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Innovative Interfaces Acquires VTLS

Submitted by Marshall Breeding on June 2, 2014 - 11:47am

Innovative Interfaces has acquired Blacksburg, VA-based VTLS as part of its strategic expansion strategy. This move follows the acquisition of Polaris announced in April 2014. The acquisitions were conducted in parallel, with different schedules for closing. The acquisition of VTLS significantly expands Innovative’s international reach and brings a number of new technology products under its corporate umbrella. VTLS had been the longest standing company remaining under the ownership and management of its founder in the library technology industry. VTLS and its precursors have been active since 1974, initially through Virginia Polytechnic Institute and State University--better known as Virginia Tech--and since 1985 as an independent company.

VTLS was privately owned by Dr. Vinod Chachra who has now sold all interest in the company to Innovative interfaces for an undisclosed sum. Chachra will continue to serve for an interim period as the Vice President of Global Expansion for Innovative Interfaces, assisting with the smooth transition to the new corporate organization. Key executives in VTLS will become part of Innovative’s management structure and the overall workforce and operating locations will remain intact.

Dr. Chachra has been an active participant and supporter of the business community. The House of Representatives of the Commonwealth of Virginia passed a resolution in February 2014 recognizing his accomplishments. Vinod Chachra received his Ph.D in Industrial Engineering and Operations Research from Virginia Tech in 1972 and served in a number of academic and administrative roles for the university, culminating in his appointment as Vice President for Information Systems in 1982. Dr. Chachra left Virginia Tech in 1985 when he became the President and Chief Executive Officer of VTLS as it became a independent company.

Innovative’s acquisitions of Polaris and VTLS expand the scale of the company in terms of revenue potential, workforce, and customer libraries. The 2,100 client libraries of VTLS expands Innovative’s total customer base to around 9,500 libraries. At the end of 2013 VTLS reported it employed a total of 77 employees and Polaris employed 97. Prior to the merger, Innovative itself employed 410, not counting those employed by its distributors. The combined company is expected to employ more than 500, approaching the size of Ex Libris, which remains the largest in the industry with 536. (Statistics from Library Systems Report 2014, American Libraries.)

The offices of VTLS will become operations centers for Innovative. Through the launch of its own facilities and those of its acquired companies, Innovative has created a network of operations centers that give it considerable domestic and international coverage:

  • Emeryville, CA (Headquarters)
  • Syracuse, NY, former headquarters of Polaris
  • Blacksburg, VA, former headquarters of VTLS
  • Dublin Ireland, established by Innovative in January 2013
  • Noida, India, established by Innovative as a development and support center in September 2013
  • Barcelona, Spain, former office of VTLS
  • Selangor, Malaysia, former office of VTLS

VTLS Product and Services

VTLS offers a variety of technology products and services for libraries and has been active in providing services to assist libraries in the creation of websites and digital resources with the open source Drupal content management system. The company has also been proactive in the implementation of new standards, including RDA, FRBR, and Bibframe. While VTLS has been offering its products as hosted services in recent years, the vast majority of its customers rely on local server installations.

VTLS-Virtua, the company’s flagship integrated library system, initially launched in 1998 as the successor to classic VTLS that operated HP mainframes. Virtua is based on a multi-tier client/server architecture, using Oracle as its relational database management system and Apache SOLR for its indexing and search engine. In recent years Virtua has been engineered with more sophisticated consortial support, allowing the consolidation of many previously separate installations of Virtua into a single instance. Its functionality is organized according to the traditional ILS modules, including cataloging, circulation, serials management, and acquisitions. Virtua’s metadata management modules natively support FRBR (Functional Requirements for Bibliographic Records) hierarchies and RDA (Resource Description and Access) cataloging rules.

VTLS-VITAL provides highly customizable digital asset management system on the open source Fedora repository platform. First introduced in 2004, VITAL has been implemented by libraries and related organizations to support institutional repositories and digital collections. A specialized version, VITAL Media, supports streaming media in multiple channels and formats and has enhanced the native support in Fedora in the way it handles linked data RDF triple stores.

VTLS-Chamo Discovery is VTLS’ discovery layer product designed to deliver access to a library’s collections, enriched through a variety of features from the realm of social networking. Chamo was initially introduced in 2009, and re-launched in 2012 as Chamo Discovery. In a consortial implementation, Chamo Discovery allows patrons to maintain multiple borrowing profiles when associated with multiple libraries or institutions. Chamo offers APIs which facilitate integration with a Drupal-based library Web site. VTLS bases many of its patron interface products on Drupal and offers consulting services to assist libraries with creating customized applications based on this open source content management system. Chamo Discovery enables a library to provide access to its print and digital collections, events, and any licensed and free data for which it has access to metadata.

VTLS-MozGo, a mobile application for libraries was launched in 2012, available for Android and iOS devices, includes capabilities such as searching of a library’s collections, ability to view account details, including items charged, due dates, and fines owed, as well as presenting information about the library, such as opening hours, program, and location maps.

All the products of VTLS will continue to be supported and developed. Even as Innovative proceeds to develop new generation products, it has a strategic interest in maintaining the loyalty of the libraries that rely on all of the incumbent products. Ongoing support and development of these products will be essential to retaining the client libraries of the acquired companies and therefore preserving the value of its investments.

A Global Customer Base

Though based in Blacksburg, VA in the United States, the vast majority of VTLS customer libraries reside in other international sectors. The acquisition of VTLS extends Innovative’s International presence. While Innovative also had even broader international involvement, VTLS operated in a number of countries that did not overlap. VTLS has libraries using its products in 43 countries. Prior to the acquisition, Innovative was active in 50 countries, which now expands to 66.

Some of the international strongholds of VTLS include Poland, Malaysia, Spain, Switzerland, Pakistan, and Russia. The national libraries of Morocco, Ireland, Pakistan, Wales, Slovakia, Switzerland, Belgium, Azerbaijan, Malaysia, and India all currently use Virtua. Bibliotheca Alexandrina implemented Virtua in 2000. Virtua finds use in many types of libraries, including national, academic, public, and in many large consortia.

VTLS has seen success in placing Virtua in two of the busiest municipal libraries in the world. The Hong Kong Public Library signed a technology contract in March 2010 with Hewlett Packard that included Virtua as the library automation component. This implementation of Virtua was completed in March 2012 with full acceptance by the library. The Virtua system in the Hong Kong Public Library serves its 3.8 million library patrons through 67 branches with annual circulation transactions exceeding 59 million. VTLS broke into the major municipal library arena with Virtua in 2008 when it was selected by The Queens Borough Public Library of New York City to replace its aging DRA Classic system.

Virtua has also been implemented in many specialized environments. ISSN International Center in Paris relies on a customized version of Virtua for managing the ISSN-L. The Library of Congress uses Virtua for its materials acquisition operations throughout many international locations.

Leveraging Corporate Scale

The acquisition of VTLS fits within the strategy of expansion seen by Innovative since its transition to new ownership. Polaris strengthened its position among public libraries in the United States; VTLS expands its global footprint, adding many prestigious libraries to the fold of many different types and sizes.

From a technology perspective, the consolidation of these three companies will enable an efficient mechanism toward the development of products based on cloud computing technologies and Web-based interfaces. Each of the three companies had made initial forays into this modern technology paradigm. Sierra, developed by Innovative provided a major transformation of Millennium into a more open environment based on a services-oriented architecture. Polaris had begun the initial development of LEAP, a set of Web-based interfaces for the staff functions that will operate with the Polaris server component to complement the current Windows-based staff client. VTLS has begun its initial development of Open Skies, which brings its current automation systems into a new services-oriented platform. Yet each of these companies also faced an even more ambitious development initiative to produce new platforms based on current cloud computing technologies. One of the benefits of this consolidation will involve the ability to leverage the development personal, technology expertise, and other resources of the three companies into a single development initiative with significantly more capacity together than any of the companies would have individually.

The Dominance of Private Equity

This move further solidifies the dominance of private equity ownership for the large companies in the library technology industry. Since 2006, a steady stream of private equity acquisitions and other transitions have transformed the industry from one that was fragmented, with a larger number of companies competing with overlapping products for a limited universe of potential clients, to one that has become highly consolidated. The roster of companies currently owned by private equity firms includes:

  • Innovative Interfaces (HGGC and JMI Equity)
  • Ex Libris (Golden Gate Capitol)
  • Infor Library Solutions (Golden Gate Capital)
  • SirsiDynix (Vista Equity Partners)
  • Civica OMERS Private Equity
  • Bibliotheca (One Equity Partners)

The Library Corporation, under the ownership and management of Annette Murphy, founded in 1974 remains as the last major company owned and operated by its founders.

VTLS Corporate History

VTLS traces its beginnings to the Newman Library of Virginia Tech, which in the early-1970’s was interested in automating its operations with one of the computer based circulations systems which were just beginning to be implemented in large academic libraries. Although the leading systems under consideration, including CLSI, offered much of the capabilities the library required, the providers of the systems were not willing to implement some additional features the library considered important. This impasse led the university on a path to develop its own system, which began in 1974 by the Systems Development Department of Virginia Tech under the direction of Dr. Vinod Chachra. The personnel of the Newman Library were active participants in the development of the system, lending their expertise toward in many aspects of the project. The original system, known as CFS, or Circulation and Finding System, the precursor to the VTLS integrated library system, was completed and placed into production for the Newman Library in September 1975. The software was originally developed to operate on Hewlett Packard mini computers.

Initial phase of commercialization through Center for Library Automation

The Systems Development Department continued to develop the software, resulting in a complete automation system that included cataloging, serials control, and a public access catalog. In 1980 the Center for Library Automation was established under the Systems Development Department, working closely with the Newman Library to market and support VTLS to other libraries. By 1983, the university had sold VTLS to 31 additional libraries and 60 installations were reported by 1985. Acquisitions and Fund Accounting modules were completed in 1989.

VTLS, Inc. launched as a separate company

Following the success of the Center for Library Automation in marketing and supporting VTLS, on July 1, 1985, the project was spun off into a separate company. Virginia Tech Intellectual Properties operated as a non-profit corporation to facilitate the transfer of technology created within the university to commercial applications. VTIP facilitated the creation of VTLS as for-profit company. VTLS, Inc. initially operated in space within the Newman Library and later moved to the Virginia Tech Corporate Research Center as its first tenant. The new company was led by Vinod Chachra as its President and CEO. VTLS, Inc. was initially co-owned by Chachra and VTIP. By 1990 the company reported $3.6 million in revenue.

In April of 1994, Chachra acquired full ownership through a $2.64 million buy-out of the equity of VTIP. This 20-year chapter of private ownership came to a close with the acquisition of VTLS by Innovative.

VTLS saw strong adoption in the United States during this phase, and later attracted interest in many libraries in international regions. Domestically, many academic libraries and consortia of public libraries implemented VTLS. The public libraries of West Virginia, for example, were part of a statewide automation project based on VTLS. Other major libraries acquiring VTLS included the Columbus Metropolitan Library, Iowa State University, University of Alabama, the College of William and Mary, and many others.

VTLS enters the client-server arena

As technology evolved away from the minicomputer or mainframe terminal-oriented systems upon which the original VTLS software was based, the company saw the need to develop a new system more consistent with the technologies coming in to play during that era.

Virtua was first announced in August 1996, as its new generation system supporting relational database management, Unicode, client-server architecture, and data warehousing, and APIs. The development of Virtua saw some delays, resulting in some libraries that had initially shown interest to instead select other systems. University of Kansas, for example, selected Virtua in 1996, but ended up purchasing Voyager from Endeavor Information Systems. In May 1998 L'Universite Catbolique de Louvain became the first library to implement Virtua in production.

During the transition from the classic version of VTLS to Virtua, the company saw a diminished presence among libraries in the United States as adoption in libraries in international regions strengthened.

Open Skies: consolidating products into a library services platform

In March 2013 VTLS announced the launch of a new product suite, called Open Skies, which builds on its major products into a more unified library services platform. Though development was largely complete at the time of its acquisition, no sales of Open Skies had been announced.

Company leadership

The company has been lead since its inception by Vinod Chachra, except for a five-year period from March 2003 through February 2007 when industry veteran Carl Grant served as its President and Chief Operating Officer. Following the completion of his contract, Grant exited the company and Chachra resumed the title of President in addition to the role of Chief Executive Officer that he retained during Grant’s tenure.

Perspective

Business transitions such as this acquisition of VTLS and Polaris by Innovative always evoke some degree of concern among the libraries that rely on the products and support of the acquired company. In these circumstances, one can expect a mix of continuity and change. In the short term, support and other practical issues generally remain intact. Lessons learned in previous consolidations demonstrate that it is counterproductive to disrupt current technology products. Longer term changes may revolve around whether the product which the library has selected and implemented will continue to be developed in the indefinite future. But that question applies even in the absence of a business transition given the need for companies to refresh their product lines to meet the ongoing changes in the nature of library collections and their services and the need to keep up with the changing cycles of technology. As libraries become more deeply engaged with digital and electronic resources in addition to print resources they will benefit from the development of new systems shaped around those realities. In this case, all three companies were already on some course toward developing new generation products. A consolidated company potentially has greater capacity to produce the ambitious developments that libraries need relative to what would be possible through each of the incumbent companies individually. Whether the library community benefits from this consolidation hinges on whether the technology produced is compelling enough to balance the narrowing of choices in the marketplace.