piece of code but repackages it to serve different languages with different user interfaces. "Because we come from a small country, we had to think internationally from day one, and so the product can run in any language . . . We are exporting in 25 languages to 57 countries, unlike our US competition, which is focused on the English-speaking market."

A milestone was the first foray into the US and winning Harvard as a customer. Today, 600 of its 1,650 customers are in the US - even after many people warned Ex Libris it was crazy to try to enter this market given large competitors, such as Chicago's Endeavor Information Systems. "We have this idea that if we go to a new country, you go to the top. If I manage to first sell to Harvard in the US or UCL in London, then I can go down to the smaller institutions."

Ex Libris plans to fund acquisitions through a combination of organic growth and possible private equity financing. But while capital raising has rebounded this year, figures released this week by the Israeli Venture Capital Research Centre showed a slight decrease over the third quarter.

Still, Mr Shem Tov forecasts the worldwide library market will reach more than Dollars 1bn annually, with growth coming from existing customers as they go digital as well as new customers, particularly in Asia where Ex Libris has customers.

The company has a network of distributors selling the products in secondary markets. Regional tensions, however, mean the Muslim world is out of bounds. "We don't sell directly in the Middle East. We have some customers in Egypt through our French office and in Malaysia through our UK office."

As for the future, he believes that business promotes peace. "I'm sure we will one day expand in the Middle East and any solution to peace lies in economics." His vision: a Disneyland in the Gaza Strip, that would create thousands of jobs and give the Palestinians a stake in the future. "People laugh but I'm serious; they're not thinking far or wild enough."

By SHARMILA DEVI

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