For the past 30 months, I've been tracking the "Sitecore Paradox." The heretofore quite successful Web Content & Experience Management (WCM) vendor seems to have hit a major strategic hurdle, where it can't match the major MarTech suite vendors in breadth of capabilities, while it's bundled, all-you-can-eat platform strategy seems more apt for the mid-market, as opposed to a clientele anchored in one of the most complicated and feature-rich WCM offerings in the market. 

What's a Sitecore to do?  And what does this mean for you?

Capital Occupation

Sitecore recently conducted a promotional blitz with a kind of answer: they would invest $1.2B in a "capital investment plan,"  supposedly the "largest ever in the MarTech space."  Observers (including many competitors) were quick to pounce on multiple ambiguities.

Hey @TonyByrne I’ve been out of the DXP game for a while. Can you help me translate this? https://t.co/oHdiBZNp8Z

They obviously didn’t raise $1.2b

— Tom Wentworth (@twentworth12) January 19, 2021

Has Sitecore actually raised additional funds?  Seemingly not, or we'd hear about it.

Is this really just about R&D spend?  No. The vendor seems focused on building sales and marketing capacity around the world, which sounds like an investor's answer to a tech company dilemma. 

Indeed, is this really all capital spend, and if so, over how many years?  No. Some of the spending -- like "brand awareness campaign" -- seems operational, and over an uncertain duration.

Is Sitecore going to refactor its flagship WCM for the cloud-native era?  Maybe (see below).

Will Sitecore acquire more firms?  Always possible, but at this point, any acquisition could crowd out some existing toolsets sold by the vendor, so current licensees beware...

WCM vs. OCP

My own hunch is that Sitecore is indeed undertaking a capital lunge to build a cloud-native WCM based off the Stylelabs Content Hub SaaS infrastructure they purchased in 2018.  The time to have done that would have been just after acquisition, much the same way Microsoft exploited Yammer as a learning ground for cloudifying SharePoint.  Now it feels late, especially since the vendor has spent the past three years doubling-down on its partner-driven, platform-oriented model with its XP WCM offering.  Any new cloud WCM platform will take years to build and burn in.  In the meantime, you the enterprise customer should remain wary of funky hybrid offerings that comingle Content Hub and Sitecore's incumbent WCM platform in awkward (and potentially expensive) ways. 

On the plus side, Content Hub itself is a plausible offering in what RSG calls the "Omnichannel Content Platform" (OCP) marketplace. 

Just understand that there is a big leap from managing heterogeneous content+asset+data components, versus curating highly personalized, assembled pages.

Note that Sitecore is not alone in this dilemma. Episerver has likely backed itself into a similar corner.  Acquia, Adobe, Oracle, and Salesforce are also facing headwinds amid increasingly urgent attempts to dominate their customers' MarTech environments (e.g., see their CDP inadequacies). 

Sitecore in the 2020s

Sitecore says they have seen unprecedented revenue levels during the pandemic, and I believe them.  They're evidently increasing license fees and performing more services work.  The nature of Sitecore's WCM platform today tends to deepen vendor lock-in, which investors love, but licensees can lose patience over time.

Indeed, the new decade has brought large enterprises to a turning point in MarTech stacks.  The pandemic has only accelerated this trend.  We don't yet consider Sitecore a "legacy" WCM offering like TeamSite, Vignette, and SharePoint, but its fundamental architectural assumptions date to the early 2000s, and the vendor seems to believe that it can own an outsized share of your stack at a time when enterprises are diversifying their suppliers and focusing on integration-friendly enterprise tooling. If you already license Sitecore XP or Commerce now, there's no rush for the exits, but you should meter future investments accordingly and avoid sunk costs going forward.